Horticulture Value Chain Development Sector Project, Afghanistan€¦ · Horticulture Value Chain Development Sector Project (RRP AFG 51039) Project Number: 51039-002 Grant Number:

Horticulture Value Chain Development Sector Project (RRP AFG 51039)

Project Number: 51039-002 Grant Number: xxxx-AFG 29 August 2018

Afghanistan: Horticulture Value Chain Development Sector Project Important Note: This Project Administration Manual is an active document. It will be updated and revised progressively as and when necessary during each review mission. The contents herein are intended to assist and facilitate project management and implementation. If there is any conflict with any other legal agreement(s) related to this project, the provisions in the legal agreements will prevail.

Project Administration Manual

http://www.adb.org/Documents/RRPs/?id=51039-002-2

ABBREVIATIONS

ABE – agro-business enterprises ADB – Asian Development Bank CPMO – Central Program Management Office (of MAIL) CPP – community participation in procurement CQS – consultant quality selection DAIL – departments of agriculture, irrigation and livestock DMF – design and monitoring framework EARF – environmental assessment and review framework EIRR – economic internal rate of return EMP – environmental management plan FIRR – financial internal rate of return GAP – gender action plan HACCP – hazard analysis and critical control points IEE – initial environmental examination ISC – implementation support consultant MAIL – Ministry of Agriculture, Irrigation and Livestock MOF – Ministry of Finance NGO – Nongovernment organization PIU – project implementation units (regional) PMU – Project Management Unit QCBS – quality and cost-based selection SIP – subproject investment proposal SIR – subproject investment report SPS – Safeguards Policy Statement (2009)

CONTENTS

Page I. PROJECT DESCRIPTION.................................................................................................................... 1 II. IMPLEMENTATION PLANS ................................................................................................................ 1

A. Project Readiness Activities .......................................................................................................... 1 B. Overall Project Implementation Plan ............................................................................................. 2

III. PROJECT MANAGEMENT ARRANGEMENTS .................................................................................. 4 A. Project Implementation Organizations: Roles and Responsibilities .............................................. 4 B. Key Persons Involved in Implementation ...................................................................................... 5 C. Project Organization Structure ...................................................................................................... 6 D. Selection of Participating Provinces .............................................................................................. 9 E. Subproject Selection and Approval Process ................................................................................. 9

IV. COSTS AND FINANCING .................................................................................................................. 22 A. Key Assumptions ......................................................................................................................... 22 B. Detailed Cost Estimates .............................................................................................................. 22 C. Contract and Disbursement S-Curves ......................................................................................... 27 D. Fund Flow Diagram ..................................................................................................................... 28

V. FINANCIAL MANAGEMENT ............................................................................................................. 29 A. Financial Management Assessment ............................................................................................ 29 B. Disbursement ............................................................................................................................... 32 C. Accounting ................................................................................................................................... 33 D. Auditing and Public Disclosure .................................................................................................... 33

VI. PROCUREMENT AND CONSULTING SERVICES ........................................................................... 34 A. Advance Contracting and Retroactive Financing ........................................................................ 34 B. Procurement of Goods, Works, and Consulting Services ........................................................... 35 C. Procurement Plan ........................................................................................................................ 36

VII. SAFEGUARDS ................................................................................................................................... 44 VIII. GENDER AND SOCIAL DIMENSIONS ............................................................................................. 46 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION ............ 47

A. Project Design and Monitoring Framework ................................................................................. 47 B. Monitoring .................................................................................................................................... 47 C. Evaluation .................................................................................................................................... 47 D. Reporting ..................................................................................................................................... 47 E. Stakeholder Communication Strategy ......................................................................................... 48

X. ANTICORRUPTION POLICY ............................................................................................................. 48 XI. ACCOUNTABILITY MECHANISM ..................................................................................................... 48 XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL .................................. 50 APPENDIXES Appendix 1: Incremental Staff Schedule ................................................................................................ 51 Appendix 2: Terms of Reference for Implementation Support Consultants ...................................... 53 Appendix 3: Terms of Reference for Facilitation Partner ..................................................................... 68 Appendix 4: Project Sustainability Measures ........................................................................................ 71

Project Administration Manual Purpose

1. 2. The project administration manual (PAM) describes the essential administrative and

management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

3. The Ministry of Finance (MOF), the Ministry of Agriculture, Livestock and Irrigation (MAIL) are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the recipient and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by MAIL of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

4. At grant negotiations, the recipient and ADB shall agree to the PAM and ensure consistency with the grant agreement. Such agreement shall be reflected in the minutes of the grant negotiations. In the event of any discrepancy or contradiction between the PAM and the grant agreement, the provisions of the grant agreement shall prevail.

5. After ADB Board approval of the project's report and recommendations of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

1. The proposed project will help strengthen Afghanistan’s horticulture value chain by (i) improving processing efficiency and marketing capacity of domestic agro-business enterprises (ABEs); (ii) modernizing crop production through better planting material, trellising, modern green houses, and on-farm facilities; and (iii) contributing to the national effort in establishing internationally recognized brands of Afghani horticulture produce. It will increase value addition for horticultural commodities produced in eleven (11) provinces in Central, South, and East Afghanistan.1 As such, the project will contribute to increasing import substitution of fresh and processed fruit and vegetables, and expanding exports of high-value fruit, vegetables, and nuts in which the country has a comparative advantage. 2. Impact, Outcome, and Outputs. The project is aligned with the following impact: improved agricultural productivity and food security.2 The project will have the following outcome: production and value addition of horticulture products increased. The two outputs are (i) horticulture value-chain infrastructure and facilities improved; and (ii) national capacity for horticulture export expansion developed.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities

Indicative Activities 2018–2019 Responsible

Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19

Board consideration and approval ▲ ADB

Grant agreement signing ▲ ADB, MOF, MAIL

Government legal opinion provided

▲ MOF and MOJ

Grant effectiveness ▲ ADB

Government budget inclusion ▲ MOF

Project Management Unit staff appointments

▲ MAIL

Recruitment and mobilization of implementation support consultant

▲ ▲ MAIL and ADB

ADB = Asian Development Bank; MAIL = Ministry of Agriculture, Irrigation and Livestock; MOF = Ministry of Finance; MOJ = Ministry of Justice. Source: Asian Development Bank estimates.

1 Project provinces include Bamyan, Ghazni, Kabul, Khost, Kunar, Laghman, Logar, Nangahar, Paktika, Paktya, and

Wardak. Kandahar is a highly potential project province, which may be included after year 1 of project implementation subject to a review of the security situation, demand for subproject investment, and appropriate implementation arrangements. Together, these provinces account for 26% of the national planted area of fruit, 21% of the national area of vegetables, and 22% of the national horticulture production output.

2 Government of Afghanistan, Ministry of Agriculture, Irrigation and Livestock. 2016. National Comprehensive Agriculture Development Program (2016–2020). Kabul.

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B. Overall Project Implementation Plan

Table 2: Project Implementation Plan

Indicative Activities 2018 2019 2020 2021 2022 2023 2024

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

1. Horticulture value chain infrastructure and facilities improved.

1.1 Issue request for proposal for implementation support consulting services (Q4 2018).

1.2 Issue request for proposals for facilitation partner services (Q3 2019).

1.3 Execute subproject agreements with approved subproject investors for goods and works for the two representative subprojects (Q1 2019).

1.4 Conduct awareness raising campaign, elicit subproject investment proposals, screen and evaluate subprojects and execute subproject agreements on conforming subprojects (Q1 2019–Q4 2023).

1.5 Facilitate construction/materials and equipment supply for approved subprojects (Q3 2019–Q3 2024).

1.6 Formalize delivery contracts between affiliated farmers and ABEs (by Q4 2024).

2. National capacity developed for horticulture export expansion and import substitution.

2.1 Conduct quality assurance audits for processors/traders, develop plans for upgraded facilities and provide training on procedures (Q3 2020-Q3 2024).

2.2 Pilot brand development for key horticulture products unique to Afghanistan (Q1 2022–Q4 2024)

2.3 Undertake adaptive research to support the modernization of horticultural production, marketing and processing (Q1 2020–Q4 2023).

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Indicative Activities 2018 2019 2020 2021 2022 2023 2024

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2.4 Prepare long-term national horticulture marketing and branding strategy for high value commodities

2.5 Identify suitably qualified individuals to undergo post graduate and fellowship training (by Q3 2020).

2.6 Support farmer, processor/trader and MAIL staff capacity building initiatives (by Q4 2020).

3. Project Management Activities 3.1 Refurbish the PMU/regional PIUs and appoint implementation staff by Q1 2019.

3.2 Set up project performance management system by Q2 2019.

3.3. Prepare annual progress reports.

3.4 Prepare draft project completion report by Q4 2024.

ABE = agro-business enterprises, PMU = project management unit, PIU = regional project implementation units, Q = quarter. Source: Asian Development Bank.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Organizations Management Roles and Responsibilities

Executing Agency Ministry of Finance (MOF)

MOF will be the executing agency and will be responsible for overall coordination and financing of the project.

Implementing Agency Ministry of Agriculture, Irrigation and Livestock (MAIL)

MAIL will be responsible to oversee the implementation of the project. It will utilize the existing Central Program Management Office (CPMO) in Kabul in the MAIL head office. The project will establish its own project management unit (PMU) as part of CPMO responsible for all ADB projects and programs implemented by the MAIL. It will set up regional project implementation units (PIUs) for a cluster of provinces in provincial departments of agriculture, irrigation and livestock (DAILs), embedded within the DAIL offices to avoid setting up a parallel structure and to strengthen government institutional capacity. The DAILs will coordinate with agricultural development officers at the district level.

Project Management Unit

The PMU will be responsible for the following:

• overall management and coordination of the relevant outputs;

• guiding and overseeing the work of the PIUs;

• establishment and implementation of the project performance management system;

• hiring of project staff;

• confirming subproject selection, feasibility studies and submitting to ADB for “no-objection”;

• approving and certifying subprojects’ compliance with the eligibility criteria;

• procurement of goods, works and services, following ADB procedures;

• establishing and managing advance account, submission of withdrawal applications to ADB, retention of supporting documents;

• preparation of annual forecast of contract awards and disbursements;

• compilation of reports from the PIOs and preparation of project progress reports;

• submission of progress reports and annual audit report and financial statements; and

• preparation of a project completion report.

Regional Project Implementation Units

Regional PIUs will be responsible for:

• implementation of project activities at the provincial level, under the management and leadership of the PMU.

Asian Development Bank

ADB will:

• provide a grant from the Asian Development Fund resources;

• issue “no-objection” for subproject feasibility studies for financing, monitor project implementation arrangements, disbursement, procurement, consultant selection, and reporting;

• monitor schedules of activities, including funds flow; • review compliance with agreed procurement procedures;

• review compliance with grant covenants;

• monitor effectiveness of safeguard procedures;

• analyze the outcome of the capacity building and training initiatives;

• monitor conformity with ADB anti-corruption policies;

• undertake periodic review missions; and

• undertake a joint midterm review mission with the government.

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B. Key Persons Involved in Implementation

Executing Agency

Ministry of Finance Mohammad Khalid Payenda Deputy Minister of Finance Ministry of Finance Email address: [email protected] Office Address: Ministry of Finance Building, Pashtonistan Watt, Kabul, Afghanistan


Environment, Natural Resources and Agriculture Division (CWER), Central and West Asia Department (CWRD)

Donneth A. Walton Director, CWER Telephone No.: +63 2 632 5847 Fax No.: +63 2 636 2231 Email address: [email protected]

Project Team Leader Bui Minh Giap Senior National Resources and Agriculture Economist, CWER Telephone No. +63 2 632 6900 Email address: [email protected]

mailto:[email protected]



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C. Project Organization Structure

3. The project organization and management structure is depicted in Figures 1–4 below. Project incremental staff schedule is in Appendix 1.

Figure 1: Project Organization Structure

PIU = project implementation unit.

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Figure 2: Project Management Unit Structure

DAIL = Department of Agriculture, Irrigation and Livestock; MAIL = Ministry of Agriculture, Irrigation and Livestock. *Project implementation activities in Kabul, Logar, and Wardak will be coordinated from the project management unit due to their proximity.

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Figure 3: Regional Project Implementation Unit Structure

MAIL = Ministry of Irrigation, Agriculture and Livestock; NGO = nongovernment organization; PIU = project implementation unit.

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D. Selection of Participating Provinces

4. The provinces were selected based on a number of considerations concerning existing levels of horticultural production, their potential for expanded production, their access to markets, their access to infrastructure to supply these markets, and the security of the province. Some 13 provinces were considered as potential participating provinces at the outset of the design but were reduced to 11 in order to focus on geographic areas that would allow regional implementation units to efficiently implement the project. At this level, the project would account for a significant volume of the national production of the crops considered to have potential for further expansion. For fruits and nuts, priority items included (based on value chain analyses prepared by the Enhancing Agricultural Value Chain for Sustainable Livelihood Project [EAVS] and other projects in the sector) apples, apricots, peaches, plums, pomegranates, cherries, pears, almonds, figs, walnuts, grapes, and oranges. For vegetables, priority crops considered in the analysis included potatoes, onions, carrots, water melons, melons, and tomatoes. Priority was accorded to those crops with either export expansion potential or the potential for import substitution. 5. In order to achieve maximum coverage over the planted areas for these crops, the 11 provinces of Bamyan, Ghazni, Kabul, Khost, Kunar, Laghman, Logar, Nangahar, Paktika, Paktya, and Wardak were selected. Kandahar is a highly potential project province, which may be included after year 1 of project implementation subject to a review of the security situation, demand for subproject investment, and appropriate implementation arrangements. The grouping of the provinces into regional zones for implementation are presented in Figure 1 above. With the selection of these provinces, the project will cover the percentage of planted area as indicated for the main crops in Table 3. Subprojects will be based on these crops or others with either export expansion or import substitution potential as outlined below.

Table 3: Project Coverage of Potential Crops Fruit and Nutsa % of National

Planted Area Vegetables % of National Planted

Area

Apples 52.4% Potatoes 46.9%

Apricots 36.1% Onions 68.4%

Peaches 22.8% Carrots 26.0%

Plums 24.9% Water melons 8.5%

Pomegranates 7.0% Melons 1.0%

Cherries 13.4% Tomatoes 39.4%

Pears 19.7%

Almonds 15.4%

Figs 7.3%

Walnuts 21.2%

Grapes 26.1% a This assessment has not included production in Kandahar province.

E. Subproject Selection, Appraisal, and Approval Process

6. Two levels of subproject investments will be financed under the project (i) agro-business enterprise (ABE) subprojects, and (ii) on-farm affiliated farmer subprojects. Eligible items under the first category include the establishment or rehabilitation of:

(i) Pre-cooling rooms (static and mobile); (ii) Pack houses, sorting or grading buildings and equipment;

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(iii) Storage (zero energy, cold-room and controlled atmosphere) for small- and medium-sized facilities (100–500 tons);

(iv) Processing equipment, machinery to expand processing capacity; (v) Quality control testing laboratory facilities; (vi) Introduction of hazard analysis and critical control points (HACCP) and good

manufacturing practices disciplines into processing facilities; and (vii) Tissue culture laboratories (potatoes, clonal root-stock, and micro-propagation).

7. Eligible items under the affiliated farmer category include:

(i) Water sources and distribution networks (ponds or reservoirs, drip, and other gravity-fed irrigation systems);

(ii) Greenhouses—only modern (high-tech) greenhouses (1,000–4,000 m2) are eligible for project support;

(iii) Planting material (potato, onion, tomato, and cucumber hybrid seeds, clonal root stock, and high-density certified saplings);

(iv) Trellising (for grapes and high-density orchards); (v) On-farm storage for onions and potato; and (vi) On-farm processing (e.g. ‘kishmish khanas,’3 apricot drying trays, grading equipment,

and small-scale processing equipment). 8. Given the substantially different nature (and size) of investments for the respective subprojects, two separate identification, screening, preparation, and approval processes will be adopted.

1. ABE Subprojects

9. During preparation, a workshop was conducted with ABEs to substantiate the potential demand for participation in the project. Participants were invited from a variety of sources including other project contacts and the Afghanistan Chamber of Commerce and Industry. Whilst some 70 ABEs attended the workshop, it is anticipated that there will be significantly wider interest once the grant has been approved and effectivity confirmed. Procedures for implementation must therefore include the identification of potential subproject proponents, eliciting subproject investment proposals (SIPs), screening individual proposals against agreed criteria, evaluating proposals and approving those consistent with overall project objectives.

a. Identification of Subproject Proponents

10. Public awareness campaigns will be coordinated by the project management unit (PMU) at national level and from the regional project implementation units (PIUs). This will be achieved through media releases, promotional material, and targeted workshops to explain the objectives of the project and elicit interest from ABEs operating in participating provinces. The campaign will be initiated immediately upon appointment of staff within project management structures and will be supported by the implementation support consultants (ISCs). It will be repeated at strategic times during project implementation to ensure potential ABE proponents are fully aware of the opportunity for participation. These activities are likely to continue for the first three years of implementation. Staff from the PMU and regional PIUs will need to follow-up these campaigns with potential ABE proponents on a one-to-one basis to assist them in the preparation of a SIP.

3 Local word for grape drying facility for raisin production comprised of drying racks in a shaded, well ventilated

structure made predominantly of mud and bricks and protected from precipitation and dust.

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The SIP will be submitted to the PMU (in case the ABE proponent is based in Kabul, Logar, or Wardak province), and regional PIUs (for ABE proponents based in other provinces) where the SIP’s progress through evaluation procedures can be monitored. 11. The process for preparing and implementing subprojects will follow steps (in table below), some of which will be the responsibility of the PMU and/or PIUs whilst others will be undertaken by the subproject investor (ABE) themselves.

