SCCD: G .G.

AFRICAN DEVELOPMENT FUND Language: English Original: French

FEDERAL REPUBLIC OF NIGERIA

SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY IN EKITI, ONDO AND CROSS RIVER STATES

(SNPFS)

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes)

AGRICULTURE AND AGRO-INDUSTRY DEPARTMENT OSAN JULY 2006

TABLE OF CONTENTS Page Project Information Sheet, Currency and Measures, List of Tables, List of Annexes, (i-ix) List of Abbreviations, Basic Data Sheet, Project Logical Framework, Executive Summary 1. ORIGIN AND HISTORY OF THE PROJECT 1 2. THE AGRICULTURAL SECTOR 2 2.1 Salient features 2 2.2 Agricultural and Rural Development Strategy 2 2.3 Land Tenure 3 2.4 Cross-Cutting Issues 4 2.5 Rural Financing 6 2.6 Institutional Framework 6 2.7 Constraints and Potentials 8 2.8 Donor Interventions 9 3. THE SUB-SECTORS 11 3.1 The Crops Sub-sector 11 3.2 The Irrigation Sub-sector 12 4. THE PROJECT 13 4.1 Project Concept and Rationale 13 4.2 Project Area and Beneficiaries 15 4.3 Strategic Context 16 4.4 Sector Goal and Objective 17 4.5 Project Description 17 4.6 Production Market and Prices 25 4.7 Environmental Impact 26 4.8 Social impact 28 4.9 Project Costs 29 4.10 Sources of Finance and Expenditure Schedule 30 5. PROJECT IMPLEMENTATION 31 5.1 Executing Agency 31 5.2 Institutional Arrangements 32 5.3 Supervision and Implementation Schedules 33 5.4 Procurement Arrangements 33 5.5 Disbursement Arrangements 36 5.6 Monitoring and Evaluation 36 5.7 Financial Reporting and Auditing 37 5.8 Aid Coordination 38 6. PROJECT SUSTAINABILITY AND RISKS 38 6.1 Recurrent costs 38 6.2 Project Sustainability 39 6.3 Critical Risks and Mitigation Measures 40

7. PROJECT BENEFITS 40 7.1 Financial Analysis 40 7.2 Economic Analysis 41 7.3 Social Impact Analysis 41 7.4 Sensitivity Analysis 42 8. CONCLUSIONS AND RECOMMENDATIONS 42 8.1 Conclusions 42 8.2 Recommendations 43

LIST OF TABLES TABLE Page 4.1 Summary of Project Cost Estimates by Component 29 4.2 Summary of Project Cost Estimates by Category of Expenditure 29 4.3 Summary of Project Cost by Source of Finance 30 4.4 Summary of Project Cost by Category of Expenditure and Source of Finance 30 4.5 Summary Expenditure Schedule by Component 31 4.6 Summary Expenditure Schedule by Source of Finance 31 5.1 Summary Implementation Schedule 33 5.2 Summary of Procurement Arrangements 34 6.1 Summary of Recurrent Costs 38 7.1 Project Sensitivity Analysis 42

LIST OF ANNEXES ANNEXES 1. Map of Project Area 2. Project Organisation Chart 3. Provisional List of Goods and Services 4. Table of Economic and Financial Analysis 5. Bank Group Operations in Nigeria 6. Environmental and Social Management Summary

VOLUME 2

Appendix 1. Farm Budgets 2. Computation of the Rate of Return 3. Detailed Cost Tables 5. Terms of Reference 6. FAO NPFS Summary This report was prepared by Messrs. D. Lekorchi, Civil Engineer; A. B. Kamara, Agricultural Economist; M. Basalirwa, Financial Analyst; A. Gombe Agronomist and M. Mashinkila, Gender Specialist, following a mission to Nigeria in May 2006. Additional inquiries relating to the report should be addressed to the authors or Mr. S. Z. Moussa, Division Manager, OSAN.3 (Extension 2143).

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AFRICAN DEVELOPMENT FUND BP 323 – 1002 Tunis Belvédère, Tunis - TUNISIA

TEL: (216) 71.10.20.36 FAX: (216) 71.10.37.55

PROJECT INFORMATION SHEET

Date: June 2006

1. COUNTRY : Nigeria 2. TITLE OF PROJECT : Support to the National Programme for Food Security in Ekiti, Ondo and Cross River States (NPFS) 3. LOCATION : Ekiti, Ondo and Cross River States 4. BORROWER : Federal Republic of Nigeria 5. EXECUTING AGENCY : Federal Ministry of Agriculture and Rural Development

(FMARD) FCDA Secretariat, Area 11 P.M. B. 135, Garki, Abuja, Nigeria Tel: (+234) 9 3142405 Fax: (+234) 9 3142532 6. PROJECT DESCRIPTION: The sector goal of the National Programme and proposed project is to improve national and household food security and reduce rural poverty on a sustainable basis. The objective of the project is to increase agricultural production and the incomes of rural households and beneficiary communities. The proposed project will have four components, namely: (A) Community Development; (B) Land and Water Development; (C), Production Enhancement and Diversification; and (D) Project Management. 7. TOTAL COST : UA 27.58 million

Foreign exchange : UA 20.30 million Local cost : UA 7.28 million 8. ADF LOAN : UA 22.00 million 9. OTHER SOURCES OF FINANCE

FGN/State Governments : UA 4.48 million Beneficiaries : UA 1.11 million 10. DATE OF APPROVAL :

ADF : September 2006

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11. PROBABLE COMMENCEMENT DATE AND PROJECT DURATION Commencement : January 2007 Duration : 5 Years

12. PROCUREMENT OF GOODS, WORKS AND SERVICES

Procurement of Works, Goods and Consultancy services financed by the ADF resources will be carried out in conformity with Bank Group Rules of Procedure for the Procurement of Works, Goods or, as appropriate Rules of Procedure for the Procurement of Consultants, using Standard Bank Bidding Documents. National Competitive Bidding (NCB) procedure will be used for works, including water management structures, markets and rural road infrastructure. National Shopping (NS) will be used for the procurement of equipments. Consultancy Services will be procured using the Short List (SL) mode of procurement.

13. CONSULTANCY SERVICES REQUIRED

Consultancy Services will be provided in the following fields: research/extension linkages, training of farmers and extension workers, Annual Auditing, Mid-Term Review and the Project Completion Report.

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CURRENCY AND MEASURES Currency Equivalents (May 2006)

UA 1 = NGN (Naira) 183.348 UA 1 = USD 1.47106 USD 1 = NGN 124.6368

Weights and Measures

Metric system

Financial Year 1 January – 31 December

ABBREVIATIONS

ADP Agriculture Development Programme (existing Government Structure at State Level) CAADP Comprehensive African Agriculture Development Programme CAHW Community Animal Health Worker CBO Community-based Organization CDF Community Development Fund DTC Demonstration and Training Centre FASCOM Farmers' Agricultural Inputs Supply Company FDPRS Federal Department of Planning, Research and Statistics FDRD Federal Department of Rural Development FDSGR Federal Department of Storage and Strategic Grain Reserve FFS Farmers Field School FMARD Federal Ministry of Agriculture and Rural Development FME Federal Ministry of Environment FMWR Federal Ministry of Water Resources LGA Local Government Area LGC Local Government Council MDG Millennium Development Goal MT Metric Tons NEEDS National Economic Empowerment and Development Strategy NEPAD New Partnership for Africa Development NERICA New Rice for Africa NPC National Planning Commission NSRD National Strategic Food Reserve Department NWRI National Water Resources Institute PRA Participatory Rural Appraisal PRSD Planning Research and Statistics Department REFILS Research Extension Farmer Input Linkage System SEEDS State Economic Empowerment and Development Strategy SGR Strategic Grain Reserve SME Small and Medium Enterprise SSC South-South Cooperation TOT Training of Trainers WUA Water User Association

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NIGERIA – SNPFS: PROJECT STRATEGIC RESULTS FRAMEWORK (SRF) HIERARCHY OF OBJECTIVES

EXPECTED RESULTS BY CORRESPONDING SECTOR

REACH PERFORMANCE INDICATORS SOURCE

INDICATIVE TARGETS TIMEFRAME

ASSUMPMTIONS AND RISKS

GOAL Sector Theme

SECTOR THEME Long-term outcomes

BENEFICIARIES

INDICATORS /SOURCE Long-term outcome

TARGET INDICATORS and timeframe

Contribute to food security and poverty reduction

Increased income and self-sufficiency in major food crops, livestock and fisheries

Communities and farmers in Ekiti, Ondo and Cross River States.

National Statistics and programme reports.

Rural poverty decreases from 66% in 2006 to 35% by 2015.

Government remains committed to the implementation of the NEEDS / SEEDS.

OBJECTIVE Project

Medium-Term OUTCOME

BENEFICIARIES

INDICATORS /SOURCE Medium-term outcome

TARGET INDICATORS and Timeframe

ASSUMPMTIONS AND RISKS

Increase agricultural output and incomes of rural households and beneficiaries.

Average yields increase of about 46% and 55% for major crops under rainfed and irrigated system respectively.

80,850 rural farmers (60% women)

- State statistics; - Local Government (LGA) statistics; programme and project reports.

- Average yield increases of major crops by about 50% by 2011. - Project beneficiaries’ annual income increase from N 22,600.00 in 2006 to N 1.7 million in 2011.

Government remains committed to implementing the expansion phase of the NPFS.

ACTIVITIES / INPUTS

Short-Term OUTCOME

BENEFICIARIES

INDICATORS /SOURCE Short-Term outcome

TARGET INDICATORS and Timeframe

ASSUMPMTIONS AND RISKS

COMPONENT A: COMMUNITY DEVELOPM’T & INSTITUTIONAL SUPPORT

1. Farmer groups formed and trained. 2. Community driven development plans prepared. 3. Capacity building at Federal, State and LGA levels undertaken. 4. Market information systems strengthened 5. Health and nutrition support strengthened

1.1 450 farmer groups formed, comprising 25 farmers each; 1.2 450 farmer groups trained 2.1 27 communities in all the project sites 2.2 80,850 farm households in all the 27 communities (60 % women) 3.1 PCU at FMARD 3.2 State ADP staff 3.3 LGA staff 4.1 450 farmer groups 4.2 About 8 million people in the 3 states. 5.1 12 Health facilitators 5.2 450 farmer groups 5.3 About 15 schools

- 66 % of target groups formed and 45% trained by 2009. - 3 Community development funds established by 2008 - 45% of training activities implemented by 2009 Means of Verification - Project supervision reports; - Project Monitoring and Evaluation reports - Programme reports - Mid-term review; - Supervision reports

1.1 About 300 farmer groups formed by 2007; and 450 by 2008. 1.2 About 200 farmer groups trained by 2009; and 450 by 2011. 2.1 27 community development plans prepared annually starting from 2007 2.2 3 CDFs established by 2008 3.1 3 workshops for TOT organised by 2008. 3.2 20 courses for extension staff conducted by 2009, and 45 by 2011. 3.3 54 extension staff trained/ equipped by 2011. 4.1 3 units of data collection and dissemination system in the ADPs strengthened by 2008. 4.2 About 1,000 market information leaflets disseminated monthly from 2007 to 2011. 4.3 3 radio programmes per week per state from 2007 to 2009, and 5 radio programmes by 2011. 5.1 6 health facilitators trained and quipped by 2008, and 12 by 2010. 5.2 10 home garden management courses by 2008, and 12 by 2009. 5.3 9 school gardens established by 2009, and 15 by end of 2010.

Assumptions - Continued funding and support of the State and Local Government Risk Indicator - Disbursement ratios - Weak capacity of LGCs Mitigation: - Undertaking for counterpart contribution to be deducted at source. - Monitoring of disbursement record - Capacity building

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COMPONENT B:

LAND & WATER DEVELOPMENT

1. Water use and control structures constructed / rehabilitated. 2. Soil fertility of rainfed farms improved. 3. Small water reservoirs constructed / rehabilitated 4. Rural access roads improved.

- 80,850 rural farmers (60 % women) - 80,850 rural farmers (60 % women) - 80,850 rural farmers (60 % women) - 80,850 rural farmers (60 % women)

- 300 ha of irrigation land developed and producing crops by 2009. - 40% of target yield increases achieved by 2009 - 60% of targeted demonstration farms and training achieved by 2009. - 40% of small water reservoirs constructed by 2008. - 65% of target rural roads rehabilitated by 2009. - 50% of basic infrastructure maintenance training conducted by 2009. Means of Verification - Project supervision reports; - Project Monitoring and Evaluation reports - Programme reports - Mid-term review; - Supervision reports

1.1 27 water user associations capacitated for irrigated crop production by 2007. 1.2 Pump irrigation developed from 0 ha in 2006 to 300 ha by 2009 and to 600 ha by 2011. 1.3 Increase in yields of irrigated crop of: maize from 2.5 MT/ha in 2007 to 2.9 in 2008, to 4 MT/ha in 2011; rice from 1.5 MT/ha in 2007 to 2.3 MT/ha in 2008, to 3 Mt/ha in 2011; tomatoes from 2.4 MT/ha in 2007 to 2.8 MT/ha in 2008, to 3.2 MT/ha in 2011; pepper from 2.3 MT/ha in 2007 to 2.6 MT/ha in 2008, to 3 MT/ha in 2011; and okra from 2.4 MT/ha in 2007 to 2.8 MT/ha in 2008, to 3 MT/ha in 2011; leafy vegetables from 2.4 MT/ha in 2007 to 2.8 MT/ha, to 3.2 MT/ha in 2011; cow peas from 0.8 MT/ha in 2007 to 1.0 MT/ha, to 1.6 MT/ha in 2011; 2.1 10 demonstration farms established by 2009 and 18 by 2011. 2.2 One soil laboratory rehabilitated and equipped (Ekiti State) by 2008 and 3 soil labs equipped by 2011 2.3 3 courses for ADP staff in laboratory techniques by 2007 and 6 by 2007. 2.4 60 farmer field demonstrations conducted by 2009 and 81 by 2011. 2.5 40% of farmers using improved soil conservation techniques by 2009 and 100% by 2011. 3.1 6 small earth dams constructed and 9 rehabilitated by 2008 and 15 constructed by 2011. 3.2 60 km of erosion control structures constructed by 2009 and 90 km by 2011. 3.3 - 6 training courses and 27 demonstrations in total provided. 4.1 About 180 km of rural access roads improved by 2009 and 270 by 2011. 4.2 20 courses in basic infrastructure maintenance conducted by 2009 and 40 by 2011.

Assumptions - Erratic rainfalls - Contractors recruited are qualified and performing - Satisfactory rate of adoption of techniques Risk Indicators - Decrease in harvest - Delays in the implementation of civil works - Decreasing level of technology adoption Mitigation - Construction of water harvesting structures - Capacity of national contractors improved through implementation of project small works - Strengthen extension system supporting adopters

COMPONENT C: PRODUCTION ENHANCEMENT AND DIVERSIFICATION

1. Crop production intensified on rainfed farms.

1.1. 9,300 farm households (about 60% women)

- 50% of target yields achieved by 2008. - 9 agro-processing units / equipments installed and functional by 2009. - 400 ha of fodder banks established by 2008.

1.1 15,000 ha rainfed agriculture cultivated annually from 2007, and 600 ha irrigated land developed and cultivated annually from 2007. 1.2 Increase in yields of: cassava from 11.2 MT/ha in 2007 to 13 MT/ha in 2008, to 15 Mt/ha in 2011; maize from 1.9 Mt/ha in 2007 to 2.1 in 2008, to 2.5 MT/ha in 2011; yam from 13 MT/ha in 2007 to 15 MT/ha in 2008, to 18 MT/ha in 2011; sweet potatoes

Assumptions - No conflicts between farmers and pastoralists - No marketing and price constraints

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2. Agro-processing and storage facilities established. 3. Rural market developed 4. Livestock production enhanced 5. Aquaculture development enhanced 6. Agro-forestry developed

2.1 2,850 farming households for all the diversification activities, about 60% women. 3.1 11,500 farming families, of whom 60 % are women. 4.1 540 farm households (about 60% women) 5.1 12 farm households (about 60% women) 6.1 500 farm households (about 60% women)

- 100% of target community nurseries established by 2008. - 60 ha of community agro-forestry farms established by 2008. Means of Verification - Project supervision reports; - Project Monitoring and Evaluation reports - Programme reports - Mid-term review; - Supervision reports

from 4.5MT/ha in 2007 to 5 MT/ha in 2008, to 6 MT/ha in 2011; and cocoa yam from 4.5 MT/ha in 2007 to 8 MT/ha in 2008, to 12 MT/ha in 2011. 1.3 3 community nurseries by 2008 and 6 by 2010 1.4 18 training courses on intensification conducted by 2008 and 27 by 2009. 2.1 18 agro- processing equipment by 2008 and 27 by 2011. 2.2 18 training courses in agro-processing and marketing conducted by 2008 and 27 by 2009. 2.3 9 storage silos by 2008 and 27 by 2011. 3.1 18 rural market structures constructed by 2008 and 42 by 2011. 4.1 400 ha of fodder banks (with hand dug wells) developed by 2008 and 1,000by 2011. 4.2 10 improved structures for small ruminant by 2008 and 25 by 2011 4.3 15 kits for community animal health workers (CAHW) procured in 2007. 5.1 2 Fish fingerlings and 12 equipped fish production units constructed by 2008. 6.1 9 community agro-forestry nurseries established by 2008. 6.2 60 ha of agro-forestry farms established by 2008 and 135 by 2011 6.3 6 agro-forestry training modules conducted by 2009.

Risk Indicators - Frequency and seriousness of reported conflicts - Post-harvest losses; proportion of unsold products. Mitigation - Dialogue committees are put in place at state level - Market construction and improved access roads and market information systems

COMPONENT D: PROJECT MANAGEMENT ACTIVITIES A. Community Development 1. Groups formation 2. Community driven development

1. Project management team established and operational 2. Technical Assistance (TA) by FAO in place

- Federal Ministry of Agriculture and Rural development (FMARD) - State Ministry of Agriculture and ADPs

Means of Verification - Periodic project progress reports. - Minutes of Federal, State and LGA level project management meetings. - Bank supervision reports - Department reports

1.1 6 PCU Staff (at least 2 women) and 21 ADP Staff (at least 4 of them women) seconded to the project by January 2007. 2.1 4 FAO funded TAs providing technical assistance to the project by January 2007.

High staff turnover at FMARD (PCU). Mitigation: Competitive incentives to staff seconded to project.

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3. Capacity building (Federal, State, LGA) 4. Market information 5. Health & nutrition B. Land and Water Development 1. Water use and control 2. Soil fertility improvement 3. Small water reservoirs 4. Rural access roads C. Production and Enh. Diversification 1. Production intensification. 2. Agro-processing and storage 3. Rural markets 4. Livestock 5. Aquaculture 6. Agro-forestry D. Project Management

PROJECT COSTS (UA million) A = 9.30 B = 10.91 C = 5.61 D = 1.75 TOTAL = 27.58 ADF LOAN = 22.00

BENFICIARIES - 80,850 rural farmers - About 60% women

DURATION - 5 YEARS

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EXECUTIVE SUMMARY 1. General 1.1 Over the past 20 years, Nigeria has witnessed a decline in growth in the agriculture sector with its share of the GDP declining from over 60 percent in the pre-oil period to about 30 percent in 2005. Growth in the sector is slow and has resulted in rising food imports and falling levels of national food self sufficiency and increasing rural poverty. In an effort to reverse these trends, the Federal Government of Nigeria (FGN) has renewed its commitment to promoting growth in the agricultural sector and prepared the National Economic Empowerment and Development Strategy (NEEDS). The country now faces the challenges of translating the agricultural growth objectives of NEEDS into feasible and well-coordinated interventions that will raise farm-level productivity, diversify production, strengthen rural market networks, stimulate the emergence of profitable value-adding agro-industries, and link producers and processors to domestic, regional and international markets. 1.2 In a move to achieving these objectives, the FGN with assistance from FAO implemented the Special Programme for Food Security (SPFS) as a pilot programme in Kano State, with the objective of identifying, adapting, testing and promoting intervention packages that promote growth in the agriculture sector. The SPFS was further up-scaled into a five-year nationwide National Programme for Food Security (NPFS) between 2002 and 2006, covering the 36 states of the country (109 sites), with a total programme cost of USD 45.2 million, entirely funded from national sources. The nationwide NPFS programme was completed in June 2006 and has already demonstrated very positive impacts. The FGN now intends to start the expansion phase of the NPFS (2007-2011) and has completed a programme preparation document, together with the FAO, that entails the introduction of 218 new sites nationwide. 1.3 The expansion phase of the NPFS is designed in a more integrated manner, to allow for the development of synergies between the various interventions components and to decentralize project implementation to attract greater project ownership at State and Local Government as well as beneficiary levels. Government commitment is reflected by the level of resources (USD 45.2 million) already spent during the first phase of the NPFS, a nationwide benchmarking exercise that ranks states on the basis of their financial performance and project implementation record, as well as funding a comprehensive study implemented by the FAO, which forms the basis of the design of the SPFS programme. In line with this framework, the design of this project is highly participatory and community-driven, pulling on experiences of the pilot phase of the NPFS to support communities to identify critical areas of intervention, thereby creating local level participation and ownership to enhance project sustainability. 2. Sector Goal The sector goal is to improve national and household food security and reduce rural poverty on a sustainable basis. 3. Project Objective The objective is to increase agricultural output and the incomes of rural households and beneficiary communities in the project areas.

