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AFRICAN DEVELOPMENT FUND Language: English Original: English

REPUBLIC OF ANGOLA

APPRAISAL REPORT

BOM JESUS – CALENGA SMALLHOLDER AGRICULTURAL DEVELOPMENT PROJECT

This document contains errata or corrigenda (see Annexes)

AGRICULTURAL AND RURAL DEVELOPMENT DEPARTMENT (OCAR)

CENTRAL & WEST REGIONS SEPTEMBER 2005

TABLE OF CONTENTS Page

Project Information Sheet, Currency and Measures, List of Tables and Annexes, List of Abbreviations and Acronyms, Basic Data Sheet, Project Logical Framework, Executive Summary………………………………….i –xii

1. ORIGIN AND HISTORY OF THE PROJECT .......................................................... 1 2. THE AGRICULTURAL SECTOR............................................................................. 2 2.1 Salient Features…………………………………………………………………….2 2.2 Land Tenure……………………………………………………………………… 4 2.3 Cross-Cutting Issues……………………………………………………………….5 2.4 Institutional Framework……………………………………………………………8 2.5 Agricultural Sector Constraints and Potential ........................................................ 12 2.6 Agricultural Development Policy and Strategy...................................................... 13 2.7 Donor Intervention ................................................................................................. 14 3. IRRIGATION AND CROP SUB-SECTORS........................................................... 15 3.1 Crop Sub-Sector ..................................................................................................... 15 3.2 Irrigation Sub-Sector .............................................................................................. 16

4. THE PROJECT ......................................................................................................... 18 4.1 Project Concept and Rationale ................................................................................. 18 4.2 Project Area and Project Beneficiaries................................................................... 19 4.3 Strategic Context .................................................................................................... 23 4.4 Project Objective .................................................................................................... 24 4.5 Project Description ................................................................................................. 24 4.6 Production, Market and Prices ............................................................................... 30 4.7 Environmental Impact ............................................................................................ 31 4.8 Project Costs........................................................................................................... 32 4.9 Sources of Financing and Expenditure Schedule ................................................... 33 5. PROJECT IMPLEMENTATION ............................................................................. 34 5.1 Executing Agency ..................................................................................................... 34 5.2 Institutional Arrangements ........................................................................................ 34 5.3 Supervision and Implementation Schedule ............................................................... 36 5.4 Procurement Arrangements ....................................................................................... 38 5.5 Disbursements Arrangements.................................................................................... 39 5.6 Monitoring and Evaluation........................................................................................ 40 5.7 Financial Reporting and Auditing ............................................................................. 43 5.8 Aid Co-ordination...................................................................................................... 43 6 PROJECT SUSTAINABILITY AND RISKS .......................................................... 43 6.1 Recurrent Costs ...................................................................................................... 43 6.2 Project Sustainability.............................................................................................. 44 6.3 Critical Risks and Mitigating Measure................................................................... 45 7 PROJECT BENEFITS .............................................................................................. 46 7.1 Financial Analysis .................................................................................................. 46 7.2 Economic Analysis................................................................................................. 48 7.3 Social Impact .......................................................................................................... 48 7.4 Sensitivity Analysis................................................................................................ 49 8 CONCLUSIONS AND RECOMMENDATIONS................................................... 49

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LIST OF TABLES

Table 2-1: Crop Production and Per-capita Availability 4 Table 4-1: Summary of Project Cost Estimates by Component............................................... 31 Table 4-2: Summary of Project Estimates by Category of Expenditure .................................. 32 Table 4-3: Project Sources of Finance ..................................................................................... 32 Table 5-1: Implementation Schedule ....................................................................................... 36 Table 5-2: Summary of Procurement Arrangements ............................................................... 38 Table 5-3: Expenditure Schedule by Component .................................................................... 39 Table5-4: ADF/Government/BeneficiariesExpenditure Schedule 39 Table 5-5: Summary of Expenditure by Category and Source of Finance 39 Table 6.1: Summary of Recurrent Costs……………………………………………………...42 Table 7-1: Financial Results..................................................................................................... 46 Table7-2: Sensitivity Analysis 48

LIST OF ANNEXES Number of Pages 1. Map of the Project Area 1 2. Project Organisation and Management 1 3. Implementation Schedule 2 4. Environmental and Social Management Summary 2 5. List of Bank Group operations in Angola 1

The report was prepared by Messrs. A. Gombe, Agronomist (Team Leader), Moses Basalirwa, Senior Financial Analyst, J. Opio-Omoding, Agricultural Economist all of OCAR.2 and Consultant Irrigation Engineer following an appraisal mission to Angola in June 2005. Contributions were also received from Ms. Rita Ba Naye, Gender Specialist and Mr. M.M Traore, Environment Specialist, all of OCAR.0. Additional inquiries relating to the report should be directed to the authors or Mr. S. Z. Moussa, Manager, OCAR.2 (Ext. 2143) or Mr. C. R. Spencer, Director, OCAR (Ext. 2036).

AFRICAN DEVELOPMENT FUND BP 323 – 1002 TUNIS BELVEDERE, TUNISIA TEL: (216) 71 333 511 FAX: (216) 71 351 933

PROJECT INFORMATION SHEET 1. COUNTRY : Republic of Angola 2. PROJECT TITLE : Bom Jesus– Calenga Smallholder Agricultural Development

Project 3. LOCATION : Bom Jesus Commune (Icolo-e Bengo Municipality) and

Calenga Commune (Huambo Province, Caala Municipality)

4. BENEFICIARY : Republic of Angola 5. EXECUTING AGENCY: Ministry of Agriculture and Rural Development Luanda Commandante Gika Street, Cx Postal 507, Luanda, Angola

Tel: (244) 2 32 3224/35/41; Fax: (244) 2 32 36 51 E-Mail: [email protected]

6. PROJECT DESCRIPTION: The project components are i) Rural Infrastructure Development; ii) Agricultural Development, iii) Capacity Building and, iv) Project Management. The main activities include irrigation development, intensification of rain-fed agriculture and training of staff and farmers. 7. TOTAL COST : UA 19.776 million

Foreign exchange : UA 14.707 million Local cost : UA 5.069 million 8. ADF GRANT : UA 17.200 million 9. OTHER SOURCES OF FINANCE Government of Angola : UA 1.904 million Beneficiaries : UA 0.672 million 10. DATE OF APPROVAL : (Expected October 2005) 11. PROBABLE COMMENCEMENT DATE AND PROJECT DURATION

Commencement : June 2006 Duration : 5 Years

12. PROCUREMENT OF GOODS, WORKS AND SERVICES Procurement of goods, works and consultancy services financed by ADF resources will be carried out in conformity with Bank Group Rules of Procedure. The procurement of civil works (Rural Infrastructure) will be by International Competitive Bidding (ICB); Vehicles & equipment and provision of training by National Competitive Bidding (NCB); and consultancy services through competition on the basis of a short-list. 13. CONSULTANCY SERVICES REQUIRED Consultancy services for the development of agricultural statistics and planning, irrigation policy, training, mid-term review, design and supervision of engineering works, auditing of the project accounts, MTR, PCR, MIS design, monitoring and monitoring, including M & E of the Environmental and Social Management Plan (ESMP) will be required.

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CURRENCY AND MEASURES (June 2005)

UA 1 = KZ 133.502 UA 1 = USD 1.47495 USD 1 = KZ 90.5129

FINANCIAL YEAR

1 January – 31 December

WEIGHTS AND MEASURES

METRIC SYSTEM

LIST OF ABBREVIATIONS AND ACRONYMS

ADRA : Adventist Development and Relief Agency AWP : Annual Work Plan BPC : Banco Poupanca e Credito (BPC) CLUSA : Cooperative League of USA DNAFF : National Directorate of Agriculture, Livestock and Forestry DNDR : National Directorate of Rural Development DNHAER : National Directorate of Agrarian Hydraulics and Rural Engineering EDA : Municipal Agricultural Office ESMP : Environmental and Social Management Plan FFS : Farmer Field School GAPHA : Irrigation and Rural Development Unit GDP : Gross Domestic Product GOA : Government of Angola ICB : International Competitive Bidding IDA : Institute of Agricultural Development of MINADER IIA : Institute of Agricultural Research of MINADER KZ : Angolan Kwanza LCC : Local Consultative Committee MFI : Micro Finance Institution MINADER : Ministry of Agriculture and Rural Development MOU : Memorandum of Understanding MSL : Mean Sea Level MUE : Ministry of Urban and Environment NGO : Non-Governmental Organisation OCAR : Agricultural and Rural Development Department of ADB PCR : Project Completion Report PIU : Project Implantation Unit PSC : Project Steering Committee SDF : Social Development Fund SME : Small and Medium Scale Enterprise SMS : Subject Matter Specialist SOPIR : Society for the Management of Irrigation Schemes USAID : United States Agency for International Development VEW : Village Extension Workers WFP : World Food Programme WV : World Vision International

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BOM JESUS – CALENGA SMALLHOLDER AGRICULTURAL DEVELOPMENT

PROJECT

PROJECT MATRIX – ADF GRANT

Project Results-Based Logical Framework

HIERARCHY OF OBJECTIVES

EXPECTED RESULTS BY CORRESPONDING SECTORS

AND THEMES

REACH PERFORMANCE INDICATORS SOURCE

METHOD

INDICATIVE TARGETS TIMEFRAME

ASSUMPTIONS AND RISKS

GOAL Sector Theme SECTOR/THEME Longer-term outcome

BENEFICIARIES INDICATORS Longer-term outcome

TARGET INDICATORS and TIMEFRAME

Increase farmers’ food security and incomes

Contribute to increasing the current 9% contribution of agriculture to GDP to its pre-war status of 15% with emphasis on food production (maize, beans and potato production).

70% of the population that is dependent on agriculture and specifically, 11,000 farm families

(55,000 subsistence producers) in the communes of Bom Jesus and Calenga of which 50% are women

• National statistics on economy and agriculture • Provincial reports • Project Reports

By PY5, 11,000 farm families in Bom Jesus & Calenga will have an equivalent per capita income of USD 4,575 & $ 3,465 respectively from the current per capita base of US $ 380 for Bom Jesus farmers and US $ 300 for Calenga Increase production of target food

crops: Crop From To PY (Mt/ha) (Mt/ha) Potato 8 15 5 Maize 1 4.5 5 Bean seed 0.6 2 5

• The prevailing peace process is consolidated • The Government macro-economic reform process remains on track

Project OBJECTIVE Medium-term OUTCOMES BENEFICIARIES INDICATORS Medium-term outcome

TARGET INDICATORS

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AND THEMES


METHOD






Objective: Increase agricultural output and farmers incomes.

Open up 27,150 ha of agricultural land (26,000 in Calenga and 1,150 Bom Jesus Communes) through installation of rain-fed and gravity flow irrigation infrastructure. Increased production and

multiplication of mother and breeder potato tuber (from 8 tons/ha to 15 tons/ha annually), maize (1 ton/ha to 4.5 tons/ha annually) and been seeds (0.6 tons/ha to 2 tons/ha annually) through contract farmer,

adaptive and on-station model in Huambo Research Institute to meet farmer seed needs Emergence of viable farmer

associations and organisations, capable enough to sustain agricultural production at: maize 3 tons/ha annually, beans 1.5 tons/ha annually & potatoes 12 tons/ha annually.

11,000 rural farmers who till on average 2.6 ha plots MINADER as ministry

and its institutions at Provincial & Municipality level Total population of

about 55,000 people living in Bom Jesus and Calenga Communes

Mid term out figures: 20,000 ha put into use with

cropping intensity of 100% (double current intensity) Put 750 ha into use with

cropping intensity 120% Opening up 20 ha of

potatoes with an annual yield of 15 tons/ha Opening up 160 ha of

maize with an annual yield of 3 tons/ha Opening up 200 ha of beans

with an annual yield of 1.5 tons/ha 545 farmer associations

strengthened and institutionally capacitated to run as business enterprises Means of Verification Project Monitoring &

Evaluation reports Ministry Reports

Bring the cropping intensity to 135% of the present in Calenga and 200% in Bom Jesus by the end of YR5 Open 20 ha for potato tuber, 160

ha for maize and 800 ha for bean seed multiplication in Huambo Research Station to provide farmers with seeds Create 545 farmer associations and

20 farmer apex organisations, fully linked to credit and output marketing facilities 20-farmer apex association

strengthened to sustain irrigation facilities and agricultural production.