Steps Responsibility

(i) Preparation of a SIP including detailed engineering design where appropriate

ABE

(ii) Screening SIPs for eligibility against agreed criteria PMU and/or PIU with assistance of the ISC

(iii) Preparation of feasibility study called subproject investment report (SIR) together with assessments of social and environmental safeguards and financial and economic impact assessments

PMU and/or PIU with assistance of the ISC ABE’s Consulting Engineer to prepare DED

(iv) Detailed design for works including technical surveys where required

ABE’s Consulting Engineer to prepare. Reviewed by ISC Supervising Civil Engineer

(v) Implementation schedule (including procurement) for contractors to undertake construction and suppliers to deliver and install equipment

ABE

(vi) Implementation of works contracts ABE and ABE’s Consulting Engineer DED and Supervision Contract engaged by ABE

ABE = agro-business enterprise, DED = detailed engineering design, ISC = implementation support consultants, PIU = project implementation unit, PMU = project management unit, SIP = subproject investment proposal.

b. Step 1 – Screening of SIPs

12. Based on submitted SIPs, the PMU and/or regional PIU with assistance of ISC team will review proposals against agreed criteria for eligibility to ensure proposed subprojects are consistent with project objectives and ADB and Afghan social and environmental safeguards. The following eligibility criteria have been agreed between the government and ADB to guide screening activities:

(i) The subproject must be shown to contribute to strategic objectives of the HVCDSP; (ii) The subproject must target horticultural crops (grapes, apples, cherries, apricot,

peaches, pine nuts, citrus, potatoes, onions, tomatoes, cucumber, or bell pepper) prioritizing horticultural crops that have export expansion or import substitution potential;

(iii) The subproject must be located in one of the districts of participating provinces; (iv) Raw materials required for processing by the trader and/or processor are sourced

from one or more of the participating provinces; (v) The proposing ABE must provide proof of permanent land tenure (formal or informal

agreement) where fixed improvements are to be constructed; (vi) The proposing ABE must have a valid business license (Ministry of Commerce and

Industry as appropriate);

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(vii) The proposing ABE must have been active in the industry for the last two (2) years (validated by license and articles of association [by-law]);

(viii) There must be no resettlement impact from the subproject (i.e. only ADB category C for resettlement);

(ix) There must be no environmental impact from the subproject that cannot be mitigated (no ADB category A for the environment);

(x) The proposing ABE must confirm commitment to affiliate with at least 100 farmers (that can include tenant farmers) and agree to cooperate in some or all of the following areas: input supply (including planting material), technical support services, and on-farm storage facilities;

(xi) The proposing ABE must be willing to contribute at least 50% of the eligible investment cost;

(xii) The proposing ABE must demonstrate adequate financial resources for operation and maintenance of constructed buildings and installed equipment;

(xiii) The grant amount for any one subproject investments must be greater than $100,000 and less than $1 million; and

(xiv) Subproject financing is limited to two sources, namely investment funds by the subproject investor and grant funds provided under the project.

13. This screening is a critical part of the process as non-conforming subprojects should be rejected before further investment is made in their preparation. The project will use the SIP, together with field investigations as the basis for confirming eligibility.

c. Step 2 – Preparation of Subproject Investment Report

14. The project team (PMU staff supported by ISCs) will prepare a SIR in accordance with an established format4 that will be the basis for consideration by the project evaluation committee. These will include detailed engineering designs required for construction works. Subproject investors (ABEs) will be responsible for recruiting consultants to prepare detailed engineering designs for their qualifying subprojects. As private engineering consultants are likely to required, the investor shall be responsible for recruiting the consultant although their cost can form part of the overall investment in the subproject and be eligible for project funding in the agreed amount. For construction works, these design consultants will also prepare bills of quantities that can be used for bidding purposes. Detailed designs will be reviewed by the PMU supported by the ISCs and when satisfactory, will be approved by the PMU Manager. Figure 4 shows the procedures for appraisal and approval of ABE subprojects.

4 The SIR will include technical, economic, social, environmental and financial aspects and report on any public

consultations needed to approve the respective subproject.

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Figure 4: Procedures for Appraisal and Approval of ABE Subprojects

ABE = agro-business enterprise; ISC = implementation support consultants; MAIL = Ministry of Agriculture, Irrigation and Livestock; N = No; PIU = project implementation unit; PMU = project management unit; Y = Yes.

ABE

Investor

MAIL

Delegated Authority

MAIL

PIU Technical Team/ ISC

Evaluation Committee reviews

merits of subproject investment

report and prepares subproject

agreement

MAIL

PMU/PIU

Subproject agreement is presented to MAIL

management for approval

Subproject agreement is signed

between MAIL and ABE investor

Interested ABEs prepares subproject

investment proposals and submits to MAIL

MAIL PMU/PIU reviews

subproject investment proposals

and check if subproject qualifies

based on eligibility criteria Is subproject eligible?

MAIL

Evaluation Committee

MAIL PMU/PIU Technical Team

with assistance from ISC

prepares Subproject Investment

Report

ABE

Investor

Is subproject feasible?

PIU/ISC checks if

investment is

feasible?

Y

N

Y

N

ABE implements subproject

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15. The SIR must also confirm the eligibility of each subproject based on the original eligibility criteria as well as the threshold financial internal rate of return (FIRR) of >= 7.14% or such another threshold rate re-calculated in March each year, and an economic internal rate of return (EIRR) of >= 9%. Unquantified benefits must be documented and can be used as an argument to justify the eligibility of subprojects for project financing. In particular, the review will ensure that the subprojects meet the following criteria:

(i) Subproject is shown to be technically feasible and the expected FIRR of >= 7.14% or such another threshold rate re-calculated in March each year, and EIRR of >= 9%. If the estimated economic rate of return is below 9%, there must be justifications of other benefits that cannot be readily quantifiable;

(ii) Cost estimates have been clearly identified and confirmed as realistic and all sources of funding have been identified and agreed and/or confirmed;

(iii) The relevant SIR contains a detailed financing plan for operation and maintenance, including: the operations of the proposed investment to be sustained by the subproject proponent, and the sufficient budget amount and corresponding source of funding are specified and agreed upon by the investor;

(iv) That there have been adequate discussions with affiliated farmers likely to supply the facility to alert them to the opportunities for on-farm investments to improve the quantity and quality of inputs to the subproject investment;

(v) A subproject is shown to have no major negative environmental or social impacts, and mitigation measures have been defined for minor impacts; and

(vi) A subproject is shown to have no significant resettlement impacts, in accordance with the government laws and regulations and ADB’s Safeguard Policy Statement (2009).5

16. A SIR (that forms the basis of subproject approval) will include a social safeguard due diligence report, that will be prepared by the PIU, supported by the PMU with guidance of the ISC. The SIR will be reviewed by MAIL’s evaluation committee and referred to the Deputy Minister for ratification as an approved subproject. If not, the SIR will be returned to the PMU and/or PIU for clarification of the areas of concern. Once approved, the project will execute an agreement (Subproject Agreement) between MAIL and the subproject investor (ABE) that will confirm the subproject as a qualifying subproject in which the detailed obligations of the project in respect of eligible expenditure, financing share, implementation, and payment arrangements confirming the required documentation and approval arrangements for the release of funds. Once this subproject agreement has been signed by both parties, the subproject can proceed to construction.

d. Step 3 – Consideration by MAIL Subproject Evaluation Committee

17. The Subproject Evaluation Committee will meet on a quarterly basis or as required to review prepared SIPs and confirm that proposed subprojects are accepted as confirmed subprojects. Once the SIP has been approved by MAIL’s Subproject Evaluation Committee, an agreement will be drafted between project and the subproject investor that details the terms and conditions of the grant provided by the project.6

5 Available at: http://www.adb.org/documents/safeguard-policy-statement. 6 Start-up consultants have been engaged to draft the format of this agreement that will contain details of the subproject

investment, the associated costs and the financing plan stating which party will be responsible for payment of which items in accordance with the bills of quantities contained in the SIR.

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e. Step 4 – Execution of Subproject Agreement

18. The project will negotiate the draft agreement with the approved subproject investor and, once both parties agree on its content, execute the Subproject Agreement. This document will form the legal basis for disbursement of grant funds to the approved subproject investor in accordance with the terms and conditions established therein.

f. Step 5 – Construction and Equipment Supply

19. Once the detailed designs are approved by the PMU Manager (that should be provided in the SIR or appraisal document for the subproject), the ABE will be responsible for procurement of contractors for works and for contracting suppliers to supply any equipment. The ISCs will provide support to the ABE in the event that there is less familiarity with procurement of such items. It is important that ABEs arrange the purchase of the investment as they will be providing 50% of the investment funds and it is in their interest to secure the cheapest and most appropriately designed equipment for installation in their premises.

g. Step 6 – Construction Supervision

20. Construction supervision will be the responsibility of the consultants engaged by the ABE for detailed engineering design as they will produce the bill of quantities and detailed designs and are ideally placed to supervise construction, ensuring the technical specifications are adopted in the process. They will also be responsible for confirming achievement of progress payment stages during construction for payments due under the contract that will match the payment arrangements specified in the subproject agreement (that establishes the legitimacy of the claim for release of funds from the project) between the PMU and subproject investor.

2. Affiliated Farmer Subprojects

21. In view of tight security restrictions imposed during preparation, it was not possible to canvas the full extent of interest from affiliated farming communities. Information on the potential demand for eligible on-farm subprojects was derived from discussions with the traders and processors as well as other horticulture projects being implemented in Afghanistan. The project design incorporates an additional layer (NGO facilitation partners) between the ABE and affiliated farmers (those supplying horticultural produce to ABEs) and will assist in coordinating on-farm investments. These facilitation partners will play a critical role in identifying interested farmers in (i) identifying what investments affiliated farmers wish to access, (ii) preparing SIPs on behalf of a number of farmers, (iii) identifying sources of supply of the intended investments, (iv) coordinating installation on affiliated farmer properties, and (v) preparing the documentation that will authorize payment from the project. 22. On-farm investments comprise two separate types—those with significant requirement for material purchases (greenhouses, trellising, planting material, irrigation distribution systems) and those requiring largely local materials and labor (kishmish khanas, underground- or above-ground storage, and water storage ponds). As such they require different implementation and procurement arrangements. Both will undergo the same preparation procedures until the commencement of procurement.

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a. Identification of Affiliated Farmer Subprojects

23. In order to strengthen the linkages between ABEs and their affiliated farmers, NGO facilitation partners will work in close consultation with beneficiary ABEs to identify potential farmer beneficiaries. The facilitation partner will canvass potential investments amongst the affiliated farmers based on the list of eligible items established by the project. In consultation with the concerned ABE, they will identify the precise nature of on-farm investments the project can support. Given the likely size of these investments (most beneficiary farmers have land holdings of less than 1 hectare [ha]), there are likely to be a large number of individual investments identified for each beneficiary ABE. 24. The identification process will include public awareness campaigns, community meetings, and other mechanisms that are appropriate for rural Afghanistan. The facilitation partner will need to have a strong presence at this grass-roots level on a regular basis and be able to communicate in local languages with the affiliated farmers.

b. Step 1 – Preparation of Affiliated Farmer Subproject Investment Proposals

25. The facilitation partner will aggregate farmers investment demands according to the type of intervention i.e. they will group farmers requiring irrigation facilities into one group of up to approximately 20 farmers in one geographical area, then assist in preparing subproject investment proposals (SIPs) in a format required by the project. 26. The facilitation partner will use the SIPs, together with field investigations as the basis for confirming eligibility prior to submission to the PIU and/or PMU. The SIPs will be submitted through the facilitation partner to the PIUs and/or PMU where they will be registered as potential subprojects. The process for preparing and implementing subprojects will follow steps (in table below).

Steps Responsibility

(i) Preparation of a SIP Facilitation Partner

(ii) Screening SIPs for eligibility against agreed criteria PMU and/or PIU with assistance of the ISC

(iii) Preparation of feasibility study called subproject investment report (SIR)— with assessments of social and environmental safeguards and financial and economic impact assessments

PMU and/or PIU with assistance of the ISC

(iv) Detailed design for works including technical surveys where required

Not required

(v) Implementation schedule (including procurement) for contractors to undertake construction and suppliers to deliver and install equipment

PMU, PIU, and Facilitation Partner under the framework contract signed between PMU and contractors and/or suppliers

ISC = implementation support consultants, PIU = project implementation unit, PMU = project management unit, SIP = subproject investment proposal.

c. Step 2 – Screening of SIPs

27. Based on the submitted SIPs, the PMU and or PIUs will review proposals against agreed criteria for eligibility to ensure proposed subprojects are consistent with project objectives and

17

ADB and Afghan social and environmental safeguards. The following eligibility criteria have been agreed between the government and ADB to guide screening:

(i) Investment to be used for one of the target horticultural crops (grapes, apples, apricot, peaches, pine nuts, citrus, potatoes, onions, tomatoes, cucumber, or bell pepper) with priority given to horticultural crops that have export expansion or import substitution potential assuming suitable agro-climatic conditions exist in that location;

(ii) Located in one of the districts of target provinces and within reasonable access to the associated ABE’s proposed or existing premises;

(iii) Sustainable access to water for irrigation, to be verified and confirmed by the project; (iv) No significant resettlement impact (i.e. only ADB safeguard category C for

resettlement); (v) No significant environmental impact (no ADB safeguard category A for the

environment); (vi) Farmer must be willing to link with an upstream ABE for product disposal with potential

areas of cooperation including: input supply (including planting material), technical support services, on-farm storage facilities;

(vii) Subproject investments must be greater than $10,000 and less than $50,000; and (viii) Farmers must be willing to contribute at least 20% of the eligible investment cost for

on-farm improvements subject of the grant. These can be in the form of contribution in kind (other than land) such as their labor for installing equipment and facilities.

28. This screening is a critical part of the process as non-conforming subprojects should be rejected before further investment is made in their preparation.

d. Step 3 – Preparing Affiliated Farmer Subproject Investment Report

29. The project team (PMU staff supported by ISCs) will prepare a subproject investment report (SIR) in accordance with an established format that will form the basis of the consideration by the project evaluation committee. The SIR must confirm the eligibility of each subproject based on the original eligibility criteria as well as the threshold FIRR of >= 7.14% or such another threshold rate re-calculated in March each year, and an economic EIRR of >= 9%. Unquantified benefits must be documented and can be used as an argument to justify the eligibility of subprojects for project financing. In particular, the review will ensure that the subprojects meet the following criteria:

(i) Subproject is shown to be technically feasible and the expected FIRR of >= 7.14% or such another threshold rate re-calculated in March each year, and EIRR of >= 9%. If the estimated economic rate of return is below 9%, there must be other benefits that cannot be readily quantified;

(ii) Cost estimates have been clearly identified and confirmed as realistic and all sources of funding have been identified and agreed/confirmed;

(iii) The relevant SIR contains a detailed financing plan for operation and maintenance, including: the operations of the proposed investment to be sustained by the affiliated farmer, and both a sufficient budget amount and corresponding source of funding are specified and agreed upon by same;

(iv) That there have been adequate discussions with associated ABE and that incremental production arising from the on-farm investments can be readily disposed of through the ABE;

(v) A subproject is shown to have no major negative environmental or social impacts, and mitigation measures have been defined for minor impacts; and

18

(vi) A subproject is shown to have no significant resettlement impact, in accordance with the government laws and regulations and ADB’s Safeguard Policy Statement (2009).

30. There are standard designs available from MAIL and other development projects currently being implemented in Afghanistan, the PMU and/or PIUs will make available relevant plans to facilitation partner field operators to modify according to the farmers’ requirements (mostly concerning scale). As on-farm investments are simple structures, no detailed design drawings are necessary, and installation can proceed without seeking ratification of engineers from the PMU. The SIR (that forms the basis of subproject approval) will include a social safeguard due diligence report, that will be prepared by PIU, supported by the PMU with guidance of the ISC.

e. Step 4 – Consideration by MAIL Subproject Evaluation Committee

31. The SIR will be reviewed by the regional project evaluation committee and, if all the conditions outlined above are met, it will be referred to the PMU for ratification as an approved subproject. If not, the SIR will be rejected and returned to the facilitation partner for clarification of the areas of concern.

f. Step 5 – Execution of Subproject Agreement

32. Once approved as a qualifying subproject, MAIL will sign a subproject agreement with the NGO facilitation partner on behalf of the affiliated farmers forming the aggregated investment. This agreement will confirm the subproject as a qualifying subproject in which the detailed obligations of the project in respect of eligible expenditure, financing share, procurement arrangements, and payment arrangements confirming documentation and approval arrangements required for the release of funds.7

g. Step 6 – Implementation of On-farm Subprojects

33. For Farmer Subprojects Using Purchased Materials. In parallel, the PMU will procure the supply of the required items through a framework contract between the PMU and possibly two suppliers for each type of subproject. The subproject agreement between the PMU and the facilitation partner will authorize the facilitation partner to place delivery orders with the supplier in which the affiliated farmer’s requirements and location will be specified. The facilitation partner will monitor delivery and/or establishment of the on-farm investment in cooperation with the PIU staff members and certify the goods have been delivered. Individual farmers will also have to sign a goods receipt confirmation, that together with the facilitation partner attestation, will trigger release of project funds from the project imprest account direct to the supplier under the framework contract. 34. In view of farmers’ limited knowledge of potential suppliers and sources of modern construction materials, the facilitation partner will be the focal point to coordinate suppliers and delivery to farmers for which the farmer will confirm receipt. The farmer is required to assist in its installation as an in-kind contribution to the cost of the investment. Construction supervision is not necessary as structures will be of simple design and simple materials. The diagrammatic representation of implementation arrangements for purchased material on-farm subprojects is in Figure 5.

7 ADB has engaged a start-up consultant to draft the various types of subproject agreements needed under the project.

19

35. For Farmer Subprojects Using Local Materials. As these on-farm investments are characterized by local materials and labor for construction, there is no need for an external supply arrangement of materials as the farmer will be able to obtain the same. The facilitation partner will still go through the process of aggregating on-farm investments, preparing subproject SIPs based upon which the PIU and/or PMU will (with the support of the ISCs) prepare SIRs that will form the basis for consideration by MAIL’s evaluation committee. In the case of a positive outcome, a Subproject Agreement will be executed with the facilitation partner detailing the obligations of both the project and affiliated farmers. The difference between local material subprojects and those above is that the project will affect direct payment to the individual farmer bank accounts after confirmation of completion of construction and commissioning of the investment. For this reason, community participation in procurement is the elected method for procuring this category of on-farm investments. The process of implementing this category of on-farm investments is presented diagrammatically in Figure 6.

20

Figure 5: Procedures for Appraisal and Approval of Affiliated Farmer Subprojects Using Purchased Materials

FP

Facilitation Partner

Facilitation partner

collates farmers’

requirements for on-

farm enhancement

as part of a

subproject

investment

MAIL

PMU/PIU

FP prepares subproject investment proposal

on behalf of farmers and submits to MAIL

MAIL PMU/PIU Technical Team

with assistance from ISC

prepares subproject investment

report


subproject investment

proposals and check if it

subproject qualifies based on

eligibility criteria Is subproject eligible?

MAIL

PMU/ PIU/ ISC Team

Evaluation

Committee reviews

merits of subproject

investment report

and prepares

subproject

agreement

Y

PIU/ISC

checks if

Investment

is Feasible?


MAIL


N

N Y

Subproject agreement is

presented to MAIL

management for Approval

MAIL

Delegated Authority

Subproject agreement is signed between

MAIL and FP on behalf of farmers

FP

Intermediary

Supplier/contractor provides

goods or construction for

implementation of subproject

MAIL

CPMO Procurement

Contractor

Goods/ Works

MAIL CPMO

Procurement

Team

procures

suppliers/

contractors

through a

framework

agreement

FP issues

purchase order

to suppliers/

contractors on

behalf of farmers

FP monitors implementation

CPMO = Central Program Management Office; FA = framework agreement; FP = facilitation partner; ISC = implementation support consultants; MAIL = Ministry of Agriculture, Irrigation and Livestock; N = No; PIU = project implementation unit; PMU = project management unit; Y = Yes.