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4. Project Description and Output The Bank intervention will be for five years and will cover the following components: (A) Community Development and Institutional Support: fostering community empowerment, group formation and development, training, capacity building at State, LGA and farmer levels, and availing market support services; (B) Land and Water Development: establishment of 18 production sites in selected LGCs through land and water development, infrastructure development and provision of agricultural equipment, inputs and services; (C) Production Enhancement and Diversification: providing opportunities for crop diversification, animal production, aquaculture and agro-forestry; and (D) Project Management. 5. Purpose of the Loan The ADF Loan of UA 22.00 million, amounting to 80 percent of total project cost estimated at UA 27.576 million, will be used to finance 83.89 percent of the foreign exchange (UA 17.208 million) and 68.31 percent of local cost (UA 4.972 million).. 6. Project cost The total project cost has been estimated at UA 27.58 million. The ADF funding will be UA 22.00 million while UA 5.58 million will be contributed by the Federal, State and Local Governments, as well as the beneficiary communities. Of this, the foreign exchange costs are estimated to be 73.60 percent and local costs will comprise 26.40 percent. 7. Project Implementation The executing agency for the SNPFS will be the Federal Ministry of Agriculture and Rural Development (FMARD). The project will be implemented by existing institutions within FMARD. The existing Project Coordination Unit (PCU) of FMARD would be responsible for the overall coordination at Federal Level. The Agricultural Development Programmes (ADP) will implement the project at state level. Technical Assistance to the project will be provided by FAO under existing NPFS arrangements with the Government. 8. Conclusions and Recommendation 8.1 The project design has incorporated lessons learnt from past experience and findings of the 2004 country portfolio performance review so as to addressed issues like: delays in fulfilling loan conditions, inadequate availability of counterpart funds, inadequate financial management and control systems at both Federal and State government levels, harmonisation of Bank interventions and procedures with those of other donors and effective monitoring of project implementation. 8.2 The project is technically feasible, economically viable, socially desirable and environmentally sustainable. It is recommended that a loan not exceeding UA 22.00 million be granted to the Government of Nigeria to finance the implementation of the project under the conditions specified in this report.

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1. ORIGIN AND HISTORY OF THE PROJECT 1.1 Over the past 20 years, Nigeria has witnessed a decline in growth in the agriculture sector with the its share of the GDP declining from over 60 percent in the pre-oil period to about 30 percent in 2005. Growth in the sector is slow and has resulted in rising food imports and falling levels of national food self sufficiency and increasing rural poverty. 1.2 In an effort to reverse these trends, the Federal Government of Nigeria (FGN) has renewed its commitment to promoting growth in the agricultural sector and prepared the National Economic Empowerment and Development Strategy (NEEDS). The policy objectives of NEEDS are complemented by those contained in the New Agricultural Policy (NAP) and the Rural Development Policy (both of 2001), which further emphasise growth and development of all aspects of agriculture, and increased investment in rural areas. The country now faces the challenges of translating the agricultural growth objectives of NEEDS into feasible and well-coordinated interventions that will raise farm-level productivity, diversify production, strengthen rural market networks, stimulate the emergence of profitable value-adding agro-industries, and link producers and processor to domestic, regional and international markets. 1.3 In a move to achieving these objectives, the FGN with assistance from FAO implemented the Special Programme for Food Security (SPFS) as a pilot programme in Kano State, with the objective of identifying, adapting, testing and promoting intervention packages that promote growth in the agriculture sector. The SPFS was further up-scaled into a five-year nationwide National Programme for Food Security (NPFS) between 2002 and 2006, covering the 36 states of the country (3 pilot sites per state, i.e. 109 sites), with a total programme cost USD 45.2 million, entirely funded from national sources. The nationwide NPFS programme was completed in June 2006 and has already demonstrated very positive impacts. 1.4 The FGN now intends to start the expansion phase of the NPFS (2007-2011) and has completed a programme preparation document, together with the FAO, that entails the introduction of 218 new sites nationwide or six additional sites in each of the 36 States. To implement the programme, the Government has requested the Bank to finance the ‘Support to NPFS Project’ in three states (Ondo, Ekiti and Cross River States), selected on the basis of a benchmark exercise carried out by the FGN and stakeholders including donors, in which states were prioritized for development interventions based on good performance in policy, budgetary and fiscal management, service delivery, communication and transparency, and agricultural potential. The Government’s programme preparation report was discussed with the Bank on 24 March 2006, and modalities for the Banks participation in the programme were spelt out. The Bank prepared the project from the submitted FAO preparation report and sent an appraisal mission to Nigeria between 8 and 29 May 2006 to appraise the present project. 1.5 The Support to the NPFS is thus based on the submitted programme preparation report, field data collected using a participatory approach during the project appraisal mission, documents received or consulted at Government Ministries and Departments, discussions held with non-governmental organizations and donors, as well as with Nigerian counterpart Experts, Government authorities (at Federal, State and Local Governments levels), and development partners such as the World Bank, IFAD, FAO, CIDA, UNICEF, DFID, UNDP and the Embassy of Norway, among others. Selected Local Governments and communities in the project states were also visited and discussions held with Local Government Officials and farmer groups.

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2. THE AGRICULTURAL SECTOR 2.1 Salient Features 2.1.1 Since independence, agriculture has been the most important sector in the Nigerian economy in terms of its contribution to the GDP, a position that was later taken by the mining (oil) sector. The sector contributes about 32 percent of the country’s GDP, employs about 70 percent of the estimated 120 million people and provides employment to about 80 percent of the rural population, generating the bulk of the country’s non-oil revenue. Agricultural growth rates increased modestly from 4.25 percent in 1997 to 4.5 percent in 1999 and to 4.7 percent each in 2001 and in 2005, all of which are nevertheless higher than the population growth rate of 2.5 percent. The challenge thus faced by the sector is to sustain this increase with a view to removing the observed food insecurity and abject poverty particularly in the rural areas. 2.1.2 Of Nigeria’s estimated 70 million hectares of agricultural land, about 40 million hectares are under permanent pastures, with another 3 million under permanent crops, leaving about 28 million hectares for arable crops. Forestry constitutes about 26 million hectares. In 2005, agriculture contributed about 32 percent of GDP, the bulk of which came from the crops sub-sector, which contributes about 85 percent of the agricultural GDP. Livestock production contributes about 10 percent of the agricultural GDP, fisheries about 4 percent and forestry about 1 percent. While the crops sub-sector emerges as the most significant in terms of contribution to GDP, the contribution of livestock, agro-forestry and the fisheries sub-sectors to household food security has become increasingly recognized nationwide. 2.1.3 Agriculture in Nigeria is mainly rural-based and almost entirely rain-fed. Rural Nigeria is divided into seven agro-ecological zones, namely, semi-arid zone in the northern region; the savannah zone in the northern and middle regions; highland areas in the middle and southern regions; forest-savannah derived in the southern and middle regions; mangroves in the Niger Delta; freshwater swamps in the Niger Delta and lowland rainforest in the south. The agro-ecological setting largely determines the country’s diverse production systems. Two major production methods dominate the production system: (i) the traditional production method, which is found in all parts of the country and consists of land holdings of less than 2 hectares, with a variety of food crops mainly for consumption purposes, and (ii) the use of improved production technologies, like improved fadama farming, which utilises water logged areas and use of improved seeds in combination with various technologies as well as commercial farming. 2.2 Agriculture and Rural Development Strategy 2.2.1 In the past decades, the effectiveness of agriculture and rural development strategies was constrained by narrow base of policy formulation, poor implementation and weak coordination. To overcome these weaknesses, the FGN in 2001 adopted a New Agricultural Policy (NAP), which had most of the features of the old policies, but with more focused direction and better articulation. The major thrusts of the policy were on: (i) Creating a conducive macro-economic environment to stimulate greater private sector investment in agriculture; (ii) Rationalising the roles of the different tiers of government; (iii) Re-organising the institutional framework for government intervention in the sector; (iv) Actualising and implementing integrated rural development; (v) Increased budgetary allocation to enhance production and productivity; (vi) Increasing fiscal incentives to agriculture and reviewing trade regulations; (vii) Empowering

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local communities to play an active role in their own development; and (viii) Promoting increased use of machinery and inputs through favourable tariff policy. As a means to effectively operationalise the new policy, the Government commissioned a rural sector strategy study, which resulted in the creation of a new Rural Development Strategy (in 2001) in support of the new agricultural policy. The goal of this new strategy is poverty reduction by improving the livelihood and living conditions of the rural poor. The new strategy is based on participation at all levels, and it spells out the roles and responsibilities for the Federal, State and Local Governments, and the Private Sector so as to avoid redundancies and duplication of functions. 2.2.2 To date, effective implementation of this policy has been constrained due to: (i) the predominant urban bias in the selection of projects and policy measures; (ii) a lack of community participation in the dialogue and key decisions on rural development; (iii) insufficient attention at the Federal Government to production development, and (iv) pervasive public interference in private enterprise. To overcome these constraints, the FGN has made concerted efforts, as declared in the NEEDS and the decentralisation policy, to provide state and local governments with additional resources, to enable them to improve service provision in production, infrastructure development and provision of agricultural and social services. It is also encouraging that the total level of investment in agriculture by the three tiers of government is increasing over the years, with 3 percent of the national budget committed to agriculture which targets a 6 percent growth rate for the sector. 2.3 Land Tenure 2.3.1 Nigeria’s land tenure system, State Governors have been the legal custodians of all land since 1978. However, the de-facto land tenure rights follow the traditional usufruct system, which is governed by customary law. Under the customary land tenure system, the village headman maintains the traditional community control of the land and founding families have the customary rights to use the land once they have cleared it. The land will revert to the community only when it is left fallow for a very long time and upon the death of an heirless cultivator. For women, in particular, the access to land is through men (husband, father, etc.). Customary rights are not registered and depend on the testimony of the village head and his deputy. Land can also be bought, leased or acquired through pledging. In fact, about 40 percent of farmers use a combination of these tenure systems to improve their access to land. 2.3.2 The dominant land tenure system in the country is based on customary land systems operating alongside statutory laws, whereby land is categorized into gazetted land, customary land (traditional authority), individual land holdings and 99-year leaseholds. Customary systems are highly varied and often complex, but the common denominator is that they lack registration of title and can, therefore, not be used as collateral for short or long term credit from financial institutions. Customary systems are, however, under pressure in many places from increasing populations and commercialisation as well as the need for secure individual rights among both women and men, and for an efficient and open land market. While the communal land tenure systems continue to move towards individual landownership owing to strong population pressure, the Land Use Decree (LUD) represents an attempt on the part of the Government of Nigeria to modify land tenure and access for purposes of development. The LUD has produced a number of unforeseen results, like the fragmentation of land holdings. However, the proportion of land under public tenure remains relatively low in selected states despite the LUD.

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2.3.3 A major consideration for the Bank financed Food Security Project in the selected states is that there are still massive land areas in the selected target states that have not been exploited, showing that there is still great potential for agricultural development in these states. It should also be recognized that the agricultural sector in these states is dominated by smallholder farmers, a production characterised by extensive use of land and shifting cultivation. 2.4 Cross Cutting Issues 2.4.1 Gender: The Nigerian Constitution adopted in 1998, advocates for equal rights and duties Between men and women and also provides for punishment for discrimination and privileges based on gender. The National Planning Commission has prepared a practical manual for mainstreaming gender into State’s SEEDS to promote gender equity in development process. The SEEDS call for promotion of the integration of gender analysis and gender indicators in the monitoring and evaluation of the development plans and programmes. Women represent 49.6 per cent of the estimated population of 130 million people. The literacy rate of women is much lower compared to that of men. In 2004, 62.25 per cent of females were illiterate compared to 49.33 percent of males. Gender gaps in primary school enrolment and adult literacy are still very low and stand at 78 per cent and 80 per cent respectively. About 60 per cent of the population has access to improve water source and 30 per cent of the child population under 5 years suffers of malnutrition. 2.4.2 A recent study1 reports that Nigerian women account for more than 60 percent of the agricultural labour force and contribute up to 80 percent of the total food production and 100 a&percent of the processing in most regions. Women further contribute most of the labour (70 percent) committed to the major crops including maize, cassava, cowpeas, melon and rice produced in the southeast. While men are responsible for land clearing, burning and making yam mounds, women do the planting, weeding, staking, harvesting and marketing of yam and cassava in the south-western Nigeria. In addition, women in the southwest cultivate their own plots where they grow a variety of crops for home use or market sale, and also own and manage small ruminants and poultry, and contribute to their husband’s expenditures for farming. 2.4.3 The main gender dimension of the agricultural sector and food security in Nigeria is linked to gender-based inequalities, with differential access of men and women to productive assets. These inequalities lead to deprivation of options to escape from poverty, lack of protection, limited education and training, low participation and powerlessness. About 14 percent of adult women own land, as opposed to 80 percent of adult men. Female-headed households constitute about 80 percent of the landless and near landless population in Nigeria. Since the access to credit to purchase farm implements and other inputs is often based on ownership of land, this implies that women also women lack access to credit from the formal credit institutions. Women are less able to participate effectively in decision-making and are often deprived of basic legal rights, including those for entering into contracts and inheritance. Cultural beliefs in most of Nigeria are further constraints to the education of women, and very often farm extension services and training are targeted at men. Adult illiteracy amongst Nigerian, for instance, stands at 61 percent and 45 percent for men and women respectively, and 40 percent and 30 percent for male and female youth respectively. Similar trends are also observed for school enrolment, which is between 45-55 percent for males and 26-32 percent for females.

1 World Bank, 2003

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2.4.4 To address these constraints, the National Programme for Food Security (2002-2006) had specific components (training, health and nutrition, among others) which focused on women, and activities for improving the access of women to resources including land, inputs, skills training, technology and other related services. This focus is also emphasized in the design of new projects to be financed under the NPFS, with proposed modules that specifically target women. The key achievements of the NPFS in its pilot phase are the creation of the Women in Agriculture (WIA) program and the incorporation of the Health and Nutrition Component into the NPFS. This facilitated the development of a dialogue with women groups so that their perspective could be considered in the refinement and dissemination of new technologies, particularly in areas of agro-processing and marketing, where women are predominant. 2.4.5 Poverty: Nigeria ranks 125th in the 2005 Human Development Index, with basic indicators that place the country among the 26 poorest countries in the world. Two out of three Nigerians (66 percent) live in extreme poverty as measured by the international standard of one dollar a day as of 2004, and the proportion has increased dramatically during the last two decades. In the same year, both per capita income and per capita private consumption were lower than the early 1970s. Per capita income fell from USD 1,600 in 1980 to USD 270 in 2000. Although poverty has increased in all households in Nigeria, it is more pronounced in male-headed households. Male-headed households contribute over 80 percent to the three measures of poverty while female-headed households contribute 5-16 percent. Key social indicators show that 63 percent female household heads had no formal education compared with 55 percent of males. Between 1996 and 2000 per capita expenditure on food grew by 5 percent in male-headed households while it declined by 9.3 percent among female-headed households.

2.4.6 Poverty in Nigeria is concentrated in rural areas, where about 64 percent live below the poverty line compared to 35 percent in urban areas. While a greater proportion of poor households are found in the north than in the south, the highest incidence of poverty is observed in households engaged in agriculture, i.e. about 90 percent poor households in Nigeria are engaged in agriculture. Agricultural growth, therefore, is important for the eradication of extreme poverty and hunger in Nigeria. Past poverty reduction programmes, including the Family Economic Advancement Programme, had a marginal impact on poverty, despite large budgetary allocations. These programmes failed to achieve their objectives because of poor design. The government has a new poverty reduction plan based on lessons from the past, aimed at reducing the poverty level to about 35 percent by 2015. 2.4.7 HIV/AIDS and Malaria: Although Nigeria recorded a reduction in HIV prevalence from 5.8 percent in 2001 to 5 percent in 2003, and to 4.7 percent in 2005, HIV/AIDS is a significant health problem especially in the age groups ranging from 15 – 35 years. It has killed more than 1.7 million people and orphaned 1.5 million children. Some 2.7 million Nigerians, including 120,000 children are now living with AIDS. As a result Nigeria’s life expectancy has fallen to 47 years as against 53 years during 1980 to 1995. As the majority of those affected are within the economically active population group, AIDS and malaria are having a devastating effect on the economy. It has been estimated that HIV/AIDS alone is responsible for a 0.5 percent drop in the country’s economic growth rate. The impact of HIV/AIDS on the agricultural sector is mainly by increasing the unavailability of the required labour force through reduced life expectancy. This situation is gradually leading to the neglect and reduced maintenance of vital agricultural infrastructure such as the rural feeder roads, and irrigational canals which are labour intensive.

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The loss of labour in the agricultural sector is also increasing leading to insecurity in livelihoods and consequently to food insecurity. 2.4.8 In response to the AIDS pandemic, a Presidential AIDS Council and the multi-sector National Action Committee on AIDS (NACA) were created in 2000. NACA has developed an Emergency Action Plan and a national 4-year HIV/AIDS strategy emphasising prevention. 2.5 Rural Financing 2.5.1 Nigeria’s rural financial sub-sector comprises both formal and informal financial institutions. There are four major providers of rural financial services in the formal and semiformal financial sectors in the country and these are: commercial banks, community banks and microfinance institutions. The largest player in formal rural finance is the Nigeria Agricultural Cooperative and Rural Development Bank with 201 branches nationwide. This is followed by the community banks. There are 753 community banks currently operating in the entire country of which two-thirds (about 500) are rural based. 2.5.2 In addition to the above, there are also government credit schemes which have been used to provide some financial services to the rural communities. Such schemes included: the National Poverty Eradication Programme, Small and Medium Enterprises Equity Investment Scheme established in 2001, requiring banks to set aside 10 percent of their pre-tax profit for investment in SMEs; and the Refinancing and Rediscounting scheme introduced in 2002 by Central Bank of Nigeria to rediscount facilities to real sectors, including agriculture. 2.5.3 The operations of this sub-sector are governed by the new Policy for the microfinance sector issued by the CBN in December 2005. The Policy provides a framework for the future operations of, (i) those Commercial Banks that will not be able to increase their minimum equity to the required NGN 25 billion, (ii) Community Banks and (iii) Microfinance Institutions. The policy objectives are to: (a) make financial services accessible to a large segment of the potentially productive population; (b) promote synergy and mainstream the informal sub-sector into the national financial system; (c) enhance service delivery by microfinance institutions to micro, small and medium entrepreneurs; (d) contribute to rural transformation; and (e) promote linkage programmes between universal banks, specialised institutions and microfinance banks. 2.6 Institutional Framework 2.6.1 Federal Level: The Federal Ministry of Agriculture and Rural Development (FMARD) provides technical support to the states ministries for agriculture and rural development through the Projects Coordinating Unit (PCU) and the technical Departments. It ensures technology generation and dissemination, project and programme coordination and implementation, rural sector planning, monitoring and research. Under the FMARD, the Federal Department of Agriculture (FDA) implements federal government-supported projects and programmes at the state level and provide technical backstopping to the Agricultural Development Programme (ADPs) and other units. The Federal Department of Agricultural Sciences (FDAS) oversees agricultural research and extension. The Federal Department of Livestock and Pest Control Services (FDLP) oversees policy development and implementation for livestock development, veterinary and pest control services, while the Federal Department of Fisheries (FDF) formulates policies and strategies for the development of fisheries. The Federal Departments of Rural Development (FDRD), Land Resources (FDLR), Planning, Research and Statistics (FDPRS),

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Cooperative Development (FDCD), all have strategic responsibilities for policy formulation and fostering development in these areas. 2.6.2 The Federal Ministry of Environment (FME) is responsible for environmental policy development, environmental impact assessment and monitoring and control for all programme and projects, including those in agriculture. The Federal Ministry of Water Resources (FMWR) is the national coordinating body in the water sector, in key areas including formulation and implementation of national irrigation policy, irrigation development and support to irrigated agriculture, and coordinating the development and utilisation of water resources for agriculture, domestic, industry and other uses. The FMWR also supervises the 12 River Basin Development Authorities (RBDAs) and the National Water Resources Institute (NWRI). Finally, at the federal level, the National Planning Commission (NPC) is charged with national planning and macroeconomic development. The agricultural sector planning is undertaken by the Department of Agriculture and Industries. The Agriculture Division is responsible for the national three-year rolling plan for agriculture, in consultation with the FMARD, and ensures that annual plan and budget proposals from FMARD and state ministries of agriculture are consistent with the proposals of the rolling plan. 2.6.3 State Level: The numerous public institutions supporting agriculture and rural development at state level include: (i) Technical Service Support, provided by the Ministry of Agriculture (MoA), Agricultural Development Authorities (ADA), Agricultural Development Programmes (ADP), Ministry of Water Resources and Rural Water Development, Ministry of Commerce, Industry and Cooperatives, Ministry of Works, Housing and Transport); (ii) Socio-Economic Support, provided by Ministry of Health, Ministry of Women Affairs and Social Development, Ministry of Education; (iii) Sector Planning, Monitoring and Evaluation, provided by Ministry of Local Government or Chieftaincy Affairs, State Planning Commission or Ministry of Economic Development or Planning; and (iv) Commercial/Financial Services, project management units, input supply companies and agricultural mechanisation authorities. 2.6.4 The ADPs are existing state institutions with a mandate to raise agricultural production and improve the living standards of the rural population. They provide technical support through extension services to smallholder farmers as a means of promoting the adoption of improved farming techniques. They are also engaged in the distribution of inputs through Farmers’ Agricultural Inputs Supply Companies (FASCOM), generate critical monitoring and evaluation data for the agricultural sector, and carry out the day to day implementation activities of the national and donor-funded agricultural projects and programmes at the state level in coordination with PCU. The ADPs in some states such as Ekiti, Ondo and Cross River, have adequate staff capacity of between 30 to 50 people, comprising the state SPFS project coordinator, facilitators, site managers, data processing clerks, extension agents, field enumerators and support staff. The ADPs have soil and laboratory equipment and transport facilities; though these need to be strengthened for the forthcoming additional activities. The technical capacity of the ADPs needs to be strengthened to match the implementation requirements of the expanded NPFS programme. 2.6.5 Local Government Level: As required by the Constitution, the government of each state has enacted necessary laws to provide for the establishment, structure, composition, finance and functions of Local Government Councils (LGC). The LGCs make recommendations to a state planning commission (or a similar body) on the economic development of the Local Government Area (LGA), such as proposals on agricultural or economic development, and road

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construction and maintenance, among others. The local council chairman is the Chief Executive of the LGC. The major sources of revenue for the LGA are federal and state budget allocations, augmented by internally generated revenue from other sources indicated in the constitution. The responsibilities of the Agriculture Department of the LGA relates to the overall agricultural development, including crops, livestock, fisheries and agro-forestry/forest plantation development. The LGC is generally staffed with about 9 Food Security Coordinators and 9 Extension Workers. During the first phase of the NPFS, the LGC staff prepared simple local programmes for food security in close collaboration with PCU, ADP and the communities concerned, which served as entry points for all development and service initiatives and built synergies with other development partners.