National seed policy will evolve that will enable further multiplication of better quality seed to meet farmer domestic and market demand

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AND THEMES


METHOD






Component 1: Rural Infrastructure Development.

1. 27,150 ha of land brought under intensive smallholder agriculture by Yr.5 through development of irrigation infrastructure in Bom Jesus and rain-fed agriculture in Calenga Commune 2. 137 km of feeder roads rehabilitated to gain access to input and output markets. 3. 13 bridges rebuilt to facilitate market and production linkages 4. 76 water wells drilled to provide safe domestic water to over 11,000 farm families. 5. 2 Health Centers (HC) rehabilitated to provide basic preventive and curative health services to 11,000 farm families

• 11,000 rural farmers who till on average 2.6 ha plots. • Directly targeting other benefits like improved water supply, health services and road network to 55,000 people in Bom Jesus and Calenga, though these benefits cut across entire community of Bom Jesus and Calenga Communes.

1a) 42 km of main streams and channels protected 1b) 2 water pumping stations constructed; 1c) 4 big water reservoirs constructed 1d) 60 reservoirs de-silted and rehabilitated 2) The following number of kilometres and bridges repaired: 2a) 58 km of class 1 feeder roads 2b) 79 km of class 2 feeder roads 3a) 4 class 1 bridges 3b) 9 class 2 bridges 4a) 16 boreholes 4b) 60 hand-dug wells drilled 5a) A Health unit each in both Bom Jesus and Calenga

1.a) 14 km annually effective PY2 and 28 km by PY3; 1b) Two stations constructed by PY2 1c) 1 reservoir constructed each year effective PY2; 1d) 15 each year effective PY2; 2a) 12 km rehabilitated in PY1 and 23km in PY2 & YR3; 2b) 30 km rehabilitated in PY2 and PY3 each and 19 in PY4; 3a) 1 bridge in PY1 and 3 in PY2; 3b) 3 bridges each year, effective PY2; 4a) 3 boreholes drilled in PY1, 10 in PY2 & 3 in PY4; 4b) 5 wells dug in PY1, 15 each in PY 2-4 & 10 in PY5; 5a) 2 HC in PY2 rehabilitated / up-graded.

The De-mining programme to rid some key access roads of unexploded ammunitions will go on schedule.

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AND THEMES


METHOD






Component 2: Agricultural Development.

1) One IIA Research Station in Shianga – Huambo technically supported to develop through adaptive and on-farm research to produce and multiply potato, bean and maize mother and breeder seeds for farmers 2) Technical support to research and farmer extension linkages are created within IIA that can be replicated to other institutes 3) Farmer support infrastructure provided.

11,000 rural farmers who till on average 2.6 ha plots, including IIA, MINADER and farmers

1a) 2,000 tones of certified seed potato produced and distributed to farmers 1b) 300 tones of maize seeds produced through farmer contract arrangement and distributed to farmers 1c) 640 tones of bean seeds produced through farmer contract arrangement and distributed to farmers 2a) Farm equipments and accessories provided to IIA 2b) Demonstration oxen provided to IIA but managed by Farmer organizations 2c) Staff housing rehabilitated in IIA 3) Milling, storage and collection of farm produced enhanced

1a) 20 ha of land opened at IIA to produce 2,000 tones of potato seed in each pf PY1 & 2; 1b) 160 ha of land for maize seed multiplication developed through contract farmer arrangement in PY1 & PY2; 1c) 800 ha of land for bean seed multiplication developed through contract farmer arrangement in PY1 & PY2 with an average of 200 ha / year 2a) One farm machinery unit and equipment provided to IIA and 2 tractors to Bom Jesus for preparation and demonstration PY2; 2b) 2 pairs provided to Farmer Apex Organization in PY1; 2c) 4 staff houses rehabilitated in YR1 3a) 19 milling structures developed in PY2; and 3b) 18 collection and storage centers rehabilitated in PY2.

1 National Seed Policy is quickly developed to regulate the seed sector 2. Government commitment to support IIA continues

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AND THEMES


METHOD






Component 3: Capacity Building.

1) MINADER institutionally and technically supported to discharge its constitutional duties and responsibilities. 2) Institutional support and capacity building for the local beneficiary community

MINADER and its institutions at Provincial and Municipal level in Luanda, Huambo, Calenga and Bom Jesus. Farm families involved in the Project

• Technically more proficient Ministry capable of discharging its field (extension) services & functions to meet the demands of farmers. • Irrigation Policy developed • Agricultural Database set up and operational • Planning, Monitoring & Evaluation systems, mechanisms and procedures established. 2) Emergence of capable community institutions capable of sustaining project activities

1a) 10 complete sets of computers and office equipments bought for MINADER & its institutions in PY1; 1b) 4 units of vehicles provided to field staff in PY1; 1c) 60 units of motorcycles bought for field extension staff PY1; 1d) 61 staff re-trained locally & abroad in various fields in PY1 – PY5. MTR target is 30 staff trained; 1e) 1 TA provided each in areas of irrigation, agric. statistics and planning, environmental & project management & M&E in PY1 to PY5 and target database established in PY3; 1f) MINADER offices rehabilitated in Huambo, Bom Jesus, Calenga and IIA in PY1; 1g) 1 set each of soil testing and survey equipment bought for the Dept. of Lands and Survey and IIA 2a) 930 farm families organized, trained and enabled to access micro finance services in YR1 – YR5 2b) 545 farmer groups trained in various fields in PY1 – PY5; and MTR target is 300 farm groups trained; 2c) 20 Farmer Apex associations formed, organized and trained in PY1 –PY5; with MTR target of 10 associations trained; 2d) 500 FFS selected and trained, 150 each year of PY3 & 4 and 200 in PY5

Government will able to retain trained staff.

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AND THEMES


METHOD






Component 4: PROJECT MANAGEMENT ACTIVITIES 1) Rural Infrastructure 1. Land and Irrigation Infrastructure 2. Feeder Road Dev 3. Rural (Water & Health) Infrastructure 2) Agricultural Development (a) Seed Multiplication (b) Farmer Support (c) Agricultural input 3) Capacity Building (a) Institutional Building at MINADER (b) Capacity Building at Provincial level (c) Capacity Building at Farmer level 4) Project Management a) Recruitment of project staff b) Prepare Reports and conduct audit c) Agreement with participating service providers 4. Undertake Mid-term review

Project management team established and operational RESOURCES/PROJECT BUDGET SOURCES: (UA million) ADF Grant: 17,200 GOA: 2.576 TOTAL: 19,776 BUDGET (UA million) Rural Infrastructure: 11,508 Agric Development: 1,576 Capacity Building: 4,873 Project Management: 1,819 TOTAL PROJECT: 19.776

MINADER and its institutions at Provincial and Municipal level in Luanda, Huambo, Calenga and Bom Jesus.

Strong and effective PMU capable to follow Bank rules and procedures as well as follow implementation.

A full fledged PMU consisting of a Coordinator, M & E, Accountant, 3 TA’s and support staff recruited in YR1

Availability of technically proficient candidates/staff

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EXECUTIVE SUMMARY

1. Project Background

The Angola three-decade civil conflict hit the agriculture sector so hard that it made the country move from an important exporter of agricultural commodities to a net importer. Many productive farmers became dependent on food aid. With the adoption of the new peace agreement in 2002, the Government of Angola (GOA) has identified priority sectors that tackle the problem of unemployment, food shortage and poor living standards. Agriculture is one such a sector that has been identified. The Government, through re-activation of agriculture has put its emphasis on increased food production, multiplication of improved seed varieties and organisation and training of rural farmers. The focus is thus on the rural sector, and particularly on smallholder farmers who eke living out of subsistence production. To advance this course, the Government in 2005 re-submitted to the Bank Group a request for financing a smallholder agricultural development project. This request was based on ADB/GOA identification in 2000; original feasibility study by Italian Consulting Firm and various preparatory studies by FAO and the Government. Bom Jesus in the periphery of Luanda, the capital and Calenga in central highlands of Huambo Province were selected as communes with good agricultural potential. The two communes also offer opportunities for testing and developing small scale rain-fed and surface water irrigation approaches and technologies under improved farm production and management systems. Based on local knowledge and existing agricultural practice, these approaches and technologies, including high yielding seeds, once certified, will be replicated nationally. The main project impact will be in terms of increased food security and incomes derived from agriculture. The annual incremental crop production at full project development over the project area is estimated per ha at 2.5 tonnes for beans, 3 tons for maize, 20 tonnes for tomato, 20 tonnes for onion, 15 tonnes for cucumber and 25 tonnes for cabbage. In addition, Bom Jesus site beneficiaries will have a legal right to irrigated land through government provision of land titles. 2. Purpose of the Grant

The ADF Grant of UA 17.200 million, amounting to 87% of total project cost estimated at UA 19,776 million, will be used to finance 95% of the foreign exchange (UA 14.707 million) and 64% of local cost (UA 5.069 million). 3. Sector Goal and Project Objective

The sector goal is to contribute towards enhanced food security, incomes and rural poverty reduction. The Project specific objective is to increase in a sustainable manner the agricultural production and incomes of smallholder farmers in the two project sites.

4. Brief Description of the Project’s Outputs

To achieve the above objective, the project will focus its attention on (i) Rural Infrastructure Development consisting of irrigation, roads, water and health infrastructure, (ii) Agricultural Development; (iii) Capacity Building; and (iv) Project Management. Other planned Project outputs and activities include: (a) Strengthening of human and logistic capacities of the Ministry of Agriculture and Rural Development (MINADER) and its line institutions, and (b) drawing up of structural plans, land surveys and land titling in Bom Jesus site and; (c)

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propagation and development of improved seed varieties for farmers and introduction of improved farming methods and practices to the beneficiary farmers.

5. Project Cost

The total project cost is estimated at UA 19,776 million out of which UA 14,707 million (74.37%) will be foreign currency and UA 5,069 million (25.63%) will be in local currency. 6. Source of Finance

The African Development Fund and the Government of Angola will finance the project. ADF funds will be utilised to finance all Rural Infrastructure except beneficiary contribution of UA 0.67 million, Agricultural Development (except vehicles and training for MINADER Luanda and Provincial HQ), Capacity Building at three levels, national (MINADER level), Provincial and farmer level and Project Management (except salaries of project site staff and office rental). Total ADF Grant contribution represents 87% of the total project cost. In total, the ADF Grant contribution will be used to cover 95% of the foreign exchange costs and 64% of local costs. The Government of Angola and the beneficiaries’ contribution of UA 2.576 million representing 13% of the total project cost will be utilised to cover vehicles and training for MINADER Luanda and Provincial HQ, salaries of project site staff and office rental. Procurement of goods, works and consultancy services financed by ADF resources will be carried out in conformity with Bank Group Rules of Procedure. The procurement of civil works (Rural Infrastructure) will be by International Competitive Bidding (ICB); Vehicles & equipment and provision of training by National Competitive Bidding (NCB); and consultancy services through competition on the basis of a short-list. Consultancy services required will be for the development of agricultural statistics and planning, irrigation policy, training, mid-term review, design and supervision of engineering works, auditing of the project accounts, MTR, PCR, MIS design, monitoring and monitoring, including M & E of the Environmental and Social Management Plan (ESMP). 7. Project Implementation

The project will be implemented over a period of five years. The overall implementation of the project activities will be the responsibility of MINADER. 8. Conclusions and Recommendations

8.1 Conclusions

The project will directly benefit about 11,000 households (55,000 individuals) and create 75,000 seasonal jobs. About 545 farmers’ groups will be created and or strengthened and about 11,000 individual farmers will be trained by the project. Over 50% of the farmers trained will be women. The project will lead to a substantial increase in agriculture production and contribute to poverty alleviation as well as improve food security at household level. The increase in maize, vegetable, fruit and bean production will induce increased employment and income generation opportunities in backward and forward-linked industries. The project will also serve as coherent framework for the self-promotion of rural actors, land security for farmers in Bom Jesus site and the conservation of natural resource. Group formation and training will facilitate technology adoption, access to inputs and marketing. The project, as

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designed, is socially desirable, environmentally sound, technically feasible, and financially and economically viable. The economic rate of return determined is 30%. The proposed project remains a high priority in the agricultural development policy of the Government of Angola and it is consistent with the Bank Group’s vision and strategy for the country.