21

Figure 6: Procedures for Appraisal and Approval of Affiliated Farmer Subprojects Using Local Materials

FP


MAIL

PMU/ PIU/ ISC Team

MAIL

PMU/PIU

Facilitation partner collates farmers’

requirements for on-farm enhancement

as part of a subproject investment


subproject investment

proposal and check if it

subproject qualifies based on

eligibility criteria

MAIL PMU/PIU Technical Team with

assistance from ISC prepares

subproject investment report

FP prepares subproject investment

proposal on behalf of farmers and submits

to MAIL

MAIL

Delegated Authority

Evaluation Committee reviews merits

of subproject investment report and

prepares subproject agreement

Subproject agreement is presented to

MAIL management for approval

Subproject agreement is signed between

MAIL and FP on behalf of farmers

MAIL


FP

Intermediary


Y

PIU/ISC checks if

investment is

feasible?

N Y

Farmers implements subproject

FP/PIU monitors subproject

implementation

N

Is subproject eligible?

CPMO = Central Program Management Office; FP = facilitation partner; ISC = implementation support consultants; MAIL = Ministry of Agriculture, Irrigation and Livestock; N = No; PIU = project implementation unit; PMU = project management unit; Y = Yes.

22

IV. COSTS AND FINANCING

A. Key Assumptions

36. The following key assumptions underpin the cost estimates and financing plan: (i) exchange rate: AFS 71.75 = $1.00 (as of 7 June 2018); (ii) price contingencies based on expected cumulative inflation over the implementation period are as follows:

Table 4: Escalation Rates for Price Contingency Calculation Item 2019 2020 2021 2022 2023 2024

Foreign rate of price inflation 1.5% 1.5% 1.6% 1.6% 1.6% 1.6% Domestic rate of price inflation 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Source: Asian Development Bank. B. Detailed Cost Estimates

37. Detailed cost estimates are presented in the following tables.

23

Table 5: Detailed Cost Estimates by Expenditure Category ($’000)

Table 6: Allocation and Withdrawal of Grant Proceeds*

*Subject to the condition for withdrawal described in para. 5 of Schedule 2 of the Grant Agreement.

(AF Million) (US$ '000) % Total

Local Foreign Total Local Foreign Total Base Costs

A. Agro-Business Enterprise (ABE) Subprojects

1. Grant Financing for ABE Subprojects 1,064.0 1,596.0 2,660.0 15,200.0 22,800.0 38,000.0 33.0

2. ABEs' Contribution to Subprojects 1,064.0 1,596.0 2,660.0 15,200.0 22,800.0 38,000.0 33.0

Subtotal 2,128.0 3,192.0 5,320.0 30,400.0 45,600.0 76,000.0 66.0

B. Affiliated Farmer Subprojects

1. Grant Financing for Farmer Subprojects 1,131.2 282.8 1,414.0 16,160.0 4,040.0 20,200.0 17.0

2. Farmers' Contribution to Subprojects 282.8 70.7 353.5 4,040.0 1,010.0 5,050.0 4.0

Subtotal 1,414.0 353.5 1,767.5 20,200.0 5,050.0 25,250.0 22.0

C. Vehicles and Equipment

1. Vehicles 2.3 21.1 23.4 33.5 301.1 334.6 0.0

2. Equipment 3.6 8.3 11.9 51.0 119.0 170.0 0.0

Subtotal 5.9 29.4 35.3 84.5 420.1 504.6 0.0

D. Capacity Development 143.0 19.5 162.5 2,043.0 278.4 2,321.4 2.0

E. External Monitoring (Safeguards) 12.6 0.0 12.6 180.0 0.0 180.0 0.0

F. Financial Audit 8.4 0.0 8.4 120.0 0.0 120.0 0.0

G. Project Management

1. National Project Management Unit

a. Office Establishment 2.5 1.1 3.5 35.0 15.0 50.0 0.0

b. Incremental Staff 36.4 15.6 52.0 519.8 222.8 742.6 1.0

c. Operating Costs 62.2 26.7 88.9 889.0 381.0 1,270.0 1.0

d. Government Financed Operations 15.1 0.0 15.1 216.0 0.0 216.0 0.0

Subtotal 116.2 43.3 159.5 1,659.8 618.8 2,278.6 2.0

2. Regional Project Implementation Units



c. Operating Costs 120.2 51.5 171.8 1,717.8 736.2 2,454.0 2.0


Subtotal 172.8 66.3 239.1 2,468.8 947.0 3,415.8 3.0

3. Consulting Services

a. International Consultants 0.0 153.1 153.1 0.0 2,187.0 2,187.0 2.0

b. National Consultants 42.2 18.1 60.3 602.7 258.3 861.1 1.0

c. Consultant Support Costs 13.6 5.8 19.5 195.0 83.6 278.5 0.0

Subtotal 55.8 177.0 232.9 797.7 2,528.9 3,326.6 3.0

4. Farmer Facilitation 112.3 48.1 160.5 1,605.0 687.9 2,292.8 2.0

Subtotal 457.2 334.8 792.0 6,531.3 4,782.5 11,313.8 10.0

Total Investment Costs 4,169.1 3,929.2 8,098.3 59,558.8 56,131.0 115,689.8 100.0

Total BASELINE COSTS 4,169.1 3,929.2 8,098.3 59,558.8 56,131.0 115,689.8 100.0

Physical Contingencies 51.3 32.4 83.7 732.7 462.4 1,195.1 1.0

Price Contingencies 107.7 16.4 124.1 1,538.9 233.6 1,772.5 2.0

Total PROJECT COSTS 4,328.1 3,977.9 8,306.0 61,830.4 56,827.0 118,657.4 103.0

Source: Asian Development Bank.

ADB ADF FINANCING

Category Sub-Category

Investment Costs 75,000,000

1

All project expenditure items

[including: grant financing for agro-business

enterprise subprojects; grant financing for farmer

subprojects; vehicles and equipment; capacity

development; external monitoring (safeguards);

financial audit; project management (except office

space for PMU and PIUs); consulting services; and

farmer facilitation]

75,000,000100 percent of total expenditure including

taxes and duties

Total 75,000,000


Horticulture Value Chain Development Sector Project

CATEGORY

No. Item

Amount Allocated [$]Percentage and Basis for Withdrawal from

the Grant Account

24

Table 7: Detailed Cost Estimates by Financier ($’000)

Total Duties &

Amount % Amount % Amount % Amount % Amount % Taxes


1. Grant Financing for ABE Subprojects 38,000.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 38,000.0 32.0 3,800.0

2. ABEs' Contribution to Subprojects 0.0 0.0 38,000.0 100.0 0.0 0.0 0.0 0.0 38,000.0 32.0 0.0

Subtotal 38,000.0 50.0 38,000.0 50.0 0.0 0.0 0.0 0.0 76,000.0 64.0 3,800.0


1. Grant Financing for Farmer Subprojects 20,200.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 20,200.0 17.0 2,020.0

2. Farmers' Contribution to Subprojects 0.0 0.0 0.0 0.0 5,050.0 100.0 0.0 0.0 5,050.0 4.3 0.0

Subtotal 20,200.0 80.0 0.0 0.0 5,050.0 20.0 0.0 0.0 25,250.0 21.3 2,020.0


1. Vehicles 364.2 100.0 0.0 0.0 0.0 0.0 0.0 0.0 364.2 0.3 36.4

2. Equipment 183.1 100.0 0.0 0.0 0.0 0.0 0.0 0.0 183.1 0.2 18.3

Subtotal 547.2 100.0 0.0 0.0 0.0 0.0 0.0 0.0 547.2 0.5 54.7

D. Capacity Development 2,960.4 100.0 0.0 0.0 0.0 0.0 0.0 0.0 2,960.4 2.5 0.0

E. External Monitoring (Safeguards) 230.1 100.0 0.0 0.0 0.0 0.0 0.0 0.0 230.1 0.2 0.0

F. Financial Audit 153.4 100.0 0.0 0.0 0.0 0.0 0.0 0.0 153.4 0.1 0.0



a. Office Establishment 56.1 100.0 0.0 0.0 0.0 0.0 0.0 0.0 56.1 0.0 0.0

b. Incremental Staff 917.1 100.0 0.0 0.0 0.0 0.0 0.0 0.0 917.1 0.8 91.1

c. Operating Costs 1,581.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 1,581.0 1.3 0.0

d. Government Financed Operations 0.0 0.0 0.0 0.0 0.0 0.0 276.1 100.0 276.1 0.2 0.0

Subtotal 2,554.2 90.2 0.0 0.0 0.0 0.0 276.1 9.8 2,830.2 2.4 91.1


a. Office Establishment 125.6 100.0 0.0 0.0 0.0 0.0 0.0 0.0 125.6 0.1 0.0

b. Incremental Staff 729.5 100.0 0.0 0.0 0.0 0.0 0.0 0.0 729.5 0.6 72.5

c. Operating Costs 3,043.4 100.0 0.0 0.0 0.0 0.0 0.0 0.0 3,043.4 2.6 0.0

d. Government Financed Operations 0.0 0.0 0.0 0.0 0.0 0.0 331.3 100.0 331.3 0.3 0.0

Subtotal 3,898.5 92.2 0.0 0.0 0.0 0.0 331.3 7.8 4,229.8 3.6 72.5


a. International Consultants 2,496.5 100.0 0.0 0.0 0.0 0.0 0.0 0.0 2,496.5 2.1 0.0

b. National Consultants 1,050.3 100.0 0.0 0.0 0.0 0.0 0.0 0.0 1,050.3 0.9 0.0

c. Consultant Support Costs 344.3 100.0 0.0 0.0 0.0 0.0 0.0 0.0 344.3 0.3 0.0

Subtotal 3,891.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 3,891.0 3.3 0.0

4. Farmer Facilitation 2,565.2 100.0 0.0 0.0 0.0 0.0 0.0 0.0 2,565.2 2.2 0.0

Subtotal 12,908.9 95.5 0.0 0.0 0.0 0.0 607.4 4.5 13,516.3 11.4 163.5

Total Investment Costs 75,000.0 63.2 38,000.0 32.0 5,050.0 4.3 607.4 0.5 118,657.4 100.0 6,038.3

Total PROJECT COSTS 75,000.0 63.2 38,000.0 32.0 5,050.0 4.3 607.4 0.5 118,657.4 100.0 6,038.3


GovernmentAffiliated Farmers

Agro-business

EnterprisesADB

25

Table 8: Detailed Cost Estimates by Output ($’000)

Subproject Implementation National Capacity

Financing Support Development Total


1. Grant Financing for ABE Subprojects 38,000.0 0.0 0.0 38,000.0

2. ABEs' Contribution to Subprojects 38,000.0 0.0 0.0 38,000.0

Subtotal 76,000.0 0.0 0.0 76,000.0


1. Grant Financing for Farmer Subprojects 20,200.0 0.0 0.0 20,200.0

2. Farmers' Contribution to Subprojects 5,050.0 0.0 0.0 5,050.0

Subtotal 25,250.0 0.0 0.0 25,250.0


1. Vehicles 0.0 364.2 0.0 364.2

2. Equipment 0.0 183.1 0.0 183.1

Subtotal 0.0 547.2 0.0 547.2

D. Capacity Development 0.0 0.0 2,960.4 2,960.4

E. External Monitoring (Safeguards) 0.0 230.1 0.0 230.1

F. Financial Audit 0.0 153.4 0.0 153.4



a. Office Establishment 0.0 56.1 0.0 56.1

b. Incremental Staff 0.0 917.1 0.0 917.1

c. Operating Costs 0.0 1,581.0 0.0 1,581.0

d. Government Financed Operations 0.0 276.1 0.0 276.1

Subtotal 0.0 2,830.2 0.0 2,830.2


a. Office Establishment 0.0 125.6 0.0 125.6

b. Incremental Staff 0.0 729.5 0.0 729.5

c. Operating Costs 0.0 3,043.4 0.0 3,043.4

d. Government Financed Operations 0.0 331.3 0.0 331.3

Subtotal 0.0 4,229.8 0.0 4,229.8


a. International Consultants 0.0 2,496.5 0.0 2,496.5

b. National Consultants 0.0 1,050.3 0.0 1,050.3

c. Consultant Support Costs 0.0 344.3 0.0 344.3

Subtotal 0.0 3,891.0 0.0 3,891.0

4. Farmer Facilitation 0.0 2,565.2 0.0 2,565.2

Subtotal 0.0 13,516.3 0.0 13,516.3

Total Investment Costs 101,250.0 14,446.9 2,960.4 118,657.4

Total PROJECT COSTS 101,250.0 14,446.9 2,960.4 118,657.4


Infrastructure and Facility Improvement

26

Table 9: Detailed Cost Estimates by Year ($’000)

2019 2020 2021 2022 2023 2024 Total

I. Investment Costs


1. Grant Financing for ABE Subprojects 1,900.0 5,700.0 11,400.0 9,500.0 7,600.0 1,900.0 38,000.0

2. ABEs' Contribution to Subprojects 1,900.0 5,700.0 11,400.0 9,500.0 7,600.0 1,900.0 38,000.0

Subtotal 3,800.0 11,400.0 22,800.0 19,000.0 15,200.0 3,800.0 76,000.0


1. Grant Financing for Farmer Subprojects 0.0 2,424.0 4,646.0 5,454.0 5,454.0 2,222.0 20,200.0

2. Farmers' Contribution to Subprojects 0.0 606.0 1,161.5 1,363.5 1,363.5 555.5 5,050.0

Subtotal 0.0 3,030.0 5,807.5 6,817.5 6,817.5 2,777.5 25,250.0


1. Vehicles 313.9 12.3 12.5 12.6 12.9 0.0 364.2

2. Equipment 183.1 0.0 0.0 0.0 0.0 0.0 183.1

Subtotal 497.0 12.3 12.5 12.6 12.9 0.0 547.2

D. Capacity Development 73.9 435.9 715.1 826.0 513.5 396.1 2,960.4

E. External Monitoring (Safeguards) 33.8 35.5 37.3 39.2 41.1 43.2 230.1

F. Financial Audit 22.6 23.7 24.9 26.1 27.4 28.8 153.4





c. Operating Costs 190.7 256.6 266.8 277.5 288.8 300.6 1,581.0


Subtotal 426.1 443.2 461.1 479.9 499.6 520.3 2,830.2




c. Operating Costs 458.8 477.0 496.0 515.9 536.9 558.8 3,043.4


Subtotal 743.5 642.7 668.7 695.9 724.6 754.5 4,229.8


a. International Consultants 407.2 586.5 665.6 509.0 151.0 177.1 2,496.5

b. National Consultants 183.1 182.4 232.8 229.7 156.5 65.7 1,050.3

c. Consultant Support Costs 48.8 58.3 60.6 63.1 65.6 47.8 344.3

Subtotal 639.1 827.2 959.1 801.8 373.2 290.6 3,891.0

4. Farmer Facilitation 128.1 589.7 613.2 604.8 629.4 0.0 2,565.2

Subtotal 1,936.8 2,502.8 2,702.0 2,582.5 2,226.8 1,565.5 13,516.3

Total Investment Costs 6,364.0 17,440.1 32,099.3 29,303.9 24,839.1 8,611.0 118,657.4

Total PROJECT COSTS 6,364.0 17,440.1 32,099.3 29,303.9 24,839.1 8,611.0 118,657.4


27

C. Contract and Disbursement S-Curves

Table 10: Projections for Contract Awards and Disbursement

ADB's ADF Grant

($ million)

Year Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2019 0.00 4.80 1.00 0.20 6.00 0.00 0.50 1.00 1.50 3.00

2020 2.00 3.00 2.00 0.50 7.50 2.00 1.50 3.00 1.75 8.25

2021 5.00 9.00 4.00 4.50 22.50 7.00 4.00 5.00 2.75 18.75

2022 10.00 13.00 4.00 3.00 30.00 5.00 12.00 9.00 4.00 30.00

2023 2.00 2.00 1.00 1.00 6.00 4.00 2.00 3.10 2.15 11.25

2024 1.00 1.00 0.50 0.50 3.00 1.00 1.00 0.50 0.95 3.45

2025 0.00 0.00 0.00 0.00 0.00 0.10 0.10 0.10 0.00 0.30

Total 75.00 75.00

$ million

Year

Source: ADB estimates

Projections for Contract Awards Projections for Disbursement

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

1 2 3 4 5 6

Contract Awards

Disbursement

28

D. Fund Flow Diagram

Figure 7: Project Fund Flow Diagram


Implementation Support

Consultants (Company)

a Direct payment apply subject to amount.

Project Management

Unit

ABEs, Contractors,

Suppliers, and Farmers

Fund

released

through

advance

account to

beneficiaries

and/or their

contractors/

suppliers a

Fund released as

direct payments for

consultant's service

Ministry of Finance

Project Management Unit

(oversight and report

consolidation)

Fund released to advance

account for project

management expenses

and subproject financing

29

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

38. The financial management assessment (FMA) was conducted during May–June 2018 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA considered the capacity of MAIL, including fund-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 39. Based on the assessment of MAIL, there are substantial financial management risks in respect of its proposed role in project management under the proposed project. However, MAIL has significant experience in the implementation of projects financed by ADB, the World Bank, the European Union, and other international development agencies. The financial management arrangements in place for those projects are appropriate for the proposed project. 40. It is concluded that the overall pre-mitigation financial management risk of MAIL is substantial. MAIL has adequate capacity to administer advance account procedures with the 6 month-expenditure limit proposed and the statement of expenditure (SOE) procedures with the proposed ceiling for individual transaction limit. MAIL has agreed to implement an action plan of key measures to address the deficiencies, with assistance of the implementation support consultants. Actions to address MAIL’s key financial management limitations during project implementation are provided in Table 11.

Table 11: Financial Management Action Plan

Risk Description Risk

Assessment Risk Management Plan

Complied by

Delay in processing payments may be significant due to overlapping procedures, roles, and review steps at the project level, CPMO level, MAIL finance department, and the Treasury Department of the Ministry of Finance.

Moderate • Operational and organizational roles will be clearly defined in MAIL organization structure with delineation of finance functions of project personnel involved in financial management.

• Work plans will be developed to indicate core activities of all project personnel (i.e. CPMO project finance staff and FAAD public servants at MAIL).

Q2 2019

30



Complied by

MAIL finance unit may have insufficient capacity to manage project fund flows and ensure proper fund disbursement that could lead to less efficient use of funds for the purposes intended.

Moderate • CPMO will be assisted by implementation support consultants familiar with ADB procedures in the initial years to ensure proper fund disbursement.

• CPMO will employ project staff with previous experience with ADB-funded projects and provide further training in ADB procedures to help mitigate risks.

• Project finance staff will be adequately trained, at the project startup, in conducting discounted cash flow (DCF) analysis of subproject investment proposals (SIPs) and evaluating financial positions of ABEs.

Q2 2019

Risk of increased staff turnover in the project units (PMU/PIU) because of low government compensation.

Moderate • Project will be adopting the National Technical Assistance (NTA) Salary Scale which is comparable to market rates to limit turnover.