2.7 Constraints and Potentials 2.7.1 Constraints: The critical constraints impeding growth in Nigeria’s agriculture include: (i) low agriculture productivity, which is attributed to farmer’s lack of access to new and proven agricultural technology, (ii) low private investment in agriculture, both primary production and processing, due to low expected profitability, which in turn stems from low productivity, and (iii) non-competitiveness of the export sector, which can be attributed to a number of factors including: (a) high production cost per unit, (b) domestic-policy related obstacles that discriminate against exports, (c) the difficulty of accessing regional and domestic markets, and (d) the challenging international trade environment, as well as the poor state of rural access roads and inadequate market infrastructure for domestic marketing. For agricultural productivity to improve, Nigeria’s farmers should have access to new agricultural technology. Though technology alone will not solve the problem of low productivity, it is a vital and indispensable part of the solution. Weak research and extension services, limited use of improved genetic resources and purchased inputs, low levels mechanization and irrigation and poor access to production credit all contribute to the low productivity of Nigerian agriculture and constrain agricultural growth. 2.7.2 Other major constraints to sustainable development of agricultural sector include: (i) unfavourable business climate to promote investments in agriculture, (ii) infrastructure deficiencies, (iii) limited access and use of long-term credit, (iv) high risk of investment in agricultural sector, and (v) degradation of the natural resources, in particular the degradation of agricultural lands due to soil erosion as results of poor farming practices, uncontrolled forest clearing and overgrazing. These constraints are in many ways the legacy of weak institutional and policy environment for agriculture, which is itself compounded by the deficiencies in governance. The weak policy environment has been strongly recognized and is adequately reflected in current policies on agriculture as well as in the rural development strategy. The weak institutional environment for agriculture is a cross-cutting factor that extends, deepens, and helps perpetrate the problems caused by the three key constraints discussed. The institutional environment is thus an area that requires support to overcome constraints to agricultural growth. 2.7.3 Potentials: Nigeria’s agricultural sector has a high potential for growth. The country’s vast irrigation potential remains largely unexploited. Estimates of the country’s irrigation potential range between 1.6 and 2.5 million hectares. Currently, only 0.7 percent of the nation’s cultivated land is under irrigation, which is roughly 220,000 hectares, or less than 1 percent of the total area under crops. The contribution of irrigated agriculture to total crop production is therefore very small. The agricultural intervention strategies proposed in NEEDS, NAP and the

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rural development strategy adequately recognize the need for exploiting this potential, all of which require donor support for operationalization in view of the huge investment needs. 2.7.4 Secondly, the potential of the rainfed sub-sector remains largely unexploited, as yields of major food crops and grains are far below African averages, and for major crops only about 60 percent of the agronomic potential. Stimulating yields in the rainfed sub-sector which accounts for over 90 percent of agricultural production, through appropriate interventions in land and water management, offers a unique opportunity for stimulating agricultural growth in Nigeria. The potential for livestock, fisheries and aquaculture are also reported to be largely underexploited, which offer further opportunities for production diversification and integration to increase agricultural production and productivity. The existence of community-based organisations (CBOs) in Nigeria, taking many different forms and playing diverse social and economic roles in community-based production is a potential that can be tapped. Similarly, most communities already have community development associations (CDAs), which embark on agricultural and infrastructure self-help projects that have the entire members of the community as target beneficiaries, but lack adequate resources for effective implementation. 2.7.5 Finally, Nigeria’s relatively large domestic market for food and fibre provides substantial potential for agricultural growth in the medium-term, especially since domestic production shortfalls for some commodities are currently being met through imports, and could be met by domestic production. Future growth in population and (hopefully) real incomes would stimulate demand for agricultural goods and provide additional opportunities for growth in the agriculture sector. Once domestic production has expanded however, additional growth will have to come via expansion into regional and international markets, access to which is currently constrained by inadequacy of domestic market infrastructure, non-competitiveness of the country’s export crops and international agricultural policies. 2.8 Donor Interventions 2.8.1 Donor interventions: Various donors including Bank Group have been supporting the Federal Government’s efforts to implement the Rural Development Strategy. The on-going development programmes are as follows: 2.8.2 Bank Group: The Bank group has 14 on-going projects of which 5 are within agricultural sector. The Bank and the World Bank co-financed in 2000 the Community-Based Poverty Reduction Project (UA 20.00 million). This project has two components: capacity building focusing on policy formulation at the state and local governments and community based initiatives through a Community Development Fund, which is managed by Local Government Authorities. This project is part of an overall program of community-based development of which IFAD intervention of 2002 is part. The Bank Group financed the Community Based Agriculture and Rural Development approved in 2003 for a total amount of UA13.00 million. The Fadama Development Project approved in 2003 with a total amount of UA22.00 million constitutes part of the broader program of community development. Other Bank Group projects include: (i) Support to Agricultural and Rural Institutions, approved in April 2005 for a total amount of UA3.00 million, the Institutional Support Program to the Nigeria Agricultural Co-operative Bank approved in 1992 and completed in 1997 (UA 4.61 million), and (ii) Integrated Management of Invasive Aquatic Weeds in West Africa for a total amount of UA1.94million, approved in 2004 to support government effort to control weeds in the major water bodies in the

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sub-region, and (iii) Emergency Assistance to support Government initiatives to combat avian flu for a total amount of UA0.5 million, approved in 2005. 2.8.3 Other Donors: IFAD was the first donor to effectively contribute to the new Rural Development Strategy by financing community-based agriculture and rural development activities in 2002. Its contribution is about USD 30.00 million with a focus on capacity building at community, local, and state level and production and rural infrastructure development through a Community Development Fund, which is managed by the Local Government Councils. The project is being implemented in all the selected eight states and the physical execution of the activities is progressing well. The Community Based Natural Resource Management Project is funded by IFAD with a loan of USD 30.00 million, implemented in the nine States of the Niger Delta, namely, Bayelsa, Delta, Rivers, Imo, Akwa Ibom, Abia, Cross River, Edo and Ondo. The project emphasizes natural resources and environmental management, using the Community Based Organizations, and became disbursement effective in May 2006. 2.8.4 The World Bank is currently financing National Fadama Phase II (2003 -2010) for a total amount of USD100 million. It financed the National Fadama Phase I Project from 1994 to 1999. This project, with a total cost of USD 67.5 million, was built on the achievements of some of the Agricultural Development Programs in the north of the country in developing the Fadama irrigation system through the extraction of shallow groundwater with low-cost pumping devices. By making agricultural production less dependent on erratic rainfall, the project raised farmers’ incomes and contributed to food security and poverty alleviation. One of the shortcomings of the project, however, was that not enough attention was accorded to processing and marketing. 2.8.5 Other donor institutions which financed agriculture and rural development activities in Nigeria include IFAD which is financing the Community Based Agriculture and Rural Development Program for USD 80.00 million. It is also financing the Roots and Tubers Project and the Community Based Natural Resources Management Program. The Special Program for Food Security, financed by FGN, and managed by the FAO (USD 45.20 million) and DFID through its ‘Promoting Pro-poor Opportunities from Commodity and Service Markets’ Project, which aims at improving the livelihood of the poor by facilitating the development of viable agriculture commodity and service markets.

2.8.6 Lessons learned: The positive lessons learnt form the Bank portfolio and those of other donors intervening in Nigeria indicate that the objectives of their programmes/ projects are to contribute to poverty alleviation by using demand driven approaches and human skills development at the grass-root level, which is in line with the Government’s decentralisation policy. The agricultural projects, in particular, support the development of acceptable technologies, which have a high return on investment, are simple to maintain and are affordable. The FGN-supported NPFS in the 109 sites, in particular, has demonstrated that demand-driven community development is the way forward to sustainable food security and income generation in rural areas. The bottom-up approach that involved farmers in the identification of production priorities has enhanced the project ownership and its sustainability. The pilot phase of NPFS further demonstrated the potential for increasing incomes and improving livelihoods through well-managed and cost-effective livestock enterprises, as well as aquaculture development, which have demonstrated a potential for increasing production, incomes and livelihoods. The recent review of the NSPFS showed that the small engine pump system (direct pumping or with tube well/wash bore) was highly successful and technologically suitable based on its simplicity

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(user operation and management), relatively low costs (initial investment and operational), and cost effective, with quick results.

2.8.7 Negative lessons have also emerged from delayed project implementation which has been the main reason for the limited impact of most donor-financed interventions, including Bank-financed projects. The delays are not only related to the numerous loan conditions that lead delayed project start-up, but are also due to failure to or delays in availing counter funding. The reluctance of Local Government Administrations to commit funds to effectively support agricultural development programmes and projects led to delayed counterpart contribution to the first phase of the NPFS, with implementation delays and low impacts in some states. As a result of this situation, the FGN has instituted a benchmarking exercise which will prioritize states on the basis of good performance in previous projects, especially with regards to timely delivery of counterpart funds, good budgetary and fiscal management record, and service delivery, all of which are critical for successful project implementation. Other factors contributing to poor project performance include: (i) delay in recruitment of the project qualified staff and (ii) the high staff turnover at the Project Implementation Unit (PIU). 2.8.8 Experience from the implementation of donor-financed projects and the NPFS further indicate that unless sufficient attention is given to capacity building and effective local level participation, there is a risk that the process of demand-driven development, on which the design of current project interventions are based, will not be successfully institutionalised. Also, the untimely delivery of farm inputs, especially fertilizers, to the State Coordinating Office and the NPFS sites impacted negatively on production and yields, due to inefficiencies in the agro-input market, lack of market information and support services and weak institutional capacity. Therefore decentralized project implementation, such as the one planned within the framework of the NPFS, requires strong capacity building and institutional support components, as well as the provision of support services in the areas of extension and marketing. 3. THE SUB-SECTORS 3.1 The Crops Sub-sector 3.1.1 Nigeria’s agro-ecological diversity offers a unique opportunity for growing a wide variety of crops. The high rainfall of the South and Central Regions makes it suitable for crops such as roots and tubers including yam, cassava, cocoyam and sweet potatoes, as well as paddy rice, groundnuts and assorted fruits and vegetables, in addition to traditional cash crop such as cocoa and palm oil. In the semi-arid North, sorghum, millet and maize are the basic cereal staples. Irrigated crops especially vegetables are also important crops in the North. Statistics for 1997-2001 indicate that the average total domestic supply of cereals (including sorghum, millet and maize) was about 23 million MT, of which local production accounted for only 21 million MT, leaving some 2.4 million MT to be covered by imports. The domestic utilisation of these cereals for the same period comprised 72 percent as food, and the rest for other uses including seeds, animal feeds. Less than 2 percent goes through agro-processing while more than 10 percent wastes away under the prevailing harsh tropical conditions. 3.1.2 With over 90 percent of crop production done by smallholder farmers with average farm sizes of between 1.0 to 2.0 hectares, farmers are asserting every effort to diversify crops and increase cropping intensity to increase income. Field surveys covering 1997-2001 indicated an

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increase of between 30 and 78 percent in areas planted with dry season vegetables such as okra, carrots, aubergines and other leafy vegetables. Most farmers own 2 to 3 parcels of land with varying degrees of fertility, with different crop combinations in various cropping systems. Due to poor land use management, soil properties have degenerated considerably. This has resulted in low organic matter content, declining nutrient yields, fragile topsoil structure and reduced soil moisture availability. These adverse soil properties in turn, have increased vulnerability due to accelerated water and wind erosion. 3.1.3 As a result of poor land use practices and minimal use of inputs, productivity of major crops remains considerably low. For cereals, productivity varies from 0.5 to 1 MT per hectare depending on the amount and timing of the rains, and for cowpeas and groundnuts from 0.3 to 0.4 and 0.6 to 0.8 MT per hectare respectively. Empirical data that improved technologies, increased access to inputs and improved extension services can increase yields of major crops considerably to about 3.0 MT per hectare for sorghum), 1.6 MT per hectare each for mille and cowpea, 5 MT per hectare for maize, and for yams and cassava up to 20 and 28 MT per hectare respectively, using improved varieties. This creates an urgent need for targeted interventions in soil fertility improvement to increase productivity in the rained crop production, and increased access to technologies, inputs and improved extension services. 3.1.4 Nigeria has four main vegetation zones patterned along rainfall, edaphic conditions, drainage and topography. These include (i) mangrove forests; (ii) humid forest zone; (iii) a sub-humid forest zone; and (iv) savannah zone in the remainder in the country. Forestry is a major economic activity in Nigeria, employing about 75,000 workers, although about 2 million people are actively employed in the informal wood-based sector and agro-forestry. The potential for agro-forestry development especially for household food security for farmers has become increasingly recognized in the last few years. The introduction and sustainable management of trees and woodlots in farming systems has become essential for improving on a long-term basis soil fertility and soil conservation as a vehicle to diversify farming incomes throughout the year in Nigeria. However, several constraints impede the integrated management of landscape and land resources through improved agro-forestry. These include the need for the production and reliable supply of agro-forestry seedlings. Farmer-extension-researcher linkages for successful uptake of agro-forestry technology is another area that needs to be strengthened. 3.2 The Irrigation Sub-sector 3.2.1 Nigeria is considered to be abundantly blessed with both surface and ground water resources. By conservative estimate, only about 10 percent or less of the potential irrigable lowlands is so far under irrigation. Nigeria has a total of 3.14 million hectares of irrigable land, which consists of 2.04 hectares for farmer owned and managed schemes based on conjunctive use of surface water and shallow ‘fadama’ aquifers and 1.1 million hectares for formal public irrigation projects. Approximately 70 percent of the potential area for irrigation development is in the north, with 20 percent in the south and 10 percent in the middle belt. Thus, irrigation activities have concentrated mainly in the far north. Elsewhere, there has been little or no tradition of irrigation or water management. Irrigation has been used in Nigeria for the production of a variety of crops, namely, sugarcane, wheat, rice, maize and high value vegetables. The main vegetable crops grown under irrigation include tomatoes, onions, peppers, garlic, eggplant, cucumber, carrot, lettuce, cabbages, okra and pumpkins.

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3.2.2 Historically, Nigeria had been depending on rain-fed cultivation and irrigation activities were restricted to the ‘fadama’ areas, using the traditional ‘shaduff’ system. The Sahelian drought in the mid 1970 made the Government to view irrigation as a technical answer to increased food production. Consequently, following the oil boom in the 1970s Government launched several large-scale irrigation schemes were constructed using impounded water from large dams in the 1970s and early 80s. The River Basins Authorities developed large dams and capital intensive water-conveying systems. About 160 dams were constructed in the country, with an estimated total reservoir capacity of 11 billion cubic metres to irrigate about 725,000 hectares. Most of these schemes are no longer operational due to high operating costs, poor maintenance and lack of ownership by the intended beneficiaries. The main constraints with the large scale schemes is the mismatch of technologies with the knowledge and capacity of farmers to manage them, poor operational and maintenance care, poor financial returns to participating farmers and huge dependency of public support and subsequent lack of sustainability. The actual irrigated area under these schemes declined from 45,000 hectares during 1990/91 to only 26,000 hectares during 1999/2000. Reliable figures beyond 2000 are not available. 3.2.3 These constraints with large scale schemes coincides with accruing evidence of success with small-scale irrigation interventions, which is now gaining popularity in the country. This recognition led to the focus of the Fadama I project on small-scale irrigation, under which, an estimated 55,000 hectares of ‘fadama’ lands was put under production by private smallholder farmers using low-cost motorised pumps. While small-scale irrigation technologies such as tube-wells/wash bores and various pumping schemes using surface and ground water are now available in the country, their large dissemination to achieve meaningful impacts is still a major challenge. Another key focus of irrigation is the introduction of supplementary irrigation in the dry seasons to minimize the risks of crop failure resulting from droughts and the potential for introduction dry season crops to diversify increase farm incomes. The potential for small scale irrigation development remains huge, but is largely unexploited despite new efforts made by the Government with the NPFS and donors with the Fadama II project. 4 THE PROJECT 4.1 Project Concept and Rationale 4.1.1 The Government principal strategy is to promote agricultural development programmes that aim at increasing food production in order to improve food self-sufficiency, while generating through processing and marketing of surplus to improve the standard of living of the population. The National Programme for Food Security was initiated to respond to the Government of Nigeria decision to address the issues of high rate of malnutrition and reduction of poverty in the country. Therefore, alleviating poverty and ensuring sustainable food security are overarching objectives of the FGN. The Government’s decision to further expand the NPFS is based on a recognition of the need to scale up the interventions implemented in the pilot phase to the entire country, so as to achieve the Millennium Development Goals (MDGs) as outlined in the NEEDS and SEEDS framework. The NPFS adopts an integrated approach that covers several high potential production activities in the agriculture sector, including training and capacity building, improvement of rural access roads and markets for inputs and outputs, enhancement of crop production and diversification into livestock, fisheries and agro-forestry management among others. These groups of activities are developed as intervention packages or modules with the

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participation of the beneficiary communities at consultative meetings, and are designed to respond to the community needs and production opportunities in the areas targeted by the NPFS. 4.1.2 The National Programme for Food Security, which costs about USD 360 million, has an objective to increase agricultural production and productivity in areas where Nigeria has a comparative advantage in order to: i) meet the bulk of its food needs through local production and ii) generate surplus for the market. The NPFS activities are also targeted to promote import substitution and to secure food supplies by a combination of domestic production and import financed with income generated from other sources to ensure the country food self-sufficiency and self-sufficiency as well as its reserves for emergency disaster relief and calamities (Cf. paragraph 1.4). Against this background the expansion phase of NPFS will continue to foster the sustained development of smallholder agriculture and income generation in rural areas. 4.1.3 The technical review of the NPFS programme in 2005 confirmed the relevance of the programme as a poverty reduction strategy, which in its pilot phase resulted in a rapid improvement in food production, food security at the household and community levels and rural poverty alleviation, particularly among communities at the 109 sites and recommended its nationwide expansion. Programme expansion is also recommended due to the success of the pilot phase of the NPFS, and in particular the high level of participation and enthusiasm of project participating states and beneficiaries to continue and build on the success of the project. 4.1.4 The expansion phase of the NPFS is designed in a more integrated manner, to allow for the development of synergies between the various interventions components and to decentralize project implementation to attract greater project ownership at State and Local Government as well as beneficiary levels. Government commitment is reflected by the level of resources (USD 45.2 million) already spent during the first phase of the SPFS, a nationwide benchmarking exercise that ranks states on the basis of their financial performance and project implementation record, as well as funding a comprehensive study implemented by the FAO, which forms the basis of the design of the SPFS programme. In line with this framework, the design of this project is highly participatory and community-driven, pulling on experiences of the pilot phase of the NPFS to support communities to identify critical areas of intervention, thereby creating local level participation for ownership to enhance project sustainability. All the proposed project interventions such as land and water development, production enhancement and diversification and community-driven development activities will be owned and managed by communities and beneficiary groups. The project will ensure formation or strengthening of community based organizations, and especially will facilitate the creation and training for women groups and Apex organizations. The project design further takes into account the need for substantive efforts to enhance extension and outreach to increase the number of beneficiaries in a cost effective manner, so as to take advantage of complementarities between this project and the existing Bank-financed projects in the three states. 4.1.5 A study of options revealed that costly investments in public sector large-scale irrigation have resulted in disappointing results. Large-scale public irrigation schemes have been poorly managed and are not suitable to management by smallholders. The recent review of the NSPFS showed that the small engine pump system (direct pumping or with tube well/wash bore) was highly successful and technologically suitable based on its simplicity (user operation and management), relatively low costs (initial investment and operational) with quick results.

