UPDATE - Issue no. 11 - March 1998

UPDATE

Issue No. 11 - March 1998

In this issue:

From the Director . . .

This issue of UPDATE focusses on FAO’s Technical Cooperation Programme and briefly describes a few recent examples of how TCP funding can facilitate and accelerate the Investment Centre’s task of helping countries to obtain external capital investment for high priority, well-designed and sustainable development projects. Because TCP funds are limited, their release is subject to strict criteria, but when these criteria are met assistance is timely, swift and to the point. Through TCP, FAO reaches out in a practical and effective manner, in response to government requests. TCP projects draw on all of FAO’s technical expertise and experience, concentrating assistance where it is most urgently needed.

David Forbes Watt

FAO’s Technical Cooperation Programme Speeds Up Investment

A country’s lack of funds to initiate or complete key studies urgently needed before an investment project can be prepared and presented to a financing institution has frequently delayed and even halted the investment process. One source of funding to bridge this gap is FAO’s Technical Coooperation Programme [see BOX]. Over the past five years the TCP has granted more than US$ 13 million to developing countries to pay for urgently required pre-investment work which could not be funded readily or quickly enough from other sources - allowing project preparation to go forward, culminating in loan agreement and the disbursement of investment funds.

TCP support is also available when a country - recent examples are Haiti and Angola - is in urgent need of investment to rebuild its agricultural economy but requires immediate help in assessing investment priorities. Here the TCP has stepped in, funding detailed studies by FAO which have been used as a basis for the design of investment projects and programmes that attract not only external multilateral and bilateral financing but also investment from national and private sector sources.

Establishment of the Technical Cooperation Programme in 1976 marked awareness of the need for FAO to sharpen its capacity to provide quick-response, technical assistance to its member nations. TCP was born out of the recognition that much could be achieved - and much saved - by the timely provision of assistance in key areas where progress was impeded or blocked by the lack of some critical intervention. It was to serve as a new instrument, outside but parallel to the normal channels of development aid, that could respond rapidly and effectively to countries’ most urgent needs: small, urgently needed actions, of modest cost and limited duration that would have a catalytic and multiplier effect.

TCP operations are funded from FAO’s own budget, focussing scarce resources where they can be used to greatest effect in selected areas - Investment being only one of several categories (the others are Emergencies, Training, Advisory Services, Formulation and Programming Missions, Assistance to Development, and Inter-Country Cooperation). Requests for TCP assistance are made directly from the government to FAO’s Director-General and, to ensure maximum national involvement and follow-up, must be accorded high government priority. Ultimate if not immediate beneficiaries must be small-scale producers in the food and agriculture sectors, including forestry and fisheries: to help ensure ownership and sustainability, TCP projects are designed and implemented with their fullest participation.

The Programme offers short-term expert and consultant services, practical training, and equipment and supplies considered essential to attain specific objectives. The total cost of a TCP project is limited to a maximum of US$ 400 000 and on average is about half this amount. Project duration is preferably one to three months, never to exceed 24 months. TCP projects are implemented jointly by FAO, through its technical units at headquarters and in the field - using a mix of expertise including national consultants - and by the national counterpart agency designated by the recipient government.

For further information about FAO’s Technical Cooperation Programme, please refer to the TCP Unit, Technical Cooperation Department, Food and Agriculture Organization of the United Nations, Viale delle Terme di Caracalla, 00100 Rome, Italy, FAO. E-Mail: Hans.Page@fao.org or Tel.: + 39 (6) 57054058 or Fax + 39 (6) 57053134.

Irrigation rehabilitation in FYR Macedonia

In May 1996 a mission from the FAO Investment Centre visited FYR Macedonia at the request of the Government and the World Bank to prepare an Irrigation Rehabilitation and Restructuring Project. The project would have two basic components: rehabilitation of the irrigation infrastructure in two regions covering 38,500 hectares, and institutional and policy reform.

During the mission the Government indicated that it would like to start the design work for the two largest irrigation schemes as soon as possible. National funds were available to cover part of the cost of a local design team but were not sufficient to pay for international expertise to supervise the design team - which was needed to ensure that the project reflected modern approaches to irrigation design and reconstruction. The Government explored the possibility of securing advance funding for this purpose from the European Union (PHARE funds) and from the World Bank’s Project Preparation Facility (PPF). However, initial indications were that funds from these sources could not be made available in time.The Government asked the mission to see if assistance could be obtained from FAO’s Technical Cooperation Programme.