By Q1 2019, and

throughout the project

implementation period

Non-standardized procedures for financial management in various projects at the CPMO could limit efficiency of the disbursement process and lead to delays in posting of payments.

Moderate • Implementation support consultants will be hired for the project and will include a financial management specialist to provide support for CPMO. The specialist will assist in standardizing financial management system to conform to internationally accepted standards.

• Implementation support consultants will be engaged to strengthen the CPMO and PMU and/or PIU capacity.

Q2 2019

Challenges may be encountered in managing disbursements due to weak internal control which may cause delay in payments (i.e. consultants’ fees, etc.).

Moderate • Use of direct payment, commitment, and reimbursement procedures for prompt payment of large contracts will mitigate these risks.

Direct payments applicable throughout

project implementati

on period

Staff skills are satisfactory for bookkeeping but may not be effectively suited for project proposed responsibilities. Risks of preparing erroneous documents that could lead to fund misappropriation.

High • The financial management specialist will assist project finance staff in acquiring higher skills levels in accounting by allowing them to learn by example and through on the job training.

Upon mobilization of ISC, and throughout


on period

31



Complied by

Accounting system had been implemented (i.e. charts of accounts used for projects and activities). Project budgeting is carried out in some detail but use in performance reports is somewhat limited.

Moderate • Implementation support consultants will be provided to assist in timely preparation of financial reports.

Monthly, throughout


on period

Internal Audit department’s function has been expanded to include development projects, but staff still require familiarity with audits of donor-funded projects.

High • MAIL will ensure that the internal audit department be provided sufficient training and exposure to audits of donor-funded projects

• Effectiveness will be monitored during implementation.

By Q3 2019

Capacity of external auditors in the country is weak and only applies ISSAI Level 3 principles.

Substantial • Project financial auditing will be supported through project funds, enabling recruitment of quality external auditors.

Annual audit report

submission to ADB

Limited financial management skills may result in preparation of financial reports not being completed in a timely manner.

Moderate • CPMO and PMU/PIU in coordination with the PCU to prepare and submit to the management of ADB quarterly and annual progress reports on project implementation and operation.

• Monitor compliance with loan covenants, including submission of audit project accounts.

Every quarter,

starting Q2 2019

Inadequate information systems may cause discrepancies in records posted for the project.

High • Rolling out AFMIS software to line ministries will help monitor information uploaded to the central database and minimize discrepancies of records.

• Integration of CPMO finance team to MAIL finance department will ensure close coordination with AFMIS designated personnel to access and record data.

By Q2 2019

Overall Risk Assessment

Substantial

ADB = Asian Development Bank; AFMIS = Afghanistan Financial Management Information System; CPMO = Central Project Management Office (of MAIL); FAAD = finance and administration department (of MAIL); FM = financial management; ISSAI = International Standards of Supreme Audit Institutions; MAIL = Ministry of Agriculture, Irrigation and Livestock; MOF = Ministry of Finance; NTA = national technical assistance; PCU = project coordination unit; PIU = project implementation unit; PMU = project management unit. Source: Asian Development Bank.

41. The following actions shall be taken, as outlined in Table 12.

32

Table 12: Financial Management Action Plan

Actions Complied by

Appoint a project manager to head the PMU, reporting to the CPMO project director.

Q4 2018

Appoint the CPMO Project Finance Manager or Finance Officer as the focal point to handle the project’s financial management and ensure timely preparation and submission of project financial statements.

By Q1 2019 and throughout project


Mobilize ISCs’ national financial management specialist to assist the CPMO in ensuring that project financial management adhere to sound accounting principles.

By Q2 2019 and throughout project


Ensure that the project complies with financial covenants and audit recommendations in a timely manner.

throughout project implementation period

CPMO = Central Project Management Office, ISC = implementation support consultant, PMU = project management unit, Q = quarter. Source: Asian Development Bank.

B. Disbursement 42. Grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time),8 and detailed arrangements agreed upon between the government and ADB. Online training for project management and implementation staff on disbursement policies and procedures is available.9 Project management and implementation staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 43. MAIL through the CPMO will be responsible for (i) preparing disbursement projections; (ii) collecting and retaining supporting documents; and (iii) preparing and sending withdrawal applications to ADB. 44. Advance Fund Procedure. MAIL will open one US dollar advance account at a commercial bank acceptable to ADB to facilitate disbursements. The advance account is to be used exclusively for ADB’s share of eligible expenditures. MAIL, who administers the advance account, is accountable and responsible for proper use of advances to the advance account. MAIL will establish the advance account in its name and shall be accountable and responsible for proper use of advances to the advance account. The outstanding advance to the advance account under MAIL’s name will not exceed MAIL’s estimated six-month budget. The request for initial and additional advances to the advance account should be accompanied by an Estimate of Expenditure Sheet10 setting out the estimated expenditures to be financed through the account for the forthcoming six (6) months. The ADB’s project team responsible for project administration, will review the reasonableness of the 6-month estimates provided by MAIL. Supporting documents should be submitted to ADB or retained by MAIL in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account.

8 The handbook is available electronically from the ADB website (http://www.adb.org/documents/ loan-disbursement-

handbook. 9 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning 10 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time).

http://wpqr4.adb.org/disbursement_elearning

33

45. Statement of Expenditure Procedure. The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account. A ceiling of $200,000 per individual payment is applied under SOE procedure. Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. 46. Direct Payment. Direct payments to contractors and consultants will be made in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time). 47. Before the submission of the first withdrawal application (WA), the recipient should submit to ADB, sufficient evidence of the authority of the persons who will sign the WAs on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per WA is stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid (i) by MAIL and subsequently claimed to ADB through reimbursement; or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The recipient should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements11 system, once rolled out for Afghanistan, is encouraged for submission of WAs to ADB. 48. Conditions for Withdrawal from the Grant Account. Conditions for withdrawal from the grant account are: (i) MAIL shall have prepared and approved the Guidelines for Evaluation of Subproject Investment Proposals in form and substance acceptable to ADB, which include methodology for assessment of ABEs’ financial position and capacity to fund 50% of total subproject cost, and (ii) MAIL shall have trained relevant project staff in using the Guidelines. C. Accounting

49. MAIL will maintain or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project. MAIL will prepare project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. MAIL will prepare and submit to ADB in the English language within six (6) months of the end of each financial year the audited project financial statement. 50. Asset registry check. ADB’s Office of Anti-corruption and Integrity (OAI) has issued an asset inspection guide for executing and implementing agencies, which includes pertinent checklists. MAIL shall ensure that the asset registry is set up for CPMO, PMU and PIUs; and asset inventory checked, monitored and updated based on the asset inspection guide.12 D. Auditing and Public Disclosure

51. MAIL will cause the detailed project financial statements to be audited in accordance with International Standards on Auditing, by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the MAIL.

11 The Client Portal for Disbursement facilitates online submission of WA to ADB, resulting in faster disbursement. The

forms to be completed by the Borrower are available online at https://www.adb.org/documents/client-portal-disbursements-guide.

12 https://www.adb.org/sites/default/files/institutional-document/431571/asset-inspection-project-integrity.pdf

https://www.adb.org/documents/client-portal-disbursements-guide

https://www.adb.org/documents/client-portal-disbursements-guide

https://www.adb.org/sites/default/files/institutional-document/431571/asset-inspection-project-integrity.pdf

34

52. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the grant were used only for the purpose(s) of the project; and (iii) whether the executing agency and implementing agency were in compliance with the financial covenants contained in the legal agreements (where applicable). 53. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal project supervision, and followed up regularly with all concerned, including the external auditor. 54. The government, MOF, and MAIL have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.13 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 55. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Public Communications Policy 2011.14 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.15

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

56. All advance contracting will be undertaken in conformity with ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The issuance of invitations to bid under advance contracting will be subject to ADB approval. The recipient and MAIL have been advised that approval of advance contracting does not commit ADB to finance the project.

13 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

14 Public Communications Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications 15 This type of information would generally fall under public communications policy exceptions to disclosure. ADB. 2011.

Public Communications Policy. Paragraph 97(iv) and/or 97(v).

http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications

35

57. Advance Contracting. No contract will be awarded until after grant effectiveness. However, to ensure smooth implementation startup, recruitment process for the project implementation support consultant will be initiated after the fact-finding mission, which entails advertising to call for expressions of interest, shortlisting, issuing request for proposals, and proposal evaluation. 58. Retroactive Financing. Not applicable. B. Procurement of Goods, Works, and Consulting Services

59. For procurement of goods, works, non-consulting services, and consulting services in the project, ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time) shall apply. 60. Framework agreement (FA) procedures will be used for goods and works contracts estimated to cost more than $0.1 million or more, and supply contracts valued at $0.1 million or higher. Open competitive bidding (OCB) procedures will be used for procurement of vehicles for CPMO/PMU. For on-farm enhancements subprojects requiring purchased materials or works by contractors, suppliers and/or contractors will be procured through framework agreements. However, subprojects using local materials and/or requiring farmers’ direct implementation (such as “kishmish khana”, underground- and above-ground storage units), farmers would be engaged under community participation in procurement (CPP) through the facilitation partner. Request for quotations (RFQs) will be used for contracts for procurement of works and equipment less than $100,000. 61. Before the start of any procurement, ADB and the government will review the public procurement laws of the central and state governments to ensure that the grant proceeds are used with due considerations to the core procurement principles and regulations defined in ADB’s Procurement Regulations (2017, as amended from time to time). In case of any inconsistency, the ADB regulations prevail in accordance with provisions of the grant agreement. 62. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and framework agreement guidelines is stated herewith. 63. All consultants will be recruited in accordance with ADB’s Procurement Regulations (2017, as amended from time to time).16 The terms of reference for the implementation support consultants are detailed herewith. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality-cost ratio of 90:10 for both the ISC and facilitation partner. Services for capacity development, project financial audit, and safeguards monitoring will be engaged using the consultant’s qualification selection (CQS) method. Individual consultants for impact evaluation will be engaged through individual consultant selection. 64. Various packages of the procurement plan are presented in the following sections.

16 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation

at: http://www.adb.org/documents/handbooks/project-implementation/

36

C. Procurement Plan

Basic Data

Project Name: Horticulture Value Chain Development Sector Project

Project Number: 51039-002-AFG Approval Number: 51039-002

Country: Afghanistan Executing Agency: Ministry of Finance

Project Financing Amount: $118.66 million Implementing Agency:

(ADB Grant: $75.00 million) Ministry of Agriculture, Irrigation and Livestock

Date of First Procurement Plan: ………… Date of this Procurement Plan: 29 August 2018

*Note: Estimated package amounts in this procurement plan are all in base-cost, inclusive of taxes and duties, but exclusive of contingencies.

a. Project Procurement Thresholds

65. Except as ADB may otherwise agree, the following process thresholds given in table below shall apply to procurement of goods and works.

Thresholds for Procurement of Goods and Works

Method Threshold

Open Competitive Bidding (OCB) and/or Framework Agreement for Goods (National Advertisement)

Between $100,001 to $2,000,000

Framework Agreement for Works (National Advertisement)

Between $100,001 to $5,000,000

Community Participation in Procurement* (Subproject Agreements)

Up to $100,000

Request for Quotations for Goods Up to $100,000

Request for Quotations for Works Up to $100,000

* Note: The Ministry of Agriculture, Irrigation, and Livestock (MAIL) will coordinate with facilitation partners within the project sites to identify subproject investment for on-farm enhancement to benefit farmers. Once the subproject investments are identified, facilitation partners prepare a Subproject Investment Proposal for review of MAIL (See Eligibility Criteria). Approved subprojects will entail a Subproject Agreement signed by MAIL and the affiliated farmers through the facilitation partner (NGO). Affiliated farmers would implement the subprojects. The procurement process follows the procurement procedure for ADB-financed projects used by MAIL under the Enhancing Agricultural Value Chain for Sustainable Livelihood Project (EAVS) using community participation in procurement framework.

b. ADB Prior or Post Review

66. Except as ADB may otherwise agree, the following, given in table below, prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project.

Procurement Methods

Procurement Method Prior or

Post Comments

Procurement of Goods and Works

Open Competitive Bidding Prior Prior review (for vehicles)

37

Procurement Method Prior or

Post Comments

Framework Agreement (Works)a Prior Prior review applies to the procurement of the first two framework agreements. If the first two contracts are procured satisfactorily It will be determined by ADB if post-review may be used.

Framework Agreement (Goods)b Prior Prior review applies to the procurement of the first two framework agreements. If the first two contracts are procured satisfactorily it will be determined by ADB if post-review may be used.

Community Participation in Procurement

Prior Prior review applies to the procurement of the first three (3) subproject agreements. If the first three are procured satisfactorily it will be determined by ADB if post-review may be used. Applied in accordance with the Procurement Regulations for ADB Borrowers (Goods, Works, Consulting and Non-Consulting Services)

Request for Quotations for Works Post

Request for Quotations for Goods Post

Recruitment of Consulting Firms

Quality and Cost Based Selection (QCBS)

Prior QCBS 90:10.

Consultant’s Qualification Selection Prior Applicable in accordance with the Procurement Regulations for ADB Borrowers (Goods, Works, Consulting and Non-Consulting Services)

Recruitment of Individual Consultants

Individual Consultants Selection Prior ADB = Asian Development Bank, FA = framework agreement, NGO = nongovernment organization. a Use of Framework Agreements would be applied for procurement of works wherein schedule of delivery will be

provided during issuance of Purchase Orders from the facilitation partner. b Use of Framework Agreements would be applied for procurement of goods wherein deliveries (quantity and schedule)

are provided during issuance of Purchase Orders from the facilitation partner. Source: Asian Development Bank.

c. Goods and Works Contracts Estimated to Cost $1 Million or More

67. The table below lists the goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Goods and Works to be Procured During the First 18 Months

Package Number

General Description

Estimated Value* ($ ‘000)

Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(quarter/ year)

Comments

MAIL/ HVCDSP/ FA -002

On-Farm Enhancementa

(Trellising Materials for High Density Orchards)

1,000 FA (Goods) Prior 1S1E Q4/2019 2 packages

38

Package Number

General Description


Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(quarter/ year)

Comments


On-Farm Enhancementb

(Drip Irrigation System)



On-Farm Enhancementc

(High Density Orchards)


a Supply of Trellising Materials for High Density Orchards. Two suppliers will be engaged to provide for 100 hectares (ha) of trellising in 11 provinces.

b Supply and Installation of Drip Irrigation System on farmland including materials for maintenance for 2 years of operation. Two suppliers will be engaged to install drip irrigation system to 80 ha of farm in 7 provinces.

c Establishment of High Density Orchards. Two contractors will be engaged to establish 100 HD orchards in 11 provinces for 2 years.

d. Consulting Services Contracts Estimated to Cost More Than

$100,000

68. Table below lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Consulting Services to be Procured During the First 18 Months

Package Number

General Description


Recruitment Method

Review (Prior/ Post)

Type of Proposal

Advert. Date

(quarter/ year)

Comments

MAIL/ HVCDSP/ CONS-001

Implementation Support Consultants

3,643.5 QCBS Prior FTP Q3 / 2018 International; QCBS 90:10



2,437.4 QCBS Prior FTP Q2 / 2019 QCBS 90:10


External Monitoring Safeguards

180.0 CQS Prior STP Q2 / 2019 International


Adaptive Research

150.0 CQS Prior STP Q2 / 2020


Grading and Certification

150.0 CQS Prior STP Q2 / 2020 International

e. Goods and Works Contracts Estimated to Cost Less than $1 Million

and Consulting Services Contracts Less than $100,000

69. Table below groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

39

Smaller Value Contracts Estimated to be Awarded During the First 18 Months

Goods and Works

Package Number

General Description

Estimated Value ($ ‘000)

Number of

Contracts

Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(Quarter/ Year)

Comments

MAIL/ HVCDSP/ SHP-001

Repair and Renovation of PMU offices

30 1 RFQ Post Q1/2019 Small Works

MAIL/ HVCDSP/ FA-001

Motor Vehicles for MAIL CPMO/PMU

250 1 OCB Prior 1S1E Q2/2019 5 units twin cabs

MAIL/ HVCDSP/ SHP -002

Furniture and Fixtures for PMU

20 1 RFQ Post Q2/2019

MAIL/ HVCDSP/ SHP -003

Office Equipment for PMU

50 1 RFQ Post Q2/2019

MAIL/ HVCDSP/ SHP-004 (4–7)

Repair and Renovation of Regional PIU offices

52 4 RFQ Post Q3/2019 Four sites : Bamyan, Nangarhar, Ghazni, and Paktya


Furniture and Fixtures for Regional PIU

60 1 RFQ Post Q4/2019


Office Equipment for Regional PIUs

60 1 RFQ Post Q4/2019

MAIL/ HVCDSP/ FA-00

On-Farm Enhancementa

600 1 FA (goods) Prior 1S1E Q4/2019 2 contracts

MAIL/ HVCDSP/ FA-00


400 1 FA (goods) Prior 1S1E Q4/2019 2 contracts

MAIL/ HVCDSP/ NCB-00


850 1 FA (works) Prior 1S1E Q4/2019 3 contracts

MAIL/ HVCDSP/ SPA-001 (1–2)

On-Farm Enhancementd

140 2 CPP Prior (first

three)

Q1/2020


On-Farm Enhancemente


three)

Q1/2020


On-Farm Enhancementf


three)

Q1/2020

MAIL/ HVCDSP/ CON-004

Capacity Building (MAIL/DAIL Staff Training)

120 1 CQS Prior 1S1E Q3/2019 SY 2019–2024

40

Goods and Works

Package Number

General Description

Estimated Value ($ ‘000)

Number of

Contracts

Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(Quarter/ Year)

Comments


Project Financial Audit

60 1 CQS Prior 1S1E Q1/2020 Audit for SY 2019–2021

a Supply and installation of greenhouses, average area of 1,000 m2 each. Two suppliers will be engaged for supply and installation of 15 units of greenhouses.

b Supply Trellising Materials for Grapes. Two suppliers will be engaged to provide materials for 32 hectares of trellising. c Construction of Water Storage Ponds. Three contractors will be engaged to construct 170 units of water storage ponds. d Construction of Kishmish Khana (Raisin Dryers). The first 3 subprojects would be subject to prior review; and post review thereafter.

Maximum value for an individual contract is $100,000. e Construction of Underground Storage (Potatoes). The first 3 subprojects would be subject to prior review; and post review thereafter.