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4.2 Project Area and Beneficiaries 4.2.1 Project Area: Bank support to the expansion phase of the NPFS is provided to Ekiti, Ondo and Cross River States. These states were ranked high on the basis of a benchmarking exercise undertaken by the Nigerian Government and Donors, in which states eight (8) were prioritized for development interventions based on good performance in policy, budgetary and fiscal management, service delivery, and communication and transparency. Other considerations relate to the extreme poverty status of Ekiti, the participation of Ondo State in the Bank-funded NERICA Rice Project, the presence of a Sea Port Development Project in Ondo State, and the proposed Nigeria-Cameroun Road Project in Cross River State. Within each state, the criteria for selecting the project sites include: agricultural potential of the area and involvement of the communities in agriculture and related activities and willingness to participate and mobilize counterpart contribution. The selection criteria for Participating States, Participating Local Governments and Participating Communities have been discussed and agreed upon during the Abuekota workshop of May 2006. 4.2.2 Ekiti State covers an area of about 7,000 square kilometres and has population of about 1.9 million. The state has distinct wet and dry seasons, which characterize its humid tropical climate, with the dry season extending from November to March. Annual rainfall varies from about 500 mm in the northern belt to 1,100 mm in the forest belt. Ondo State has an area of 15,317 square kilometres, comprises 18 Local Government Areas (LGAs) and has a total population of about 3.2 million. The state is characterised by an undulating landscape with several elevations, and has two distinct seasons (the rainy and the dry seasons) similar to that of Ekiti. The state has relatively high rainfall that varies between 1,524 and 2,540 mm per annum. Cross River State covers an area of 98,000 square kilometres and has a population of about 2.7 million. The agro-ecology is characterised by coastal plain and rainforest in the South and moist savannah and highland in the North. The state has a humid tropical climate that is characterized by wet and dry, with wet season occurring between February/March) to October/November. The rainfall is a highly variable rainfall and ranges from about 3,000 mm per annum in the forest and coastal zone to less than 170 mm per annum in the Northern zone. 4.2.3 The target communities in each of the three states are not accessible by all weather roads. These feeder roads are seriously affected by erosion, thus requiring spot improvement or rehabilitation and State attention. Linkages between research, extension and farmers are generally weak, with a consequent lack of access to market information and agricultural innovations and technology. Research and extension linkages need to be revitalized and a reliable system put in place to ensure farmers’ access to markets, market information and innovative agricultural technology. Operational skills of extension staff need to be improved on participatory approaches, and farmer group formation needs to be undertaken and existing groups strengthened as entry points for extension to pass on information and innovative approaches especially to women. 4.2.4 Beneficiaries: The direct beneficiaries of the Bank supported project in the three states would be 11,550 households, which represent 80,850 of rural people at an average of seven (7) people per household, about 60 percent of which are women. The direct beneficiaries of the crop production activities will include 8,700 farming families or 60,900 poor rural people relying solely on agriculture. This will include 1,200 households benefiting from irrigation interventions (8,400 rural people) and 7,500 farming families or 52,500 people benefiting directly from rainfed

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crop production. The direct beneficiaries of the diversification activities will include 2,850 rural families or 19,850 rural people, benefiting directly from fisheries, agro-forestry and livestock production activities, including poultry. Women who constitute about 60 per cent of the farming communities in subsistence agriculture and about 70 per cent of the farm labour force are the prime beneficiaries of the project. About 54 per cent of the population in the project area is reported to be close or under the poverty line, and about 36.50 per cent of the population is considered illiterate. Poverty in the 3 States is concentrated in rural areas, where about 60 per cent of the population lives below the poverty line (42.15 per cent in Ekiti and in Ondo States, and 41.60 per cent in Cross River State). Adult male literacy rates stands at 55.77 per cent in Ondo State, 64.54 per cent in Ekiti State, and 70.22 per cent in Cross River. Only 47 per cent of females in Ondo and Ekiti States and 45 per cent in Cross River can read. Gender disparities show a higher proportion of net enrolment in primary and secondary education for females than for male. 50.49% males in Cross River reported use of protection from AIDS and Sexual transmitted diseases as compared to 49.51% females, while 50.10% females and 49.90% males reported use of protection in Ondo. In spite of the high primary and secondary education enrolment for females, there is a higher HIV prevalence among females who make up 55% of adults living with HIV/AIDS. The rural-urban poverty gap is mirrored by similar gaps in terms of access to basic social services and amenities, which are concentrated in a few cities. 67.84 percent of the population in Ekiti, 42.54 per cent in Ondo, and only 23 per cent in Cross River has access to safe water. About 70 per cent of the population in the project area has no safe sanitation and unauthorized waste disposal. 4.2.5 Agriculture is a dominant economic activity and main source of employment in the 3 States (accounting for 80 per cent of household income) with average farm sizes of between 1.2 and 2.0 hectares. The farming system comprises yam and cassava based cropping systems, intercropped with maize, melon, cocoyam and vegetables, as well as tree crops such as cocoa and palm oil. Intercropping system is also widely practiced in the 3 States. Although, the 3 states have a good potential for agricultural production, the food production in the project area is still below expectation due to the low productivity of major crops, like, cassava, yams, maize, cocoyam, melon, sweet potatoes, plantains, cowpeas, groundnuts, maize, rice and vegetables (Cf. paragraph 3.1.3). Farmers also practice livestock (small ruminant rearing and poultry keeping) and fishing activities to improve the household food security and to supplement their incomes. The average household size in the 3 States is about 7 persons. Agricultural production is dominated by small scale farming families, with over 270,000 farm families in Ekiti State, 350,000 in Ondo State, 292,000 in Cross River State. An average annual household income is estimated at about N 48,000 in Ekiti and Ondo States and N 72,000 in Cross River State. 4.3 Strategic Context 4.3.1 Nigeria’s New Agricultural Policy (NAP) and the Rural Development Policy are mutually reinforcing and both provide the necessary framework for implementing the expansion phase of the NPFS and thus the SNPFS project. The NAP emphasises the enhancement of growth and development of all aspects of agriculture in a sustainable manner. The Rural Development Policy (RDP) is drawn on the National Economic Empowerment and Development Strategy (NEEDS) and its sister strategy for state level, the State Economic Empowerment and Development Strategy (SEEDS) which are driving policy and programming in Nigeria toward achievement of the Millennium Development Goals by 2015. The RDP is particularly geared toward stimulating increased investment in rural areas entirely dependent on agricultural

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production. This is also very consistent with the Bank’s Country Strategy Paper 2005-2009 for Nigeria, which defines the Bank Group’s medium-term intervention priorities for the country. 4.3.2 The NPFS is strongly linked to the New Partnership for Africa’s Development (NEPAD), as Nigeria counts among the core group of African countries, which defined the NEPAD framework, in the aftermath of the UN Millennium Declaration. Under the NEPAD initiative, African Heads Governments set an ambitious target of 7 percent annual growth rate in GDP over the next 20 years to eradicate poverty, achieve food security and build the foundations for achieving the Millennium Goals (MDGs). This is to be realized through NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP), focused on investment in three of its critical pillars2 that can make the earliest difference to Africa’s food crisis. The NPFS framework and the design of this project thus seek to specifically contribute to Water Control, Rural Infrastructure and Market Access (Pillars 1 and 2), and sustainable development of Fisheries, Livestock and Forestry (Pillar 5). Therefore the integrated approach of Nigeria’s expansion phase of the NPFS is strongly based on the critical need to streamline interventions within the NEPAD framework so as to enhance coordination and improve development effectiveness. The implementation of the NPFS programme, to which this project is contributing, is particularly important for the achievement of critical Millennium Development Goals (MDGs) in Nigeria, particularly the goals of eradicating extreme poverty and hunger. 4.4 Sector Goal and Objective 4.4.1 In line with the NPFS programme, the sector goal of the ‘NPFS Support Project’ is to improve national and household food security and reduce rural poverty on a sustainable basis. 4.4.2 The objective is to increase agricultural output and the incomes of rural households and beneficiary communities. 4.5 Project Description 4.5.1 The proposed Bank intervention is a support to the NPFS in three States with high agricultural and food production potential (paragraph 4.1.2). The project consists of the following four components: A) Community Development, B) Land and Water Development, C) Production Enhancement and Diversification, and D) Project Management. The project will finance the development of 18 new sites out of the 218 sites targeted by the NPFS Programme, and provide additional support to the 9 existing ones in the three states. 4.5.2 The project consists of the following four components: A) Community Development, B) Land and Water Development, C) Production Enhancement and Diversification, and D) Project Management. The project will finance the development of 18 new sites out of the 218 sites targeted by the NPFS Programme, and provide additional support to the 9 existing ones in the three states. Activities at the sites will also promote opportunities created by the NFSP during the

2 NEPAD’s CAADP is conceptualized around five constituent pillars. These pillars include: 1) Expansion of the area under sustainable land management and reliable water control systems; 2) Improvement of rural infrastructure and trade-related capacities for improved market access; 3) Enhancement of food supply and reduction of hunger; 4) Development of agricultural research, technology dissemination and adoption for sustained productivity; 5) Sustainable development of livestock, fisheries and forest resources.

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pilot phase to increase the participation of women, and to enhance their leading role in key agricultural activities particularly agro-processing, food production and income diversification opportunities that to improve food security. A) COMMUNITY DEVELOPMENT AND INSTITUTIONAL SUPPORT 4.5.3 The Component will build capacity at the Farmer Level, at the LGA Level, PCU Level and at the State Level. It will introduce agricultural market information support systems that will link farmers to input dealers and output markets. 4.5.4 Group Formation and Training. There are already 225 groups of farmers formed during pilot NPFS phase in the three states. The project will support the formation of 450 new groups in the three states. The project will utilize the services of competent, locally active NGOs selected on a competitive basis to carry out community sensitization and group formation. The activities will include: identification and sensitization of existing groups, mobilization and formation of new groups and sensitizing them on how to access and utilize project services and production opportunities. The groups will be formed on the basis of common production activities (rainfed crops producers, irrigation groups, livestock, fisheries, poultry groups, agro-forestry, agro-processing, etc.). Each group will consist of about 45 farmers, including at least 40 percent women. The 25 groups at each site will form an Apex Group that will comprise of the executives of the individual groups. At least 50 percent of the members of the Apex Group will be women. The Apex Group will represent the farmer groups on issues related to the financing of inputs, provision of land preparation services, marketing and financial services (credit, savings, etc). 4.5.5 The project will finance a total of 125 training sessions in the following areas: group coherence, participation and team spirit; application of extension information on input use and output marketing; group-based management (including cost recovery) of common resources such water points, boreholes, such as micro earth dams, farm machinery; basic farm budgeting and book keeping; agro-processing techniques; access to, and management of credit, savings mobilization and off-farm income activities; group investment and maintenance of group coherence; actions for strengthening group performance. About 30 special training sessions will be organized for group leaders in each state to serve as focal points for further tutoring of group members and action plans will be developed for strengthening weaker groups. 4.5.6 Community Driven Development Planning. The project will establish 9 Community Driven Development Teams (CDDTs), three (3) per state. The CDDTs will comprise of certificate holders and will be gender balanced to ensure that project related needs expressed by women will be taken into consideration. The team formation will be facilitated by staff members of concerned departments such as crops, rural development, livestock, primary health, natural resources, education, community development and works of the Local Governments. The communities will be trained on community driven development approaches, such as Participatory Rural Appraisals, in order to assist them in preparing and implementing their Community Development Plans. 4.5.7 Federal, State and LGA Level Capacity Building. Three training of trainers (TOT) courses in various aspects of project implementation and project cycle management for the subject matter specialists at PCU will be carried out. The operational capacity of PCU will also be further strengthened with eight (8) units of each of the following: desktop computers, printers,

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laptop computers, photocopiers and fax machines. These implements will be used by subject matter specialists involved in project implementation. 4.5.8 The project will support 45 refresher courses for existing extension staff in concepts, features and processes of community-based participatory extension; management of group dynamics, innovations and communication skills and farmer training techniques for rapid technology adoption and expansion of production activities. Workshops will also be financed to facilitate dialogue and exchange of experiences between the 3 project states and sites, and to enhance interaction among Apex Groups within the state, and between Apex Groups in different states. Five courses will be administered in the first project years, and 20 each in the second and third years of project implementation. Also 8 training sessions will be conducted in management focusing on women groups involved in crops, livestock, fisheries and off-farm in come activities. The project will strengthen the operational capacity of the ADP with 8 desktop computers, 2 laptop computers, 4 printers, 2 photocopiers and six fax machines for each state. 4.5.9 The project will also avail a total of 54 motorcycles and four 4WD pick-ups to support project implementation activities, one for each state and one for PCU. One 4WD pick-up will be provided for each of the 18 new sites financed by counterpart funds. Also, some office renovation and improvement (including toilets) will be financed. The LGA will also be supported with 2 desktop computers for each of the 9 sites, and 2 laptop computers per state for use by extension workers and data collectors. 4.5.10 Market Information Systems. One market information data collection and dissemination system will be strengthened in each state to facilitate linkages between farmers on the one hand and agro-input dealers, credit institutions and output buyers on the other. The Data Collection Unit of the ADP will be supported to collect, analyse and disseminate the requisite data to farmers and all NPFS sites in formats that will be understandable through collaboration with the trained extension staff. The Unit will also explore and establish linkages between NPFS producers and institutional procurements (hospitals, prisons, and hotels) as well as linkage to marketing boards. The project will also finance State TV and Radio Market Information Broadcast to ensure full coverage of all farmers and communities within the state. 4.5.11 Health and Nutrition Support. The project will finance the development of 15 school gardens, training for 4 State Health Facilitators per state, and conduct 12 home garden management courses (targeting women groups), as well as other demand driven courses that will be identified during project implementation. Also the project will provide support in the area of HIV/AIDS awareness campaign especially among male and female farmer groups, locally adaptable malaria control programme at the NPFS sites and home gardening for women groups in specific groups and communities based on expressed needs. B) LAND AND WATER DEVELOPMENT 4.5.12 The objective of this component is to increase agricultural productivity through availing irrigation water and introducing low-cost water harvesting technologies to the farmer groups. The project will further support farmers to undertake soil fertility improvement activities, and will rehabilitate rural access roads.

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4.5.13 Water Use and Control. The project will provide funds for the development of 600 hectares of irrigation in the three states. This will entail the dissemination of 540 small water pumps with appropriate equipment for irrigated maize, rice and vegetable production. In each state, 200 hectares of irrigated crops will comprise about 60 hectares of maize, 60 hectares of rice, 20 hectares of tomatoes, 20 hectares of pepper, 20 hectares of okra, 10 hectares of cowpea and 10 hectares of traditional vegetables. The proposed micro-irrigation schemes include: i) direct pumping of water from open water sources (300 pumps of 3.5 each for 1 hectare irrigation); ii) 2.5 hectares small scheme pumping consisting of diversion structure, small canals and riser pipes (40 pumps of 5 hp each); iii) wash bore pumping (100 pumps of 3.5 hp each), and iv) tube well pumping (100 pumps of 3.5 hp each). The location the irrigated plots and the water sources for the surface pumping will be determined by the ADP in close collaboration with the respective community. The project will provide 4 ground water monitoring equipments per each project site. Training will be organized by ADP Subject Matter Specialists and Site Facilitators so as to acquaint farmers with operation and maintenance before handing over. 4.5.14 The project will support requisite design studies for implementation, land preparation activities, provision of inputs such as improved seeds and fertilizers on a seasonal and cost recovery basis, while the farmer groups will contribute labour for regular farming activities. The farmer groups will also receive support from the State Extension Agents in their Local Government Areas (LGA) and technical support from the Site Facilitators in linking them to input dealers and agro-shops, agro-processing facilities and marketing. 4.5.15 In addition, the project will cater for the construction and rehabilitation of small water management structures, such as micro earth-dams, erosion control hedges and dykes. A total number of 15 micro earth dams will be constructed and 16 dams already identified by the communities and the ADP will be rehabilitated. The micro earth-dams’ storage capacity will allow for the irrigation of additional 63 hectares of vegetable, comprising pepper, tomatoes and leafy vegetables. The project will finance required appropriate hydrological studies, engineering designs and supervision work for the construction and rehabilitation of the micro earth dams. The location of the new micro dams and necessary design of the civil works entailed will be obtained from the State Department for Community Development (SDCD), in collaboration with the ADP and the concerned community. 4.5.16 In the three states, the project will also support the construction of 90 kilometres of erosion control structures (contour bunds, erosion control hedges, stone and/or vegetated ridges) on slopes and farmlands threatened by erosion. These activities will be implemented on sites selected by communities and validated by surveys. These structures will improve crop water availability and increase yields of farmland in rainfed areas. The structures will be built through community labour provided by the farmer groups, organized by the Apex Committee for each site and monitored by the Site Facilitators. The project will provide simple hand implements and finance capacity building and training sessions required for the work. The structures will be owned, operated and maintained by Apex Organizations of the 25 farmer groups in each site. 4.5.17 Rural Access Roads. The project will finance spot improvement of 270 km (90 km per state) of strategic feeder roads serving 42 rural markets outlets such as the collection centres and the medium markets in the project states. The prioritized road stretches will be determined by the communities, assisted by the LGCs and the ADPs. The detailed design of the access road improvement will be undertaken by a consultancy study, based on standard design provided by

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the State Department of Feeder Roads (SDFR). The works will be carried out by local contractors under close supervision of the SDFR and LGA Authorities of the project states. Routine road maintenance will thereafter be undertaken regularly through community labour until the end of the project when the Feeder Roads Department of the State Government will take over the roads in the respective States. The project will provide the requisite maintenance support, including community training in road maintenance and availing hand tools, which will be handed over to the State Feeder Roads Department. 4.5.18 Soil Fertility Improvement. Farmers will be supported to undertake sustainable soil fertility enhancing technologies and promote sustainable land use for soil fertility improvement. This will entail the establishment of a one hectare demonstration farms on conservation agriculture at each site, giving a total of 18 demonstrations farms in the three states. The demonstration farms will be owned by communities and operated by the Apex Organization of the farmer groups in each sites, with assistance of the site facilitators and extension agents. The demonstration farms will demonstrate soil fertility improvement methods such as compost making, organic farming, on-farm soil conservation measures to improve acidic soils and reduce soil salinity and the integration of nitrogen fixing leguminous crops such as cowpea, soybean and groundnuts in existing cropping systems. The dissemination of the soil fertility improvement techniques to individual farms will be done through the farmer groups and activities of group. 4.5.19 The project will equip the three States/ADPs with soil survey equipment, GIS and soil laboratory equipment and chemicals, and will support a light renovation of the soil laboratory in Ekiti State. The project will also finance detailed surveys in the 18 new sites and socio-economic study, data collection on conservation agriculture, reviews of land use policies and environmental and health impact studies at all project sites. Two (2) tractors will be purchased for each new site for land preparation. The tractors will be maintained by the ADP and operated by the Apex Organization of the 25 groups of farmers at each site. The tractors will be hired out to farmers at affordable fees that will be used for fuelling and maintenance. 4.5.20 Training will be organized for ADP staff in laboratory techniques by offering 6 courses in each of the following areas: compost making, methods of fertilizer analysis, soil survey technology, land management, GIS data generation and management, water facilitator training, extension staff training, agro-input dealers, training of Farmer Field Days (FFD) staff on data input and processing, MIS training for FFD staff. Using the demonstration farms, 3 field demonstrations will be conducted in each of the 9 sites within each state (6 new and 3 old) on soil fertility improvement techniques. This will give a total of 81 demonstrations. 4.5.21 Offsite Land and Water Development Activities. This sub-component seeks to create an investment environment that is conducive for farmers to adopt on-site-promoted production technologies and management practices to ensure longer-term sustainability of the NPFS support project. The project will finance the adoption of improved irrigation technologies, which will include demonstration of the four types of pump schemes in 2 additional Local Government Areas (LGAs) in each project states, i.e. 6 additional pump demonstration sites in the three project states in the third project year, particularly in low land areas identified by the communities especially in lowland areas. One borehole and 1 tube well will be drilled for each pump type in each outreach LGA to facilitate the demonstration. The demonstration sites will be administered by the ADP and will be managed by the site facilitators in cooperation with the extension agents of the respective LGA.

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C) PRODUCTION ENHANCEMENT AND DIVERSIFICATION 4.5.22 This component will avail production diversification opportunities in the areas of livestock, aquaculture and inland fisheries development, increase productivity in rain-fed crop production, as well as support agricultural growth-enhancing such as agro-processing facilities and revitalize extension services and linkages to input supply and output markets. 4.5.23 Crop Intensification. The project will support the adoption of soil fertility improvement and productivity enhancing techniques for crop intensification in the rainfed sub-sector. As detailed in the farm models, it will support different rotation combinations of yams, sweet potatoes, cocoyam, maize and cassava in yam/cassava based systems, maize/cassava based systems, maize/cocoyam based systems, and maize and cassava as sole crop. At each of the 18 new sites, the project will finance crop intensification activities on 550 hectares of existing farm lands, comprising 80 hectares of yam/cassava based system, 65 hectares of maize/cassava based system, 110 hectares of maize/cocoyam systems, 80 hectares of maize single crop and 220 of cassava single crops, rotated with legumes and other conventional crops, giving rise to 5,000 hectares of rainfed crop intensification activities per state. 4.5.24 The activities will include improved agronomic practices encompassing integrated pest management, provision of farm inputs (fertilizers, farm manure, pesticides and herbicides) and the promotion of community based seed production and appropriate farm power to improve labour efficiency. Farmers will receive inputs (seeds, fertilizers, pesticides and herbicides) on a credit basis at the Apex Group level. The funds will be administered by the Apex Group representing all the farmer groups belonging to the site. The Apex Group will procure the inputs and avail it the farmer groups and each group will further avail the inputs, pesticides and integrated pest management services to its members as credit. The group’s executive will ensure credit recovery after harvest, and will collect the proceeds for the entire group and pass it on to the Apex Group. The access of women groups will be ensured by making sure that they are represented in the apex organization. Each group will guarantee repayment of its members while each apex group ensures that its individual groups repays. The apex will then deposits the collected funds into the account. 4.5.25 The project will establish 6 community nurseries (2 per each state) for on-site production of high quality seeds and seedlings of staples, legumes and vegetables. The community nurseries will operate on a cost recovery basis, and will be capacitated to supply certified seeds/seedlings and planting materials of high yielding and disease-resistant crop varieties adapted to the relevant agro-ecological zones. The specific communities to host the nurseries will be identified after group formation and after the groups have created their Apex Organizations during implementation. The Apex Organization select a ‘nurseries management group’ of 12 farmers (6 of them women) from farmer groups at the sites with the nurseries, who will be in charge of the nurseries. This group will coordinate the use community labour on the nurseries and assist the groups, coordinate the harvest and sales of the seedlings together with the executive committee of the Apex Organization for the groups. Two (2) community-based seed farms will be developed for open pollinated varieties. High potential community-based seed producers will be encouraged to operate of a private and commercially oriented basis, and will be accorded with relevant training.