8.2 Recommendations

In view of the expected project outputs, it is recommended that an ADF Grant of not more than UA 17.200 million be extended to the Government of Angola for the purpose of implementing the project as described in this report, subject to the fulfilment of conditions stipulated in the grant agreement.

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1. ORIGIN AND HISTORY OF THE PROJECT

1.1 Angola has a total area of about 1.25 million km2, and an estimated population of 15 million, of which about two-thirds live in the rural area. The country has a high potential for economic and social development, relying on its good quality and abundant natural resources (fertile soils, minerals, water, forests etc.). There are 47 river basins in Angola with high potential for irrigation. The arable and irrigable land is estimated at 57 million ha. The surface water availability is estimated at about 12,000 m3 per inhabitant per year. The country has a varied climate and its different agro-ecological zones allow diversified agricultural production. The years before independence, the greenbelt surrounding Luanda and Benguela, and the central highlands of Huambo produced enough cereals and other food products to make these population centres largely food self-reliant. However, as a result of the three-decade civil conflict, and the resulting displacement of large sections of the population from rural areas to urban centres, poverty has increased to unmanageable proportion. The rural urban population drift has also exerted pressure on limited land resources within peripherals of municipal centres. 1.2 The agriculture sector has been the hardest hit through the social, economic and political disruption of farming communities, including imposing constraints on to the supply of farm inputs and the marketing of outputs. This situation has resulted into loss of support services and marked reduction of agricultural production to the extent that the country has moved from an important exporter of agricultural commodities to a net importer. Many productive farmers became dependent on food aid, as the country’s large water resources and agricultural potential remain largely under-exploited, resulting into a large segment of its population leaving in poverty. 1.3 With the adoption of the new peace agreement signed between the government and UNITA in April 2002, Angola has now an opportunity to re-build its economy and especially its agricultural sector. The country’s agricultural potential coupled with the return of farmers to their land is likely to improve the food situation rapidly. The prevailing peace in the country has signalled the start of the recovery for the rural sector and increased production in traditional agricultural-livestock producing areas. No violations of the peace agreement have occurred to date and a return to the conflict is considered unlikely. Some 3 million wars-displaced persons and refugees have already returned home, thus creating conditions for the resumption of normal productive and social activities in rural areas. In order therefore to consolidate the peace agreement, there is an urgent need to increase agricultural production to meet domestic food requirements, to significantly improve employment generation, and to improve incomes and general quality of life both in urban and rural areas. Given the enormous development needs in the countryside, Government is moving fast by identifying high potential agricultural areas to rapidly increase agricultural production as well provide opportunities for testing and developing appropriate approaches and technologies. 1.4 Government of Angola (GOA) has as such, identified priority projects to be financed by the Bank Group. Through a feasibility study carried out by an Italian consulting firm in 1988, Bom Jesus smallholder irrigation scheme, which is part of the greenbelt in the vicinity of Luanda, was identified as having such potential for irrigation. It was further identified by GOA and the Bank in 2000 and later confirmed in 2001, 2004 and 2005, as part of the government’s post-war recovery and rehabilitation programme. In December 2004, the GOA welcomed the Bank’s suggestion to expand the scope of the proposed Bom Jesus smallholder irrigation project to incorporate a sizeable and suitable rain-fed agriculture development component in Calenga Commune in order to spread its benefits. The proposed project, Bom

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Jesus-Calenga Smallholder Agricultural Development Project (BJCSADP), therefore comprises two project sites: the Bom Jesus small-scale irrigation and the Calenga rain-fed development. 1.5 The FAO prepared a formulation (preparation) report for Bom Jesus smallholder irrigation project and a consolidated preparation report for the proposed Bom Jesus-Calenga Smallholder Agricultural Development Project in May 2002, October 2004 and March 2005 respectively. The Bank in consultation with GOA reviewed the report and found it acceptable and consequently, GOA renewed the request for financing the project in January 2005. In response, the Bank appraised the project in June 2005 based on the FAO’s project preparation reports, technical documents from the Government and consultations with different stakeholders, and information gathered during the project appraisal mission. The Bom Jesus irrigation scheme is still functioning but it needs major rehabilitation to enable small-scale farmers increase production of horticultural crops for which the readily accessible Luanda market is an excellent outlet. The Calenga project area is located in vicinity of Huambo city, which was a major war zone during the armed conflict. The Calenga commune is also declared mine-free because its territory was a transit area for both the rebels and government troops and its population is greatly affected by the poverty. 1.6 The involvement of the target population in the formulation, preparation and appraisal of the project was ensured through consultation and sensitisation sessions as well as village workshops for validation of priority activities and actions. The choice of the project areas was based on the request of the people and the willingness of the Government to initiate sustainable agricultural development programmes in highly potential productive areas. The appraisal mission held consultations with a number of development partners who supported the proposed Bank intervention in Bom Jesus and Calenga areas. The proposed project is in conformity with the Bank’s Vision and its Strategic Plan. It is also in line with the Bank’s Country Strategic Paper (CSP) and the Government strategic framework for 2003-2010 as outlined in its PRSP known as Estratégia de Combate a Pobreza (ECP) Poverty Alleviation Strategy for 2003-2006. The ECP gives priority to agricultural recovery and development with the primary objective of improving the living conditions of the most vulnerable people. Government through the ECP hopes to: (i) increase agricultural production to pre war level; (ii) promote rural trade and processing of agricultural products; (iii) reduce rural poverty and food insecurity; (iv) promote sustainable management of natural resources, and (vi) promote, rehabilitate and reconstruct basic infrastructure. The Government vision is in line with the NEPAD and CAADP objectives, which also form the basis for Bom Jesus – Calenga Smallholder Agricultural Development Project.

2. THE AGRICULTURAL SECTOR

2.1 Salient Features 2.1.1 Climatic conditions in Angola vary widely from humid tropical lowlands in the north and north-east to desert in the south. The Central Highlands contain large areas with good rainfall (1,500-2,000 mm p.a.) and moderate temperatures but with rather acidic and infertile soils. The central highlands have the highest rural population density (about 100 people/km2 against an average of 10/km2). The southern areas are much drier with only 100-1,000 mm/year. The vegetation is of dense forest to open forest, savannahs, bushes and a small desert in the south. Soil characteristics vary significantly, i.e. in the southeast, soils are sandy, as a result of the Kalahari Desert influence, and therefore, not very suitable for cultivation and extensive livestock farming.

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2.1.2 Although the soils in the higher altitudes are predominantly oxy soils of low organic content and high acidity, often with aluminium toxicity, sustainable agriculture can be practiced using adequate fertilization and liming. Within these areas, sizeable portions of Alf soils and utisoils that are suitable for agriculture are also found. Ferralitic and paraferralitic soils are spread over huge areas in the Central Plateau and the northeast, which can be used for agriculture. The sandy soils of the coastal plains and some of the soils at the foothills are low in fertility and do not retain water and are prone to salinity. The agricultural potential (arable and irrigable land) is estimated at about 57 millions ha i.e. 60% of the total land area in the country. Angola has equally a very varied climate characterised as: semi-equatorial in the forest zone, tropical humid in the North and Northeast, tempered in the central highlands, humid and dry on the Southwest coast, and finally a desert in the South on the border with Namibia. The endowment of such varied agro-ecological areas enables the country to produce a wide variety of crops, ranging from temperate to tropical products and to have a good environment for livestock development. 2.1.3 Agriculture, which is mainly rural based and almost entirely rain fed is the socio-economic base of the country. The rural sector therefore, is the main source of income and employment in the country. Over 70% of the population depend upon agriculture and livestock, mainly producing basic foodstuff and to a lesser degree milk and meat. Shifting cultivation methods are extensively practiced with farm families trading off small surplus on rural markets. During the rain season, areas at the foot of mountains are favoured, while in the dry seasons there is a move to riverbanks. Agricultural practice is characterised by use of rudimentary and manual tools and cultivation of low yield crops (maize, beans, potatoes, cassava) as a result of limited use of agricultural inputs, technical advice and credit facilities. Use of oxen (animal traction) is widely spread in the central, southern and south-western provinces. Women provide about 70% of labour force. Currently, the rural sector, which includes agriculture, livestock and forestry, is the second contributor to economic growth, contributing 9% to GDP that is dominated by the oil and diamond sector to the tune of 60% of the GDP. It should be noted however, that the modest agricultural GDP does not highlight the important role played by the agricultural sector in providing employment and livelihoods to the rural population at large. 2.1.4 Cassava and maize are the main food crops in the country. They are generally grown by peasants for their own consumption and sale. The yields for these two crops are still very low with an average of 9 tonnes per hectare for the cassava and above 350 kg per hectare for maize. Prior to independence in 1975, the country was self-sufficient in all key food crops except wheat. Agricultural exports accounted for nearly 60% of total exports and were composed of coffee (48%), sisal (5%), maize (2%) and other agricultural products including bananas, tobacco, cotton, beans, sugar, palm oil and rice (5%). Annual consumption of cereals was estimated at 87 kg per capita in 2003. With the exception of cassava, the country has to import about 230 tonnes of cereal to meet the domestic consumption cereal needs estimated at 870 tonnes for the two-year period 2003-2004. A time series data (1961-2004) of crop production and per-capita availability given in the table below indicates the decreased intake per capita for major crops except for cassava since early seventies. These figures are below the daily intake recommended by the World Health Organization (WHO).

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Table 2.1 Crop Production and Per-capita Availability. 1961-2003

Total Per Capita Total Per Capita Total Per Capita Total Per Capita Total Total C Total(000) (ton) (kg) (ton) (kg) (ton) (kg) (ton) (kg) (ton) (ton) k (ton)

1961 4,890 430,000 88 544,000 111 55,000 11 1,355,000 277 168,000 642,347 13,0081965 5,180 450,000 87 562,000 108 60,010 12 1,580,000 305 205,000 679,290 19,5091970 5,588 456,000 82 576,000 103 75,000 13 1,781,000 319 204,000 763,989 91,2001975 6,187 450,000 73 558,000 90 70,000 11 1,542,000 249 180,000 470,000 39,0001980 7,048 360,000 51 435,000 62 43,180 6 1,355,000 192 43,260 300,000 3,0001985 8,299 250,000 30 308,000 37 40,000 5 1,580,000 190 12,000 270,000 12,0001990 9,340 180,000 19 248,500 27 33,000 4 1,799,000 193 5,000 270,000 12,0001995 10,868 211,000 19 296,000 27 100,000 9 2,762,500 254 3,300 330,000 12,0002000 12,386 394,000 32 519,900 42 75,110 6 4,683,619 378 4,260 360,000 10,0002002 13,184 430,000 33 550,000 42 89,110 7 5,782,000 439 2,160 360,000 10,0002003 13,580 430,000 32 550,000 41 89,000 7 7,705,000 567 2,160 360,000 10,000

2003* 14,769 545,146 37 670,244 45 66,121 4 6,075,000 4112004* 15,299 576,917 38 720,952 47 75,965 5 6,440,000 421

* Data of FAO/WFP Crop and Food Supply Assessment Missions to Angola , July 2003/June 2004; Population at Mid-year (2003 - 2004 and 2004 - 2005)Source: FOASTAT and MINADER (Gabinete de Segurança Alimentar).