Maximum value for an individual contract is $100,000. f Construction of Onion Storage. The first 3 subprojects would be subject to prior review; and post review thereafter. Maximum value

for an individual contract: $100,000.

f. Indicative Lists of Packages Required under the Project

70. Table below provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e. those expected beyond the current period).

Goods, Works and Consulting Services

Package Numbera

General Description

Estimated Value

($ ‘000)

Number of

Contracts

Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(Quarter/ Year)

Comments

Goods and Works



(Trellising Materials for High-Density Orchards)

1,800.0 2 FA (goods) Post 1S1E 2022/24



(Drip Irrigation System)

2,800.0 2 FA (goods) Post 1S1E 2022/24


On-Farm Enhancementd

(High-Density Orchards)

3,150.0 2 FA (goods) Post 1S1E 2022/24

MAIL/ HVCDSP/ FA-00*

On-Farm Enhancemente

(Greenhouse)

1,400.0 2 FA (goods) Post 1S1E 2022/24


On-Farm Enhancementf

(Trellising Materials for Grapes)

1,000.0 2 FA (goods) Post 1S1E 2022/24


On-Farm Enhancementg

(Water Storage Ponds)

1,650.0 2 FA (works) Post 1S1E 2022/24

41

Package Numbera

General Description

Estimated Value

($ ‘000)

Number of

Contracts

Procurement Method

Review Prior /

Post/Post (Sample)

Bidding Procedure

Advert. Date

(Quarter/ Year)

Comments

MAIL/ HVCDSP/ SPA-000

On-Farm Enhancementh

(Raisin Dyers)

700.0 8 CPP Post 2021–24


On-Farm Enhancementi

(Underground Storage for Potatoes)

1,200.0 18 CPP Post 2021–24


On-Farm Enhancementj

(Above-ground for Onion Storage)

1,050.0 15 CPP Post 2021–24

Consulting Services


Capacity Building (Scholarships/ Post Graduate)

360.0 1 Prior Q1/2021 SY 2021–22


Capacity Building (Overseas Fellowship)

240.0 1 Prior Q4/2020 SY 2021–22


Project Financial Audit

60.0 1 CQS Prior Q1/2022 Audit for SY 2022–25


Adaptive Research

300.0 2 CQS Prior 2022/ 24 International


Marketing Support 171.4 1 CQS Prior 2022 International


Grading and Certification

300.0 2 CQS Prior 2022/ 24 International

Individual Consultants


Impact Evaluation Expert

113.2 1 ICS Prior 2021 International; Evaluation Economist


Impact Evaluation Expert

19.8 1 ICS Prior 2021 National; impact Evaluation Specialist

a Implementing agency to provide corresponding references for Indicative List of Packages required under the project.

b Supply of Trellising Materials for High Density Orchards–100 hectares (ha) of trellising in 11 provinces. c Supply and Installation of Drip Irrigation System on farmland including maintenance for 2 years of operation. Drip irrigation system

to 140 ha of farm in 7 provinces. d Establishment of High Density Orchards–establishment of 100 high density orchards in 11 provinces. e Supply and Installation of Greenhouses. Average area is 1,000 m2 each. Supply and installation of 35 units of greenhouses. f Supply Trellising Materials for Grapes. Materials for 100 hectares of trellising. g Construction of Water Storage Ponds. 170 units of water storage ponds. h Construction of Kishmish Khana (Raisin Dryers). 160 units of Kishmish Khana. i Construction of Underground Storage (Potatoes). 350 units of underground storage for potatoes. j Construction of Above-ground Onion Storage. 300 units of storage.

42

B. National Competitive Bidding (NCB)

1. General

71. National competitive bidding for the procurement of goods and related services shall conform to the provisions for Open Tender without prequalification as prescribed in the Procurement Law of 2008 with Amendments of January 2009 and elaborated in the Rules of Procedure for Public Procurement issued by the Ministry of Finance in November 2009, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time).

2. Registration and Other Pre-Bid Requirements

(i) Bidding shall not be restricted to shortlists or standing lists; (ii) No bid shall be declared as ineligible of the grounds of debarment without ADB’s

prior concurrence; (iii) No bid shall be declared ineligible on the grounds of government regulations that

restrict sources without ADB’s prior concurrence; and (iv) Foreign suppliers and contractors shall be allowed to bid, without registration,

licensing, and other government authorizations. However, in case these foreign suppliers and contractors are declared winning bidders, the requirements may be completed after award and before signing of contract, without unreasonable costs or additional requirements.

3. Prequalification

72. Post qualification shall be used unless prequalification is explicitly provided for in the Grant Agreement/Procurement Plan. Irrespective of the procedure applied (whether prequalification or post qualification), no domestic or foreign contractor shall be precluded from participation. 73. If prequalification is undertaken, the prequalification criteria should include "Eligibility Requirements", "Financial Situation", "Pending Litigation", and "Experience". Technical Capacity (personnel and equipment) should not be part of the prequalification criteria. 74. Interested bidders shall be given a minimum period of 28 days for the preparation and submission of prequalification applications.

4. Advertising

75. Bidding of NCB contracts estimated at $500,000 or more for goods and related services and NCB contracts estimated at $1,000,000 or more for works shall be advertised on ADB’s website via the posting of the Procurement Plan.

5. Bidding Documents

76. Procuring entities shall use standard bidding documents acceptable to ADB, based ideally on the standard bidding documents issued by ADB.

43

6. Bidding Period

77. Procuring entities shall allow for a minimum of four weeks for submission of bids.

7. Bid Security

78. Where required, bid security shall be in the form of a bank guarantee or check from a reputable bank and should not be more than two percent of the estimated value of contract to be procured.

8. Preferences

79. No preference of any kind shall be given to domestic bidders or for domestically manufactured goods.

9. Evaluation

80. No bid shall be rejected on the grounds of price, or for any other reason not related to the evaluation and qualification criteria, without ADB’s prior concurrence. 81. Prompt payment discounts offered by bidders shall not be considered in bid evaluation.

10. Price Negotiations

82. Price negotiation shall be allowed only after receiving ADB’s prior concurrence.

11. Advance Payments

83. No advance payment shall be made without an advance payment security in the form of a bank guarantee or check from a reputable bank.

12. Government-Owned Enterprises

84. Government-owned enterprises in Afghanistan shall be eligible to participate only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the procuring entity, or the project executing agency, or the implementing agencies.

13. Right to Inspect/Audit

85. A provision shall be included in all NCB works and goods contracts financed by the Bank (ADB) requiring suppliers and contractors to permit ADB to inspect their accounts and records and other documents relating to the bid submission and the performance of the contract, and to have them audited by auditors appointed by ADB.

14. Anti-Corruption Policy

(i) The Recipient shall reject a proposal for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for the contract in question.

44

(ii) ADB will declare a firm or individual ineligible, either indefinitely or for a stated period, to be awarded a contract financed by ADB, if it at any time determines that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for, or in executing, ADB-financed contract, as indicated in paragraph 1.14 (a) of ADB's Procurement Guidelines.

15. Disclosure of Decision on Contract Awards

86. At the same time that notification of award of Contract is given to the successful bidder, the results of bid evaluation shall be published in a local newspaper or well-known freely accessible website identifying the bid and lot numbers and providing information on (i) name of each bidder who submitted a bid; (ii) bid prices as read out at bid opening; (iii) name of bidders whose bids were rejected and the reasons for their rejection; and (iv) name of the winning bidder, and the price it offered, as well as duration and summary scope of the contract awarded. The executing agency and/or implementing agency and/or contracting authority shall respond in writing to unsuccessful bidders who seek explanations on the grounds on which their bids are not selected.

16. Eligibility

87. The eligibility of bidders shall be as defined under section I of the Guidelines; accordingly, no bidder or potential bidder should be declared ineligible for reasons other than those provided in section I of the Guidelines, as amended from time to time.

VII. SAFEGUARDS

88. Environmental Safeguards. The project is classified as category B for environment. An Environmental Assessment and Review Framework (EARF) has been prepared, which describes the measures required to ensure that potential environmental impacts are identified, avoided, reduced, and mitigated in accordance with SPS (2009) and the laws and regulations of Afghanistan. The EARF covers subproject screening, categorization, environmental assessment and review, and preparation of Initial Environmental Examinations (IEEs) for each category B subproject. Each IEE will include impact assessment and mitigation, public consultation, information disclosure, and an environmental management plan (EMP). EMPs consist of plans for mitigation, monitoring, reporting, and stakeholder communication during pre-construction, construction, and operation phases. 89. The IEE prepared for the two representative subprojects describes screening, categorization, assessment, public consultation, anticipated environmental adverse impacts, required mitigation and monitoring measures, and roles and responsibilities of implementing agency staff, consultants, and contractors. Both representative subprojects are assessed as category B for the environment according to ADB’s criteria in that there is a likelihood of waste water disposal into the ground water and the possibility of leakage of petrol, oils, and lubricants from backup generators associated with cool rooms given the intermittent power supplies from the national grid. The IEE concluded that the impacts of the implementation of representative subprojects with EMP will be environmentally acceptable given the proposed mitigating measures. MAIL has disclosed IEE results relevant to stakeholders. 90. Subprojects prepared during project implementation will follow the safeguard procedures set forth in the EARF. Responsibility for supervision of EARF implementation rests with MAIL.

45

MAIL will ensure that IEE findings are locally disclosed; IEEs are submitted to ADB for review and clearance unless exempted; clearance certificate applications are submitted to the National Environmental Protection Authority; EMP measures are incorporated into civil works designs and contracts, and that the PMU and/or PIU undertake the required environmental monitoring and reporting and perform their assigned roles in the grievance redress mechanism. 91. Social Safeguards. The project is classified category C for indigenous peoples. The project provinces are inhabited mostly by Pashtuns, and followed by Tajiks, Hazaras, and Uzbeks. None of these groups are considered as indigenous people’s communities based on the SPS (2009) definition of indigenous people for operational purposes. Hence, no indigenous peoples impact is envisaged in the project area. 92. The project is classified as category C for land acquisition and involuntary resettlement impacts. The project will support eligible agribusiness investments situated either on government land or land owned by the beneficiary organization and/or community. Subproject proposals that involve land acquisition or involuntary resettlement will not be considered. A resettlement framework has been prepared to guide the screening and documentation of subproject sites for involuntary resettlement.17 The resettlement framework describes the measures required to ensure that potential land acquisition and resettlement impacts are identified, avoided, reduced, and mitigated in accordance with SPS (2009) and the laws and regulations of Afghanistan. The resettlement framework covers subproject screening, categorization, and preparation of social safeguard due diligence reports for each category C subproject. A subproject investment report (that forms the basis of subproject approval) will include a social safeguard due diligence report, that will be prepared by the PIU, supported by the PMU with guidance of the ISC. An example of the Social Safeguards Due Diligence Reports for the representative subprojects is presented in Appendix 2 to the report and recommendation of the President.18 MAIL will be required to include in its progress report, a description of the sites for the investments and maintain land records of all ABE subproject sites as well as those for on-farm subproject interventions. 93. Social safeguard due diligence reports prepared for the two representative subprojects indicate that both will not trigger any involuntary land acquisition or resettlement impact. The land on which the facilities are being constructed is already owned by the subproject proponent. Being a private entity, it cannot acquire land, which is a prerogative of the state. However, a private entity can purchase the required land through negotiated settlement in a willing seller and willing buyer situation. But, with no additional land requirement, it is clear that the proposed subproject activity does not trigger ADB’s involuntary resettlement safeguards, and the subproject qualifies to be classified as category C for involuntary resettlement. A screening checklist for the two subprojects are appended as Annexes to the Social Safeguards Due Diligence Report (footnote 15). 94. Implementation Responsibility. MAIL is responsible for implementing social and environmental safeguard-related plans. Budget has been included in the project cost estimates for implementing an independent monitoring of social and environmental safeguards activities. This will ensure the obligations of the government and ADB will ensure proper implementation and adequate monitoring of the plans throughout the project period. The PMU will be staffed with one full-time environment officer and one full-time social safeguards officer to assist in the review

17 Resettlement Framework (accessible from the list of linked documents in Appendix 2 of the report and

recommendation of the President). 18 Social Safeguards Due Diligence Reports (accessible form the list of linked documents in Appendix 2 of the report

and recommendation of the President).

46

of subproject investments proposals and assist in the preparation of subproject investment reports, with regard to the IEEs and social safeguard due diligence aspects, for each subproject prior to receiving confirmation of approval for funding. The ISC will include a national environment specialist to coordinate and provide quality assurance in environment safeguard aspects of subprojects in accordance with the government’s and ADB’s requirement. The project incremental staff schedule is in Appendix 1 and the ISC expertise schedule is in Appendix 2. 95. Prohibited Investment Activities. Pursuant to SPS (2009), ADB funds may not be applied to the activities described in the ADB Prohibited Investment Activities List set forth in Appendix 5 of the SPS (2009). MAIL will ensure that the project is in compliance with applicable national laws and regulations and will apply the prohibited investment activities list to the project financed by ADB.

VIII. GENDER AND SOCIAL DIMENSIONS

96. The proposed project is categorized as “effective gender mainstreaming.” The main thrusts of gender development associated with the project investment are to (i) improve female entrepreneurship in horticulture business development and management, (ii) promote job creation for female workers directly and indirectly, and (iii) ensure that capacity building provided under the project is delivered in an appropriate manner to women engaged in agricultural activities and on-farm agro-processing supported under the project. 97. The following gender actions, together with target indicators, have been included in the project gender action plan (GAP): (i) promote employment opportunities for female workers in trading and processing facilities in ABE subprojects financed by the project; (ii) promote small-scale on-farm processing of horticultural produce by women to add value, improve food security, and household incomes from horticulture; (iii) select female individuals to participate in overseas post-graduate training and fellowship studies; (iv) processing and/or packing entities owned and/or managed by women receive HACCP certification audits; (v) improve financial management and entrepreneurial skills of women subproject owners receiving grants under the project as well as women financial management staff engaged in other ABE subprojects; (vi) recruit national social and gender officer in the PMU; (vii) conduct training for facilitation partners and PMU and/or PIU staff in techniques to improve participation of women in project activities; and (viii) ensure collection of sex-disaggregated baseline and end-line information, and monitor trends on representative female beneficiaries.19 98. MAIL will be responsible for the implementation of the GAP. Budget has been included in the project cost estimates for implementing these gender actions. The PMU has allocated full-time national social and gender officer and the ISC has a national social specialist to provide sufficient resources for proper implementation and adequate monitoring of the GAP throughout the project period. The project incremental staff schedule is in Appendix 1 and the ISC expertise schedule is in Appendix 2.

19 Gender Action Plan (accessible from the list of linked documents in Appendix 2 of the report and recommendation of

the President).

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

99. Key monitoring indicators for the proposed project are presented in the design and monitoring framework (DMF) in Appendix 1 of the Report and Recommendation of the President to the Board of Directors. MAIL will establish a project performance monitoring system by Q3 2019 to enable monitoring of detailed activities, output, outcome, and impact indicators. B. Monitoring

100. Project performance monitoring. MAIL will be required to include in its quarterly and annual progress reports information on all aspects related to the project scope as stated in the DMF. These reports will be ADB’s basis for monitoring and updating project performance and measuring the development impact of the project. 101. Compliance monitoring. Compliance of loan and project agreement covenants will be monitored through periodic ADB review missions, annual progress reports by MAIL, random checks of documents, and review of the project audited financial statements. 102. Safeguards monitoring. MAIL will undertake monitoring and reporting of the implementation of safeguards requirements and procedures specified in the resettlement plans and environmental management plans. MAIL will submit the Annual Safeguards Monitoring Report to ADB by end of January of the following calendar year. 103. Gender and social dimensions monitoring. MAIL will be required to report the GAP achievements in its quarterly and annual progress reports. C. Evaluation

104. ADB will conduct semiannual and midterm review missions to assess the progress of the project and review compliance with the loan agreement and project agreement covenants. The midterm review mission will undertake a comprehensive review of the project design and the performance of the project. It may require a change in the design and implementation arrangements. Within 6 months of physical completion of the project (by Q2 2025), MAIL will submit a project completion report to ADB in a form acceptable to ADB.20 D. Reporting

105. MAIL will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance monitoring system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure that projects will continue to be both viable and sustainable, project accounts and MAIL’s audited financial statement together with the associated auditor's report, should be adequately reviewed.

20 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar.

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E. Stakeholder Communication Strategy

106. Relevant project documents will be disclosed in accordance with ADB’s Public Communication Policy 2011. These documents include: subproject eligibility criteria and procedures for subproject appraisal and approval for ABEs subprojects and affiliated farmer subproject (as in the PAM), the resettlement framework, EARF, IEEs, and social safeguard due diligence reports contain public consultations and/or information disclosure plans and grievance reporting mechanism. These documents will be disclosed on ADB’s website after the fact-finding mission and communicated with the project-affected people (in addition to consultations during the project feasibility study).

Table 13: ADB Public Communications Strategy No. Project Documents Means of

Communication Responsible

Party Frequency Audience(s)

1. Project Administration Manual (which contains the subproject eligibility criteria and procedures for subproject appraisal and approval for ABEs subprojects and affiliated farmer subproject).

ADB’s website ADB Post fact-finding mission General Public

2. Environmental Assessment and Review Framework


3. Initial Environmental Examination for representative subprojects


4. Resettlement Framework ADB’s website ADB Post fact-finding mission General Public

5. Social Safeguard Due Diligence Reports for representative subprojects



X. ANTICORRUPTION POLICY

107. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.21 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.22 To support these efforts, relevant provisions will be included in the loan and project agreements and the bidding documents for the project.

XI. ACCOUNTABILITY MECHANISM

108. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability

21 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 22 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp

http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf

http://www.adb.org/integrity/unit.asp

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Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.23

23 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

http://www.adb.org/Accountability-Mechanism/default.asp

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XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

109. All revisions and/or updates during course of project implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.

Description of Revision Date PAM Agreed with the Government during the fact-finding mission

19 July 2018

PAM Agreed with the Government at grant negotiations 17 July 2018 Inception mission

Appendix 1 51

APPENDIX 1: INCREMENTAL STAFF SCHEDULE

Position No. of staff

Duty Station

NTA Grade Person- Years

Total person-years

National Project Management Unit

1. Project Manager 1 PMU, Kabul 6 6

2. Executive Assistant 1 PMU, Kabul 6 6

3. Provincial Coordinator 1 PMU, Kabul 6 6

4. Deputy Project Director (Technical)

1 PMU, Kabul 6 6

5. Horticulture Development Manager

1 PMU, Kabul 6 6

6. Horticulture Development Specialist

4 PMU, Kabul 6 24

7. Horticulture Officer 4 PMU, Kabul 6 24

8. Agribusiness Development Manager

1 PMU, Kabul 6 6

9. Agribusiness Development Specialist

4 PMU, Kabul 6 24

10. Agri-business Development Officer

4 PMU, Kabul 6 24

11. Food Technologist 1 PMU, Kabul 6 6

12. Engineer 1 PMU, Kabul 6 6

13. Social and Gender Officer 1 PMU, Kabul 6 6

14. Social Safeguards Officer 1 PMU, Kabul 6 6

15. Deputy Project Manager (Operations)

1 PMU, Kabul 6 6

16. Administration and Logistics Manager

1 PMU, Kabul 6 6

17. Senior Admin Officer 1 PMU, Kabul 6 6

18. Admin Officer 1 PMU, Kabul 6 6

19. IT Manager 1 PMU, Kabul 6 6

20. Environmental Officer 1 PMU, Kabul 6 6

21. Cleaners 4 PMU, Kabul 6 24

22. Security Guards 3 PMU, Kabul 6 18

23. Drivers 5 PMU, Kabul 6 30

24. Grants and Contracts Manager 1 PMU, Kabul 6 6

25. Grants and Contracts Officers 2 PMU, Kabul 6 12

* Position No. 2, 4, and 13-25 shall be recruited subject to ADB’s no-objection.