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4.5.26 The communities will be supported with 81 seed processing equipment (27 per state). Among these will be maize sheller, multi-crop thresher, portable seed cleaner, sealing machine, platform balance and rice reaper. Also, IPM kits for disease/pest monitoring as well as extension field kits will be purchased. The enhancement of crop intensification will further require the purchase 900 small hand tools procured in the first three years of implementation for clearing, manual harrowing, sowing, weeding and other yield enhancing farm operations. 4.5.27 The project will finance 27 training courses per state in each of the following crop intensification areas: integrated seed technology; seed production, processing and storage; seed certification and quality control; seed enterprise development; indigenous leafy vegetable production; integrated pest management (IPM) practices; participatory technology development; and site development training. This will comprise a total of 81 training courses for each of the above key areas for each of the three states. Also finance surveys and studies, including environmental impact assessments (EIA) will be financed. 4.5.28 Agro-Processing and Storage. Through the Apex Organization, the project will provide the communities with community agro-processing equipment to demonstrate processing of specific crops (maize, yams, cassava, vegetables) for value addition and storage. Each site will be provided with 1 agro-processing equipment and 1 metallic silo, giving to 27 equipments for all the three states. At each site, the equipments will be housed in an appropriate location such as a co-operative building or village processing centre. A storage facility will be constructed at each site to serve the group of farmers operating at the site. For each state, the project will further finance 3 training of trainer (TOT) courses, 27 courses in agro-processing technology for farmers, 3 training courses for artisans and manufacturers, 3 courses for SME entrepreneurs, 3 courses for extension staff in post harvesting technologies, and 3 in improved grain storage. The training will be completed by workshops and study tours to learn from the experience of other regions, to facilitate sharing of experience. 4.5.29 Rural Market Development. Three types of markets will be constructed, based on the expressed need of the communities, namely: 21 small markets or collection centres located around the main production belts for maize, cassava, yams and vegetables; 12 medium markets (rural markets) in strategic locations the three (3) project states and nine (9) livestock markets to facilitate immediate access to marketing facilities for fresh products. All markets will be light open structures of shed type, equipped with potable water points and latrines to ensure public hygiene. The markets will be managed by the communities with the support of the Local Governments Councils (LGCs). 4.5.30 Livestock Production. The project will establish 55 hectares of fodder banks by site for pastoralists, so as to minimise conflicts between crop producers and livestock owners. The fodder banks will be supported with the following: 125 troughs and dissemination of hay making technologies. Support will also be provided for leguminous seed production in livestock production communities, as well as one feed mill at each livestock production site. A total of 25 improved structures for small ruminant feeding will also be purchased in the 3 states. All these structures will be managed by the livestock producer groups with support of the site facilitator, trained extension workers Community Animal health Workers (CAHW). 4.5.31 Fifteen (15) veterinary field kits will be provided for Community Animal Health Workers (CAHW), and the following units of livestock production modules will be developed in the three

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states: 112 units of poultry (layers) comprising 250 birds per unit; 125 units of poultry (broilers) comprising 250 birds per unit; 108 units of small ruminants (sheep/goats) comprising 14 animals per unit; 83 rabbit production units comprising 5 animals per unit; and 114 pig fattening units comprising 24 animals per unit. The project will also finance baseline surveys and studies to generate information for the improvement of the modules. The project will further strengthen animal health services delivery of the para-vets and where this is not available train CAHWs to deliver the services. The Livestock Section of the Projects Coordinating Unit (PCU) will be strengthened with field epidemiological surveys and diagnosis equipments, and computers to facilitate data analysis and improve the service delivery capacity of the CAHW. 4.5.32 Aquaculture Development. The project will support the establishment of two units of commercial fish fingerling producers (tilapia and catfish) in each state, who will be encouraged to utilize technologies adopted from the Chinese South-South Cooperation. These producers will be linked to smallholder aquaculture farmers to supply them with fish fingerlings and other inputs. The project will finance the development of 12 fish production schemes (4 in each state). This will comprise 4 units of aquaculture, 4 units of rice-cum-fish farms of 0.5 hectares each, and 4 units of poultry-fish production belonging to the communities. The units will be equipped with appropriate water quality kits and improved fish smoking equipments, fish seines, dip nets and sampling nets. The fish smoking and marketing will be done 90 percent by women, as is already evident on the ground. To enhance sustainability, the project will finance the following training modules for the fish farmers in each state, one session per two sites: 3 sessions of farmer training in the management of fisherfolk organization; 3 sessions of aquaculture training in Integrated Irrigated Aquaculture (IIA), 3 fish farm cluster training; 3 sessions for community management, training and demonstrations. In addition, the project will finance Training of Trainers (TOT) in integrated aquaculture, business plans, record keeping, feeds and disease control, Zonal Training for 2 LG Staff per state in water chemistry, and conduct Farmer Field Schools (FFS) for fish producers and workshops and seminars. 4.5.33 Agro-Forestry Development. The project will establish 27 units of community agro-forestry nurseries (9 per state), producing seedlings of various species of mangoes, cashew, guava and other tree crops and legumes. The 9 sites will have a capacity of producing a total 20,000 seedlings per year, enough to serve each site for the development of 5 hectares of agro-forestry crops per year over 5 years, inter-planted with maize/cassava and integrated with snail production. This gives rise to 135 hectares of agro-forestry farms (45 hectares per state) developed over 5 years. The project will finance baseline studies on sustainable ago-forestry management, finance one TOT course for each of the 6 new sites in the following areas: inputs for agro-forestry income generation, community nursery, snail production, bee keeping, grass-cutter rearing. The TOTs will then pass on the acquired knowledge on the farmers in one training sessions per site. The training will include field visits and demonstrations. 4.5.34 Research-Extension-Farmer-Input-Linkages (REFIL). Eighteen (18) REFIL refresher courses (6 per state) will be financed for the existing extension staff to strengthen their capacity on new innovations in each of the following areas: complementary training on concepts, features and processes of community-based participatory extension; group dynamics, communication skills, extension and farmer training techniques and in the conduction of Farmer Field Schools (FFS) to strengthen linkages between groups and among farmers, and to provide learning opportunities for rapid technology adoption to increase the uptake of the NPFS innovations. The objective of REFIL is to create awareness about the technologies introduced at all NPFS sites

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and to promote technology dissemination. REFIL activities will further include annual zonal workshops, site and study exchange visits and support to MTR Meetings. The project will finance 3 motorcycles per site to ensure the mobility of the trained extension agents and facilitate effective coverage of all NPFS groups in the project states, and information outreach to other LGAs. The extension workers will also be provided with demonstration hand tools and field allowance as additional work incentives. D) PROJECT MANAGEMENT 4.5.35 The Bank support to the NPFS will not create a separate implementation unit but instead will make use of the existing Projects’ Coordination Unit (PCU) of the Federal Ministry of Agriculture and Rural Development (FMARD), which is in charge of agricultural projects in general and hence the coordination of the expanded phase of the NPFS in particular. A Project Team, including the National Project Coordinator (NPC) and his Deputy (Deputy NPC), and four (4) National Supervisors to supervise and coordinate at Federal level the activities of the three technical components implemented at state level, as well as the overall M&E activities, will be designated and supported by the FGN. In addition, to ensure expeditious and efficient project implementation, the FAO is providing the following technical assistants for the entire project period: Chief Technical Advisor (CTA), Chief of the Management Support Unit (Chief MSU, equivalent to Financial Controller) and an International Resident Auditor. In addition, FAO is providing several support officers and clerks to the above mentioned units. The PCU is already equipped with 9 vehicles and 12 laptops at headquarter, and 11 vehicles and 11 desktop computers at Regional Offices for the entire NPFS. 4.5.36 At the State level, the project will be implemented through the existing ADP system. In all the states each ADP has adequate office facilities and enough staff comprising a Manager, an Accountant, a Procurement Officer, a Gender Specialist, a Monitoring and Evaluation Officer, Agronomists, Field Coordinators, Facilitators, Site Managers, Data Processing clerks, Extension Agents, Field Enumerators and support staff. All ADP staff report to the Project Manager and are all on Government salary. The SNPFS will therefore only give field allowances to PCU and ADP staff specifically involved in the implementation of the Bank financed project. 4.6 Production, Market and Prices 4.6.1 The project has production components that will produce crops from rainfed and irrigated agriculture, livestock, fisheries and agro-forestry. As a results of the project intervention, it is estimated that the annual incremental crop production by the end of fifth year will be: 5,830 MT of maize; 446 MT of rice; 83,250 MT of cassava; 34,650 MT of yams; 8,250 MT of sweet potatoes; 24,300 MT of cocoyam; 178 MT of tomatoes; 167 MT of pepper; 170 Mt of okra; 38 MT of cowpeas; and 592 MT of leafy vegetables. At the end of fifth project year, it is also estimated that the annual incremental production of diversification production activities will be: 72 MT of fish; 9.4 MT of fruits (oranges and mangoes); 177,000 birds (poultry); 4,500 heads of sheep and goats, 8,200 heads of pigs and 13.5 MT of honey. Given the Nigeria’s current shortfall of domestic production for most crops especially cereals, which currently stands at 2.4 million MT covered only through imports, the project expected supply of cereals and vegetables can be easily absorbed in the country. The expected production levels of livestock and fisheries are far below domestic demand. For fisheries, the project expected incremental fish production of 72

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MT of fish is far below the estimated annual unmet domestic demand of 290 MT, and the production can thus be entirely absorbed by the domestic market. 4.6.2 Price differentials for the major food crops can be observed between states in Nigeria and between rural and urban areas within states. State price differentials range from 10 to 20 percent while price differentials within states range from 5 to 10 percent. A similar analysis exists in respect of price fluctuations over different months. There exist, therefore, trading opportunities between states as well as between rural and urban centres. In addition, there are marketing opportunities through off-season production or storage of produce from peak production periods. The existing markets at village and urban areas are a proof to that effect. Food crops, cassava, yams, maize and cocoyam, are consumed locally, and if in excess sold by women at weekly and fortnightly markets in village and urban centres. Marketing is often organised on group basis with farmers collecting and drying produce before transporting it to the market centres. The major problem in this process, however, is that access and feeder roads required to move out the produce from the farm to the collection points are often not in good conditions. This situation, combined with the lack of marketing information has led to fragmented output markets and, in general, relative low output prices. These also explain the observed price differentials within states. The inadequate level of marketing information, the worsening situation of rural roads and the poor state of some of the collecting, processing and dissemination points are serious setbacks that have slowed down the rate of development of the agricultural sector.

4.6.3 To ensure the creation of a viable marketing system, the project design makes a provision for: (i) strengthening extension skills in marketing and post harvest handling; (ii) availing agro-processing equipments and the requisite training at various levels; (iii) provision of timely commodity price information through state radio and TV; (iv) assessing the market for opportunities for group action and production expansion; (v) construction of small (collection points); medium and large markets and livestock; and (vi) improvement of access roads. 4.7 Environmental Impact 4.7.1 The SNPFS has been categorised as Category II project according to the Bank’s Environmental Guidelines. A detailed Environmental and Social management Plan (ESMP) has been prepared by the Government to identify practical environmental and social impacts of the project and formulate necessary mitigation measures. During implementation, environmental protection measures included in the legislation, as well as the responsibilities of the local, state and federal governments for protection of the environment and natural resource conservation will be observed. Further efforts will be made at implementation to identify other potential environmental problems and conflicts between different natural resource users. As specific interventions will only be determined following community-based needs assessment, communities will be assisted to assess the natural resource management requirements and anticipate likely environmental problems, so that mitigating measures are included in the design interventions. Similarly, involvement of communities in monitoring and evaluating environmental impact of interventions will allow speedy identification of environmental problems and initiation of remedial measures. A summary of the Environmental and Social Management Plan (ESMP) is presented in Annex 6. 4.7.2 Positive impacts: positive environmental impacts will include improved natural resource management protection of natural habitats and institutionalized environmental assessment in the

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design and implementation of the activities of the participating communities. Sustainable agricultural development activities will have a positive environmental impact by assisting rural communities to adopt better land husbandry practices on their farms, and communal grazing and woodland areas. Measures have been included in the project to reduce the risks of land degradation and nutrient depletion through: promotion of diversity in agro-forestry; training farmers in how to reduce use of, and the correct handling of agro-chemicals; and, most importantly, focusing all sustainable agriculture activities on taking a holistic approach to farming systems which takes into account external impacts of the proposed changes. Fishing activities would increase the income for women, when they get organized to obtain training in fishing methods and fish processing techniques, more adapted to their specific needs. Increased availability of fish proteins would improve nutrition. Water Supply activities such as drilling of wells and micro earth-dam construction and rehabilitation are likely to improve water conservation leading to sustainable management of water resources, reduced time allocated to water supply by women and children due to more reliable and closer drinking water sources. 4.7.3 Negative impacts: potential negative potential impacts associated with irrigation activities would include degradation of ground and surface water quality downstream of the irrigation site due to high concentration of nutrients and pesticides; obstruction and clogging of canals by weeds sedimentation increasing standing waters and vector breeding sites, high risk of water logging due to excessive irrigation and poor drainage, which could also cause changes in soil chemical properties (PH, salinity, fertility etc). Negative impacts likely to be generated by crop production activities would include: degradation of surface water quality downstream of crop production sites due to erosion and high concentrations of pesticides and loss of organic matter and nutrients by removal of vegetative cover. From water control structures (ponds and dykes) minimal impacts to expect would include changes in the level of ground water-table resulting from changes in the drainage and water flow, degradation of the reservoir water quality. Other impacts would be the proliferation of aquatic vegetation in canals due to excessive use of chemical fertilizers and pesticides, and exposure to water-bone diseases associated with poor sanitation, increased vector breeding and domestic and occupational behaviour respectively. 4.7.4 Mitigating Measures: during the community participatory planning phase, emphasis will be placed on minimising possible negative impacts from proposed community infrastructure development. The standard designs for infrastructure developed by the Programme, will be checked, and changed where necessary, for potential negative environmental impacts. This activity will be enhanced by technical assistance to infrastructure design and also close consultation with, and involvement of the State Environmental Protection Agencies (SEPA) at the standard design stage. Mitigation measures to be observed by the contractors should include the design of water canals in a way that reduces sedimentation and facilitate drainage and maintenance, the avoidance of clearing vegetation along water bodies, ecologically sensitive or protected areas, good fisheries management must be based on sustainable resource management and this would include information on net mesh size, different methods of harvesting, optional seasons for harvesting and limit to harvest size. 4.7.5 The general mitigating approach in livestock development activities would be the provision of advice on livestock management including the promotion of superior genetic strains that ensure quality over quantity, the restriction of livestock access to unstable areas such as steep slopes; the adaptation of the type and number of animals to the land carrying capacity; the strategic localization of water points and salt licks. Crop production activities would ensure

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cultivation techniques that minimize soil erosion, discourage crop residue burning, promote cropping patterns that use green manure and legumes to build up soil fertility, wise intercropping and take into account integrated pest management. The other specific strategies related to rural road and markets rehabilitation activities are to plan appropriate drainage infrastructures such as culverts and drains in areas sensitive to erosion and wetlands. 4.7.6 Environmental Monitoring: the PCU will be responsible for ensuring that effective monitoring is conducted. For that purpose it will link with other relevant specialized agencies both within and outside of government, with support from experienced professionals, trained and provided with appropriate field and laboratory equipment. A comprehensive monitoring plan will be required to ensure that all sub-projects are in compliance with environmental requirements, and for those sub-projects that have been subjected to an ESA, to ensure that they are in compliance with mitigation/enhancement recommendations. 4.8 Social Impact 4.8.1 The direct project benefits will arise from improved land and water use, higher cropping intensity and productivity from irrigation, improved agronomic practices, enhanced sustainable protection of crops and stored products, improved seeds, and value addition in rural areas through processing, drying and bottling. Incremental animal and fish production and agro-forestry activities, improved income of the operators and increase household food security in conjunction with improved nutritional standards under the household and community garden programme will serve the poorest tiers of the farming society especially women and children. Of the 80,850 beneficiaries, 50 percent are women. In particular, nutritional and social status of women and children will be directly improved by income gains resulting from these diversified production activities. Specifically in terms of income, the production development component will on average increase the annual net income under rain fed conditions from N 48,000 to at least N 90,000 and under irrigated farming to at least N 100,000. It is expected that about 7,500 farm families will benefit from the former and 1,200 farm families from the latter. 4.8.2 A major general benefit of the project would be the establishment of demand-driven extension service in the project states that are anchored on production sites owned and operated by communities, and concomitant support services (agro-processing, markets structures, market information system) that will particularly benefit poor farmers especially women and children. In particular, the use of rudimentary processing techniques, mostly by women and children, leads to reduced quality and value of harvested products, as the capacity to handle increased production volumes is low and hence huge post-harvest losses and loss of revenue and income. The agro-processing facilities, which will particularly target women processors, will reduce labour, crops losses and increase incomes, which will have far reaching social impacts on women and children. The setting up of a real-time market information service will generate valuable market information, which will be disseminated to farmers for enhanced market transparency. This will enable poor rural producers to gain from fairer market prices and increase profit margins to augment farm income. This additional income will increase their capacity to pay for nutritional, health, educational and other social services particularly for their children. 4.8.3 The provision of rural water infrastructure and farm machinery in a demand driven-manner and is linked to the economic activities of the requesting groups and communities will also constitute a general benefit that will particularly release work pressure on poor rural women

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and children and improve their social status. In particular, the improvement of 270 kilometres of feeder and access roads and construction of 42 collection centres and markets will reduce price differentials and increase producer prices. Women will benefit through the increased availability of food and fuel wood through the agro-forestry activities. The rural infrastructure works and the involvement of the community in the establishment of these works will provide off-farm employment opportunities that will benefit families and contribute to improved livelihoods. The training components will have far reaching social impacts in terms of awareness in nutritional diversification and on HIV/AIDS and Malaria. 4.9 Project Costs 4.9.1 The total cost of the ADF support to the NPFS, excluding taxes and duties but including physical and price contingencies is estimated to be N 5.055 billion (UA 27.58 million at May 2006 exchange rates). Of this, the foreign exchange costs are estimated to be UA 20.30 million or 73.60 percent and local costs to be UA 7.28 million or 26.40 percent. The estimated costs for the project components and for various expenditure categories are given below in Tables 4.1 and 4.2.

Table 4.1: Summary of Project Cost Estimates by Component Million Naira UA '000

COMPONENT Local Foreign Total Local Foreign Total

% of FE

1. Community Dev. & Inst. Support 234.59 779.21 1,013.80 1,279.49 4,250.02 5,529.51 77 2. Land & Water Development 432.93 1,267.45 1,700.38 2,361.34 6,912.99 9,274.33 75 3 Prod. Enhanc. & Diversification 424.77 1,516.95 1,941.72 2,316.78 8,273.87 10,590.65 78 4. Project Management 223.29 95.70 318.99 1,217.90 521.96 1,739.86 30 Total Base Cost 1,315.58 3,659.31 4,974.89 7,175.51 19,958.84 27,134.35 74 Physical Contingences 4.36 13.75 18.11 23.78 75.02 98.80 76 Price Contingences 14.68 48.12 62.80 80.05 262.48 342.53 77 TOTAL PROJECT COST 1,334.62 3,721.18 5,055.80 7,279.34 20,296.34 27,575.68 74

Table 4.2: Summary of Project Estimates by Category of Expenditure

Million Naira UA '000 CATEGORY Local Foreign Total Local Foreign Total

% of FE

Works 499.96 1,010.24 1,510.20 2,726.86 5,510.16 8,237.02 67 Goods 201.58 1,561.78 1,763.36 1,099.50 8,518.34 9,617.84 89 Services 345.80 843.30 1,189.10 1,886.07 4,599.60 6,485.67 71 Operating Cost 287.28 305.86 593.14 1,566.91 1,668.24 3,235.15 52

TOTAL 1,334.62 3,721.18 5,055.80 7,279.34 20,296.34 27,575.68 74 4.9.2 The project costs are estimated at the May 2006 exchange rates and prices in Nigeria. Prices of imported goods were obtained in Naira and converted to UA. Costs of civil works are based on estimated costs of comparable on-going works. A physical contingency rate of 4.36 percent has been applied to the cost of civil works and goods. A price contingency rate of 14.68 percent of the current international index of traded goods has been applied for foreign goods, while a rate of 12 percent has been applied to locally sourced goods in the light of the projected local inflation rate over the project implementation period.