Year Popn. Coffee Sugarcane Seed CottonMaize All Cereals Beans Roots and Tubers

2.1.5 The performance of the agricultural sector has been dismal over the past three decades, growing at a rate of less than 4.5%. This is as a result of the war, which impacted negatively to the entire production system. Productive capacities in the sector were lost due to, inter alia, massive emigration of the rural population, destruction of roads and productive infrastructure; limitation of access to some productive agricultural land as a result of unexploded land mines; breakdown of the public and private sector support services such as credit, input supply, marketing, research and technical advice. Consequently, Angola has been compelled to become chronically dependant on grain imports and fresh produce to meet its food requirements. About half (710,000 ton) of the cereal consumed in the country is now imported together with a large amount of the fresh produce consumed in the urban areas. The 2002/2003 agricultural campaigns witnessed 22.7% growth, leading to peak production figures as follows: 545,000 tons for maize, 98,000 tons for millet and sorghum, 28,000 tons for rice, 66,000 tons for beans, 62,000 tons for groundnuts, 5,800,000 tons for cassava and 6,000 tons of coffee per ha respectively. Coffee exports under the same period reached 4,300 tons. For the 2003-2004 cropping season, the production reached 577,000 tons for maize, 76,000 tons for beans and 6,440,000 tons for roots and tubers. These figures show the existing potential Angola has in meeting her food needs as well as pushing agricultural production and contribution to GDP back to its pre-war status. 2.2 Land tenure 2.2.1 The land tenure system is now regulated under the new Legal Instrument (Law No. 9/04), which was promulgated on 4 October 2004. This law preserves the rights of rural communities and customary land use systems. However, all land continues to belong to the State. By law, the state determines land use pattern and allocation. Private use of land for agriculture is regulated through transfer of perpetual land use rights whose justification must be evident for every initiative. Under the new law, land permits are granted by: (i) village traditional authorities where the area does not exceed 2 ha, (ii) in the Municipality/commune authorities between 2 ha and 1,000 ha, (iii) the Governor (provincial authorities) between 1,000 and 10,000ha, and (iii) by the Cabinet where the area is greater than 10,000 ha. 2.2.2 In the prevailing traditional land tenure system, the head of the lineage (usually the village patriarch or the soba) distributes land among active members of the community according to their food and fuel wood needs. The Soba can also grant right of use to migrants in consultation with the chief of the area. In practice, each adult member of the family maintains at least two fields: one for the rainy season and another for the dry season. The size

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of the family agricultural plot depends on the fertility of the soil, the availability of animal traction and labour. 2.2.3 As Bom Jesus was previously a government sugar estate, MINADER, based on the Land Law has acquired custodian rights over its land. The acquisition of the land by MINADER enables it to transfer ownership rights by titling of land to smallholder beneficiary farmers who are currently mere encroachers onto it. MINADER has currently a list of about 760 farm families to benefit. It’s Department of Agricultural Hydraulics and Rural Engineering has developed a topographical map of the area and it has secured understanding and agreement with the local patriarchs. Data shows that about 23% of the anticipated beneficiaries are women, a majority of whom are widows and or single headed families. 2.2.4 In Calenga, where traditional land tenure system is well entrenched, and in conformity with new land law that recognises the rights of rural communities and customary land use systems, land titling is not applicable. Farm families have returned to their traditional lands and are already farming. Beneficiary data indicates that over 33% of the households in Calenga are women headed households (widows and or single mothers). 2.3 Cross Cutting Issues 2.3.1 Population and Poverty Status: Angola, by 2003 had estimated population of 13.6 million people, of which almost 50% of it was under 15 years of age. The sex ratio was estimated at 97.3% per 100 females in 2003. About 65% of the population lives in rural areas, and 90% depend on agriculture and rural activities as their source of income and food. The resultant harsh humanitarian conditions imposed by the civil war, particularly in the rural areas, contributed towards high levels of poverty, increased malnutrition and dependency on food aid. People were displaced and economic activity particularly in agriculture fell. When the war ended, about 3.5 million people had been displaced and some 450,000 fled to the neighbouring countries. In addition, an appreciable number of ex-combatants became redundant and in need of demobilization. 2.3.2 According to the 2003 Human Development Index (HDI), Angola ranked 161 out of 175 countries included in the survey. In 2002, the country had ranked 166, indicating a further decline in HDI. Likewise, the estimate of average life expectancy at birth has fallen from 45 years in 2002 to 40 years in 2003. Seventy percent of the population survives on less than one US dollar per day. The incidence of poverty is concentrated in the rural areas where it reached 94% against 57% in the urban areas. This situation is still accentuated by illiteracy which stands at 76% (70% among men and 80% among women), malnutrition (45% of the rural population), the persistence of STD and HIV/AIDS whose prevalence is estimated at about 6%, and insufficient health care services. Some 50 percent of the population has no access to potable water and to primary health care services, and 76% has no access to basic sanitation. The rate of malnutrition among the under 5 year olds is high, close to 40%. As consequence of the war, many children and orphans are in a precarious state due to diseases, malnutrition and shortage of adequate sanitation. In 2003, under-five child mortality was 260 per 1,000 births, and is one of the highest in the world. In the same year, infant mortality was about 138 per 1,000 live births. This situation shows that poverty still remains a phenomenon essentially rural, aggravated by the shortage and/or inexistence of basic social services.

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2.3.3 Environment and Natural resource: The main environmental problem in rural areas remains soil degradation, (steady decline in the productivity of ecosystems, pollution of water resources, deforestation, loss of biodiversity and desertification) and unexploded land mines in areas where the confrontation was severe. Government has however, initiated actions aimed at: (i) ensuring conservation as well as sustainable and efficient management of natural resources with the support of development partners, (ii) pursuing and intensifying the restoration of soil fertility and step up efforts to control environment degradation, (iii) pursuing and stepping up efforts to clear agricultural land from unexploded land mines in collaboration with US Government and UNDP, and (iv) implementing education and environmental awareness raising programmes. 2.3.4 At the institutional level, a Directorate General for Environment exists in the Ministry of Urban and Environment. The Directorate intervenes in pollution control, natural resource conservation, monitoring of environmental impacts and actions, and undertakes environmental education and sensitisation. The Ministry of Agriculture and Rural Development (MINADER) also intervenes in demarcating and mapping of agricultural land and transhumance corridors and range management. The Environment legislation is currently based on environmental Protection Laws of 2003 and 2004, which impose an obligation to conduct an ESIA for all development projects. The Law N° 6/02 adopted in June 2002 regulates the use of water resources. The country has a National Environment Management Commission to oversee all environment matters. All these structures lack appropriate equipment and qualified staff and need to be strengthened. The Government however, is undertaking the requisite measures to increase the staffing and procure the necessary equipment. 2.3.5 Gender Issues: The Angolan Constitution adopted in 1992, advocates for equal rights and duties for men and women (Article 18), and also provides for punishment for discrimination and privileges based on gender. However, the situation of women worsened during the armed conflict, as they had to shoulder the greatest burden of the family, since a lot of men had left their homes either to join the war or look for work in the cities. Many were rendered widows by the war, and tens of thousands of families are now looked after by single parent women. The literacy rate of women is much lower compared to that of men, i.e. primary school enrolment shows that 70 girls are enrolled for every 100 boys. In 2002, 46% of females were illiterate compared to 18 percent of males. In rural areas, illiteracy is much higher than the national average, which is 66 percent for females and 40 percent for males. Women also suffer from limited pre- and post-natal care and delivery services. As a consequence, the maternal mortality rate is high (1,500 deaths per 100,000 in 1992). This figure, according UNICEF, came down to 1,300 to 100,000 in 2003. 2.3.6 In spite of the difficulties that are faced by Angolan women, they constitute a very productive and hard working lot, both in the rural areas as farmers, and in the urban areas as traders and businesswomen. Socially and economically, they are organised into producer groups. Their association into producer groups enables them to access micro-credit, input supply and output markets. They provide about 70% of labour force in rural and agricultural activities. Labour is gender disaggregated at household level. Women are mainly responsible for family or home-based economic activities like food production, processing and marketing of agricultural products. Gender-specific roles exist in farming activities. Men normally carry out land preparation, ridging, and spraying, while women participate in planting, weeding, water carrying, harvesting and post harvesting and marketing. They do the daily and tiring duties needed for the survival of the family (fetching water and firewood and taking care of children and farming for the household consumption).

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2.3.7 Children are involved in small-scale agricultural production such as marketing of farm produce and domestic chores. Girls work more than boys, which impacts negatively on their chances of attending school. Female-headed household represent 31% of the total population (29% in urban areas and 33% in rural). Support to women efforts in form of training and credit programmes would increase their propensity to create wealth and hence secure the livelihoods for their families. Female presence in decision-making bodies at national and local levels is low i.e. there are only 34 women members of parliament. This represents only 15.45% in the 220-member assembly. There are 5 female ministers and vice ministers respectively; this represents only 18.5% in the 27 member cabinet. In the judiciary, women represent 13.3% of the magistrates, and in the diplomatic corps, there are only 2 women ambassadors, just as there are only 2 women Communal and Municipal administrators. 2.3.8 Another vulnerable group of the society are children and orphans, and many are in a precarious state due to diseases, malnutrition and shortage of adequate sanitation. Many orphans are seen living in the streets, although GOA and some donors are endeavouring to address this problem with minimal success. To improve the situation of Angolan women and children, Government has set up a Ministry for Family and Promotion of Women. This ministry plays a key role in the management of government specific development funds and trusts, liaising with the Ministry of Health in issues pertaining to family life education and ensuring that all government policies are gender responsive. The implementation of the government gender equality and promotion strategy is seen as an important instrument in reducing the constraints of women and the current gender gap in the country. 2.3.9 HIV/AIDS: Angola is considered as highly HIV/AIDS affected country. During the time of the civil war, there were no community prevention activities and as a result, Angola is now faced with a growing HIV/AIDS prevalence. The HIV/Aids prevalence has over the last two years increased by one and half fold, that’s from 4.1% in 2003 to 6% in 2004. It is estimated that the prevalence may reach 18 percent in 2010 if the government does not increase its prevention and information campaign. This will have a greater impact onto women, orphans and to the agriculture sector in terms of labour productivity and size of land put into effective cultivation and thus food security. The government has set up a national HIV/AIDS committee to oversee the prevention and information campaigns, both in urban and rural areas. 2.3.10 Malaria, Tuberculosis and Sleeping Sickness: The three diseases are the main cause of death in the country after HIV/AIDS. Malaria accounts for nearly 80% of all out patients and 40.6% of death among the children below 5 years old. Maternal morbidity is a threat to agricultural production especially considering the fact that women constitute a big labour force to the sector. Agriculture labour productivity is further worsened by the prevalent malnutrition situation, which is dominated by protein-energy malnutrition and micro nutrient deficiency. Malaria, tuberculosis, sleeping sickness and HIV/Aids ought to be addressed to avert productivity losses in agriculture. 2.3.11 To help avert the situation, the Project will support the on-going HIV/AIDS, malaria and tuberculosis campaign and mitigation efforts through the existing government programmes. One such a programme is the government programme on Malaria Control that is implemented by the Municipality Development Committee with the support of WHO, UNICEF and NGOs. Some of the programme activities that the Project will also adopt

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include conducting awareness campaigns, improving access to drugs and preventive inputs such as impregnated mosquito nets. 2.4 Institutional Framework

A. Agriculture Institutions

2.4.1 The Ministry of Agriculture and Rural Development (MINADER) is responsible for developing and regulating activities in the agricultural sector, including crops, livestock, forestry and irrigation. MINADER’s primary roles are the formulation of appropriate agricultural policies, planning, and monitoring and evaluation within the overall national development framework. MINADER has severe constraints in meeting some of these obligations. For instance, much as facilities exist to collect and collate data, the Department in charge of Planning has only 4 professional staff. Dissemination of agricultural statistics and data for policy formulation and planning is rather very week. MINADER has also embarked on re-building a number of its irrigation infrastructure but has not yet got a policy on irrigation, agriculture water use, land use and management. Important to note however, is that MINADER has a very elaborate structure capable of discharging its obligations. The structure of the Ministry consists of (a) Ministry – Support Services, Technical and Consultative); (b) Executive Services/Policy Directorates for Agriculture, Livestock and Forestry (DNAPF), Rural Development (DNDR) and Agricultural Hydraulics and Rural Engineering (DNHAER), (c) Specialised Services/Institutes (d) Provincial Directorates and (e) Irrigation and Rural Development Units (GAPHA). All these Departments are headed by highly trained professionals whose only weakness is lack of capable frontline cadre of staff and facilitation in form of equipment and office infrastructure. 2.4.2 MINADER’s staff at headquarters number about 410. This is equivalent to roughly half the number of the established posts. The civil war constrained government’s efforts to train, recruit and retain staff due to lack of effective facilitation and remuneration. To-date, even the 270 of the existing staff classified as professionals need re-fresher training. MINADER main services are decentralized at provincial and municipal levels. At the municipal level, there are extension stations responsible for agricultural extension called Agricultural Development Stations. The Agricultural Development Stations are faced with problem of inadequate and ill equipped extension staff to the extent that it is hard to keep staff at municipal and commune level (closet to the farmers). Government is aware of these problems and has thus suggested the strengthening of institutional and management capacities of MINADER as a priority. The Project will support government in this endeavour. Government has also committed itself to increasing national budget allocation to the agricultural sector. 2.4.3 Specialised Services/Institutes: The Specialized Service Departments, Institutes and Units include: (a) Agricultural Research Unit (IIA), (b) Veterinary Research Unit (IIV), (c) Institute of Agricultural Development (IDA); (d) Institute of Forestry Development (IDF); (e) National Coffee Institute (INCA); (f) National Cereals Institute (INCER); (g) National Seeds Service (SENSE); and (h) Veterinary Services (SV), and the National Directorate of Agrarian Hydraulics and rural Engineering (DNHAER), responsible for services relating to irrigation and hydraulics. These are semi autonomous departments, with respective Directors answerable to the Minister through the Deputy Minister. The degree of their autonomy though operationally good at times has posed coordination problems at policy and planning level. To address this problem, FAO is relocating its office from the UN House to the