A TCP project proposal was drafted by the Ministry of Agriculture and the local preparation team, with the assistance of the Investment Centre mission and FAO’s Land and Water Development Division (Water Resources, Development and Management Service). In September 1996 "Assistance for Improved Design in Irrigation Rehabilitation" was approved and US$228,000 was granted from TCP resources to finance the studies.

The TCP project was able to act quickly to assist the Government in making the proposed investment project more effective. It made an important contribution to strengthening the local design team through on-the-job training in modern approaches to irrigation system design, and helped the Government to conform to World Bank loan approval requirements which call for detailed design works and contract documents to be completed for works to be initiated in the first year of a project before the loan can be disbursed. The TCP project provided detailed designs and procurement plans for six contracts for a total of US$ 2.6 million for the first year of construction. These contracts were prepared in the national language because most of the civil works contracts would be carried out through local competitive bidding.

The TCP project was operational for six months, allowing preparation of the investment project to be completed in time for review by the World Bank appraisal mission in May 1997. The US$ 32.5 million investment project was approved for financing in November 1997, in time to start construction as planned. The project will enable private farmers to fully regain the potential of irrigated agriculture through rehabilitation of the country’s deteriorated high priority irrigation schemes. Sustainability and efficiency of the irrigated area will be improved not only by the repair of infrastructure but also by the introduction of participatory management and more technologically advanced and cost-effective irrigation methods. Project financing is provided by the World Bank/IDA with US$ 12.5 million, the Netherlands with US$ 12 million and US$ 8 million from the Government.

Contact: Abdulhamid Azad (azad.azad@fao.org).

Ghana - The private sector forestry plantation development project

Increasing pressure on Ghana’s natural forests, and the need to satisfy the country’s growing demand for wood on a long-term basis, have led the Government of Ghana to encourage the development of private-sector forest plantations. At the request of Government and the African Development Bank, a mission from FAO’s Investment Centre visited Ghana in February 1997 to identify opportunities for a private plantation project for possible ADB financing.

The mission reported positively, but identified a number of institutional uncertainties as well as the need for additional information before project preparation could go forward. Since funds were lacking to finance the work involved, the Government turned for help to FAO’s Technical Cooperation Programme. A TCP project costing US$138,500 to review the feasibility of developing a plantation fund to promote private plantations was approved by FAO’s Director-General in July 1997, and work started the following month. An informal multidisciplinary task force of officers from several units in FAO’s Forestry Department (forestry policy and institutions; conservation, research and education; resources development), from FAO’s Legal Department and from the Agricultural Support Systems Division (marketing and rural finance) as well as from the Investment Centre itself, oversaw the work of the TCP project, providing technical advice, reviewing working papers and reports. The task force continued to provide support throughout preparation of the project, which was carried out by the government with help from the Investment Centre in January 1998.

The main objective of the project is to establish, over the medium term, an appropriate and self-financing institutional framework and incentive structure conducive to the development of a demand-driven forest plantations programme for both small and large-scale investors. Because of the innovative nature of the project, a cautious approach is proposed, but it is intended to increase progressively the annual planted area, to reach at the end of the six-year programme the establishment of at least 10,000 hectares per annum. The proposed project will have the following five components: (i) establishment of a Land Bank to facilitate access to land for private timber plantation investors, and a land evaluation and monitoring system; (ii) mechanisms for disbursing incentives in the form of grants and loans to potential tree planters and small-scale nursery operators; (iii) institutional strengthening including training of all stakeholders, together with public awareness campaigns; (iv) the establishment of a private sector managed Seed Bank; and (v) adaptive research.

Contact: André Simon (andre.simon@ fao.org).

The IC at a Glance

The Investment Centre (IC) is a Division of the Technical Cooperation Department of FAO. Its main task is to assist developing countries to formulate projects in agriculture and rural development, including forestry, fisheries and agro-industries, for funding by multilateral financing institutions.

In carrying out this work, the IC has programmes of cooperation with a wide range of financing institutions lending for agriculture, including the World Bank, IFAD, the Regional and Sub-Regional Development Banks, the European Bank for Reconstruction and Development, UNCDF and Arab Funds.

Since its inception, the IC has participated in formulation of 1,093 projects approved for financing, involving total investments of US$ 60.1 billion. Of this, over half is from external sources, the balance from the recipient countries.