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4.10 Sources of Financing and Expenditure Schedule 4.10.1 The project will be financed with a loan of UA 22 million from the ADF representing 80 percent, contribution from different arms of Government amounting to UA 4.466 million or 16 percent, while the beneficiaries would contribute UA 1.109 million or 4 percent of total project cost as indicated in Table 4.3 below.

Table 4.3: Project Sources of Finance

Million Naira UA '000 SOURCE OF FINANCING Local Foreign Total Local Foreign Total

% of Total

ADF 911.59 3,121.95 4,033.54 4,972.00 17,028.00 22,000.00 80 Government 219.60 599.23 818.83 1,197.78 3,268.34 4,466.12 16 Beneficiaries 203.43 0.00 203.43 1,109.56 0.00 1,109.56 4

TOTAL 1,334.62 3,721.18 5,055.80 7,279.34 20,296.34 27,575.68 100 4.10.2 The Support to NPFS will be financed with a loan from the ADF and contributions from the Federal Government, Governments of the participating States, and from project beneficiaries. ADF funding of local costs will include the cost of civil works, consultancy and NGO services for supporting beneficiaries’ sustainable income generating activities, for capacity building (including staff and beneficiary training and sensitisation). The contribution from the Government estimated at UA 4.466 million or 16 percent of project costs will cover staff salaries, part of travel expenses for the staff involved in project implementation, and operation and maintenance of vehicles and equipment as well as general operating costs of the project co-ordination office. Project beneficiaries will contribute UA 1.109 million or 4 percent of project costs in the form of labour for, among other things, infrastructure maintenance, and construction of produce storage facilities, land clearing and taking care of their crops.

Table 4.4: Summary of Financing by Category and Source of Finance UA '000

CATEGORY ADF Government Beneficiaries TOTAL A. Works 7,127.46 - 1,109.56 8,237.02 B. Goods 6,369.84 3,248.00 - 9,617.84 C. Services 6,485.68 - - 6,485.68 D. Operating Costs 2,017.02 1,218.12 - 3,235.14

TOTAL PROJECT COST 22,000.00 4,466.12 1,109.56 27,575.68 4.10.3 The project funds will be disbursed by components following the Expenditure Schedule provided in Tables 4.5 and 4.6 below.

Table 4.5: Summary Expenditure Schedule by Component

UA '000 COMPONENT 2007 2008 2009 2010 2011 TOTAL

% of Total

1. Community Dev. & Inst. Support 1,503.82 1,972.33 3,022.85 2,133.24 670.60 9,302.84 34 2. Land & Water Development 3,661.60 2,157.17 3,503.17 746.50 840.21 10,908.65 40 3 Prod. Enhanc. & Diversification 2,282.04 1,211.55 905.63 717.69 496.03 5,612.94 20 4. Project Management 367.38 317.01 432.82 317.03 317.01 1,751.25 06 TOTAL COST 7,814.84 5,658.06 7,864.47 3,914.46 2,323.85 27,575.68 100

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Table 4.6: Summary Expenditure Schedule by Source of Finance

UA '000 SOURCE OF FINANCE 2007 2008 2009 2010 2011 TOTAL

ADF 5,131.49 5,192.43 6,459.15 3,357.96 1,858.97 22,000.00Government 2,461.29 243.57 1,183.26 334.44 243.56 4,466.12Beneficiaries 222.06 222.06 222.06 222.06 221.32 1,109.56

TOTAL 7,814.84 5,658.06 7,864.47 3,914.46 2,323.85 27,575.68 5. PROJECT IMPLEMENTATION

5.1 Executing Agency 5.1.1 The executing agency for the expanded NPFS is the Federal Ministry of Agriculture and Rural Development (FMARD). In this context, the project will be implemented by existing institutions within FMARD. The existing Project Coordination Unit (PCU) of FMARD would be responsible for the overall coordination of project activities in the 3 participating states. The PCU, which is mandated with the responsibility of implementing and monitoring the implementation of all projects in the agriculture sector, has sufficient qualified staff (22 seconded professional staff and 17 FAO staff of different level in total) 22 support staff, 37 drivers, 12 security staff and 10 technical staff, equipped with 9 vehicles and 12 laptops for PCU headquarter and 11 vehicles and 11 desktops for regional Offices. The Projects Coordination Unit (PCU) of the Federal Ministry of Agriculture and Rural Development will designate a Project Team which, with the FAO Technical Assistant, will be responsible for the day-to-day management of the project activities. The Project Team will include the National Project Coordinator (NPC) and his Deputy (Deputy NPC), and four (4) National Supervisors to supervise and coordinate at Federal level the activities of the three technical components implemented at state level, as well as the overall M&E activities. At federal level, the project team has at its disposal existing Finance and Payment Unit, Procurement Unit, General Support Unit and Resident Internal Auditor Unit. To ensure expeditious and efficient project implementation, the FAO is providing the following technical assistants for the entire project period: Chief Technical Advisor (CTA), Chief of the Management Support Unit (Chief MSU, equivalent to Financial Controller) and an International Resident Auditor. In addition, FAO is providing several support officers and clerks to the above mentioned units. 5.1.2 The FMARD would play a key role in decision-making through the Inter-Ministerial Co-ordinating Committee, which is chaired by the Hon. Minister of FMARD, and meets annually to provide overall guidance and policy co-ordination. The Technical Management Committee (TMC), under the Chairmanship of the Permanent Secretary FMARD, would be responsible for the overall co-ordination and supervision of the implementation of the programme working in close collaboration with the PCU. The PCU would be responsible for the nation wide co-ordination and provision of support to state and LGC food security activities. The Head of the PCU would be the designated National Programme Co-ordinator (NPC) of the NPFS and would also act as the Secretary of the Ministerial Co-ordinating Committee and the Technical Management Committee. He would be assisted by- and work in close collaboration with the internationally recruited Chief Technical Advisor (CTA) provided by FAO under the signed FAO/FGN cooperation agreement.

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5.1.3 PCU will use the existing system that permits collaboration among institutions at the different tiers of government and among the different projects but with Local Government Council (LGC) participation given greater prominence. The Federal Ministry of Agriculture and Rural Development through its PCU will ensure that the level of annual co-funding for the project agreed in approved budgets is available and that these funds are released to the project on time. At the State level, the project will be implemented through the existing ADP system. In all the states each ADP has the following staff: i) Project Manager, ii) Project Accountant, iii) Procurement Officer, iv) Gender Specialist, v) Monitoring and Evaluation Expert, vi) Agronomists, and vii) Field Coordinators and other staff comprising Facilitators, Site Managers, data Processing clerks, Extension Agents, Field Enumerators and support staff.. All ADP staff report to the Project Manager. 5.2 Institutional Arrangements 5.2.1 At Federal Level: With its 12 departments (including Agriculture, Agriculture Sciences, Livestock and Pest Control Service, Rural Development, Storage and Strategic Grain Reserve, Fertilizer, Land Resources and Fisheries), the Federal Ministry of Agriculture and Rural Development (FMARD) provides technical support to states for agriculture and rural development, technology generation and dissemination, land use planning, soil management, project/programme coordination, rural sector planning, monitoring and research.

5.2.2 For project implementation, a clear distinction would be made between the technical functions and financial/administrative functions. A national component manager would be appointed for each of the three main technical project components. A fourth manager in charge of monitoring and evaluation would supplement this core management team. This cluster would be responsible for the oversight and co-ordination of the project’s technical components and would report directly to National Programme Co-ordinator (NPC). Based on annual rolling plans of work and budget prepared by the component managers, the financial/administrative manager would release semi- annual funds to the State ADPs for the implementation of the project. 5.2.3 At State Level: The State ADPs will be the implementing agencies for the SNPFS at the State Level. The Programme Manager of the respective State ADPs would be designated the State Coordinator for the project, and would act as State Food Security Co-ordinator (SFSC), to harmonize and synchronize project activities at state and LGC levels. Sub-committees would be formed at state level under the Chairmanship of the SFSC to ensure synergies for programme implementation between the various state level institutions and agencies. 5.2.4 At LGC level: In order to foster the decentralization process, each participating LGC will appoint an LGC Food Security Co-ordinator. He will be responsible for preparing the LGC food security action plan in line with the overall SNPFS project of work, and budget in close collaboration with the State Food Security Co-ordinator. He will allocate selected staff for the development of each site. Funding of LGC activities would be based on the approved State programme budgets and channelled through the ADPs. 5.2.5 A Project Implementation Manual (PIM) jointly drafted and approved by the FMARD and FAO would guide all the participants in the implementation of the SNPFS. This would ensure policy makers, senior government officials and all staff of the NPFS at the Federal, State and Local Government Council levels and all stakeholders are familiar with the concepts, principles, strategies, practices and institutional framework of the SNPFS. It would also provide

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summary of the financial regulations, procurement procedures and the responsibilities assigned to all FMARD, State and LGC staff, and FAO technical assistance. 5.3 Supervision and Implementation Schedules 5.3.1 The project will be implemented over a five year period beginning January 2007. The implementation schedule shown in Table 5.1 reflects the understanding reached by the Bank with the Borrower (detailed Implementation Schedule in Appendix 5, Volume 2). In collaboration with NGCO, the Bank will undertake a launching mission to ensure that project activities commence on time. Given below is a summary of the implementation schedule:

Table 5.1: Summary Implementation Schedule

ACTIVITY TARGET DATE ACTION BY Board approval Sept. 2006 ADF Publication of the GPN Oct. 2006 FGN/ADF Loan Agreement signed and effective Oct. 2006 ADF/FGN Project Team appointed Oct. 2006 FGN Launching Mission Dec. 2006 ADF/FGN Draft bidding docs., shortlists submitted & approved Feb. 2007 FGN Equipment and vehicles supplied & works undertaken June 2007 FGN External Audit reports submitted June 2007 FGN Mid-Term Review June 2009 ADF Project Completion Report June 2012 ADF/FGN

5.3.2 The project will be supervised at least twice a year after loan effectiveness. The Bank's country office in Nigeria will regularly monitor the progress of project implementation and also participate in supervision missions as well as assist in resolving major outstanding issues likely to impede the smooth implementation of the project. The Bank and the borrower will undertake a mid-term review of the project in 2009 to review its progress in the implementation of its sub-components and assess its overall performance. 5.3.3 Within three to six months before project completion, the Borrower will prepare, following the Bank format, a Project Completion Report and submit it to the Bank. This report will form the basis of the Bank’s Project Completion Report which will be undertaken both to verify the information in the Borrower’s PCR, and to draw recommendations for measures necessary to ensure sustainability of project benefits and draw lessons for future interventions. 5.4 Procurement Arrangements 5.4.1 All procurement of goods, works and acquisition of consulting services financed by the ADF will be in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents. Procurement arrangements are summarized in Table 5.1 below. 5.4.2 Review Procedures: The following documents are subject to review and approval by the ADF before promulgation: a) Special Procurement Notice; b) Tender Documents and Requests for Proposals for Consultants; c) Tender Evaluation Reports or Reports on Evaluation of Consultants’ proposals, including recommendations for contract award; d) Draft contracts if these have been amended from the draft included in the tender documents; and e) Project

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Operation Manual, based on the Bank’s Guidelines for Procurement under Community-Based investment Projects (CBIP).

Table 5.2: Procurement Arrangements

NBF1. Works 1.1. Land Prep. 1,952.21 (1,952.21) 1,952.21 (1,952.21) 1.2. Lab./Office Renovation 911.76 (911.76) 911.76 (911.76) 1.3. Improvement of Access Roads 1,828.01 (1,828.01) 1,828.01 (1,828.01) 1.4. Const/Reh. Of Water Mgt Structur 1,147.06 (1,147.06) 1,147.06 (1,147.06) 1.5. Community Works 1,109.56 1,109.56 (0.00) 1.6. Community Nurseries 377.21 (377.21) 377.21 (377.21) 1.7. Livestock/Portable Water Points 405.77 (405.77) 405.77 (405.77) 1.8. Community Markets 505.44 (505.44) 505.44 (505.44)

2. Goods 2.1. Equipment a) Field/Lab. Equipment 2,975.02 (1,095.61) 2,975.02 (1,095.61) b) Office Equipment 313.65 (313.65) 313.65 (313.65) 2.2. Vehicles 1,613.16 (244.25) 1,613.16 (244.25) 2.3. Motor cyles 1,323.53 (1,323.53) 1,323.53 (1,323.53) 2.4. Inputs Crop Based Systems 683.42 (683.42) 683.42 (683.42) 2.5. Inputs Fisheries Devt 109.19 (109.19) 109.19 (109.19) 2.6. Inputs Livestock Modules 1,011.64 (1,011.64) 1,011.64 (1,011.64) 2.7. Agroforestry Pdn Modules 1,588.24 (1,588.24) 1,588.24 (1,588.24)

3. Services 3.1. Technical Assistance 97.54 (97.54) 97.54 (97.54) 3.2. Training 2,903.30 (2,903.30) 2,903.30 (2,903.30) 3.3. NGO Services/Vocational Training 549.93 (549.93) 549.93 (549.93) 3.4. Health Campaigns (AIDS/HIV and Malaria 416.91 (416.91) 416.91 (416.91) 3.5. Extension Support 794.12 (794.12) 794.12 (794.12) 3.6. Monitoring Services 714.71 (714.71) 714.71 (714.71) 3.7. Annual Audit/MTR 202.57 (202.57) 202.57 (202.57) 3.8. Surveys/Studies 806.60 (806.60) 806.60 (806.60)

4. Miscellaneous 4.1. Operations and Maintenance 1,090.44 (1,090.44) 1,090.44 (1,090.44) 4.2. Salary 850.15 (0.00) 850.15 (0.00) 4.3. Travel and Daily Subsistence 566.91 (566.91) 566.91 (566.91) 4.3. Rent 367.65 (0.00) 367.65 (0.00) 4.5. Other Recurrent Costs 360.00 (360.00) 360.00 (360.00)

Total Project Cost 13,393.07 (12,024.16) 4,559.94 (4,559.94) 8,513.11 (5,415.90) 1,109.56 27,575.68 (22,000.00)

PROJECT CATEGORTY

UA "000

NCB SL OTHER TOTAL

* Other: International Shopping (IS), National Shopping (NS), Community Participation in Procurement (CPP), Direct Purchase (DP). 5.4.3 Works: Procurement of civil Works valued at less than UA 0.65 million per contract will be carried out under National Competitive Bidding (NCB) procedures. Eighteen contracts, valued in total at UA 6.75 millions, will be awarded for these works comprising land preparation, lab/office renovation, improvement of access roads, construction and rehabilitation of water management structure, construction of livestock water points and community markets. NCB is appropriate for these contracts because the character, location and size of the construction works to be undertaken are such that they are unlikely to attract bids from outside Nigeria, and there are local contractors sufficiently qualified and in sufficient numbers to ensure competitive bidding. 5.4.4 The establishment of community nurseries amounting to a total of UA 0.377 million will be procured in accordance with the Bank’s Guidelines for Procurement under Community-Based Investment Projects (CBIP). The choice of Community Participations is made on the basis of an interest in project sustainability. The procurement procedures and their corresponding financial thresholds will be specified in an Operation Manual to be prepared by the Borrower and submitted for Bank approval.

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5.4.5 Goods: Field and laboratory equipment valued at less than UA 0.50 millions per contract will be procured through International Shopping (IS). Six contracts will be awarded to procure these goods valued in total at UA 2.97 millions. Those goods are so diversified that it would be of no commercial interest for any single supplier to bid for them; and they cannot be purchased locally. 5.4.6 Office equipment, vehicles and motorcycles, and all inputs detailed in table 5.2 valued at less than UA 0.55 million per contact will be acquired through National Competitive Bidding. (NCB). Twenty-one contracts will be awarded to procure those goods valued in total at UA 6.64 millions. The value, and character of these goods are such that they are not likely to attract international suppliers, and in Nigeria, there are suppliers sufficiently qualified and in number sufficient to ensure competitive bidding. 5.4.7 Services: Consultancy Services including technical assistance, training and NGO services/Vocational Training, annual audit and surveys/studies as detailed in table 5.2 and valued in total at UA 5.43 million will be procured through shortlists in accordance with the Bank’s Rules of Procedure for the Use of Consultants. The selection procedure will be based on the technical quality with price consideration, except for annual auditing, for which the selection procedure will be based on the comparability of technical proposals and selection of the lowest financial offer. 5.4.8 The services for conducting campaigns against HIV/AIDS and Malaria in collaboration with the Federal Ministry of Heath and National Action Committee on AIDS (NACA), extension support and monitoring services valued at less than UA 0.26 million per contract will be procured through Direct Negotiation procedures with specialized NGOs. These services are small-scale operations requiring an excellent knowledge of social and communal systems of the region, and thus single sources of expertise for the assignments are appropriate. 5.4.9 Miscellaneous: Operating, maintenance and other recurrent costs amounting to UA 1.45 million will be procured through existing Government procedures acceptable to ADF. 5.4.10 National Procedures and Regulations: Nigeria’s national procurement laws and regulations have been reviewed and determined to be acceptable. 5.4.11 The Executing Agency: Each ADP will be responsible for the procurement of goods, works, consulting services and training services, and will be staffed with a procurement officer. It will prepare and process all the procurement documents. The PCU will supervise the procurement process. 5.4.12 General Procurement Notice: The text of a General Procurement Notice (GPN) will be prepared by the Government and reviewed during loan negotiations and will be issued for publication in the Development Business, upon Board approval of the Loan Proposal.

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5.5 Disbursements Arrangements 5.5.1 The Special Account and the Direct Payment methods will be used. The PCU will open and maintain a Special Account in foreign currency and one Local Currency Account at a Commercial Bank acceptable to the Fund. The Special Account will be used to deposit the loan resources while the Local Currency Account will receive the contributions from the Federal Government of Nigeria. The ADF will replenish the Special Account after the PCU has provided sufficient justification for the use of at least 50 percent of the previous deposit. 5.5.2 The Federal Ministry of Finance (FMOF) of the Government of Nigeria will sign subsidiary loan agreements with the participating States. The participating States would then open two local currency accounts at banks acceptable to the Fund. The first account will receive ADF loan proceeds transferred from the Special Account based on the approved annual work plan and budget for respective states. The second account will receive counterpart funding delivered bi-annually in advance to meet the respective Government’s share of the project’s cost. 5.5.3 The initial request for disbursement of ADF funds into the Special Account, covering a period of four months, would be submitted to the Bank for approval. This request would be based on the annual work programme and budget approved by the Fund and the amount would not exceed a quarter of the annual budget. Subsequent disbursements would be subject to adequate justification of the utilisation of the preceding disbursement. Government contribution to the project costs would be deposited in the respective accounts on a quarterly basis. 5.6 Monitoring and Evaluation 5.6.1 Internal Monitoring and Evaluation will be conducted by PCU’s Monitoring and Evaluation Manager and ADP monitoring and evaluation units. The internal Monitoring & Evaluation will form an integral part of management tools to effectively assess progress of project activities, identify critical implementation constraints, and assess project impact and evaluate new opportunities. The evaluation will cover: (i) the technical aspects not only in terms of the achievement rates of activities and objectives, but also in terms of impacts on the natural and socio-economic environment; (ii) the aspects related to continuous monitoring against established criteria and benchmarks, (iii) the budgetary aspects and use of human and material resources by comparing the planned activities to those carried out, and (iv) the aspects relating to support to groups, associations and national institutions, specially for women. 5.6.2 The ADPs will have the overall responsibility for ensuring the continuous monitoring of and reporting on project activities in each state. Each ADP will carry out with support from the PCU the necessary baseline surveys, which will serve as a benchmark for mid-term review and impact assessment at project completion. Staff of the State and Local Government will be trained in M&E after which they will engage in gender disaggregated data collection and analysis. They will prepare reports on a monthly basis, which will be submitted to the PCU. These reports will be synthesized and consolidated by the PCU before submission to the ADF and the Federal Ministry of Finance. They will be submitted not later than three months after the end of the reporting period. On a biannual basis, the ADPs will prepare a project impact assessment comparing project performance with baseline data. These reports will also be submitted to PCU for compilation and submission to the Fund. A survey on the poverty profile will be conducted in each State at project start-off so as to produce baseline information base on the project sites. This

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task will be undertaken with the support of the Federal Department of Planning, Research and Statistics. This survey will in particular indicate the situation of household incomes, and set social and poverty assessment indicators which will subsequently be used for monitoring and evaluation. 5.6.3 External Monitoring and Evaluation will be conducted by FMARD through PCU. The PCU will conduct its own monitoring and evaluation visits and report regularly to the Steering Committee and the Fund on the implementation progress of various project activities. The PCU will collaborate with the National Action Committee on AIDS, the multi-sector body responsible for co-ordinating the response to the epidemic, to monitor and report regularly on the impact of the project on AIDS and related issues. The PCU will collaborate also with the Federal Environment Protection Agency to report on environmental issues in the project area. To ensure efficient monitoring and evaluation, a performance chart, prepared in compliance with Bank guidelines and with the assistance of a specialist consultant from FAO, will be made available to the monitoring and evaluation of the PCU. 5.6.4 A Mid-term Review will be carried out in the third year of project implementation by the FGN and the Bank to assess: i) compliance with project loan conditions, ii) completion progress relative to planned targets, and iii) performance of participating states and local governments. This review will form the basis for review of the project in terms of size and design to facilitate improved performance during the remaining implementation period. To facilitate this review, PCU will contract consultants to prepare a detailed progress report analysing all implementation issues and results, including agreed performance indicators. 5.6.5 Environmental Monitoring will be conducted under the responsibility of the PCU, in close collaboration with the Federal Environment Protection Agency. The PCU will use the services of a consultant to determine and describe the indicators. A provision of UA 100,000.00 per state has been made for the purpose of this monitoring. 5.6.6 Reporting: The Project Management Unit will prepare quarterly and annual activity reports on the progress of the project in accordance with Bank guidelines, and submit them to the Government and ADF. At project completion, the Borrower will prepare a completion report in line with the Bank format. This report will form the basis of the Bank’s version of the Project Completion Report entailing verification of the information in the Borrower’s PCR, and recommendation of measures necessary to ensure sustainability of project benefits and draw lessons for future interventions. Both the Mid-Term Review and Borrower’s Completion reports will be submitted for approval by the FADPEC before they are forwarded to the Bank. 5.7 Financial Reporting and Auditing 5.7.1 The PMU will keep accounts that will enable the monitoring and control of expenditure by category to be done effectively. The Executing Agency will be required to submit to the Fund an external audit report covering the project's operations in the previous year. An independent external auditor acceptable to the ADF will carry out the audit and provisions have been made in the project budget for the cost of the audits. The annual audit report and accompanying financial statements, including bank statements and statements of expenditure will be submitted to the ADF for review no later than six months after closure of the financial year. The financial management and governance will be strengthened through the supervision by the Chief Technical Adviser, the Chief of the Management Support Unit (Financial Controller),

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Procurement Officer and the Resident Auditor provided by the FAO. The project will also ensure capacity building in area of financial management system, internal control and audit in order to address the issues of corruption and governance for effective control. 5.8 Aid Co-ordination 5.8.1 At the macro-level, donor co-ordination is ensured under the joint chairmanship of the United Nations Development Program and the National Planning Commission. Multilateral and bilateral agencies, such as the World Bank, the NGCO of the Bank, IFAD, CIDA, USAID, and DFID, among others have established an informal donor coordination mechanism for projects and programs in the Agriculture and Rural Development Sector. They meet once per month in Abuja to discuss thematic issues within the sector. The chair rotates among the donors. 5.8.2 At the Federal level, FMARD launched in 2002 the Agriculture and Rural Development Consultative Group (ARDCG) as a formal donor coordination mechanism. It is chaired by the Minister of Agriculture and Rural Development and comprises all government, multilateral and bilateral agencies involved in agriculture and rural development. Its role is to review progress of donor-assisted programs and projects in the context of poverty alleviation. To strengthen donor coordination activities, the project has provided for a quarterly meeting where the project steering committee will meet with all donors and stakeholders in the agriculture sector and update them on the progress of the project. 6. PROJECT SUSTAINABILITY AND RISKS

6.1 Recurrent costs 6.1.1 The total recurrent costs are estimated at UA 2.46 million (about UA 0.82 million per participating state). Of this amount the ADF will pay UA 0.75 million (about UA 0.25 million per participating state) while the Federal, State and Local Governments will pay UA 1.71 million (about UA 0.52 million per participating state). This is indicated in Table 6.1 below.