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headquarters of MINADER. A number of development partners are also coming around this problem by directly working within and with the few MINADER professional staff. 2.4.4 Provincial Directorates: These are executive departments of the Provincial administration that basically work with the pertinent central departments of MINADER on all technical matters. They also cooperate and undertake all the extension and other specialized services of such Ministries as Fisheries and Environment. 2.4.5 Irrigation and Rural Development Units (GAPHA): These are organizational structures intended to promote agriculture, livestock and forestry activities in key selected “green zones’’ in the country. The green zones are selected by virtue of their potentially abundant water resources (irrigation perimeters) and land fertility. The objective of their formation is to promote growth of small, medium and large farm holders. Nine GAPHAs have been formed including one at Bom Jesus. The Bom Jesus GAPHA has basic staff consisting of 2 agronomists, 1 irrigation engineer and 3 technicians. Operationally, the Bom Jesus staff have no adequate equipment to discharge their mandate particularly land survey and mapping equipments. Bom Jesus GAPHA needs help with land mapping and survey in preparation for land titling. 2.4.6 Institute for Agricultural Development (IDA) is headed by a director located within MINADER in Luanda, and has senior staff within the provincial agricultural offices to assist and guide the 54 Municipal Agricultural Offices (EDA). The EDAs are the cohorts of the front-line extension workers involved in the day-to-day field activities with farmers. Information available from the Directorate Head office indicates that, nationally all EDAs are under equipped and staffed. They have very basic transport for only senior staff, leaving the rest of field staff un-provided for. Many of IDA field facilities and offices have been destroyed and can no longer meet farmer requirements. To meet the ever-increasing farmer demand for extension services and support, Government has been forced to form partnerships with NGOs. In Huambo Province for instance, MINADER has memorandum of understanding with an NGO known as World Vision International to help discharge EDA responsibilities and also institutionally to support IDA at that level. Operationally, EDAs staff are also involved in the supply of some agricultural inputs, dissemination of tested technology and collection of agricultural data. Of the total 909 IDA/EDA staffing, 426 are classified as technical/professional, the rest being administrative/support staff. EDA staff number 483 with 149 professionals. A majority of these need re-fresher training. The Project will assist in training the very vital ones – based on necessity and discipline, within Angola and where required outside the country. 2.4.7 At the Provincial level also, MINADER has entered into working understanding with some NGOS to support agricultural extension staff. For instance, World Vision and Cooperative League of the United States of America (CLUSA) have been contracted by MINADER to work in the municipalities adjacent to Luanda City. These two NGOs are running a contract farmer model to help with multiplication of seeds and as well churn out a number of farmers that are using improved seeds and approved agricultural practices. Together with EDA, they identify promising farmers, train them and provide them with basic starter seeds. Since these farmers already belong to a farmer group, CLUSA, World Vision and EDA work to link them to credit, other input suppliers and to an output market. The interesting aspect of this model is that both the farmers and EDA staff get trained. MINADER has approved this approach as good for both farmer and extension agent in terms of support to production, access to input supply and output markets.

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2.4.8 In terms of group formation, registration and support, these NGOs working within a stipulated government framework for group formation, registration and management help groups to formally register with the Ministry of Commerce and finally attain legal recognition from the Ministry of Justice as fully fledged entities with legal rights and obligations. The key aspect of recognition involves obtaining a group constitution that spells out group membership, composition, office bearers, capital and type of business to deal in. From the Project perspective, MINADER will deal with Ministry of Commerce and Justice respectively to help farmer groups attain the required legal recognition. 2.4.9 Institute for Agricultural Research (IIA) is a nation-wide agricultural research institute in charge of development, testing and supply of seed and planting materials and technology. Currently, its research operations include food crops, fruits, horticulture and industrial crops. It has staff strength of 160 including 14 PhD, 19 MSc and 29 BSc holders, the rest being technicians. The Institute has now about 10 plant breeders among its staff. Most of the staff is now mainly based in Luanda as a result of the war. It has 9 research stations in 4 provinces, Huambo being the main centre. The Huambo Centre was destroyed and stopped its activities in the year 2000 immediately following its rehabilitation that was financed by ADB credit. It is gradually being reactivated with basic rehabilitation of its facilities and posting of 3 BSc holders and 15 technicians. The laboratory is however still not operational. It is currently executing the Propanalto Programme with World Vision International and Africare to supply seed to farmers under the emergency programme. The Huambo station in Shianga is closely allied to the Huambo Agricultural College, which has also partially re-opened and the only institute of higher learning in agriculture. There are also three Agricultural Technical Colleges, which provide four-year high school level training, located in Lubango, Huambo and Malanje, and are the main providers of extension workers in the country.

B. NGOs, Traditional and Village level Institutions

2.4.10 The post war situation has brought in a large number of international NGOs to Angola plus the emergence of national ones. However, the most visible ones in terms of activities and support to the agriculture sector include World Vision (WV), Save the children Fund (SCF), Africare, Catholic Relief Services (CRS) and the Cooperative League of the United States of America (CLUSA). Locally, a few Angolan NGOs are beginning to get involved in development initiatives, notably ADRA- Acçao para o Desenvolvimento Rural e Ambiente. Both international and local NGOs work through social groups, many of which have been helped to graduate to legally recognised village associations. In Huambo Province, for instance, some of the village groups and associations that have been organised and trained by World Vision and ADRA are aimed at accessing agricultural inputs and marketing services to the farmer producer groups. Reports from WV and ADRA indicate that their model of service delivery appears to work well. These associations are rather in their early stages of development. Given time, they are expected to federate into producer cooperatives. Currently, these associations need a strong strengthening process in terms of organisation, training and management. 2.4.11 The smallest Government administrative unit is the commune. Below the commune, the prevailing administrative organization is community-based under the traditional (tribe and clan) system. Under this system, the smallest administrative unit is the village followed by the sub-village. The sub-village is locally known as “ombala”. A traditional chief or village councillor known as seculu heads the village administration. Below the seculu are the nsooba’s – the sub village administrators, who help with the sub-village or “ombalas” affairs.

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The nsooba’s help in organising and mobilising the communities for any social, political and economic intervention. Locally, the traditional administrative framework in Angola is used as a means for organizing rural communities into development work groups. This system has been applauded as working well to the extent that the municipal and communal administration is using the village and ombala set-up as a vehicle for delivering development messages and activities. The seculu and nsooba’s set-up have also been reported as very important local institutions in land matters, population re-settlement, coordination and implementation of relief and establishment of group saving system, known as quixiquila or ondyuluca

C. Financing of the Rural Sector 2.4.12 Banking institutions in Angola are limited in number and outreach. Their present features are largely the result of financial sector reforms (liberalisation of interest rate ceilings and commercial lending policy for especially small scale borrowers) that have been going on since the early 1990s. Banking institutions can be divided into (i) formal banking institutions, (ii) Government development funds, (iii) micro-finance initiatives/NGOs, and (iv) an informal financial sector. The formal banking sector comprises of the National Bank of Angola (Central Bank) and about 15 commercial banks. Although the banking sector is going through a period of restructuring, modernization and diversification, services offered are limited in number and outreach and are somehow costly. Most of the rural farmers, particularly small and medium scale farmers have limited access to credit mainly due to high interest rates (ranging from 20-80%) and lack of collateral to fulfil the requirements of commercial banks. Although on a limited scale, three commercial banks have shown interest in rural micro-credit. These are Banco Africano de Investimentos (BAI), Banco Sol (BS) and Banco de Fomento e Exterior (BFE). In particular, BS already offers short training in financial management, book keeping and group dynamics to its clients that receive small amounts of credit and thus registering repayment rate as high as 92%. The cost of loan management, administration and delivery varies, but obviously high with small borrowers thus driving interest rate levels between 6-80%. The pay back period is generally short with weekly and monthly reimbursement and a short grace period. Borrowers are generally from the middle to high class. 2.4.13 Some Government development funds have been established to provide credit to the rural people. The most significant one is the Economic and Social Development Fund (FDES). The FDES with initial capital of US $ 20 million was established in May 2000. It has three lines of credit, namely; transport industry, agriculture and fishing and, metal/mechanical industry. Loans vary from US$ 1,000 to US$ 100,000 and are dollar indexed with interest rate of 9%. The management commission of 1% is repaid in four-month instalments over a maximum period of four years. Since September 1999, the Ministry of Family and the Promotion of Women is also implementing a micro-credit program targeting women. The main objective of the program is to promote income-generating activities and to reduce poverty. At present the total loan fund is about US$ 100,000, managed by a technical unit within the Ministry. The program targets small-scale agriculture and petty trade. 2.4.14 Recent experiences of NGOs like World Vision, CLUSA, CARE, Development Workshop (DW) and the Association for Rural Agricultural Development (ADRA) have shown that farmers can borrow and effectively repay their loans. Driven by early successes and the shift from a strictly humanitarian assistance and approach to one that aims for more sustainable economic development, micro-finance is increasingly considered as a tool in the economic development. Repayment rates for World Vision, CLUSA and CARE have now

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reached 95% in the past 2 years). Schemes are experimenting with alternative forms of collateral. 2.4.15 To supplement the limited credit to agriculture by the different institutions mentioned above, farmers also rely on informal sources of finance like moneylenders. The arrangements in the informal sector are typically short-term in nature, interest rates depend on the relationship between lender and borrower, and repayment takes place according to the capacity and/or convenience of the borrower. In addition, some farmers have organised themselves in rotating savings and credit associations, locally referred to as Quixiquila. It is a solidarity group composed of farmers in the same village, vendors in the same market, members of the same church, migrants from the same area, or employees in the same office. The popularity of Quixiquila in Angolan rural sector is not exactly known, but it is estimated that about 45% of the farmers may use its services. Although flexible and well adapted to conditions in the rural sector, the availability of informal loans is limited; they are small in size, and mainly for consumption and working capital rather than investment purposes. Through the Project, farmers operating in groups will be organised and assisted to access the ready available micro-finance and credit services from the commercial baking sector. 2.4.16 Most NGOs and some commercial banks have adopted best practicess in micro finance management. Characteristics of the new approach can be summarized as follows: (i) use of dollar-indexed loans; (ii) annual interest rates ranging from 12% to 80% in schemes managed by commercial banks and NGOs; (iii) repayment rates of more than 90%; (iv) loan sizes of US$ 50 to 300, with increases based on good performance up to US$ 1,500; (v) focus on activities with rapid turnover, including trade; (vi) concentration in urban and peri-urban areas; (vii) loan periods of less than 6 months (with the exception of World Vision, CLUSA, CARE and ADRA); (viii) lending to solidarity groups; (ix) guarantee fund or down payment to secure loans; (x) strong involvement of the credit provider in the identification of clients; (xi) training of solidarity groups on loan procedures, simple book keeping, simple accounting, group capacity building, leadership etc. Within the agricultural financing sector, two commercial banks, Bank Sol and the Banco Poupança e Credito (BPC) are worth mentioning, as they are among the few institutions that are keen to finance smallholder’s agricultural undertakings. 2.5 Agricultural Sector Constraints and Potential

2.5.1 The agricultural sector constraints include: (i) political process (peace) still in its formative stages, (ii) macro-economic programme which is still being fine-tuned, (iii) high levels of inflation, (iv) food imports and unregulated seed market, (v) controls on profit margins which depress rural commerce, (vi) damaged road and rail links, (vii) limited rural infrastructure and storage capacity, (viii) food shortages in some regions, (ix) inadequate financial and credit systems for rural production and commerce and (x) dilapidated public services (poor levels of human resource and need for agricultural legislation). At MINADER level, staff have had no training for a long time and are leaving to the private sector and NGOs attracted by better remuneration. Its institutions such as IIA (Institute for Agronomic Research), IDA (Agricultural Development Unit), and EDA (IDA’s provincial Agricultural Development Stations) also need to be re-built, strengthened and modernised. These problems are intertwined with lack of coherent policies in key sub-sector areas, inadequate planning process as a result of ill functioning data and statistical systems. Government is aware of these problems and it is working hard to address them. For instance, staff car incentive scheme has been initiated, staff career development and training is being implemented and recruitment and promotion is on merit. Slowly, the public sector will become a viable employer once again.