PERU: Sistema de riego y drenaje

A través del Programa de Cooperación Tecnica (PCT) de la FAO, el Centro de Inversiones (CI) prestó asistencia al Gobierno del Perú, durante 1992-93, en la preparación de estudios de factibilidad para la rehabilitación de 13 sistemas privados de riego, ubicados a lo largo de la costa peruana: San Lorenzo, Chancay-Lamnayeque, Huaral-La Esperanza, Santa Rita de Siguas, Yuramayo, Santa Lacramarca, Huaura-Santa Rosa, La Joya Antigua, Chili Regulado, Sama, Chincha, Ica y Vitor. Esos sistemas, alimentados por represas y otras obras de embalse construidas hace algunas décadas por el Estado, son manejados por juntas de regantes y abarcan una superficie total de más de 300,000 Ha. Debido a la falta de mantención, la disponibilidad de agua disminuyó considerablemente, lo cual trajo como consecuencia una caída de la producción en estos sistemas, inclusive de la producción de cultivos de alto valor, y una disminución de los ingresos de los 60,000 productores que integran las juntas. En consecuencia, se consideró esencial la rehabilitación de los sistemas (adecuadamente acompañada por planes de operación y mantención de largo plazo de la infraestructura), a ser financiada por los beneficiarios con un aporte mínimo del Gobierno.

Los estudios de factibilidad, financiados por el PCT, por un valor total de US$ 240.000 fueron realizados por diversos equipos de consultores locales bajo la supervisión de un Coordinador Nacional nombrado por el Ministerio de Agricultura. El CI realizó varias misiones de apoyo, de una duración de 2-3 semanas cada una e integradas por un equipo multidisciplinario liderado por un economista, para orientar y revisar el trabajo de los consultores nacionales. En particular, las misiones se preocuparon de armonizar las metodologías y los criterios utilizados por los grupos de consultores para evaluar la viabilidad técnica, financiera y económica de los distintos sistemas de riego y de uniformar la presentación de los estudios de factibilidad. En la fase final, el CI también colaboró en la revisión del informe final del PCT preparado por el Coordinador Nacional. Aparte del apoyo logístico prestado a los consultores nacionales, la Representación de la FAO en Lima jugó un papel valioso no sólo como administrador del PCT en el país sino también como intermediario eficaz entre el CI y el Ministerio de Agricultura y sus consultores.

Desde su inicio, el PCT generó mucho interés por parte del Banco Mundial (BM) y los estudios producidos por el PCT fueron utilizados como insumo principal en la preparación de un proyecto de inversión en el sector de riego en Perú. Dicho proyecto, cuyo costo total se estima alrededor de 172 milliones de dollares norteamericanos, beneficiará de un posible financiamiento del Banco Mundial y de la ayuda bilateral del Gobierno Japonés.

Contact: Loretta Sonn (loretta.sonn@fao.org).

MADAGASCAR: Réhabilitation du périmètre du Bas-Mangoky

Le projet de réhabilitation du Bas-Mangoky a été identifié par le Centre d’investissement en 1996 pour le compte du groupe de la BAD qui l’a retenu en priorité pour sa préparation et son évaluation en 1998. Il s’agit d’un projet particulièrement intéressant concernant la remise en état et la mise en valeur d’aménagements réalisés dans les années 60, et dont les infrastructures primaires sont encore en très bon état ; ces infrastructures primaires ont été conçues pour pouvoir irriguer 100 000 hectares environ. La préparation du projet impliquait des études préalables relativement lourdes de façon à (i) minimiser les risques techniques et organisationnels; (ii) chiffrer les coûts avec précision; et (iii) faciliter la préparation dans un délai minimum. A cet égard le PCT s’est impliqué dans le financement de ces études pour un montant global de 182 000 de $ E.-U; le document de projet a été élaboré avec la collaboration de la Division de la mise en valeur des terres et des eaux et de la Division de la production végétale et de la protection des plantes; ces études, conduites par des consultants nationaux et internationaux, sont aujourd’hui terminées et elles sont d’un très bon niveau. Elles ont concerné quatre domaines essentiels:

  • le génie rural: diagnostic des aménagements, définition des travaux de réhabilitation et d’entretien, modalités d’exécution des travaux ; le travail réalisé permet de passer directement au stade de l’avant projet détaillé (APD);

  • le désenclavement routier: diagnostic de l'état des routes d'accès, définition des travaux de réhabilitation et d'entretien; le travail réalisé permet de passer directement au stade APD;

  • l’organisation des usagers: diagnostic de la situation sociale, capacité à s’organiser, besoins en formation et appui; 21 associations ont été mises en place;

  • l’environnement institutionnel: diagnostic de la situation actuelle et perspectives de mise en place d’institutions de statut privé; en particulier il est prévu que les associations d'usagers de l'eau (AUE) et leur fédération soient entièrement res- ponsables de la gestion de l'eau et de l'entretien du périmètre.