Table 6.1: Summary of Recurrent Costs (‘000) UA '000

SOURCE OF FINANCE 2007 2008 2009 2010 2011 TOTAL ADF 148.00 184.00 168.00 162.00 85.00 747.00 Government 264.00 312.00 348.00 384.00 404.00 1,712.00

TOTAL 412.00 496.00 516.00 546.00 489.00 2,459.00 6.1.2 The ADF contribution will mostly be used to pay for the cost of project monitoring related travel and daily subsistence allowances and for the maintenance of equipment. The Government contribution will meet the cost of staff salaries, office rent and other recurrent expenditures. The operation and maintenance of the physical infrastructure such as the rural access roads and marketing and water supply infrastructures will be the responsibility of the communities. The recurrent costs will easily be met from the Government budget as most of these represent salaries and rent, which are already being paid by the state and local governments.

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6.2 Project Sustainability 6.2.1 The project will be implemented through a participatory approach that will ensure the involvement and commitment of all stakeholders, particularly farmers, states and local governments. The technical sustainability of the project primarily depends on the farmers adopting production packages and improved technologies on a permanent basis to generate profits on their farm investments. The farmer groups created or strengthened by this project provide a viable framework within which the sustainability of the project will be nurtured and accelerated. Through the project activities, particularly component A, farmer groups will be trained in planning and implementation of development initiatives with little or no external assistance. Through its community development and institutional support component, the project has key training packages for farmer groups, extension workers, ADP staff and site facilitators. The extension staff and site facilitators are regular staff of the existing Government structure who are already on Government salary and will continue providing extension and other farmer support services even after the project. The presence of these national institutions in which the project is embedded, gives a strong foundation for sustainability. This is further complemented by the provision within the project for strengthening the capacity of the ADPs, LGCs and their support staff to improve their efficiency of service delivery and support to beneficiary farmers. 6.2.2 The production components of the project support adapted technologies (small pumps, micro earth-dams, agro-processing equipments, contour bunds and agro-forestry techniques) which are simple and affordable, and are already in use in the project area. The pumps will be owned, managed and maintained by trained farmer groups linked to extension workers and sites facilitators. The farmer groups utilizing the micro earth dams are organized in Water User Associations (WUAs) recognised as legal entities, and supported by the State Department of Cooperatives which is part of the Government structure. Maintenance of the micro earth-dams will be done by the WUAs through community labour and using commonly agreed water user fees, with technical support from site facilitators. The agro-processing equipments will be maintained by the group of agro-processors, while the processing fees will be utilized for maintenance, spare parts and subsequent replacement of the machines. 6.2.3 The market infrastructure including rural access roads, will be maintained by the community in collaboration with the administration of the LGCs. Sustainability of the improved rural roads will achieved through routine maintenance using community labour until the end of the project when the State Feeder Roads Department will take over. In this regard, the project further provides community training in road maintenance. The markets will be subject to the existing local regulations and fees that will generate proceeds to allow basic hygiene and maintenance to ensure sustainability. The market information systems will enhance linkages between farmers, markets and the private sector, and will enhance the farmers’ respond to market and price incentives on sustainable basis. 6.2.4 Given that the project is developed within the framework of the national programme for food security, which is developed to revitalize the role of agriculture as an engine for integrated development, the project activities fall within Government’s immediate priority for promoting agricultural growth at the Federal, State and Local levels. The project is a support to the NPFS programme that is the country’s major vehicle for implementing the NEEDS and SEEDS, which guide short- and long-term agricultural and rural development strategies at the Federal and State levels. The project will thus acquire the requisite support from the three tiers of Government,

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which is necessary to enhance successful implementation and sustainability. The Government has further declared the NPFS as a NEPAD activity for Nigeria. The NEPAD CAADP particularly stipulates investment in land and water resources, small rural infrastructure, food security and agricultural research and extension as key priorities for agricultural development. 6.3 Critical Risks and Mitigation Measures 6.3.1 Climatic variability: rainfall variability sometimes leads to crop failures or yield decreases in the project area. The project will promote small scale irrigation development and water harvesting structures to stabilize crop yields, and increase cropping intensity in the project states. The project will further support training and awareness creation that will enable farmers to adhere to recommended cropping calendar that minimize the risk of crop failures due to rainfall variability and droughts. 6.3.2 Potential conflicts: conflicts between farmers and pastoralists have been reported in the project states, resulting from animals destroying crops. The State Governments have already instituted dialogue committees that mediate between these two groups and so far all the conflicts have been resolved. In addition, the project plans to establish 1,000 hectares of fodder banks for livestock grazing, served with watering points, to keep animals away from crop fields. Further, the project will ensure awareness campaigns and training for amicable conflict resolution. 6.3.3 Technology adoption: slow rate of technology adoption was reported in some project states during the pilot NPFS phase. The project has ensured that the technologies selected are among those already adapted, tested and in use by communities in the project area. The project is also supporting activities that will strengthen the linkages between research and extension, and the interaction of extension workers with farmers. 6.3.4 Market risks: increasing production on such a large scale may be associated with market and price risks. In this regard, the project will ensure the construction of market infrastructure, improvement of rural access roads, as well as putting in place a market information system to enhance price uniformity and increase market generated efficiency gains to producers, and reduces losses due to unsold products. 7. PROJECT BENEFITS 7.1 Financial Analysis 7.1.1 Success of the project in realizing its targets of improving the livelihood beneficiary farmers will depend on several factors, among which are: i) the number of farmers and farmer groups that will have access project opportunities and the intensity of crop production; ii) the proportion of the farmers that will up-scale their production and apply new innovations to increase yields and expand production area, and iii) the proportion of land that will be available for emerging farmers to utilize and for existing farmers to expand their current production capacities. To facilitate the estimation of the potential benefits that will accrue to farmers in the project countries, projections were made assuming double cropping using four cropping systems and crop yield increase scenarios with various crop combinations.

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7.1.2 Four crop scenarios include: yam-maize-cassava module, rice-irrigated vegetables module, sweet potatoes-cocoyam-vegetable module. These modules will combined and apportioned to various portioned of land based on soil suitability as identified during project appraisal. On the basis of these crop combinations, projections have been made for one ha per household of the selected crops to estimate the incremental net benefits resulting from the project’s intervention. 7.1.3 Using the scenarios indicated above, the investment cost ranged from a minimum of N 19,000 for small ruminant upgrading to a maximum of N 296,000 for palm fruit and ground nut processing with a mean value of N 111,826. The operating cost ranged from a minimum of N 65,730 for sorghum based crop mixture to a maximum of N 1,611,900 for gari processing with a mean value of N 3,96,948. The annual incremental benefit ranged from a minimum of N 7,378 for artisanal fishery to a maximum of N 203,482 for layer production with a mean value of N 65,715. The net present value ranged from a minimum of N 22,615 for yam based crop mixture to a maximum of N 1701,517 for layer production with a mean value of N 251,442. 7.2 Economic Analysis 7.2.1 To assess the potential impact of the project on the national economy a comparison of the economic benefits with and without the project was carried out. On the basis of a 25 year production period an internal economic rate of return of 34 percent is realised under the project intervention. These estimates assume: a) A 25 year production period to facilitate the full realisation of the investment costs, especially on the adaptive research and capacity building activities under the project; b) Economic prices for seed vegetables and rice are based on the projected domestic and regional market prices. Although import substitution would result in the loss of revenues from taxes and duties, no adjustment is made on this account because of the advantages to be realised by saving foreign exchange and even gaining export earnings from trade in rice and rice seed between the regional member countries and beyond; c) Irrigated rice yields of 1.5 MT/ha without fertilisers and 2.5 MT/ha with fertilisers applied; yams yields of 12.0 MT/ha; maize yields of 2.5 MT/ha and cassava yields of 15.0 up to 18.0 MT/ha; d) On average farmers harvest at least 2 times a year, with irrigation; and e) Most of the agricultural products produced under the assumed inter-cropping model are for both subsistence consumption and for market orientation, largely within the production area. 7.3 Social Impact Analysis 7.3.1 Direct benefits would arise from improved land and water use, higher crop productivity through the production of improved seeds, reduction in storage losses, and value addition in rural areas through processing and packaging, enhanced sustainable protection of crops and stored products, improved seeds, and incremental animal and fish production and catches. This would enhance the income of the operators and increase household food security. In particular, nutritional and social status of women and children will be directly improved by income gains resulting from expansion of cultivated area, increased crop productivity and diversified production activities in livestock, fisheries and agro-forestry. Women will benefit from the increased availability of food and fuel wood through the agro-forestry activities. 7.3.2 The provision of rural infrastructure in a demand-driven manner and linked to the economic progress of the requesting groups and communities also constitutes a general benefit. In particular, the improvement of rural access roads and construction of markets centres will

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reduce price differentials, improve producer prices and increase farm profits. Further, the rural infrastructure works and the involvement of the community in the establishment of these works will provide off-farm employment opportunities that will contribute to improved livelihoods. Another benefit is the setting up of a real-time market information service, which would secure enhanced market transparency, provide necessary information for a market oriented agricultural extension service, and the statistical data base for State and National planning. 7.4 Sensitivity Analysis 7.4.1 Returns from the project may differ from the assumptions used in the analysis of the project benefits as a result of technology adoption rates or land allocation rates differing from those assumed for this analysis, bad weather, pests or disease infestation, or changes in the costs of principal inputs. As indicated below in the results of the sensitivity analysis, the returns from the project are more sensitive to changes in revenue than rising costs.

Table 7.1: Project Sensitivity Analysis

Assumptions Resulting EIRR Values Basic EIRR Estimate 34% Costs rise 10% 27% Benefits fall 10% 16% Delay in project implementation by 2 years 18%

7.4.2 The estimated rates of return are relatively high. This could be even higher if fertilisers are applied in which case yields would double. The high rates of return provide a margin of safety for stakeholders. This also underscores the need for the intensification of efforts to ensure that the quality of the output is maintained at a high level thereby enhancing the competitive margin and prices of crop outputs. 8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions 8.1.1 The proposed project is a priority for the Government of Nigeria that is based on its agricultural development strategy as reflected in the National Economic Empowerment and Development Strategy (NEEDS). This is consistent with the Bank’s vision and poverty reduction strategy as spelt out in the Country Strategy Paper 2005–2009 for Nigeria, which defines the Bank’s short-term intervention strategy for the country. By developing 15,600 hectares rainfed and irrigation land for crop production, it is expected that 16,500 persons will be brought out of malnutrition annually, and that rural poverty will decrease from 66 percent today to 35 percent by 2015. The direct beneficiaries of the project would be 11,550 households, which represents 80,850 of rural people of which about 50 percent are women. The project is technically feasible, economically viable, socially desirable and environmentally sustainable.

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8.2 Recommendation 8.2.1 In view of the expected project’s outputs, it is recommended that a loan not exceeding UA 22.00 million be granted to the Government of Nigeria to finance the implementation of the project. The loan would be subject to the following conditions.

(a) Conditions Precedent to Entry into Force The entry into force of the loan agreement shall be subject to the fulfilment by the Borrower of the provisions of section 5.01 of the General Conditions.

(b) Condition Precedent to First Disbursement The obligations of the Fund to make the first disbursement of the loan shall be conditioned upon the entry into force of the loan agreement and the fulfilment by the Borrower of the following condition. The Borrower shall have submitted:

“ Evidence of the designation of the project team within the existing PCU, comprising four (4) National Supervisors with qualifications acceptable to the Bank to supervise and coordinate the 3 technical components and the monitoring and evaluation activities of the SNPFS ” (See para. 5.1.1).

(c) Other condition “ Submission to the Fund of the Subsidiary Agreements signed between the Federal Government of Nigeria and the participating States ” (See para. 5.5.2).

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Annex 2

NIGERIA – SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY (NSPFS)

PROJECT ORGANISATION CHART

Note: Each state will comprise of nine sites or Local Government Areas (LGA)

Project Steering Committee

(Chaired by Minister of FMARD)

Project Coordinating Unit (PCU)

ADP EKITI

ADP ONDO

ADP CROSS RIVER

LGA LGA LGA LGALGA LGA LGA LGA LGA

Annex 3

NIGERIA – SUPPORT TO THE NATIONAL FOOD SECURITY PROGRAM (SNPFS)

PROVISIONAL LIST OF GOODS AND SERVICES

UA '000

PROJECT CATEGORTY Local Foreign Total 1. Works 1.1. Land Prep. 390.45 1,561.76 1,952.21 1.2. Lab./Office Renovation 314.70 597.06 911.76 1.3. Improvement of Access Roads 365.60 1,462.41 1,828.01 1.4. Const/Reh. Of Water Mgt Structures 229.41 917.65 1,147.06 1.5. Community Nurseries 94.31 282.90 377.21 1.6. Livestock Water Points 101.44 304.33 405.77 1.7. Community Markets 126.36 379.08 505.44 Sub-total 1,622.27 5,505.19 7,127.462. Goods 2.1. Equipment 2.1.1 Field Equipment 0.00 1,095.61 1,095.61 2.1.2 Office Equipment 0.00 313.65 313.65 2.2. Vehicles 0.00 244.25 244.25 2.3. Motor cycles 0.00 1,323.53 1,323.53 2.4. Inputs Crop Based Systems 183.53 499.87 683.40 2.5. Inputs Fisheries Devt 27.30 81.89 109.19 2.6. Inputs Livestock Modules 252.91 758.73 1,011.64 2.7. Agro forestry Pdn Modules 397.06 1,191.18 1,588.24 Sub-total 860.80 5,508.71 6,369.513. Services 3.1. Technical Assistance 29.38 68.15 97.53 3.2. Training 767.64 2,135.66 2,903.30 3.3. NGO Services/Vocational Training 156.47 393.46 549.93 3.4. Health Campaigns (AIDS/HIV and Malaria 145.92 270.99 416.91 3.5. Extension Support 198.53 595.59 794.12 3.6. Monitoring Services 250.15 464.56 714.71 3.7. Annual Audit/MTR 141.80 60.77 202.57 3.8. Surveys/Studies 201.17 605.43 806.60 Sub-total 1,891.07 4,594.61 6,485.674. Operating Costs 4.1. Operations and Maintenance 371.84 718.60 1,090.44 4.2. Travel and Daily Subsistence 226.87 340.04 566.91 4.3. Other Recurrent Costs 0.00 360.00 360.00 Sub-total 598.71 1,418.64 2,017.35

Total Project Cost 4,972.85 17,027.15 22,000.00

NIGERIA – SUPPORT TO THE NATIONAL FOOD SECURITY PROGRAM (SNPFS) Annex 4

TABLE OF ECONOMIC ANALYSIS

WITHOUT PROJECT WITH PROJECT Discount Discounted Incremental Discount Discounted

Rev/Ha. Op. Cost/Ha Net Flows Factor Cash Flows Rev/Ha. Invest Op.

Cost/Ha Net Flows Cash Flows Factor Cash Flows Year NAIRA NAIRA NAIRA 12% NAIRA Year NAIRA Cost NAIRA NAIRA Naira 12% NAIRA

1 0.00 0.00 0.00 1.00 0.00 1 0.00 50,890.00 16,000.00 -66,890.00 -66,890.00 1.00 -66,890.00 2 48,780.00 35,800.00 12,980.00 0.89 11,552.20 2 27,800.00 40,500.00 7,757.50 -20,457.50 -33,437.50 0.89 -29,759.38 3 48,780.00 35,800.00 12,980.00 0.80 10,384.00 3 58,500.00 25,800.00 15,515.00 17,185.00 4,205.00 0.80 3,364.00 4 48,780.00 35,800.00 12,980.00 0.71 9,215.80 4 142,200.00 11,400.00 72,220.00 58,580.00 45,600.00 0.71 32,376.00 5 48,780.00 35,800.00 12,980.00 0.64 8,307.20 5 142,200.00 72,220.00 69,980.00 57,000.00 0.64 36,480.00 6 48,780.00 35,800.00 12,980.00 0.56 7,268.80 6 142,200.00 72,220.00 69,980.00 57,000.00 0.56 31,920.00 7 48,780.00 35,800.00 12,980.00 0.51 6,619.80 7 142,200.00 72,220.00 69,980.00 57,000.00 0.51 29,070.00 8 48,780.00 35,800.00 12,980.00 0.45 5,841.00 8 142,200.00 72,220.00 69,980.00 57,000.00 0.45 25,650.00 9 48,780.00 35,800.00 12,980.00 0.40 5,192.00 9 142,200.00 72,220.00 69,980.00 57,000.00 0.40 22,800.00

10 48,780.00 35,800.00 12,980.00 0.36 4,672.80 10 142,200.00 72,220.00 69,980.00 57,000.00 0.36 20,520.00 11 48,780.00 35,800.00 12,980.00 0.32 4,153.60 11 142,200.00 72,220.00 69,980.00 57,000.00 0.32 18,240.00 12 48,780.00 35,800.00 12,980.00 0.29 3,764.20 12 142,200.00 72,220.00 69,980.00 57,000.00 0.29 16,530.00 13 48,780.00 35,800.00 12,980.00 0.26 3,374.80 13 142,200.00 72,220.00 69,980.00 57,000.00 0.26 14,820.00 14 48,780.00 35,800.00 12,980.00 0.23 2,985.40 14 142,200.00 72,220.00 69,980.00 57,000.00 0.23 13,110.00 15 48,780.00 35,800.00 12,980.00 0.20 2,596.00 15 142,200.00 72,220.00 69,980.00 57,000.00 0.20 11,400.00 16 48,780.00 35,800.00 12,980.00 0.18 2,336.40 16 142,200.00 72,220.00 69,980.00 57,000.00 0.18 10,260.00 17 48,780.00 35,800.00 12,980.00 0.16 2,076.80 17 142,200.00 72,220.00 69,980.00 57,000.00 0.16 9,120.00 18 48,780.00 35,800.00 12,980.00 0.14 1,817.20 18 142,200.00 72,220.00 69,980.00 57,000.00 0.14 7,980.00 19 48,780.00 35,800.00 12,980.00 0.13 1,687.40 19 142,200.00 72,220.00 69,980.00 57,000.00 0.13 7,410.00 20 48,780.00 35,800.00 12,980.00 0.12 1,557.60 20 142,200.00 50,000.00 72,220.00 19,980.00 7,000.00 0.12 840.00 21 48,780.00 35,800.00 12,980.00 0.10 1,298.00 21 142,200.00 72,220.00 69,980.00 57,000.00 0.10 5,700.00 22 48,780.00 35,800.00 12,980.00 0.09 1,168.20 22 142,200.00 72,220.00 69,980.00 57,000.00 0.09 5,130.00 23 48,780.00 35,800.00 12,980.00 0.08 1,038.40 23 142,200.00 72,220.00 69,980.00 57,000.00 0.08 4,560.00 24 48,780.00 35,800.00 12,980.00 0.07 908.60 24 142,200.00 72,220.00 69,980.00 57,000.00 0.07 3,990.00 25 48,780.00 35,800.00 12,980.00 0.06 778.80 25 142,200.00 72,220.00 69,980.00 57,000.00 0.06 3,420.00

Net Present Value 304555 EIRR 34%

Annex 5 NIGERIA – SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY (SNPFS)

BANK GROUP OPERATIONS IN NIGERIA

Project name (all projects are On-Going) Source of Finance

Approval date

Sign. date

Closing date

Effective date

Last disb.