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2.5.2 Other major constraints to sustainable development of the agricultural sector include: (i) the inaccessibility to production areas, markets and other commercial networks due to the destruction of basic infrastructures, (ii) loss of previously cleared agricultural land to forest cover and land mines, (iii) population exodus to urban centres thus posing a labour constraint to agriculture, (iv) low levels of rural incomes, (v) lack of access by farmers to freely negotiable (individual) rather than bank credit, (vi) poor institutional capacity at central, provincial, communal and local levels, (vi) the breakdown of the public and private sector support services to agriculture, such as credit, input supply, marketing, research and technical advice, and (vii) the degradation of the natural resources, in particular the degradation of agricultural lands due to soil erosion as a result of poor farming practices, uncontrolled forest clearing and overgrazing. 2.5.3 Despite these constraints, the country has a high agricultural potential. It has abundant natural resources, including its coastline that stretches for nearly 1,650 km. Its water resources, hydro-electric potential, agricultural lands, oil and minerals is yet to be fully exploited and when done so, has an enormous capacity to generate employment, income and foreign exchange. Soil characteristics vary significantly, with total arable and irrigable land estimated at 57 million ha. Only about 2.5-3 million ha of land is currently cultivated annually, of which 75,000 ha is the formal irrigated land and about 350,000 ha is under water-controlled systems. Irrigation potential in the country is estimated at 6.7 million ha. The country has equally very varied climate that is influenced by different agro-ecological zones, and hence allowing diversified agricultural production. In addition, the country has twenty-six important perennial rivers that flow into the ocean, and many other smaller streams and seasonal rivers that can be used for irrigation. Fortunately, GOA’s is committed to giving the private sector a greater role in the economy. Coupled with favourable institutional, legal and regulatory policy environment, this great potential will quickly be harnessed. 2.6 Agricultural Development Policy and Strategy

2.6.1 The Poverty Reduction Strategy Paper (PRSP-I) for the period 2005-2006, known as Estratégia de Combate a Pobreza (ECP) constitutes the country’s reference document for the definition of sectoral strategies and policies as well as the basis for preparing medium-term socio-economic development plans. It defines the major national orientations and interdependent sectoral strategies and policies aimed at halving the incidence of poverty until 2025. The global objective of the ECP is to consolidate peace and national unity by improving the standard of living of the people, particularly of the vulnerable groups, by motivating them to participate actively in the social and economic development of the country. 2.6.2 The agricultural objective of the ECP is basically the enhancement of food security and rural development. In order to achieve these objectives, the priority areas of intervention as identified by the ECP are: strengthening the traditional production capacity of the agricultural sector; revitalizing the domestic market system; the sustainable development of natural resources; creation of favourable conditions for development of the private sector, and institutional strengthening with a view to making the municipal administration the focal point for rural development. These areas of focus are now the guiding development principles that are followed by MINADER and are expected to be further refined to become more location and sub-sector specific to address the afore mentioned constraints. The Government formulated a long-term (2025) and medium-term (2005-2009) Development Programme, which presently is the subject of discussion with the development partners.

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2.7 Donor Intervention

2.7.1 With the advent of peace, most donor assistance is gradually moving from relief, emergency and rehabilitation to development phase. In the agricultural sector, the following development programmes are on-going: 2.7.2 Bank Group: The Bank Group has four on-going projects among which two are within the agricultural sector: (i) the Artisanal Fisheries Development Project, and (ii) the Study for the preparation of an Environmental Investment Programme. Due to delays in meeting the loan and grant conditions coupled with language difficulty (Portuguese vis-à-vis English and French), the Banks working languages, the implementation of these two on-going operations is rather slow. Another problem is GOA unfamiliarity with the Bank procedures for procurement of goods and services. The Bank financed projects in the health and education sectors have recorded the same problems. Constant training of project staff and follow-up missions, including the on-going decentralisation of country offices that will soon result into establishment of the Bank office in Angola is anticipated to address these problems. 2.7.3 Others Donors: The main interventions of the other multilateral donors in the rural sector include: (i) the Link Relief Rehabilitation and Development Project and the Seeds Distribution Operations financed by the European Union (EU); both projects aim at reducing food insecurity by supplying inputs to farmers, and are focussed in Huila, Namibe and Cunene Provinces; (ii) the Social Support Fund, which is an instrument for financing service delivery and infrastructure improvement covering nine provinces and the Emergency Multisector Recovery Project aimed at helping the country in seed multiplication and improvement of rural roads; the World Bank finances both operations; (iii) The International Fund for Agricultural Development (IFAD) has two on-going projects that started in the nineties: Food Crops Development Project (PRODECA), which focuses on increasing small farmers’ food security and incomes in Malange province; and Artisanal Fisheries Project (PESNORTE), which aims at improving livelihoods of rural people involved in inland fisheries in Zaire province. The implementation of these projects was affected by the civil war; hence their planned implementation is delayed; (iv) a number of Emergency and food security projects have been under implementation by FAO: Seed multiplication and distribution, provision of tools and restocking of livestock, and technical assistance to MINADER in land administration through a project known as Capacity Building and Land Delimitation (2000-2005); and (v) the World Food Programme (WFP) provides a massive assistance of food supply and food-for work programme in support of agricultural production and rural infrastructure, in partnership with FAO and NGOs. 2.7.4 Bilateral donors essentially channel their funds towards the agricultural sector through major international development partners, such as for instance the World Bank (NORAD), WFP (France), EU (Italy, France, and Spain), and NGOs. Of the bilateral donors, the United States Agency for International Development (USAID) has important development assistance in agriculture through its Food Security and Rural Development Programme. The programme, expected to be completed this year, covers Huambo and Bie’ provinces, and its principal elements include: seed multiplication; provision of farm tools and seeds to farmers; and provision of food-for-work for rehabilitation of rural infrastructure, and to assist in the development of rural group enterprises. The Private sector, especially the Multinational oil company, Chevron-Texaco Corporation, along with USAID, is assisting the Pro-Planalto Project that aims at promoting sustainable agricultural development activities in the Central Plateau through integrated approach.

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2.7.5 There is great scope for collaboration and development of synergy and complimentarity with a number of the above mentioned donors. Both EU and the World Bank have indicated willingness to collaborate at policy level. FAO is directly working within MINADER and their experience in seed multiplication and distribution will be very handy. FAO on-going work in land administration is also expected to enhance the Bank proposed activities under rural infrastructure development component. The proposed project management, while working from within MINADER will be able to tap into this wealth of staff experience. 2.7.6 The lessons learnt from Bank portfolio and those of other donors intervening in Angola indicate that: (i) efficient project management requires constant development of local human resources and empowerment of beneficiary communities; (ii) projects financed within the framework of emergency programmes offer numerous lessons in the context of dealing with communities returning to the country side to undertake farming and; (iii) project delays are as a result of administrative inefficiencies. For instance, implementation delays arising out of procurement inadequacies are as result of language difficulties – Portuguese vis-à-vis English and French, the working language of the Bank Group. It is expected however, that the performance of the Angolan portfolio will improve with the opening of a Representation of the Bank in the country. The Bank Country Office will provide institutional and technical support to project execution. The proposed project has taken these recommendations and lessons into account.

3. IRRIGATION AND CROP SUB-SECTORS

3.1 Crop Sub-Sector

3.1.1 Traditional peasant families who till the land as smallholder farmers dominate the crop sector in Angola. They produce just enough to meet their farm family food requirements with little surplus sold in the rural markets. Many still practice-shifting cultivation with the use of rudimentary farm tools. Use of animal traction is however, widely spreading in the central, southern and south-western provinces. On average, farm holdings are about 2-3 ha with a big share given to rain-fed food crops. In areas where irrigation is practised, the smallholder irrigated plots do not exceed 0.2 ha. It is estimated that traditional peasant farmers account for 80% of the agricultural production, with 18% and 2% respectively by medium-size large-scale commercial farmers. There are five (5) farming systems practised according to the agro-ecological zones of the country: (i) cassava farming associated with small ruminants in the plains; (ii) coffee growing in the highlands; (iii) maize associated with vegetables in the environs of the big urban centres; (iv) millet and sorghum associated with livestock activities in the south; and (v) intensive fruit and vegetable farming systems, using irrigated and conserved water. The main crops grown in the country include: (i) cereals dominated by maize, which is a basic staple food, cultivated across entire the country, rice grown in the central plateau and south east regions and millet and sorghum mainly cultivated in the provinces of southern and central regions; (ii) roots and tubers (cassava, sweet potatoes and Irish potatoes), (iii) vegetables and horticulture (beans groundnut and traditional horticulture); traditional horticulture includes tomatoes, pepper, aubergines, paprika, cabbage, onion, garlic, among other crops, and (iv) fruits which include mango, banana, citrus pineapple, avocado, papaya, passion fruit, apples, peers, grapes etc. 3.1.2 Vegetables are cultivated by smallholder, medium as well as large commercial farmers throughout the country. To support smallholder farmers to meet their credit, input,

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extension and marketing needs, one development approach has been proven as workable. Notably, (a) the NGO sensitise, organize and train farmers so that they become a cohesive group of about 10-20 members ready to cooperate among themselves; (b) the small farmers’ groups are organized to form a higher tier association in which different committees, such as a credit committee, marketing committee, land committee and the like, are established to deal with specific issues of interest to farmers; (c) the NGO, after sufficient training of the farmers, approaches a commercial bank to organize the delivery of credit, a supplier to deliver inputs, and a trader/wholesale dealer to become an outlet channel for farmers’ produce. The solidarity group becomes a basis for loan management and repayment as well as management of other inputs like water, extension services etc. The Project will not innovate any group support approach. It will instead use the same approach with the help of an NGO. 3.1.3 Agricultural production system collapsed since the end of the seventies. However during the last two agricultural campaigns significant recovery signals have become evident. Overall, cereal production is registering levels recoded in the sixties and early seventies though adequate levels of food production are still far to come as the population of Angola has increased more than two fold in the last two decades. Yield estimates made in 2003 suggest that they are indeed very low with an average of 550 kg/ha for maize, 350 kg/ha for millet, 390 kg/ha for groundnut and 220kg/ha for beans. Main food crop production estimates (1961-2004) are explained in the table under paragraph 2.1.4. According to MINADER, the cropped area in the 2003-2004 campaign was about 2.8 million hectares representing a remarkable 87% increase over the 2001-2002 data. In the same year total cereal production was about 0.65 million tons (about 49% of the country’s needs). On the other hand, the more severe drops in cash crops production have not been reversed. No data is available for annual vegetable and fruit production. 3.1.4 While data on crop acreage and yield are unreliable in Angola, FAO estimates maize yields to be as low as 270 kg/ha. In 1987, it was 353 kg/ha, much lower than in 12 other central African countries (which ranged from 727 kg/ha to 2,000 kg/ha). The very low yields most likely relate to intercropping with only the yield of the main crop being recorded. Labour constrains together with the use of degenerated low yielding seed varieties, coupled with low soil fertility and the non-use of fertilisers are the main contributory factors to poor farm yields. Total fertiliser distribution in 1992 was 16,000 tons, or equivalent to a paltry 10kg/ha of maize. 3.2 Irrigation Sub-Sector

3.2.1 Water Resources: The huge natural resource of Angola is formed by the large floodplains, river valleys and basins along the Atlantic Coast. The dense networks of rivers in the south east of the country take their source from the central high plateau and drain into the Okavango basin. While in the north and northeast, the Zaire and Zambezi River, including their tributaries take their course in the Congo before draining to the Atlantic Ocean. Of the estimated national surface water availability of 184,000 million m3 about 41% drains into the Atlantic Ocean. Potential for establishment of reservoirs and major diversion structures for irrigation exist in the steep transitional zone between the Central Plateau and the low plains along the west coast. Potential further exists for small river diversion structures and small storage reservoirs within the gentle transition area between the Central Plateau and the swamps and low lands in the east. Annual renewable ground water sources, on the other hand, are estimated at 72,000 million m3occurring at depths of 10-30 m in the Central Plateau, 5-30 m in the coastal zone and over 200 m (and low yield) in the semi-arid areas in the south.