La préparation a pu se dérouler en disposant d’informations fiables et la plupart des questions en suspens soulevées au moment de l’identification ont reçu une réponse. Grâce au projet du PCT le document de préparation sera prêt pour le mois de mai 1998.

Le projet proposé au Groupe de la BAD aura un coût total de l’ordre de 18 millions de $ E.-U; la production additionnelle devrait atteindre 30 000 tonnes de paddy en année de croisière; la rentabilité interne devrait dépasser 20%.

Contact: Jean Leteuil (jean.leteuil@fao.org)

Briefly noted

During the period November 1997-February 1998 the Investment Centre carried out 169 missions to 73 countries.

AFRICA

The Centre assisted in identification of agricultural and rural development projects in Guinea (AfDB). It helped prepare a rural and agro-forestry development project and a national extension programme in Cameroon (AfDB and IFAD),and an agricultural statistics programme in Ghana (WB); it identified soil fertility interventions in Ethiopia, Eritrea, Guinea, Malawi and Madagascar for the WB, and a country strategy and opportunities paper in Guinea Bissau (IFAD). The Centre updated a rural development project in Madagascar (AfDB), followed up a forestry project in Uganda (TCP), identified a soil and water management project in Senegal (WB), irrigation programmes in Malawi (IFAD), Niger (IsDB) and Ghana (WB), a private sector forestry plantation programme in Ghana (AfDB), and an agricultural sector reform project in Angola (TCP). It undertook full formulation of a rural diversification project in Mauritius for IFAD, and a marketing study in Malawi for AfDB. It prepared a small-scale irrigation project in Mali and an agricultural research and extension project in Uganda for the WB, and an irrigation project in Uganda for AfDB. It assisted in the evaluation or supervision of projects for the WB in Kenya, Malawi, Zimbabwe, for AfDB in Equatorial Guinea, Gabon, Ghana and Senegal, for UNCDF in Mali and for IFAD in Mauritania. The Centre also initiated or continued formulation of food security programmes in Eritrea, Ghana, Kenya, Malawi and Zambia (SPFS). It contributed to sectoral reviews in Burkina Faso, Malawi, Mozambique, Nigeria, Senegal and Togo (WB), and Ethiopia (AfDB).

ASIA

The Investment Centre helped prepare a country strategy outline for Nepal (WFP), assisted with preparation of rural development projects in Cambodia and India, and an irrigation project in India for the WB. Assistance continued for shifting cultivation in Lao and rural infrastructure in Vietnam (AsDB), for environment and irrigation in India (FAO and WB). Formulation was initiated in India for a tribal communities programme (IFAD) and for a soils reclamation project (WB). The Centre participated in preparation of an irrigation project in Pakistan (WB), reviewed preparation reports for fisheries in Bangladesh (WB) and followed up on preparation of an irrigation project in Vietnam (WB). It contributed to the appraisal of irrigation and forestry projects in China (WB) and of diversified agriculture in India (WB), and in evaluation or supervision of WB projects in Bangladesh, India, Indonesia, Nepal and Sri Lanka. It also assisted in rural development and water management sector work for the WB in Indonesia and India. Identification missions were undertaken for food security programmes in Bangladesh (WB), China and PDR Korea (UNDP) and Pakistan (SPFS).

LATIN AMERICA

Identification started for an environment project in Uruguay (WB) and for land tenure in Ecuador (IDB). Preparation was carried out for rural investment in Bolivia (WB), artisanal fisheries in Colombia (IFAD), small farmers development in the Dominican Republic (IFAD), land fund and administration in Guatemala and El Salvador (WB), private forestry in Nicaragua (WB), animal health and plant pathology in Brazil (WB), coconut water in Dominica (CDB) and agricultural credit in Mexico (WB). The Centre participated in appraisal of projects for biodiversity and poverty alleviation in Argentina, and land management in Brazil (WB). It also assisted in evaluation or supervision of WB projects in Argentina, Brazil, Chile, the Dominican Republic, Ecuador, Honduras, Mexico, and Uruguay. Sub-sector studies were initiated for irrigation in Argentina, Brazil and Mexico, for agriculture in Mexico and Peru, land administration in Ecuador, and environment in Haiti (WB). The Centre continued formulation of a food security programme in Bolivia and Honduras (SPFS), and prepared pre-feasibility studies for small-scale irrigation projects in St. Lucia and Dominica (TCP).