Regional Project Implementation Units (4)

26. Regional Manager 4 PIUs 6 24

27. Business Development Officers 20 PIUs 6 120

28. Horticulture Officer 20 PIUs 6 120

29. Engineers 4 PIUs 6 24

30. Monitoring and Evaluation Officer 4 PIUs 6 24

31. Finance Officers 4 PIUs 6 24

52 Appendix 1

Position No. of staff

Duty Station

NTA Grade Person- Years

Total person-years

32. Admin and Logistics Officer 4 PIUs 6 24

33. Drivers 8 PIUs 6 48

34. Guards - security staff 8 PIUs 6 48

35. Cleaners 4 PIUs 6 24

Appendix 2 53

APPENDIX 2: TERMS OF REFERENCE FOR IMPLEMENTATION SUPPORT CONSULTANTS

Islamic Republic of Afghanistan Project No. 51039-002: Horticulture Value Chain Development Sector Project

Terms of Reference for Implementation Support Consultants

A. Project Background 1. The Asian Development Bank (ADB) is considering a grant in the amount of $75 million to implement a project entitled Horticulture Value Chain Development Sector Project. The overall objective of the project is to improve production and value addition of horticultural products in 11 preselected provinces of include Bamyan, Ghazni, Kabul, Khost, Kunar, Laghman, Logar, Nangahar, Paktika, Paktya, and Wardak in the more secure areas of the country where the greatest potential exists for the production of export expansion and import substitution horticultural crops. Being a sector modality design, the focus of investment is on agro-business enterprises (ABEs) (horticultural traders, processors and packing operators) and on-farm improvements to increase quantity and quality of priority horticultural produce to these enterprises. 2. The project has identified eligible items of investments for both categories as well as eligibility criteria for their participation in the project. By working in parallel with these groups, the project will strengthen the linkages between farmers and traders and/or processors to make the producers more aware of the demand for goods as well as associated quality requirements. Investments will also facilitate the supply of out-of-season perishable products on the domestic market thereby protecting valuable foreign reserves. The project will also reduce the significant post-harvest handling losses that plague the industry at present. These objectives will be served by a number of subprojects that will be identified, designed, and implemented with partial project financing during the six years of implementation. The project will also provide resources for its second output that will include (i) adaptive research, (ii) commodity marketing, (iii) international quality standards and certification, and (iv) capacity building for farmers, traders, and Ministry of Agriculture, Irrigation and Livestock (MAIL) staff (including technical fellowships). 3. Whilst MAIL has considerable experience in the implementation of horticultural development projects funded by multilateral and bilateral donors, most of the support provided to date has been off-budget where implementation units have operated independent of established government procedures. This project is the first ‘on-budget’ in the sector and also the first requiring coordinated implementation with the private sector (ABEs and affiliated farmers). As such, there are incremental skills required for the implementation that are not available within the public service or that can be readily recruited from local individuals. A Project Management Unit (PMU) will be established within MAIL and regional project implementation units in four regional centers to coordinate implementation of the project. Technical support is however required to ensure that the expertise is made available to the project to efficiently implement the project but also to provide specific areas of technical support during implementation. 4. The PMU therefore shall recruit implementation support consultants (ISCs) with the specific expertise outlined below on a competitive basis through a firm using the quality- and cost-based selection (QCBS) procedure with a quality-to-cost ratio of 90:10 in accordance with ADB’s Procurement Regulations (2017, as amended from time to time). The package of international and national specialists will be based in Kabul but will be required to visit all 11 provinces to support implementation subject to security arrangements. Other technical consulting services are summarized in Table 18 below and are described in detail in the following sections.

54 Appendix 2

B. Objective and Scope of Work

5. Objective. International consulting services will be required to assist the implementing agency in project management and supervision. The ISC will be selected and engaged in accordance with ADB’s Procurement Regulations (2017, as amended from time to time). The implementing agency’s PMU, as members of the project bid evaluation committee, will recruit the ISC following the QCBS procedure with a quality-to-cost ratio of 90:10.

6. Scope of Work. An international consulting firm (the consultant) will be engaged by the PMU. The ISC consultant will assist PMU in overall project implementation and supervision. Key aspects of the consultant’s work will include, but not limited to the following:

(i) Assist the PMU in managing and implementing the project and ensuring compliance with the project implementation plan, the grant agreement, and the project agreement(s);

(ii) Prepare bid documents for goods, works, and services in accordance with the procurement plan for the project, and assist the PMU in bid evaluation and contract award;

(iii) Prepare requests for proposal for capacity development and other consulting services, and assist PMU in proposal evaluation;

(iv) Provide technical oversight and guidance on technical aspects related to the ABE and on-farm subprojects, and capacity development;

(v) Supervise the implementation of, and monitor the compliances with social and environmental safeguards, and social and/or gender development aspects;

(vi) Help set up systems and procedures including relevant management and monitoring templates for the PMU to follow; and

(vii) Build capacity of staff in the PMU to undertake their tasks. 7. Consultant’s General Qualifications. The minimum requirements for the consultant are (i) an international consulting firm with extensive and proven experience in value addition in agricultural market chains, project management, and implementing and supervising investments co-financed by the private sector; (ii) familiarity with requirements of horticultural development projects in the Islamic Republic of Afghanistan; and (iii) implementation and supervision experience with similar projects financed by ADB and/or the World Bank. The international consulting firm may associate with other international and national consulting firms as appropriate. The consulting firm must have recent relevant experience and/or engagement in the country and have the necessary support structures to deal with security and other logistics required for operating in this environment. 8. Expertise Schedule. The contract for consultant’s service will be time-based. The ISC comprises a total of 334 person-months (including 71 person-months of international specialists and 263 person-months of national specialists). Advance action for recruitment of ISC will be requested to facilitate the timely mobilization of consultants. The ISC will be fielded shortly after loan effectiveness. Additionally, the ISC will hire adequate support staff to support its consultants in undertaking their duties in an effective and efficient manner. A summary of input schedule is given in the table below, which can be adjusted during project implementation to ensure optimal utilization of resources and efficient outputs and/or deliverables.

Appendix 2 55

Summary ISC Input Schedule

Source: Asian Development Bank estimates.

C. Outline Terms of Reference by Expertise

9. Team Leader/International Agri-business Development Specialist (International: 26 person-months); Deputy Team Leader/Value Chain Specialist (National 44 person-months). The proposed positions are required to assure that subproject designs will adequately address the issue of value addition for export expansion and import substitution objectives for horticultural products of Afghanistan and that there is adequate technical support available during the preparation of subproject designs and their subsequent review based on technical requirements. They will also be needed to support the PMU and PIUs during implementation to assist in subproject identification, screening, preparation (of SIRs) and supervision during construction to strictly enforce the safeguard requirements during construction. In addition, expertise is needed in small to medium enterprise business development and planning. The positions require a minimum of 10 years of experience in the field of business development and more than 5 years of experience in the field of value chain development. They will be based within the PMU but will be required to travel on frequent occasions to project provinces, sometimes for extended periods subject to security considerations. The specialists will have tertiary qualifications from an internationally recognized institution and will be fluent in the English language. Individual specialists will be able to demonstrate good written skills in English and the national language Pashtu and Dari (national specialist only). Both will have good interpersonal

Position Unit Total

1. International Specialists

a. Team Leader/International Agri-business Development Specialist p-mnth 26

b. Subproject Screening/Implementation Specialist p-mnth 7

c. Procurement and Grants Contract Supervision Specialist p-mnth 7

d. Subproject Economist p-mnth 8

e. Food Technologist p-mnth 9

f. Monitoring and Evaluation Specialist p-mnth 6

g. Unallocated International Specialists p-mnth 8

Subtotal 71

2. National Specialists

a. Deputy Team Leader/Value Chain Specialist p-mnth 44

b. Supervising Civil Engineer p-mnth 18

c. Horticultural Specialist p-mnth 24

d. Contract Farming Specialist p-mnth 30

e. Procurement and Grants Contract Supervision Specialist p-mnth 40

f. Financial Management Specialist p-mnth 34

g. Monitoring and Evaluation Specialist p-mnth 32

h. Social Safeguards and Gender Specialist p-mnth 14

i. Environmental Specialist p-mnth 18

j. Unallocated National Specialists p-mnth 9

Subtotal 263

Total 334

56 Appendix 2

and communication skills and will be familiar working in large multinational teams. Duties of the specialists will include the following:

a. Team Leadership (i) Support the PMU in the preparation of monthly, quarterly, and annual reporting

obligations under the grant; (ii) Provide a point of contact between the government PMU and project management

structures and the ISC to coordinate activities of individual specialists; (iii) Assist in the preparation of annual workplans and associated budgets for

consideration by the government and ADB; (iv) Assist the PMU in the implementation activities for the identification, preparation,

evaluation, and implementation of subprojects for both ABEs and on-farm investments;

(v) Support the PMU office in maintaining accurate accounts and financial reporting as required under the grant;

(vi) Manage the inputs of specialist consultants engaged through the ISC contract and guide their activities to ensure inputs are timely and achieve their intended purpose; and

(vii) Other tasks agreed with the project management.

b. Agri-business and Value Chains (i) Support the PMU to develop an information and awareness campaign to elicit SIPs

from interested commercial entities and farmers; (ii) Assist the PMU in the identification of target value chains to be the focus of project

interventions from both a commodity and geographical perspective; (iii) Assist in developing a strategy for the identification of potential subproject

investors; (iv) Train the PMU and/or PIU staff and facilitating partner staff in the conditions for

participation in the project and in assessing eligibility criteria for the subprojects; (v) After a review of available value chain studies undertaken in Afghanistan, prepare

commodity market investigations and analyses for potential horticultural value chains to assist in identifying the most promising areas for investment;

(vi) Undertake a technical review of all subproject feasibility studies (SIRs) prepared by the PMU and/or PIUs. This review shall;

• Include field inspections of the proposed sites;

• Pay special attention to minimizing any disturbance to the natural environment and mitigating and corrective measures as appropriate;

• Review the practicality of storage implications for the investment to confirm that capacity of the storage area is consistent with planned sales patterns/product movement;

• Ensure that financial assessments of investment are completed in both financial and economic terms and that (through cash flow analysis), the subproject investor has access to adequate resources to finance the purchase of incremental raw material through the facility;

• Ensure that designs take account of security arrangements and access to external public infrastructure and services. In particular, together with the civil engineer, ensure that designs do not have excessive recurrent expenditure implications post commissioning; and

• Provide written comments and recommendations to the PMU on each subproject reviewed detailing any changes or modifications to the technical

Appendix 2 57

design. (vii) Assist the monitoring and evaluation specialist in designing a baseline survey to

capture the base case scenarios of ABE subprojects (including the affiliated farmers) and identify verifiable indicators that can be used to measure the success of the investment;

(viii) Assist the financial management specialist to develop training programs to introduce improved financial management practices amongst beneficiary ABEs to generate the measures required for monitoring purposes;

(ix) Conduct annual reviews of ABE grants to determine if changes are needed in the means of identifying potential grantees and in the nature of interventions provided under the project; and

(x) Conduct annual reviews of on-farm investments financed by the project to determine efficiency in identification (carried out by facilitating partners) and the mechanisms used for procurement and payments of these investments.

10. Subproject Screening/Implementation Specialist (International: 7 person-months). The Subproject Screening/Implementation Specialist is necessary to assure design of subproject investments are technically sound, and that the review process leading to subproject approval is rigorous and consistent with project requirements as stated in the PAM. S/he will also be needed to support the PMU and/or PIUs and facilitating partners during implementation to assist in subproject identification, design, review, construction supervision, and to strictly enforce the safeguard requirements. In addition, expertise is needed as planning the implementation of a large number of diversified investments over a wide geographic area with different degrees of design complexity. The positions require a minimum of 5 years of experience in the field of subproject design plus more than 10 years of experience as a logistics and management specialist. S/he will be based within the PMU but will be required to travel to the project area, security arrangements permitting. The specialist will have tertiary qualifications from an established and recognized institution in either business management or engineering and will be fluent in English. S/he should be able to demonstrate good written skills in English and demonstrate good interpersonal and communication skills. S/he should be familiar with working a large multinational team. The Subproject Screening and Implementation Specialist will undertake the following:

(i) Review the PAM as developed during the grant processing and provide guidance to the PMU regarding the use of, and required regular updating of the PAM;

(ii) In consultation with the CPMO and/or PMU, assist in opening the advance accounts for the project (one to be located in the PMU) and first advance payment into the account through an initial withdrawal application;

(iii) Assist the PMU in establishing national and regional offices (office upgrades and equipment set-up) and staff appointments as detailed in a duty statement for each position (also to be prepared);

(iv) Together with the procurement specialist, provide support to the PMU for the procurement of goods and consulting services in accordance with the Procurement Plan detailed in the PAM. These will include:

• Assist the PMU in the preparation of short listing criteria for the selection of ISC and facilitation partners;

• Assist the PMU in the preparation of standard contracts for consulting services using ADB standard contract document templates for both contracts;

• Assist the PMU in the preparation of the documentation necessary for the procurement of office equipment, office upgrading, and vehicles;

• Assist the PMU in the preparation of pro-forma subproject agreement that will

58 Appendix 2

be used to specify conditions for ABE and affiliated farmer access to project grant funds and arrangements for disbursement; and

• Assist the PMU in the preparation of documents for recruitment of facilitation partners to assist in on-farm subproject implementation;

(v) Train PMU and/or PIU and facilitation partner staff in the process of subproject review, preparation, and monitoring;

(vi) Carry out briefings for the PMU staff focusing as required on project management, ADB requirements, and procedures for procurement, disbursement, reporting, monitoring and evaluation (M&E), and anticorruption;

(vii) Assist the PMU in carrying out workshops at provincial and district level to build capacity of staff engaged in aspects of project implementation;

(viii) Assist the PMU in carrying out workshops at the provincial level for provincial administrator representatives to familiarize them and build capacity relating to ADB procedures and regulations including for procurement, safeguards, anticorruption, and other project objectives and activities; and

(ix) Provide advice on good project administration office procedures such as tracking correspondence and filing.

11. Procurement and Grants Contract Supervision Specialists (International: 7 person-months; and National: 40 person-months). The specialist must have at least a master’s degree in economics, business administration, finance, and procurement or a relevant educational background with at least 15 years of experience in procurement and contract management and familiarity with ADB procurement procedures and practices. Experience of Afghan finance and procurement systems is preferable. The challenges imposed by the large number of relatively small procurement contracts demands a thorough understanding of the principles for both open competitive bidding (nationally advertised) as well as the more complex arrangements associated with community participation in procurement, both of which are used extensively in the procurement of on-farm investments. S/he will:

(i) Assist the team leader in managing and implementing the project and ensuring compliance with the project implementation plan, the loan agreement, and the project agreement(s);

(ii) Ensure that the ADB procurement directives and norms, described in the loan and project agreements, are fully respected in all stages of the procurement of goods, works, and services for the project;

(iii) Assist the PMU in preparing bidding documents for the turnkey contracts in accordance with ADB guidelines taking into account the Afghanistan Procurement Law and relevant regulations. Coordinating and supervising all project procurement activities, in close coordination with the PMU and ADB;

(iv) Review tender documents with particular reference to the commercial aspects to ensure ADB comments are incorporated in the final version;

(v) Assist in evaluation of bids and proposals if requested, and in the preparation of any relevant evaluation reports;

(vi) Supervise the contract clauses and contractual compliances by the contractors; (vii) Assist the PMU in regular update of the procurement plan in coordination with the

work plan and time schedule of the project and the financing plan; (viii) Support the PMU during contract negotiations and ensure meetings are properly

recorded and ADB norms and applicable national regulations are followed and that these are attached as annexes to the contract form;

(ix) Develop systems to train and transfer procurement skills on various aspects of ADB’s procedures for CPMO permanent procurement staff and PMU staff as appropriate;

Appendix 2 59

(x) Verify that correct documentation for each disbursement related to the execution of the contracts is maintained and that the corresponding contractual obligations have been fulfilled;

(xi) Develop a contract monitoring and management system that can be adopted by the project to monitor the large number of anticipated procurement contracts at national and provincial levels in cooperation with the CPMO procurement and administration staff;

(xii) Assist in the planning and budgeting for the project program, taking the lead role in the financial plan and budgets and ensuring that the assumptions, parameters, guidelines, and policies in planning are complied with; and

(xiii) Ensure timely preparation and submission of progress reports related to procurement and disbursement; particularly, contributing inputs to the ISC’s quarterly progress reports for project management and supervision and the brief monthly summary reports, highlighting potential and actual issues and/or problems related to procurement and disbursement and recommending corrective measures and/or actions for PMU’s actions.

12. Subproject Economist (International: 8 person-months). This expertise is needed to support the PMU and/or PIU to prepare subproject investment reports (SIRs). Analytical capacities need to be developed amongst project implementation staff to ensure that financially and economically viable subproject investments are financed. As an integral part of the SIR, the financial and economic analysis is required to confirm eligibility of proposed subprojects and quantify the benefit in financial terms to the subproject owner as well as to the economy as a whole. As each subproject is potentially very different in nature, it is not possible to prepare a standard process for the analysis. Interpretive economic skills are needed to capture the benefits from these investments and relate them to the costs over time. The subproject economist is required to provide such technical support to the project and train implementation staff in procedures required in the preparation of these analyses for incorporation in the SIRs. The subproject economist will have at least a bachelor’s level qualification in agricultural economics although higher level qualifications are desirable. S/he should have at least 15 years of experience in the financial and economic evaluation of investment projects and be familiar with the analytical requirements outlined in ADB’s Procedures for Conducting Economic Analyses of Projects.1 Preference will be accorded to those candidates who are familiar with the horticulture industry who can substantiate experience in assessing investments in production of horticultural crops (both annual and perennial) as well as in the associated grading, packing, and processing of horticultural products. S/he will be responsible for the following duties:

(i) Review the PAM to gain familiarity with the overall project design and concept; (ii) Review the economic and financial analyses prepared by the transactional

technical assistance consultants for the two representative subprojects presented in the supplementary appendices;

(iii) Review the list of eligible subprojects—both ABE and on-farm investments to familiarize with likely subproject investment proposals;

(iv) Review unit financial and economic models developed under similar investment projects within the horticulture sector in Afghanistan such as the National Horticulture and Livestock Project (amongst others mentioned in the Development Coordination2);

(v) Based on the review of available information sources prepare typical data

1 ADB. 2017. Guidelines for the Economic Analysis of Projects. Manila. 2 Development Coordination (accessible from the list of linked documents in Appendix 2 of the report and

recommendation of the President).