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3.2.2 Irrigation Potential and Current Situation: Irrigation potential in Angola is estimated at 6.7 million ha out of which only 3.7 million ha is under small-scale and lowland irrigation schemes. Currently, only 65,000 ha is irrigated, of which 40,000 ha is partly under highly mechanised irrigation. Comparative 1974 figures are 425,000 ha (or 18% of cultivated land) irrigated with only 75,000 ha under highly mechanised irrigation. There are three main irrigation systems in the country:- 3.2.3 Large to medium-scale irrigation systems: These were colonial and/or state-run cash crop plantations which have evolved in 1990s into green-belt farms located close to major coastal urban areas and are operated by smallholder and commercial farmers. They cover about 100,000 ha with only about 9,750 ha operational in 2004. Many of these are found in the Northern, Coastal and Southern provinces - flood plains in the humid and dry coastal zone and the southern temperate and arid zones. Plot sizes vary, but often around 15-50 ha for medium scale farmers and 3-4 ha for smallholder farmers respectively. The irrigation systems consist of weirs on the rivers, pump stations, reservoirs and, often, lined distribution canals. Rehabilitation works on these currently attract a major (but insufficient) part of MINADER budget. The Bom Jesus subproject falls under this category. 3.2.4 Small-scale gravity or pumped systems: These are essentially for smallholder commercial cultivation of maize, vegetables and fruits. About 15,000-25,000 ha is currently irrigated with this system down from about 320,000 ha in 1974. They are located in the Central Plateau area of Huambo and Bie and close to existing larger green-belt type schemes in Bengo, Benguela, Huila and Namibe. Holdings vary from 1.0 to 2.5 ha. The yields of the main crops produced are estimated at 300 kgs/ha for the maize, 5.tons/ha for beans and 7 tons/ha for Irish potato. The irrigation system varies but most consist of small river/spring diversion structures often in combination with small reservoirs and gravity on-field irrigation. These have evolved into systems with small 5-10 HP pump units mounted along reservoirs, pumping from existing canals to irrigate areas outside intended design command areas in some green-belt areas, and pumping from shallow wells and tube wells. The irrigation component of the Calenga subproject is in this category. 3.2.5 Water harvesting in lowlands and depressions: These are smallholder family holdings. The potential for this system of irrigation abounds in the central and eastern part of Angola, which has sufficient but unequally, distributed rainfall. It was estimated that in 1974 the system potentially covered about 850,000 ha. Extensive rice production is being undertaken on about 7,700 ha in Lunda Norte and Moxico In these areas farm families maintain one plot for two crops of rain-fed agriculture usually on the foothills and a second plot in river depressions for dry season cultivation. Upland rice is commonly produced using simple water diversion techniques in the swamps of the eastern areas and in the lowlands simple water harvesting and improved field storage techniques are used. 3.2.6 Current Rehabilitation and Expansion Programme: For 2003-04, GOA and provincial governments’ budget for irrigation infrastructure rehabilitation was US$ 16.1 million for the rehabilitation of about 15 schemes (an investment of US$ 360/ha). However with the exception of two schemes (Kikuxi in Luanda and Matala in Huila Provinces) for which GOA carried out heavy hydraulic works through a Brazilian loan, few medium-large schemes can be considered effectively operational. No GOA investments have been made in the case of small-scale irrigation, water conservation and lowland development since 2000.

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3.2.7 Management of Irrigation Schemes: The development of medium and large-scale irrigation schemes is the responsibility of MINADER’s unit for Irrigation Development (GAPHA). For management purposes, Government has set up an agency known as SOPIR, a Society for the Management of Irrigation Schemes. Under SOPIR, Government has given scheme beneficiaries a shareholding of 70%, while itself maintaining only 30%. SOPIR under its own structures, yet to be developed will directly interlink with scheme beneficiaries through beneficiary groups and associations. Under its 30% share holding, SOPIR undertakes the responsibility to maintain scheme infrastructure (roads, canals and the entire irrigation system), while the beneficiary will meet a number of operation expenses through user fee contribution. For the small-scale and water harvesting schemes no formal management system exists and operation and maintenance of these schemes depend on beneficiaries’ initiatives and customary practices. There are currently seven GAPHAs including that at Bom Jesus Phase I – Old Sugar Estate. The GAPHAs are overseen by provincial government authorities and rely heavily on MINADER’s budget since the farmers’ token water user fee of US$ 60/ha/year is inadequate. The GAPHAs are under funded and have very little farmer participation in management. The creation of SOPIR is anticipated to address the issues of farmer participation, under-funding and improvement on management. 3.2.8 Institutional and Legal Framework: MINADER is yet to draw a specific irrigation policy or law to guide its Directorate for Rural Hydraulics and Engineering (DNHAER). On the other hand, DNHAER is short of staff (7 professionals nationally) and has no direct control of its budget allocation, yet its mandate covers (a) policy formulation, (b) project study, design and supervision, (c) management and backstopping and (d) overall coordination of rural infrastructure. In the absence of a specific irrigation policy, Law 6/02 of 2002, grants the Ministry of Energy and Water (MINEA) overall responsibility for the management of water resources, with its National Directorate for Water (DNA) as its executive agency. This law does not make specific reference to irrigation nor does it address the relationship between DNHAER and MINEA. 3.2.9 The Project will address the issue of irrigation policy development that will also clarify the relationship between DNHAER and MINEA. Furthermore, given the high potential for irrigation in Angola, the project will support DNHAER in its technical supervisory role. It will also improve on farmer participation in operational and maintenance of schemes (especially in the Bom Jesus). Together with improved farming methods and better access to market outlets, farmers’ net incomes are expected to rise.

4. THE PROJECT

4.1 Project Concept and Rationale

4.1.1 The GoA has accorded high priority to the development of agriculture and the rural sector in the ECP 2003- 2006. The Governments principal strategy is to shift towards agricultural development programmes that aim at increasing food production in order to improve food self-sufficiency, while generating income through marketing of surplus to improve the standard of living of the population. GOA’s is also committed to giving the private sector a greater role in the economy. Consequently, a number of policies and institutional, legal and economic reforms have been enacted to enable speedy realisation of the country’s development potential especially in agriculture. 4.1.2 In order for the sector to play its vital role in the economic development, the Bank through its CSP has found it imperative to support the reconstruction of country’s food crop,

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irrigation and rural infrastructure sub-sectors through adoption of sustainable development interventions and programmes that address rural poverty and food insecurity. Community infrastructure rehabilitation is fundamental for economic revival and for meeting domestic food requirements as well as diversifying the economy from its present reliance on petroleum and mineral sector. 4.1.3 Notwithstanding the 30-year civil war, Angola has a good experience in irrigation practice with about 850,000 ha of land irrigated in 1974, producing various food and cash crops. The land area has now reduced to 64,750 ha. GOA has indicated its commitment to the irrigation sub-sector by already partially rehabilitating 1,350 ha from its normal budget allocation although funding for the agricultural sector is only 0.73% of total annual budget. Small-scale gravity or pumped systems account for 15,000-25,000 ha down from a post-conflict figure of 320,000 ha. For the 2003/2004 season, GOA and provincial governments’ budget for irrigation infrastructure rehabilitation was USD 16.1 million for the rehabilitation of about 15 schemes (an investment of USD 360/ha). 4.1.4 The 2002/3 estimates by MINADER and other organizations indicate that the production of the two most important food crops, maize and beans, have recorded some increases, but the per capita production is way below the levels reached in the sixties. However, the production of roots and tubers, particularly cassava, has risen significantly in absolute and per capita terms, very likely facilitated by the ease in producing this crop with low inputs, and farmers’ wish to secure their adequate household food needs. Recovery within the cash crop sector has not yet taken place. The production increases achieved are due more to area expansion rather than to yield increases. Yield estimates made in 2003 for the major crops suggest that they are indeed very low, averaging 550 kg per ha for maize, 350 kg per ha for millet, 390 kg per ha for groundnut and 220 kg per ha for beans. Production performance is expected to improve on a sustainable basis when the ongoing de-mining of some important production areas and the rehabilitation of major infrastructure is completed, and the provision of adequate services by the public and private sectors is reinstated. Production estimates are given in table 2.1. 4.1.5 The project is therefore well located in the heart of agricultural production, and the interventions that are proposed under the project to accelerate up-ward post conflict production trends are already being used in some parts of the country and well adapted to the local practices in the project areas. The project is based on a participatory approach as envisaged from its initial stages during the course of its identification, preparation and appraisal when meetings were held with all categories of beneficiaries, notably smallholder farmers and farmers’ organizations. Individual and group discussions were held with farmers on the fields, traders in the markets, millers at work and representatives of NGOs and bilateral and multilateral donors as well as local community elders and parliamentarians. The project design is mainly built on the experience and know-how of the target beneficiaries who are presently engaged in irrigated and rain fed agriculture. Farmers are keen to be involved in the project. Farmer/beneficiary participatory approaches have been integrated in the design of all project activities, including the project exit strategy. 4.2 Project Area and Project Beneficiaries

4.2.1 Project Area: The project consists of two sites located about 500 km apart in two Provinces: - the Bom Jesus site located at Bengo Province and the Calenga site, located in the Municipality of Caala in Huambo Province. Bom Jesus site gets its water from the Kwanza River, while Calenga gets its water from natural spring sources in the highlands of Huambo with relatively high and reliable rainfall pattern. Situated at the banks of the Kwanza and

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Caalai Rivers, Bom Jesus and Calenga areas are easily irrigable by lifting water from the river efficiently and as well using traditional rain-fed and spring water respectively. These farming systems have been proven by existing farming activities in the two sites. Irrigation and farming practice is already established in Calenga while in Bom Jesus the irrigation system collapsed long ago and will be restored. Calenga has already established farmers, many of whom are women whose production potential will just be enhanced while in Bom Jesus, the old sugar cane estate land has to be re-allocated to smallholder farmers, whom will initially need a certain degree of organisation. These differences together with others to be elaborated below constitute the nature of irrigation technology adopted for the project, the nature and scope of activities to be undertaken in each site and the structure of the project management. 4.2.2 Bom Jesus Smallholder Irrigation Site. The site is located about 5 km north-west of Bom Jesus town, some 50km southeast of Luanda, on the northern bank of River Kwanza. The site falls within the two communes of Bom Jesus (Viana municipality) and Icolo e Bengo (Catete municipality), pertaining to Luanda and Bengo Provinces, respectively. The site is about 1,150ha and well connected to Luanda and other main centres by a paved road. 4.2.3 Bom Jesus site falls within the Coastal Area agro-ecological zone of the Kwanza valley. Average annual precipitation inn the area (about 690 mm) is low, and its distribution is irregular and skewed, making rain-fed farming rather not viable. The rainy season, which experiences about 94% of average annual rainfall, is from November to April. The dry season (May to October), on the other hand experiences virtually no rain. Average temperature is 25.8°C and annual average humidity is 80.5 %. 4.2.4 The project site is bordered by an existing 1350 ha irrigation scheme in the south east, and slightly undulated zone in the east, a sandstone hilly zone in the north (the Zambela plateau), the Cambi lagoon in the south-west, and an open flood-plain in the west. Two private farms were established on the plain of the scheme command area, all practicing irrigation, with water derived from the river or from the lagoon. The plain (Kakila) itself is partially inundated in the rainy season both from the Kwanza River floods coming from the south, and from runoff coming from the hills north of the scheme. Due to the flooding in the rainy season, the lower part of the plain is cultivated in the dry season only and would need flood protection for cropping in the rainy season. The higher ground above flood level is however cultivable all-year-round with irrigation if available. 4.2.5 Bom Jesus land, by law, is wholly owned by the State. Under the custodianship of MINADER and management of the traditional chiefs, land in Bom Jesus has been gazetted for demarcation to smallholder farmers who currently till the land, including those who commute from Luanda to use it only during the rainy season. MINADER as described in paragraph 2.4.8 will work with the Ministry of Commerce to assist farmer groups and associations attain legal status to land. This, coupled with development of irrigation infrastructure will enable production of crops twice a year as opposed to the current one production cycle. Naturally, titled ownership will ensure sustainable development and proper utilisation of irrigation infrastructure to be developed by the Project. 4.2.6 The crops that are being grown now are mainly horticultural. Because of lack of viable water and other inputs, production yields stand as follows: maize 1 ton/ha, potatoes 8 tons/ha and beans 0.6 tons/ha. With the intervention of the Project (i.e. irrigation and thus offering two cropping seasons a year), the yields are expected to reach as high as 4.5 tons/ha for maize from its current base level of 3 tons/ha, 1.5 tons/ha for beans from its current base