NEAR EAST AND NORTH AFRICA

The Centre identified and prepared a fisheries export and development project in Morocco (WB), identified a smallholder aquaculture development project in Libya (IFAD) and an agricultural support services project in Tunisia (WB). It carried out an agricultural sector update in Turkmenistan (WB) and helped prepare a rural development project in West Bank & Gaza (WB), appraised a rural development project in Morocco (WB) and evaluated projects for the WB in the Yemen Republic. The Centre also initiated or continued formulation of food security programmes in Azerbaijan, Djibouti, Morocco, and Sudan (SPFS).

EUROPE

Project formulation started for irrigation in Albania and Georgia (WB). The Centre assisted in preparation of wine sector development and wholesale food market projects in Croatia (EBRD), irrigation projects in Croatia and Georgia (WB), an agricultural mechanization project in Poland (EBRD), an agricultural commodity markets project in Turkey (WB), and an agricultural support services project in Romania (WB). The Centre helped supervise and evaluate WB projets in Albania, FYR Macedonia, Poland and Turkey, and EBRD projects in Croatia and Poland. It participated in WB sector reviews for irrigation in Romania , crop production in Poland , and forestry in Georgia . The Centre also assisted in appraising an irrigation project in FYR Macedonia and a commodity markets project in Turkey (WB). It continued formulation of food security projects in Bosnia and Herzegovina and Georgia (SPFS), and participated in a forestry workshop in Romania (TCP).

Projects approved for financing

In the period November 1997-February 1998, 25 projects formulated with substantial inputs from the Investment Centre were approved by financing institutions and governments for total investments of US$1,008.86 million (the balance between the total project cost and loan amount is provided by the recipient government and beneficiaries): ARMENIA: Agricultural Reform Support US$19.8 m (US$14.5 m WB); BANGLADESH: Silk Development US$13 m (US$11.35 m IDA); BRAZIL: Northeast Rural Poverty Alleviation (Maranhao) US$106.7 m (US$80 m WB); Northeast Rural Poverty Alleviation (Paraiba) US$80 m (US$60 m WB); CAMEROON: Poverty Alleviation and Actions for Women US$22.44 m (US$20.34 m AfDF); CROATIA: Wholesale Markets US$39.6 m (US$19.3 m EBRD); ECUADOR: Development of Indigenous and Afro-Ecuadorian Communities US$50 m (US$25 m WB, US$15 m IFAD); EGYPT: El Beheira Rural Development II US$32.02 m ( US$17.67 m AfDB); ERITREA: National Livestock Development US$15.69 m (US$13.77 m AfDF); Fisheries Infrastructure Development: US$17.97 m (US$15.89 m AfDF); GHANA: Small-scale Irrigation US$30.87 m (US$20.61 m AfDF, US$4.05 m WFP); Food Crops Development US$19.24 m (US$13.74 m AfDF); Roots and Tubers Improvement US$10 m (US$9 m IFAD); INDONESIA: Rural Income Generation US$137 m (US$78.6 m AsDB, US$24.9 m IFAD); LATVIA: Riga Solid Waste Management US$25.21 m (US$7.95 m WB, US$5.12 m GEF, US$1.5 m SIDA); FYR MACEDONIA: Irrigation Restructuring and Rehabilitation US$32.5 m (US$7.5 m WB, US$5 m IDA, US$12 m The Netherlands); MALAWI: Rural Income Enhancement US$10.99 m (US$9.7 m AfDF); MEXICO: Rural Development in Marginal Areas US$63 m ( US$47 m WB); MOROCCO: Water Resources Management US$25.6 m (US$20 m WB); Rural Water Supply (PAGER) US$60 m (US$10 m WB); NEPAL: Irrigation Sector US$103.03 m (US$79.77 m IDA); PANAMA: Sustainable Rural Development, Coclé US$17.4 m ( US$12.2 m IFAD); SENEGAL: Village Management and Development US$13.4 m (US$9.5 m IFAD, US$1.4 m BOAD); VENEZUELA: Environmental Management and Cartography US$45 m (US$28 m WB); VIETNAM: Ha Giang Development for Ethnic Minorities US$18.4 m ( US$12.5 m IFAD, US$2.3 m UNDP, US$0.8 m SIDA).

- INDEX -

UPDATE, published three times a year, is the newsletter of FAO's Investment Centre - a Division of the Organization's Technical Cooperation Department. For more information, contact: The Editor, UPDATE, Investment Centre, Food and Agriculture Organization of the United Nations (FAO), v. delle Terme di Caracalla, Rome, Italy; tel:. +39 (6) 570-53568; fax: +39 (6) 570-54657; e-mail: investment-centre@fao.org.

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