60 Appendix 2

collection requirements to be used in the financial and economic analyses for each type of subproject;

(vi) Train PMU and PIU regional staff in the methods used for data collection and in interviewing subproject proponents to collect the necessary information;

(vii) Train the PMU and PIU staff in the procedures needed to carry out an economic and financial analysis in accordance with ADB requirements detailed above;

(viii) Support the evaluation committee in their review of SIRs for eligible subproject from the economic and financial aspects of the report;

(ix) Provide support to PMU staff as they prepare the respective SIPs that are presented for consideration as outlined herein;

(x) Assist in the preparation and review of prepared SIPs for consideration by MAIL Subproject Evaluation Committee; and

(xi) Other duties reasonable assigned by the ISC team leader.

13. Food Technologist (International: 9 person-months). The technical input provided by an internationally recognized food technologist is needed for the implementation of ABE subprojects. Two main areas of input will be required in technical aspects of food processing of horticultural produce and secondly in the achievement of international standards of processing hygiene. Whilst the former is a broad area given the variety of produce being considered by the project, the principles of processing (simple grading and washing to the more complex juice extraction and other forms of preservation) will be needed in subproject design. This expertise does not exist within the Horticultural Department of MAIL but will be needed to support the design and implementation of ABE subprojects. The specialist will support the ABEs in identifying suitable equipment for grading, washing, processing, and packing and in the design of facilities where these activities are to be undertaken. 14. The second part of the input relates to the introduction of international hygiene standards in existing and new processing facilities and will include quality assurance arrangements such as laboratory facilities in site. While the project is likely to engage specialist certification auditors to support individual processor efforts to achieve international hygiene standards, inputs of the food technologist will support these activities. The food technologist will have tertiary qualifications in food technology from a recognized tertiary institution. S/he will have more than 10 years of experience in the processing of temperate fruit and vegetables covering all aspects from simple grading to more complex processing where the raw material is altered significantly in the process. S/he should be familiar with commercial operating environments with the private sector although should have achieved a strong academic background to this more commercial experience. S/he will be responsible for the following:

(i) Review the PAM to become familiar with the project concept and intended outcomes;

(ii) Review the main horticultural commodities being produced in participating provinces and assist the value chain specialist in the identification of export expansion and import replacement opportunities where processing is likely to be required;

(iii) Provide guidance to PMU and PIU staff to assist them identify potential subproject owners (ABEs) where food processing might be appropriate;

(iv) Provide technical inputs to ABE subprojects that deal with food processing to improve efficiency of design and operations as well as meeting potential international standards of hygiene;

(v) Review technical production aspects of ABE subprojects dealing with food processing and recommend changes to improve efficiency of operations;

(vi) Support the PMU and/or PIU in their assessment of subproject feasibility based on

Appendix 2 61

the food technology aspects with particular attention to quality and volume of raw material supplies required in processing; and

(vii) Other matters reasonable requested by the ISC Team Leader.

15. Monitoring and Evaluation Specialists (International: 6 person-months; and National: 32 person-months). Monitoring and evaluation (M&E) is an important aspect of implementation to ensure that benefits under the project are as intended and that they are shared by affiliated farmers and others in the participating provinces, particularly by the poor. To achieve this, baseline studies need to be undertaken during the subproject design phase to identify the current socio-economic conditions of the ABE and their affiliated farmers to assess the impact after subproject completion. Financial performance monitoring will be an integral part of the subproject monitoring for ABEs to confirm the benefits achieved from the investments. To ensure that representative information is collected, and that the full extent of variation is captured within the affiliated farmer population in the baseline surveys, it is important to have experienced monitoring specialists to assist in survey design and to provide the principles for analyzing the results. In addition, the specialist will be responsible for establishing performance monitoring of the implementation of subprojects to facilitate reporting to the government and ADB. The specialists will have tertiary qualifications in rural development or a related field and have at least 10 years of experience as M&E specialists or related area. S/he will be responsible to the ISC Team Leader and be based in the PMU in Kabul with frequent travel to the target provinces as security permits. Duties of the specialists will include:

(i) Review the monitoring and evaluation recommendations in the transactional technical assistance design report and those of relevant horticulture development projects being implemented by MAIL;

(ii) Together with the PMU staff and the ISC Team Leader, determine the optimum type of monitoring program for project implementation, safeguards, and benefits including intended impacts from subprojects;

(iii) Together with PMU staff, and with reference to the DMF, design a monitoring system, and develop the project M&E manual based on measurable inputs, outputs, and outcomes;

(iv) Together with PMU staff, train PIU staff on their duties and responsibilities under the project monitoring system;

(v) Assist in recruiting an agency or institution to undertake benefit monitoring; (vi) Guide the benefit monitoring agency in undertaking baseline surveys, developing

monitoring parameters, and scheduling monitoring activities; (vii) Prepare standard formats for Quarterly and Annual Progress Reports, as well as draft

format for Project Completion Report ensuring that monitoring criteria identified to measure project performance are collected at subproject start-up; and

(viii) Periodically review monitoring activities during project implementation and report any deficiencies, problems, issues, or shortcomings to the PMU.

16. Supervising Civil Engineer (National: 18 person-months). While technical engineering requirements for implementing on-farm subprojects are not anticipated, the higher cost and technically more complex ABE subprojects will require engineering input. Under the implementation process outlined in the PAM, private engineering entities existing in Afghanistan will be responsible for preparing concept designs for each subproject involving works. In progressing the evaluation of subproject proposals, detailed engineering designs, and bills of quantity are required at feasibility level prior to the approval of subprojects. The project will meet the cost of the consulting engineers to prepare these detailed designs and construction supervision contracts. In order to carry out the technical due diligence required for civil works structures, engineering expertise is required in house for efficient processing of subproject

62 Appendix 2

proposals. Such expertise does not exist within MAIL. 17. The project requires the technical services of an engineer to review detailed engineering designs and costs associated with works for proposed ABE subprojects. The engineer will have tertiary qualifications in civil engineering from an internationally recognized tertiary institution and have at least 15 years of experience as a consulting engineer. S/he should have been engaged in preparing detailed design documents covering site investigations (including geotechnical investigations), structural load assessment, electrical services design, and water distribution systems in industrial contexts and storage facilities (including cool-room facilities). S/he should be able to substantiate more than 10 years of experience with the preparation of bills of quantity for food processing in industrial works. It would be advantageous if the engineer had experience at an international level in the preparation of detailed engineering designs using international design standards. S/he will be required to carry out the following:

(i) Review engineering design standards currently applicable in Afghanistan; (ii) Develop guidelines to assist ABEs identify the level of engineering design required for

potential subproject investments to be financed under the project; (iii) Prepare guidelines to assist local engineering consultants to prepare detailed

engineering designs for ABE proposed subprojects; (iv) Conduct information sharing workshops with selected local design consultants as to

the project standards and documentation associated with detailed engineering designs;

(v) In association with the procurement specialist, prepare a pro-forma contract that ABEs can use to engage consulting engineering expertise to develop detailed engineering design and supervision work required for inclusion in SIRs;

(vi) Review proposed detailed engineering designs of subprojects and report on design deficiencies in terms of structural tolerances and all other engineering aspects against existing design standards applicable in Afghanistan;

(vii) Assist the design and supervision of on-farm interventions such as; ponds, greenhouses, zero-energy storages, and kishmish-khanas etc., and guide the regionally stationed PIU engineers to support the preparation and modifications of on-farm structural designs;

(viii) When satisfied that designs are of the necessary standard, provide confirmation that the proposed design is technically adequate for the proposed works for consideration by the MAIL evaluation committee;

(ix) Develop a module for construction supervision that must be observed by supervising consultants responsible for subproject construction;

(x) Review operation and maintenance arrangements for the proposed investment to ensure that the ABE has access to the necessary resources to operate and maintain the facility being financed under the project; and

(xi) Other duties relating to engineering design reasonably requested by the ISC Team Leader.

18. Horticultural Specialist (National: 24 person-months). As this is a horticulture-oriented project, the requirement for technical horticultural expertise is axiomatic. During implementation, a wide range of technical issues are likely to arise extending from horticultural production, post-harvest handling, grading, storage, and processing to subsector wide issues ranging from international competitiveness, quality certification, branding, and applied or adaptive research amongst others. Within MAIL and through other development initiatives, there exists a certain level of technical expertise, particularly from the Department of Horticulture and other horticulture related international financed development projects. Individual project expertise tends to be narrowly focused in their immediate technical issues e.g. quality of planting material and the

Appendix 2 63

associated certification topics. The project needs access to strong technical knowledge covering a wide range of horticultural topics and one experienced in all aspects of temperate annual and perennial fruit and vegetable crops. 19. Technical support will be provided from a range of sources—the ISC Contract, dedicated technical staff appointed to the PMU for the duration of the project and from tertiary institutions within the country. To coordinate support from these sources, a national horticultural specialist will be engaged under the ISC Contract. S/he should have tertiary level qualifications (minimum bachelor’s level degree) from an internationally recognized university specializing in horticulture or a higher-level qualification from a tertiary institution in agricultural science or the equivalent. The specialist should have a minimum of 10 years of working experience in the sector and preferably in horticultural production, processing, and marketing areas. Experience with a packing house or processing facility or agribusiness will be recognized in the evaluation. The specialist should have a commercial background rather than academia-based experience, most of which will have been gained in the country. Experience in the sector outside Afghanistan will be highly regarded. S/he will be responsible for the following duties:

(i) Review existing horticulture value chain studies that have been conducted in Afghanistan under the Enhancing Agricultural Value Chain for Sustainable Livelihood Project and other horticultural projects;

(ii) In conjunction with the value chain specialist and Team Leader, assist in the identification of priority horticultural products to be supported under the project;

(iii) Confirm the technical viability of producing these crops in the identified provinces participating in the project;

(iv) Provide technical support to the facilitation partner, PIUs, and farmers in the identification of the most appropriate technologies (structure designs, planting materials, small scale processing equipment etc.,) to be established on affiliated farmer properties;

(v) Assist in the development of representative unit area budgets that can be used in assessing on-farm investments based on Good Agricultural Practices;

(vi) Provide guidance to the PIU staff and NGO facilitation partners in the identification of potential subproject investments at the farm level suitable for project financing and their preparation of SIPs;

(vii) In consultation with the associated ABE, support NGO facilitation partner efforts to identify investments for on-farm investments to be financed by the project;

(viii) Assist PIU and PMU staff in the development of SIRs as part of the evaluation and review process outlined in the PAM;

(ix) Review SIRs prepared by PIU and PMU staff (supported by the ISCs) to confirm technical feasibility of the investment. At ABE level, confirm the waste reduction estimates and the capacity and/or throughput of cool room facilities and packaging activities so that feasibility estimates are realistic. For on-farm subprojects, confirm the technical feasibility of production and storage for estimating financial returns on the investment;

(x) In association with the CPMO procurement team and ISC procurement specialists, assist in the development of terms of reference to recruit the needed expertise to implement output 2 activities;

(xi) Support the recruitment of service providers to the project for the implementation of output 2 initiatives;

(xii) Assist in the identification of hygiene certification auditors to be recruited under the project for HACCP certification and its implementation;

(xiii) Provide technical support for farmer and ABE training in production and post-harvest handling practices delivered by the facilitation partner in the provinces; and

64 Appendix 2

(xiv) Other items reasonably requested by the ISC Team Leader in the field of horticultural development.

20. Contract Farming Specialist (National: 30 person-months). The project design is oriented towards improving linkages between farmers, traders, processors, and the market, so they can better respond to requirements (quality and quantity of farmer produce). Horticulture value chains in Afghanistan are comprised of multiple stakeholders that operate over long distances between production areas and destination markets. This transition provides part of the reason for the excessive post-harvest losses that are widely reported throughout the industry. To improve the sustainability of project interventions at both ABE and on-farm levels, the design recognizes the important role to be played by ABEs in guiding their affiliated farmers regarding market requirements as ABEs deal with markets on a day to day basis. In many cases, they also provide technical support, access to inputs and market information to their affiliated farmers. ABEs provide the focal point for affiliated farmer deliveries of horticultural produce to national, regional and international markets. The design uses this relationship between producer and processor and/or trader (ABE) as a key element in the project design. Affiliated farmers will receive priority access to on-farm investments, facilitation partners will start their identification of affiliated farmers through consultation with the beneficiary ABE, and ABEs will assist in identifying future market demands in terms of fruit varieties, production systems, market quality requirements, and even on farm processing and/or pre-cooling and storage where appropriate. One of the key project achievements will be the improved relationship between ABE and affiliated farmer. 21. Based on the design study survey, there is already considerable interest in formalizing the relationship between affiliated farmer and their associated ABE. The two representative subprojects assessed during design both utilize contract farming arrangements to secure supplies of raw material (although not all). There is a clear demand for further development in the composition, obligations, and pricing mechanisms specified in these supply contracts. It is recognized that such contracts are often difficult to enforce in the legal sense, commitment through such an arrangement at least demonstrates an intent upon which farmers can increase their production and improve quality while ABEs can plan on incremental throughput improving the efficiency of their operations (lack of supplies are often cited as one of the main problems facing traders). It is therefore opportune to provide specialist input to further develop the concept of contract farming to consolidate the relationship that is now developing between producer and processor and/or trader. 22. The national contract farming specialist will have tertiary qualifications from a recognized institution in the field of agricultural economics, marketing, or a related subject matter. S/he should have at least 10 years of experience in the horticultural sector mainly dealing with commodity value chains as well as supply contracts. Ideally, some of this experience would have been achieved by engagement in the commercial private sector. It would be a distinct advantage if the specialist was familiar with contract farming arrangements in other Central-West Asian countries. Duties of the specialist include:

(i) Review the project documents to gain familiarity with the intended outputs and outcomes;

(ii) In association with the ISC Horticulture Specialist and the PMU horticultural officers, identify priority crops where there is scope for improved contract farming arrangements;

(iii) Hold discussions and group meetings with affiliated farmers and beneficiary ABEs to identify the strengths, constraints they face, and opportunities (socially and economically viable for both parties) in entering into contract supply and/or receival arrangements;

Appendix 2 65

(iv) Identify if technical support is required as part of the contract farming arrangements and if so, how this should be incorporated in the concept;

(v) For each specific crop (fruit and vegetable varieties) identified as a potential opportunity, develop a model contract supply agreement to be discussed amongst the relevant parties;

(vi) Engage in the widespread consultation of the content and mechanisms used in model contracts;

(vii) In consultation with selected beneficiary ABEs, pilot the adoption of the model contracts with their affiliated farmers and review results after the first season of operation;

(viii) After modification of the proposed contracts, promote their adoption with affiliated farmers, and beneficiary ABEs under the project and monitor the uptake in conjunction with the M&E units of the PIU and/or PMU;

(ix) In coordination with the PIU and/or PMU M&E staff, the specialist must make encourage both; affiliated farmers and ABEs to comply with the conditions of farming contracts;

(x) Conduct impact assessment of contract farming for both parties aimed at enhancing sustainable of horticultural production and, predictable supply in terms of quantity and quality of raw material to ABEs; and

(xi) Other tasks reasonably requested relating to contract farming arrangements by the ISC Team Leader.

23. Financial Management Specialist (National: 34 person-months). As the CPMO and/or PMU have limited experience in the implementation of ‘on-budget’ internationally financed development projects and has limited human resources to assign to the task of financial management from within their organization, it is proposed to provide a significant input of a national specialist to establish the financial management mechanisms and operate the same for the project. The terms of reference described below will be performed by the national specialist who will assume responsibility for overall financial management and reporting. Most of the inputs will be provided in the first three years of project implementation after which the demand for such services will diminish because of the on-the-job training impact on local CPMO permanent staff members. Candidates engaged for this position should be prepared to mentor local counterpart staff in procurement procedures to build capacities within the CPMO. 24. The Financial Management Specialist will hold a masters’ degree in finance, management, or public administration and also hold professional membership of a recognized accounting body. S/he should have at least 15 years of professional experience in government or the private sector and ideally have experience working on donor funded projects. The specialist must be able to demonstrate the necessary skills to establish project accounts to an international standard with the chart of accounts to be ratified by ADB and operated on an approved international accounting package with double entry book keeping. S/he should have experience in computerized accounting software program. Duties to be carried out include:

(i) Prepare a finance and accounting manual for the project. This will include accounting policies and reporting requirements for ADB and government, annual budgeting timeline and formats, accounting treatment of major transactions, internal control system, chart and code of accounts to properly recognize assets, liabilities, income, and expenditure and monthly, quarterly and annual reporting formats;

(ii) Advise on the procurement of suitable accounting software and hardware; (iii) Set-up the accounting system and chart and accounts to accommodate all

categories of expenditure outlined in the Grant Agreement;

66 Appendix 2

(iv) Train accounting staff in operations of the system, accounting policies, reporting requirements, and internal controls;

(v) Monitor on an annual basis to ensure integrity of accounting information and operation of internal controls;

(vi) Take overall responsibility of the operation of the system, integrity of data, and internal controls. Ensure that internal controls are operating as intended;

(vii) Liaise with ADB, banks, auditors, and government institutions as required; (viii) Prepare financial reports as required by the government and ADB on a monthly,

quarterly and annual basis for the overall project; (ix) Be responsible for the preparation of Statements of Expenditure and Withdrawal

Applications for submission to ADB; and (x) Other duties as required by the ISC team leader.

25. Social Safeguards and Gender Specialist (National: 14 person-months). The social safeguards and gender specialist must have at least a bachelor’s degree in social science or international development or the equivalent from a recognized tertiary institution, with at least 10 years of continuous experience working in the field of social safeguard and gender for internationally funded agricultural development projects. S/he must have considerable experience in the implementation of social safeguard due diligence and gender action plan (GAP) and be familiar with the laws and regulations of Afghanistan related to gender equity, participation and other social safeguards whilst having considerable experience in ADB-financed agricultural development projects as a social and gender specialist in the Islamic Republic of Afghanistan. Duties to be performed include:

(i) In conjunction with the M&E specialist, design a survey instrument to be used in the base line survey ahead of each ABE investment (including the affiliated farmers expected to be impacted) that will allow project impacts to be better assessed;

(ii) Train CPMO and/or PMU and PIU staff in use of the survey instrument to conduct initial household assessments for baseline data collection. Oversee at least one assessment in each participating province and mentor facilitation partner staff to ensure robust, consistent, and reliable data;

(iii) Assist in development of relevant indicators for gender disaggregated socio-economic data in collaboration with the monitoring and evaluation staff and consultants in the PMU and/or PIU and facilitation partners;

(iv) Design the manual for community engagement, test the material, and build the capacity of PMU, PIU and facilitation partners in basic community development skills, and gender awareness. Provide guidance for implementation and monitoring of the GAP and community and participation strategy;

(v) Ensure that subprojects in all participating provinces are implemented in compliance with the project’s community and participation strategy, GAP, and ADB’s requirements for social safeguards, including: (a) screening of each intervention it potential social impacts; (b) preparing due diligence reports for interventions; (c) collaborating with beneficiary communities; (d) assisting in disclosure of relevant safeguard information to affected persons and local stakeholders; and (f) assisting in implementation and monitoring of social safeguard activities;

(vi) Support the preparation of subproject social safeguard due diligence reports with respect to involuntary resettlement and train PIU and PMU staff in conducting subproject social safeguard due diligence;

(vii) Coordinate with other consultants in identifying areas where gender-inclusive and socially inclusive provisions can be strengthened under the project at both levels of subprojects; and

Appendix 2 67

(viii) Together with the monitoring and evaluation specialist, undertake the midterm and the end-of-project review with affiliated farmer communities; and

(ix) Provide guidance for implementation and monitoring of the GAP and ensure that the GAP for the project is effectively implemented and its requirements to ensure participation of women are integrated into the formulation and implementation of subprojects.