Approv. Amount

Undisb. Balance

Total Disb.

Net Loan

% Disb.

Audit Status

Sector : Agriculture

1 Community- Based Agric. & Rural Development Project ADF Loan 11.09.03 12.12.03 31.12.2011 19.12.05 27.04.06 13 12.49 0. 51 13 3.93 Due 2006

2 Institutional Support to Agric. & Rural Institut. ADF Grant 27.04.05 17.05.05 31.05.2005 27.03.06 3 3 0,00 3 0 Due 2006

3 National Fadama Development Project ADF Loan 10.12.03 12.12.03 31.12.2011 28.10.05 29.12.05 22 19.88 2.12 22 9.62 Due 2006

Sector : Environment

4 Niger Delta Social and Environmental Study ADF Grant 30.06.04 29.07.04 30.04.2007 20.05.05 24.01.06 1.7 1.31 0.39 1.7 22.89 Due 2006

Sector : Transport

5 Olokola Seaport & Free Trade Zone Study ADF Grant 27.04.05 17.05.05 31.12.2008 1.2 1.2 0 1.2 0

Sector : Water Sup/Sanit

6 Ibadan Water Supply ADB Loan 23.12.86 04.05.87 30.06.2006 17.12.87 12.06.06 26 7.77 18.23 26 70.11

Sector : Social

7 Community-Based Poverty Reduction Project ADF Loan 03.11.00 02.02.01 31.12.2007 11.09.02 15.05.06 20 16.77 3.23 20 16.15

8 Health Systems Development Project (IV) ADF Loan 11.09.02 15.10.02 31.12.2008 25.06.04 29.07.05 34.74 31.13 3.61 34.74 10.39

Sector : Multi-Sector

9 Skill Training and Vocational Education Project ADF Loan 27.07.05 - 31.12.10 - 30.0

10 Institutional Support for Governance and Capacity Building ADF Grant 18.10.01 07.12.01 31.12.2006 09.10.02 25.01.06 4 2.29 1.71 4 4264

Multinational Project

11 NEPA-CEB Power Interconnection ADF Loan 27.11.02

12 Capacity Building Inter-African Coffee Organization (IACO) ADF Grant 23.07.03 09.10.03 31.12.06 11.10.03 26.05.06 1.54 1.47 0.63 1.54 4.08 Due 2006

13 NERICA Dissemination Project ADF Loan 22.09.04 11.02.05 31.12.11 - - 1.609 1.609 0.00 1.609 0 Received

14 Invasive Aquatic Weeds Project ADF Loan 26.09.03 12.12.03 31.12.10 05.02.05 08.07.05 5.57 5.30 0.264 5.57 4.74 Due 2006

Annex 6 Page 1/5

FEDERAL REPUBLIC OF NIGERIA

SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY IN EKITI, ONDO AND CROSS RIVER STATES (SNPFS)

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY

1. Brief description of the project 1.1 The Bank intends to finance the expansion phase of the NPFS programme in three states (Ondo, Ekiti and Cross River States) to cover 18 new sites in the above states, whereas 9 sites were covered during the first phase. The project embraces the sector goal and objectives of the programme, which are to improve national food security and reduce poverty on a sustainable basis, through improvement in farm productivity, household food security and incomes in the project areas. 1.2 The Bank intervention will cover the following technical components: A) Community Development, which will foster community empowerment, group formation and development, training capacity building at State, LGA and farmer levels, and availing market support services, as well as health and nutrition services; B) Land and Water Development, which would respond to the felt needs of the rural people for the development of the facilities such as manageable irrigation schemes, rural access roads to markets, small water use and control structures for crop production, soil fertility improvement and site extension services; and C) Production Enhancement and Diversification, which will provide opportunities for crop diversification and intensification, small livestock production, aquaculture development, and strengthening of the research-extension-farmer linkages. 1.3 The environmental and social components that will likely be affected positively or negatively are the following: (a) air, water, soil, flora, fauna and ecosystems, (b) demographic trends, disease, access to productive factors, involvement in societal organization consultation and civil society strengthening. 2. Major environmental and social impacts 2.1 As it is demand driven, it is difficult at this stage, to determine which sub-projects are likely to be proposed by individual and community groups. However, based on the experience of the first phase, a list of activities has been suggested as the most likely to occur in the project areas. The following are the beneficial and adverse impacts of the various activities under the project: 2.2 Irrigation activities include the construction and rehabilitation of micro-earth dams and other water control structures, and the implementation of “fadama” type small irrigation schemes (i.e. 2.5 ha schemes and 1 ha schemes either by direct pumping or through washbore or tubewell). The project will increase access to productive land by beneficiaries of irrigation schemes, satisfy water needs for agriculture and increase opportunity for high-value crop production with access to irrigated water. Negative potential impacts would include degradation of ground and surface water quality downstream of the irrigation site due to high concentration of nutrients and pesticides; obstruction and clogging of reservoirs by weeds and silt sedimentation, increasing standing waters and vector breeding sites, water logging due to excess irrigation and poor drainage, which could also cause changes in soil chemical properties, such as pH, salinity, fertility etc.

Annex 6 Page 2/5

2.3 Since only micro-earth dams and related water control structures (ponds and dykes) will be involved under the project, minimal impacts to expect would include changes in the level of ground water-table resulting from changes in the drainage and water flow, degradation of the reservoir water quality. On the positive side there will be improved water conservation leading to sustainable management of water resources, increased access to capture fisheries fulfilling basic local needs and access to irrigated agricultural land in down stream zones. Provision of wells will reduce time allocated to water supply by women and children due to more reliable and closer drinking water sources, increase revenues for women who have additional time for alternative income-generating activities and less exposure to water- borne and water- related diseases. The improvement of rural access roads, comprising spot maintenance, culverts and drains, will allow better access to goods and services, opportunities to diversify revenues through increased access to markets and public services and improved nutrition, 2.4 The fisheries activities under the project include aquaculture development, which will bring more efficient use of existing resources especially capture fishes through improved fishing methods, marketing, distribution, processing and storage of fishery products. The income for women would increase, after they get organized to obtain training in improved fishing methods and fish processing techniques, more adapted to their specific needs. Improved nutrition due to increased availability of fish proteins will also be obtained. 2.5 The livestock activities mainly include the integrated production of small ruminants, piggery and poultry. The positive impacts would be the improvement in soil fertility due to additional nutrient (manure) whereas negative potential impacts include increased soil erosion due to land clearing and trampling. 2.6 The major activities under crop production include the intensification of the major staple crops in the project areas, land preparation, improved seed production, fertilizers and other input uses. Potential negative impacts would include: degradation of surface water quality downstream of crop production sites due to erosion and high concentrations of pesticides, and loss of organic matter and nutrients by removal of vegetation and leaching. The positive impacts likely to occur would include prevention of soil erosion due to the presence of perennial crops and on-farm agro-environmental practices; improved local food availability and supply; improved nutritional status due to increased food supply and access; increased incomes for women when agricultural product is marketed; better involvement of women in decisions related to agricultural production. Women involved in agriculture will get better organized to obtain training and support adapted to their specific needs. 3. Mitigation and Enhancement program 3.1 Under irrigation, potential mitigating measures include: awareness campaigns and proper maintenance through weeding and de-silting, the training of users in environmental protection and the consideration of various land uses while designing irrigation schemes. During construction phase, the measures to be observed by the contractors should include the design of water management structures in a way that reduces sedimentation and facilitate drainage and maintenance

Annex 6 Page 3/5

3.2 A good fisheries management must be based on sustainable resource management and this would include information on different methods of harvesting, optional seasons for harvesting and limit to harvest size. Other specific strategies are to: plan and implement wastewater disposal facilities; maintain motorized equipment in good condition in order to avoid leaks and discharge of hazardous materials; avoid locating fish ponds in areas sensitive to acidification; coordinate project activities with other land and water users; plan and manage aquaculture system in order to minimize water requirements; and ensure quality control during fish processing and storage. 3.3 In agro-forestry, measures would include: avoidance of areas sensitive to erosion and minimize land clearing areas; maintenance of strip vegetation along water bodies; avoid single-species plantations and flavor multipurpose trees; reliance on indigenous species or on those well adapted to the site characteristics, and careful introduction of exotic species. 3.4 Livestock activities. The general approach would be provision of advice on livestock management including best areas for grazing and promote superior genetic strains that ensure quality over quantity. Other specific strategies include: the restriction of livestock access to unstable areas such as steep slopes; the adaptation of the type and number of animals to the land carrying capacity; and the strategic localization of water points and salt licks. Livestock breeders (men and women) will be sensitized on controlling animal divagation that can cause economic damages, conflicts and accidents. 3.5 Crop production Activities. The general approach would be to ensure cultivation techniques that minimize soil erosion, discourage crop residue burning, promote cropping patterns that use green manure and legumes to build up soil fertility, select crop combination that work together and take account integrated pest management and rely on chemical pesticides only as “control of last resort”. Other specific approaches include the following: the adoption of pest management technologies/approaches to minimize pesticide use reducing pollutant concentration in drainage water; the use of biodegradable pesticides as much as possible; the application of organic matter to improve soil structure and fertility; and the promotion of agro-forestry techniques well adapted to the site. 3.6 Rural roads improvement and Market construction activities. The general approach would be to assist with the location, design and development of the roads/markets but consider impacts that such facilities would have on both the biophysical and social components of the environment. The specific strategies are to plan appropriate drainage infrastructures such as culverts and drains. For rural water supply, the general approach would be to ensure that water supply is adequate; that water resources are not wasted; provide effective drainage; and not encourage user conflicts. Other specific strategies include the siting of water supply infrastructures on low productive soils; the monitoring of water quality and the creation of water supply system management committees. 4. Monitoring program and complementary initiatives. In accordance with Nigerian regulations, monitoring and periodic environmental auditing will take place at every institutional level of the SNPFS. A comprehensive monitoring plan will be required to ensure that all sub-projects are in compliance with environmental requirements, and for those sub-projects that have been subjected to an ESA, to ensure that they are in compliance with mitigation/enhancement recommendations. A site-specific survey will be conducted before the commencement of project activities in order to determine environmental mitigation/enhancement measures, which should be integrated

Annex 6 Page 4/5

with subproject design and implemented under the Environmental and Social Management Plan (ESMP). To ensure compliance with national environmental, social policies and standards as well as with the Bank’s policies and guidelines, the Monitoring Program of the ESMP includes surveillance and monitoring activities, as well as indicators to be used to assess efficiency of the mitigation and enhancement measures during project implementation. Moreover, the implementation schedule shall be developed in co-ordination with the overall project implementation plan. FEPA and respective SEPA will facilitate a consultative workshop that will serve as a forum for consensus on the objectives and institutional arrangements for implementing the ESMP. 5. Institutional arrangements and capacity building requirements Facilitators supported under the project will help to organize the beneficiaries and guide them through an intensive process of group decision-making using a range of participatory techniques. A training plan for social mobilization and project sensitization has been included to facilitate stakeholder participation at all levels of project implementation including the ESMP. The project beneficiaries will participate in the State organizations responsible for oversight of targeting strategies, promotional and technical assistance strategies, fund approval of subprojects/activities, and in selected supervision of implementation. Before the commencement of project activities, an agreement will be signed between the PCU, the FEPA and the SEPAs to carry out the supervision of the site-specific survey aimed at facilitating the ESMP implementation. Among other outputs, the survey will prepare a matrix of the potential environmental and social impacts of the project with their corresponding mitigation measures, the associated costs and time frame for effectively carrying out the mitigating measures. Special attention must be given to those beneficial impacts that can be enhanced to improve the project’s environmental and social performance. 6. Public consultations and disclosure requirements The project is designed to operate in a participatory approach where all activities will be implemented in close collaboration with local communities to increase their sense of ownership of the new techniques to be introduced under the project. The project is based on the community-driven development (CDD) approach, with strong emphasis on stakeholder participation, especially at the community level. Some of the measures for which consultations will be undertaken are as follows: provision of opportunity to all affected groups, men and women, to participate in consultations by offering adapted consultation mechanism; information to men and women on how their concerns are taken into account; use consultations to determine traditional patterns of right and responsibilities concerning project components and to identify ways to increase the involvement of excluded groups. 7. Estimated costs Implementation of ESMP will be part of various project components, as to be derived from individual and inter community plans. It is estimated that UA 300,000.00 will be allocated for environmental and social management plan for the 3 States. The enhancement and mitigation costs would be the responsibility of the Community Development Associations. Effective planning (CDPs), sub-project design and application of best practices will ensure minimal impacts. The costs of design and implementation to avoid impacts will be part of the cost of the overall sub-project.

Annex 6 Page 5/5

8. Implementation schedule and reporting The implementation of the ESMP will be mainstreamed into the overall project implementation arrangement. The decentralized and bottom-up nature of the Project and specifically the implementation of the ESMP imply a diverse means of reporting such as workshop proceedings, minutes of meetings (at all levels), radio programs, staff field notes and reports as well as farmers’ records, monitoring and evaluation reports including mid-term and terminal reports, Council/Committees information papers. Moreover, reports on monitoring activities done by the FEPA and the SEPAs will be provided to the Project Steering Committee (PSC), the Bank, and will also be available to the public through NGOs or other interested groups.

Annexe

SCCD: G .G.

CONFIDENTIAL AFRICAN DEVELOPMENT FUND ADF/BD/WP/2006/91/Corr.1 17 October 2006 Prepared by: OSAN Original: English

Probable Date of Board Presentation 18 October 2006 FOR CONSIDERATION

MEMORANDUM

TO : THE BOARD OF DIRECTORS FROM : Modibo I. TOURE Secretary General SUBJECT : NIGERIA – PROPOSAL FOR AN ADF LOAN OF UA 22,000,000 UC TO FINANCE

THE SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY IN EKITI, ONDO AND CROSS RIVER STATES (SNPFS) *

Please find attached a corrigendum to the above-mentioned Appraisal Report. Attach: cc: The President

* Questions on this document should be referred to:

Mr. A. BEILEH Ag. Director OSAN Extension 2139 Mr. S. Z. MOUSSA Manager OSAN.3 Extension 2143 Mr. D. LEKORCHI Principal Civil Engineer OSAN.2 Extension 2502 Mr. A. B. KAMARA Agricultural Economist OSAN.2 Extension 3235 Mr. M. BASALIRWA Financial Analyst OSAN.3 Extension 2701 Mr. A. GOMBE Agronomist OSAN.2 Extension 3246

Mrs. MASHINKILA Gender Specialist ORPC.3 Extension 2361

NIGERIA

PROPOSAL FOR AN ADF LOAN OF UA 22.00 MILLION TO FINANCE A SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY

CORRIGENDUM - Project Appraisal Report

Abbreviations and Acronyms: PCU should be added and corrected to read “Projects’ Coordinating Unit” and not “Project Coordination Unit”, all through the report. Page 17, paragraph 4.5.1 and 4.5.2, the repeated part, starting with:” The project consists of…”, and ending with “… three States” is deleted once. Page 32, paragraph 5.2.3, the third sentence starting with:” Sub-committees …” is revised to read as follows: “ State Technical Management Committee (STMC) would be formed at State level under the chairmanship of the Prime Secretary (P.S.) of Agriculture to ensure synergy for programme implementation between the various state level institutions and agencies” Page 35, under paragraph 5.4.5 Goods: the second sentence starting with “Six contracts will …” is amended to read: “ Not less than six contracts will …”. Page 34, Table 5.2 and page 35, paragraph 5.4.6: During loan negotiations, it was agreed that these inputs be procured through the guidelines of the Community-Based Investment Projects (CBIP). Paragraph number 5.4.6 will now read “Office equipment, vehicles and motorcycles, detailed in table 5.2, valued at less than UA 0.44 million per contract, will be acquired through National Competitive Bidding (NCB). The total value of these goods is UA 1.88 million and will be subdivided into at least 9 contracts. There are adequate number of suppliers in the country sufficiently qualified to ensure competitive bidding. On the other hand, inputs for crop-based modules (amounting to a total of UA 0.683 million), for fisheries development modules (amounting to a total of UA 0.109 million), for livestock production modules (amounting to a total of UA 1.011 million) and for agro-forestry production modules (amounting to a total of UA 1.588 million) will be procured following Bank’s Guidelines for Procurement under the Community-Based Investment Project (CBIP) over at least 160 contracts. All of these are community-based activities, scattered over 18 sites (average of 10 communities per site) and spread across five years, and hence involving very small amounts per site (i.e. between UA 1,200 and UA 17,650 per site per year).” Page 34, Table 5.2: Procurement table is amended according to the above. Annex 2: has been amended to include the Federal Technical Management Committee immediately after the Project Steering Committee. The institutional arrangements at state level to include the ADP Executive Committee (ADPEC), the State Management Technical Committee (SMTC), as well as the Local Government Technical Management Committees. A revised annex 2 is attached. Annex 5: has been updated with information on status of audit and disbursement.

Annex 2

NIGERIA – SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY (NSPFS)

PROJECT ORGANISATION CHART

STMC = State Technical Management Committee LSMC = Local Site Management Committee

Note: Each state will comprise of nine sites or Local Government Areas (LGA)

Project Steering Committee

(Chaired by Minister of FMARD)

Project Coordinating Unit (PCU)

STMC ADP

EKITI

STMC ADP

ONDO

STMC ADP

CROSS

LSMC LSMC LSM LSMCLSMC LSMC LSMC LSMC LSMC

Federal Technical Management Committee (FTMC)

FAO Technical Assistance

Annex 5

NIGERIA – SUPPORT TO THE NATIONAL PROGRAMME FOR FOOD SECURITY (SNPFS)

BANK GROUP OPERATIONS IN NIGERIA

Project name (all projects are On-Going) Source of Finance

Approval date Sign. date

Closing date

Effective date Last disb.

Approv. Amount

Undisb. Balance

Total Disb.

Net Loan

% Disb. Audit Status

Sector : Agriculture

1 Community- Based Agric. & Rural Development Project ADF Loan 11.09.03 12.12.03 31.12.2011 04.05.05 31.12.11 13 12.49 0. 51 13 3.93 Due Sept 2006

2 Institutional Support to Agric. & Rural Institut. ADF Grant 27.04.05 17.05.05 31.05.2008 27.03.06 31.05.08 3 3 0,00 3 0 N/A

3 National Fadama Development Project ADF Loan 10.12.03 12.12.03 31.12.2011 28.10.05 31.12.11 22 19.88 2.12 22 9.62 Due Sept 2006

Sector : Environment

4 Niger Delta Social and Environmental Study ADF Grant 30.06.04 29.07.04 30.04.2007 29.07.04 30.04.07 1.7 1.31 0.39 1.7 22.89 Due June 2007

Sector : Transport

5 Olokola Seaport & Free Trade Zone Study ADF Grant 27.04.05 17.05.05 31.12.2008 31.12.08 1.2 1.2 0 1.2 0 Due Feb 2009

Sector : Social

6 Community-Based Poverty Reduction Project ADF Loan 03.11.00 02.02.01 31.12.2007 11.09.02 31.12.07 20 16.59 3.41 20 17.05 Due 2005/2006

7 Health Systems Development Project (IV) ADF Loan 11.09.02 15.10.02 31.12.2008 25.06.04 31.12.08 34.74 31.13 3.61 34.74 10.39 Due Feb 2007

Sector : Multi-Sector

8 Skill Training and Vocational Education Project ADF Loan 27.07.05 - 31.12.11 02.08.06 31.12.11 30.0 30.0 0.00 30.0 0.00 N/A

9 Institutional Support for Governance and Capacity Building ADF Grant 18.10.01 07.12.01 31.12.2006 09.10.02 31.12.06 4 2.29 1.71 4 42.64 Due Sept 2006

Multinational Project

10 PHC-CEB Power Interconnection ADF Loan 27.11.02 25.03.03 30.12.06 01.11.04 30.12.06 11.87 3.81 8.06 11.87 32.07 Due Sept 2006

11 Capacity Building Inter-African Coffee Organization (IACO) ADF Grant 23.07.03 09.10.03 31.12.06 11.10.03 31.12.06 1.54 1.47 0.63 1.54 4.08 Due Sept 2006

12 NERICA Dissemination Project ADF Loan 22.09.04 11.02.05 31.12.11 - 31.12.11 1.609 1.609 0.00 1.609 0 Received

13 Invasive Aquatic Weeds Project ADF Loan 26.09.03 12.12.03 31.12.10 05.02.05 31.12.10 5.57 5.30 0.264 5.57 4.74 N/A