26. Environmental Specialist (National: 18 person-months). The environmental specialist must have at least bachelor’s degree in environmental science or natural resource management or the equivalent from a recognized institution, with at least 8 years of continuous experience working in the field of environmental management. The specialist is also required to have considerable experience in environmental monitoring and be familiar with the laws and regulations of the Islamic Republic of Afghanistan related to environmental safeguards as well as having had experience in ADB-financed projects as environmentalists. The specialist will be guided by the government’s procedures on environmental management, ADB’s Safeguards Policy Statement (SPS, 2009), and the project’s environmental assessment and review framework. Having training skills and experience would also be an advantage. The specialist will:

(i) Assist the team leader in managing and implementing the project and ensuring compliance with the project implementation plan, the loan agreement, and the project agreement(s), particularly with ADB’s SPS (2009) requirements and project environment-related legal covenants;

(ii) Assist in the preparation and review of initial environmental examinations for subprojects, and assist the PMU in the appraisal and approval of eligible subprojects;

(iii) Assist PMU and PIUs in ensuring safeguard compliance—with a particular emphasis on the monitoring of implementation of the environmental management plans (EMPs) through the site-specific environmental monitoring plans and related aspects of the project;

(iv) Provide on-the-job trainings to the PMU’s environmental officer, ABE investors, and contractor’s staff prior to the start of facility construction and installation to develop their knowledge and understanding of the environmental, social, health, and safety aspects of the project, and build capacity of staff in PMU and PIUs to undertake their tasks in EMP monitoring;

(v) Assist PMU in preparation of bi-annual environmental monitoring reports for further submission to ADB; and

(vi) Contribute inputs to the ISC’s quarterly progress reports for project management and supervision and the brief monthly summary reports, highlighting potential and actual issues and/or problems related to EMPs and recommending corrective measures and/or actions for PMU’s actions.

27. Unallocated Positions (International: 8 person-months; and National: 9 person-months). This allocation has been left unidentified in view of anticipated requirements for specialist inputs to support the implementation of primarily ABE subprojects. Given the broad criteria for eligible investments ranging from tissue culture laboratories to product specific processing lines—each of which might wish to conform to international HACCP standards—the exact nature of the technical skills required to support subproject investments remains unknown. This provision is made to allow the project to gain access to leading technical specialist inputs from both national and international sources and will be provided through the ISC contract, reducing the challenges of direct recruitment.

68 Appendix 3

APPENDIX 3: TERMS OF REFERENCE FOR FACILITATION PARTNERS

Islamic Republic of Afghanistan Project No. 51039-002: Horticulture Value Chain Development Sector Project

Terms of Reference for Facilitation Partner

B. Project Background

1. The Asian Development Bank (ADB) is considering a grant in the amount of $75 million to implement a project entitled Horticulture Value Chain Development Sector Project. The overall objective of the project is to improve production and value addition of horticultural products in 11 preselected provinces of include Bamyan, Ghazni, Kabul, Khost, Kunar, Laghman, Logar, Nangahar, Paktika, Paktya, and Wardak in the more secure areas of the country where the greatest potential exists for the production of export expansion and import substitution horticultural crops. Being a sector modality design, the focus of investment is on agro-business enterprises (ABEs) (horticultural traders, processors, and packing operators) and on-farm improvements to increase quantity and quality of priority horticultural produce to these enterprises. 2. The project has identified eligible items of investments for both categories as well as eligibility criteria for their participation in the project. By working in parallel with these groups, the project will strengthen the linkages between farmers and traders and/or processors to make the producers more aware of the demand for goods as well as associated quality requirements. Investments will also facilitate the supply of out-of-season perishable goods on the domestic market thereby protecting valuable foreign reserves. The project will also reduce the significant post-harvest handling losses that plague the industry at present. These objectives will be served by a number of subprojects that will be identified, designed, and implemented with partial project financing during the six years of implementation. The project will also provide resources for its second output that will include (i) adaptive research; (ii) commodity marketing; (iii) international quality standards and certification; and (iv) capacity building for farmers, traders, and Ministry of Agriculture, Irrigation and Livestock (MAIL) staff (including technical fellowships). 3. Whilst MAIL has considerable experience in the implementation of horticultural development projects funded by multilateral and bilateral donors, most of the support provided to date has been off-budget where implementation units have operated independent of established government procedures. This project is the first ‘on-budget’ in the sector and also the first requiring coordinated implementation with the private sector (ABEs and affiliated farmers). As such, there are incremental skills required for the implementation that are not available within the public service or that can be readily recruited from local individuals. A Project Management Unit (PMU) will be established within MAIL and regional project implementation units in four regional centers to coordinate implementation of the project. Technical support is however required to ensure that the expertise is made available to the project to efficiently implement the project but also to provide specific areas of technical support during implementation. This support is primarily to be received from the implementation support consultants (ISCs) while responsibility for facilitation of on-farm investments will be undertaken by an NGO facilitation partner. 4. The PMU therefore shall recruit one facilitation partners with the specific expertise outlined below on a competitive basis using the quality- and cost-based selection (QCBS) procedure with a quality-to-cost ratio of 90:10 in accordance with the ADB’s Procurement Regulations (2017, as amended from time to time). The facilitation partners will be established in the PMU in Kabul and

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have representation in the PIU facilities in regional centers. They will also provide representation in each of the 11 participating provinces to support implementation. B. Objective and Scope of Work

5. The objective for the facilitation partner is to assist farmers to gain access to project benefits through the identification of potential farmer beneficiaries, the preparation of subproject documents required for participation in the project, the coordination of implementation of on-farm subprojects, and the coordination of post installation training in the use and maintenance of on-farm improvements. The project recognizes the presence of extension staff posted to provincial Department of Agriculture, Irrigation and Livestock (DAIL) offices and district offices but is also aware of their technical capacities and limited resource base. Left to these resources alone, the likelihood of a satisfactory outcome for the overall project would be less likely to be achieved. Facilitation partners will work alongside provincial and district staff to help build capacities in horticulture and in extension techniques through learning by doing. Facilitation partners will ensure the grass-root level access to project initiatives. 6. Typically, the facilitation partner will be a national nongovernment organization (NGO) with a minimum of 8 years of experience in supporting internationally financed rural development projects and/or programs. While it is not essential, the facilitation partner associates with an international NGO to provide these services, intermittent inputs of an international facilitation specialist are deemed necessary for the design and implementation of the facilitation support program. The NGO should have worked in the rural development sector with either MAIL, Ministry of Rural Rehabilitation and Development or the Ministry of Energy and Water on previous development projects. They will be able to report the successful completion of at least three (3) similar projects where facilitation services have been provided. They will be able to demonstrate access to qualified and experienced facilitation staff who are familiar with rural development and the associated issues in Afghanistan. They will be able to demonstrate a capacity to integrate into an existing project design and conform the project objectives and operating arrangements without being motivated by their own independent objectives. They must be able to demonstrate a willingness to contribute and respond to implementation management guidance provided by the PMU Manager when appropriate. 7. Specific duties of the NGO facilitation partner shall include the following:

(i) Review all project design documentation to develop a thorough understanding of the project—its objectives and agreed implementation arrangements (between government and ADB);

(ii) Establish a Kabul coordination office in close proximity to the CPMO and/or PMU within MAIL with the necessary support staff or have an existing office in Kabul;

(iii) Establish regional offices in Bamyan, Ghazni, Nangarhar, and Paktya in close proximity to the PIU within DAIL (preferably within subject to space availability) with the necessary support staff;

(iv) Appoint provincial facilitators—one per province and provide briefing on project objectives, outcomes, and intended activities for the facilitators;

(v) In consultation with the PMU-identified beneficiary ABE and local DAIL staff, identify the potential candidates for subproject investments to enhance on-farm horticultural production systems;

(vi) Aggregate the similar natured investment proposals into packages (comprising up to 20 individual investments) to be treated as one subproject;

(vii) Carry out an initial screening against project established criteria for on-farm investments to confirm that the proposing farmers are eligible to receive support

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under the project; (viii) On behalf of the group of farmers with similar investment category items, prepare

a Subproject Investment Proposal in the format provided by the PMU and submit to the PIU and/or PMU for processing;

(ix) Support the PIU and/or PMO during preparation of the Subproject Investment Report (with the support of the Implementation Support Consultants);

(x) After MAIL approval of the subproject, enter into a Subproject Agreement on behalf of the subproject farmer group that specifies the level of support to be provided and how payment will be affected together with farmer obligations for installation;

(xi) With the assistance of the beneficiary ABE, help farmers to identify potential material suppliers from the Framework Contract supplier for the type of material needed in the subproject;

(xii) Issue delivery orders to the framework contract suppliers on behalf of the nominated farmers in the SIPs specifying locations and beneficiary farmer;

(xiii) In conjunction with the DAIL officer, inspect the finished installation of the on-farm improvement, and issue a works completion certificate for submission to the PIU and/or PMU to trigger direct payment to the framework contract supplier;

(xiv) In consultation with the PMU Horticultural Officer and ISC Horticulture Specialist, design a training program in the use and maintenance of the installation and coordinate its delivery (financed by the PMU);

(xv) Prepare progress reports for the PMU in the issuance of subproject investment proposals and progress report concerning completed on-farm investments providing details as established by the M&E specialist and PMU staff on a quarterly basis;

(xvi) Provide feed-back to the PMU on implementation issues that arise from time to time and seek recommendations for addressing same; and

(xvii) Other tasks as reasonably requested by the PMU Manager. 8. It should be noted that the above outline terms of reference for facilitation partners and associated practical arrangements will be further refined by the PMU with assistance of the ISCs to ensure harmony, consistency, and close coordination during the project implementation.

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APPENDIX 4: PROJECT SUSTAINABILITY MEASURES

1. The issue of sustainability has plagued previous public infrastructure investments, particularly within the agricultural sector, a feature common to most internationally financed development projects in Afghanistan. Aware of this significant risk to achieving the longer-term development outcome of the project, during design, considerable attention was given to address this aspect in a number of ways at project and subproject level. As the project focusses on strengthening value chains and securing linkages between producers and the market via traders and processors, the sustainability of these linkages is of critical concern in achieving the project outcome. For farmers, incremental production of the desired quality must be sustained in the longer term. For processors and/or traders who rely heavily on farmers for their raw material inputs, factory and/or facility throughput must be sustained in the longer term to maintain operating efficiencies and hence competitiveness. Figure A3.1 outlines the framework of project interventions. 2. This was initially addressed through the identification of participating provinces. While security and geographic spread were major considerations, the project was directed to areas where there were significant volumes of existing production. Combinations of provinces were tested against provincial planted areas of a variety of horticultural crops (fruit, nuts, and vegetables) to determine how the project could have the greatest impact by working in those areas where there were already significant planted areas and also significant numbers of agro-business enterprises (ABEs). This brings greater assurance to ABEs that they will have increased quantities of raw product, particularly taking into account the significant reduction in post-harvest handling losses currently evident and potentially expanded production under the project. By focusing on existing high production areas, the risk of plant underutilization is substantially reduced. 3. The second element of sustainability is addressed through the project concept that recognizes the importance of linkages between farmers and processors/traders. These linkages will be directly and indirectly strengthened under the project. Initially, eligible ABEs will be identified to receive project support. Facilitation partners (engaged by the project) will initiate the identification of potential beneficiary farmers in consultation with the processor and/or trader. The ABE’s affiliated farmers will receive priority consideration in accessing funds for on-farm investments to improve their supplies to their linked ABE. The dual consideration of what the processor and/or trader needs together with those of the farmer will result in investments that are better sustained by both parties. These linkages will be further strengthened through the development of supply contracts between farmers and ABEs under the project. Whilst these have been difficult to establish and enforce in the past, the recognition and the facilitation of access to finance will provide a more conducive environment for the establishment of supply contracts that recognizes the interests of both parties. 4. Thirdly, the project specifically targets those commodities that have assured demand in the immediate and longer term. Value chains receiving immediate priority include grapes, apples, cherries, apricot, peaches, pine nuts, citrus, potatoes, onions, tomatoes, cucumber, and bell pepper. Project interventions focus on those horticultural crops with significant export expansion potential or those imported in significant quantities from neighboring countries. Targeted in this manner, the market for any incremental production—be it through increased areas brought into production or by reducing post-harvest handling losses, will be sure of disposal at prices providing a reasonable return to farmers and processor and/or traders. The greater focus on quality improvement of market demanded products will promote longer term sustainability of the investment.

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5. For ABE subprojects, sustainability has been addressed in two ways. Private ABEs are to be the direct beneficiaries of grant funds as an incentive to strengthen their operations, increasing value addition within the subsector. ABEs are intimately aware of the equipment and facilities needed to achieve this value addition. Certain development projects in the past in Afghanistan have supplied equipment to ABEs that did not meet their requirements, as a reminder of failed donor generosity. To address this concern and protect sustainability, the project requires ABEs to procure the equipment and/or construction contracts under the guidance of the PMU and ISCs.1 This will ensure that investments are relevant to the ABE and will result in the equipment and/or facilities being fully utilized and maintained. 6. As a second measure, subproject proponents are required to demonstrate how the equipment and/or facilities will be maintained and operated after commissioning. Potential beneficiary ABEs are required to address this in each subproject investment proposal for evaluation by the project. During evaluation, project staff will confirm that adequate resources are generated to permit the efficient operations and maintenance of the plant and/or facility and these are required to be reported in the subproject investment report upon which the decision to accept the subproject as a qualifying subproject will be made. 7. For the larger investments in facilities and cool-rooms and structures of a similar nature, concept designs will be reviewed by engineers engaged within the PMU (supported by the ISCs) to confirm that structures are of appropriate design and that operations and maintenance can be easily affected. In cases where high maintenance flooring and wall finishes are required (e.g. to establish and maintain hazard analysis and critical control points [HACCP] accreditation), maintenance requirements will be accounted for separately when the subproject investment proposal (SIP) is prepared. For items of equipment and machinery used in grading, packing, and washing will be encouraged to import items from neighboring countries as locally manufactured items, although cheaper, often have higher maintenance requirements. The selection of machinery to be purchased will be the responsibility of the ABE but they will be supported by the ISC food technologist to identify the most appropriate and minimal maintenance technologies available for the task. 8. For on-farm subprojects, investments will be identified by facilitating partners in cooperation with interested farmers and the linked ABE. In the case of planting material for particular varieties to be grown, the participation of ABEs in the process will ensure that farmers produce what the market demands. On-farm investments to establish water sources and delivery systems, these will need to confirm that reliable and sustainable sources are being accessed. Whilst this is a condition for investing in water sources on-farm, the project will conduct its own due diligence in respect of water sources, independent of the farmer’s subproject investment proposal. This will be confirmed by the project in its preparation of the subproject investment report for consideration by the evaluation committee. The status of underground resources is currently being upgraded2 that will inform due diligence carried out by the project. 9. In terms of structures constructed on farmers’ properties (trellising, green houses, storage facilities, small scale processing and/or drying facilities), the project will provide training on the operations and maintenance of these facilities as there is lack of appreciation of the need for maintenance on some of these technologically advanced systems (e.g. drip irrigation and

1 The agro-business enterprise is also investing 50% of the subproject investment cost so they have a vested interest

to purchase the right equipment and/or facilities at the cheapest price. 2 Water Resources Project under the Ministry of Energy and Water.

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fertigation). These will be provided by suppliers, Department of Agriculture, Irrigation and Livestock (DAIL) extension staff, linked ABEs, and project staff as appropriate, funded through the capacity building allocation. 10. Public-private Partnerships (PPP). The project team reviewed existing legal framework to explore the possibility for PPPs. It is concluded that, under the present arrangements in Afghanistan, the project would be better served using an alternate method for financing subprojects for long-term sustainability. The reasons behind this recommendation are outlined as follows:

(i) The PPP legal framework, as it stands, is not conducive to promoting smaller entities to incorporate to participate in PPP-related investments, due to an unaffordable scale of investment capital required;

(ii) Under the PPP arrangements, ownership of any resulting asset purchased will become the property of the government that would be unacceptable to subproject ABE investors since they are expected to contribute 50% of the total investment cost;

(iii) Any PPP-related procurement undertaken must follow the government system which can impact on the quality of items purchased by the subproject owner. A requirement to follow these procedures will result in a lack of interest by commercial ABEs with whom the project is trying to work;

(iv) Under PPP arrangements, the government pursues an invasive monitoring program whereby the independence of the private entity is challenged. Moreover, the limited capacity of private ABEs in financial management and reporting will be a big challenge to conform with government requirements; and

(v) The award of PPP contracts is frequently politically influenced and contributes to the impression (real or perceived) that the PPP will have access to concessional operating conditions being close to the government. This may create a perception of unfair competition amongst competing entities.

74 Appendix 4

Figure A3.1: Framework of Project Interventions

International and Domestic Markets [For Fruit and Vegetables]

Agro-business Enterprises (Traders and Processors)

Horticultural Producers


• Pre-cooling rooms (static and mobile).

• Pack houses, sorting or grading buildings and equipment

• Storage (zero energy, cold-room and controlled atmosphere) for small- and medium-sized facilities (100–500 tons).

• Processing equipment, machinery to extend processing capacity.

• Quality control testing laboratory facilities.

• Introduction of hazard analysis and critical control points (HACCP) and good manufacturing practices disciplines into processing facilities.

• Tissue culture laboratories (potatoes, clonal root-stock, and micro-propagation).

• Water sources and distribution networks (ponds or reservoirs, drip, and other gravity-fed irrigation systems).

• Modern (high-tech) greenhouses (1,000-4,000 m2).

• Planting material (potato, onion, tomato, and cucumber hybrid seeds, clonal root stock, and high-density certified saplings)

• Trellising (for grapes and high-density orchards).

• On-farm storage for onions and potato.

• On-farm processing (e.g. ‘kishmish khanas,’ apricot drying trays, grading equipment, and small-scale processing equipment).

• Adaptive research (demonstration of high value varieties, modern production technologies, and applications under local conditions).

• Introduction of internationally recognized standards and certification.

• Promotion of national marketing and/or branding strategies for uniquely Afghan horticultural produce.

Project Concept Project Interventions