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level of 1.2 tons/ha and, and 15 tons/ha for potatoes from the current base production level of 12 tons/ha. The anticipated farm family incomes at the current market prices will range from US $ 600 to US $ 6,000 per ha, depending on the farmer decision-making process. 4.2.7 Source of Irrigation Water: The Kwanza River is the main surface water resource for the project area and has characteristic flows at the Bom Jesus hydrograph station, of 9,160m3/s (with probability of 1-in-100 years) and 6,589 m3/s (1-in-10 years). It takes its source wholly in Angola and joins the ocean 70 Km downstream of Bom Jesus. The river is subject to tidal effect at Bom Jesus (about 400 mm/day). However salt intrusion is limited to 30 km from the estuary, which is about 40 km downstream of Bom Jesus. Therefore there is no risk of salt intrusion through the irrigation pumping stations. Water quality tests carried out on the river (1988 and 2003) indicate that the water is of good quality with a low risk of alkalisation. 4.2.8 There are two hydroelectric dams on the River Kwanza upstream of the project area, the Cambambe and Capanda Hydro Electricity Dams. The two dams are the main source of electricity power in Angola. Cambambe Dam is 180 MW with 58 x 106 m3 reservoir capacity. It is followed by the new 520 MW Capanda dam, which is to be fully installed by 2007, with a storage capacity of 4.8 x 109 m3, and is to supply 2 m3/s of water for the proposed Capanda irrigation scheme. These dams produce a more uniform but marginally lower maximum flow because of the relatively small reservoir capacities as compared to the stream flow. Similarly, the abstraction for the Capanda irrigation scheme and the Bom Jesus bottling water plant and the soft drink factory is less than 1% of even the guaranteed minimum downstream flow and would not have a significant effect on the flow downstream. There are no wells within the settlement, which as a consequence depend on the river for their domestic water needs. As an emergency measure, the project will drill boreholes to provide the beneficiary population with safe drinking water. 4.2.9 Calenga Rain-fed Agriculture Development Site. Calenga is one of the four communes of the municipality of Caala in Huambo province. It is about 30 km southeast of Huambo city the provincial capital; and about 5 km from Caala town, the capital of the municipal administration. Calenga is located on the main road to the west of Caala and traversed by the Huambo railway. Agro-ecologically, the area is part of the maize/beans and livestock production system, with a climate that is defined as hot temperate or tropical humid. Average annual rainfall is around 1,370 mm, 88% of which falls fairly uniformly in the rainy months (October-April) leaving little for the dry season, the reason for which irrigation is required for any dry season cropping. Calenga has different savannah type of vegetation and is dominated by low open forest, often of secondary growth. 4.2.10 The commune, which is part of the Central Plateau (planalto), covers an area of about 39,000ha, with an average altitude of about 1,600 m. The Caalai River on the eastern and southern part situates it in a valley surrounded by a chain of hills on the western and northern sections of its boundary. The hills are the source of numerous (at least 40) perennial springs and watercourses, which drain into the Caalai River. Farmers traditionally derive water for irrigation during the dry season by the construction of weirs on the stream courses and a network of canals and night storage reservoirs. A typical village irrigation system (at Kampunge) comprises some 100 km of canals, 5-night storage reservoirs, irrigation diversion structures and 40 Km of access roads. The individual systems have been constructed to varying levels of quality and are in varying levels of condition. There is need to rehabilitate the systems to improve the current high losses of water. The springs are also the main source of drinking water for which many ought to be protected and modernised to provide sections

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for collection of domestic/drinking water, community washing and laundry bays, and cattle drinking troughs. 4.2.11 Much as the State owns all the land in Angola, in Calenga, land is traditionally owned and managed through local chieftaincy. Through the traditional seculu and sooba hierarchy of chieftaincy, land is distributed according to farm family needs. The size of the family plot coupled with other family needs determine how much more the traditional seculu and sooba hierarchy can allocate to the family, i.e. irrigation water, community labour, upland and lowland for rain-fed and dry season farming respectively. On average however, up-land and low-land plots are in the range of 1.5 – 2.5 ha per farm family. The farming areas held by a family comprises three or four plots: a main upland area (vongongu) for rain fed agriculture; a small area in the immediate vicinity of the homesteads (otchumbo) intensively cultivated all-year-round; a medium level land (ombanda) that can be irrigated during the dry season; and a naca. The latter is found near a river, normally inundated during the rainy period, but cultivated in the dry season by exploiting the residual moisture after the water recedes. 4.2.12 The crops that are being grown now are mainly horticultural. Because of lack of viable water and other inputs, production yields stand as follows, potatoes 8 tons/ha, beans 0.6 tons/ha and maize 1 ton/ha. With the intervention of the Project, the yields are expected to reach as high as 10 tons/ha for potatoes, 1.2 tons/ha for beans and 2 tons/ha for maize. 4.2.13 Calenga Commune on comparative terms is doing fine as far as agricultural production is concerned. People have quickly settled down to farming. The speedy settlement of people followed by the level at which it has organised itself to rehabilitate a few of the river canals and the desire to use improved seeds and modern farming methods demonstrates the viability of the community. So far, World Vision, while working with MINADER (EDA) is using very promising farmers as agents for “basic” seed production under contract farmer arrangement. The Project, because of the suitability and the acceptability of this approach will also adopt it. The contract farmer method, together with adaptive farmer approach to be used at the Huambo Research Station in Shianga will be used to quickly multiply both the “mother and basic” seeds for the farmers. With the support of World Vision International, EDA staff have gained experience in organising and managing both approaches. Their experience will prove very valuable to the project implementation. 4.2.14 Project Beneficiaries: The total population in the Bom Jesus area is estimated at about 5,000. Of this, some 3,600 (900 families) are the would-be project beneficiaries who live within the five communities in the project area namely Kakila, N’golome, Cassenda, Cana Cassasa/Terra Nova and M’banza Calumbo. There are also a few from Bom Jesus town, Calumbo and Zambela villages. The project’s target beneficiaries are smallholder farmers including both men and women. The women constitute about 23% of the farming communities and are the prime beneficiaries of the project. About 67 percent of the families earn their living exclusively from subsistence agricultural activities, while 13 percent do so only from fishing in the river and Cambi lagoon. Some 18 percent of the households practice both farming and fishing activities. A small number of families (about 5%) are engaged in non-farming activities. About 70% of the population is reported to be close to or under the poverty line, and about 75 percent of the population is considered illiterate. 4.2.15 Calenga has an estimated total population of about 40,000 people, (10,000 farm families) living in 52 villages, grouped into three administrative areas. Females account for some 58 percent of the population and about 8% of the population are widows, mainly due to the war. Female-headed households account for 31% of households, a situation that requires

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women to take up more roles, which normally would have been taken by their men folk, in addition to their traditional housekeeping ones. To ensure that women and indeed all beneficiaries are adequately provided with land, especially at Bom Jesus, GOA has started the process to allocate in a transparent manner the 1,150 hectares in Bom Jesus to smallholder farmers. GOA has agreed that within twelve (12) months of the signing of the grant Agreement, submit the list of the beneficiaries to the Bank (This is a condition for the grant). The land allocation criteria will give priority to the existing farmers, women, single headed households, widows and the commitment from the beneficiary farmers to develop the land allocated within the Project active life span. 4.2.16 Farm families in Angola are notably known as very excellent as far as social organisation is concerned. Beneficiary organisation in the project will take the existing farmer group organisations. Farmers, based on the level of income, need and the size and scope of problem have always organised themselves into associations, commonly known as “kikila”. Within these farmer associations and groups, farmers have been able to get credit, extension services, market their output etc on group/solidarity basis. Using the same approach, the Project will organise, train and support farmers to access inputs, credit and to market their outputs. So far, it is estimated that there are over 300 farmer groups in the two-project sites. These farmer groups need to be re-organised to set up farmer apex organisations and trained to manage the apex associations as business entities upon which the life of the project will depend for sustainability. 4.2.17 Within the framework of groups, Angolans are equally known to be good in beneficiary contribution. The contributions which have been documented range from communal labour for farm families in need of labour to formation of development gangs/groups for opening up of community roads, water points, schools and health units. World Vision International has documented that in kind contribution either in terms of local material, time and labour often goes far beyond the external cost of local projects. Under GAPHA for instance, irrigation scheme beneficiaries have set up their on own user fee structure that is based on certain agreed social structure. Generally, beneficiary contribution for agricultural water use is in the margin of US $ 60 per annum. Given business training, and especially documentation of running costs, beneficiaries should be able to understand how much they ought to contribute if they have to break-even in their farming business as well as sustain the developed irrigation infrastructure. 4.3 Strategic Context

4.3.1 The civil war severely limited agricultural production to below subsistence levels, and thus turning Angola into a large-scale importer of foodstuffs. In 2004 food imports accounted for half of domestic consumption (709,000/1,405,000 tons), and about 1.4 million people need food aid (200,000 tons). Despite the large amounts of food imports, per capita consumption quantities are low leading to malnourishment and vitamin deficiencies, which have been worsened by lack of drinking water and poor sanitation. Consequently infant-mortality rate, though it dropped recently is still among the highest in Africa. Huambo Province, the main project site still accounts for 28% of persons in need of food aid (2003-2004) with Luanda accounting for another 5%. 4.3.2 The project therefore seeks support for subsistence farming in order to help meet food requirements of urban and rural poor, reduce malnutrition, and provide employment for unskilled labour. This will ensure food security for most of the rural population, and will spread the benefits more evenly. It will also raise incomes and living standards and expand the market for consumer goods thereby stimulating industrial growth.

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4.3.3 In line with government policy MINADER has embarked on a programme of institutional reforms towards economic and technical efficiency in agriculture. These reforms include reviewing basic laws relating to land, seeds, rural development, animal and plant health and natural resources. The project is in line with the evolving GOA Agricultural Development Policy and its National Medium Term Investment Plan (NMTIP) and will contribute significantly to achieving the objectives of this policy. The project is also consistent with the Bank Group's Vision and strategy for Angola, which focuses on the following two pillars: (i) reduction of poverty in the rural areas with an institutional support for strengthening capacities in order to improve governance and the productivity of the economy, and (ii) the creation of favourable conditions for the development of the private sector. 4.4 Project Objective

The sector goal is to contribute towards enhanced food security, incomes and rural poverty reduction. The Project specific objective is to increase in a sustainable manner the agricultural production and incomes of smallholder farmers in the project areas. 4.5 Project Description

4.5.1 The project has four main components, namely; a) Rural Infrastructure Development, b) Agricultural Development, c) Capacity Building and, d) Project Management. The Bom Jesus project site is 1,150 ha irrigation project to be developed using River Kwanza as source of water. It has been selected because of its proximity to Luanda, the main market for farm produce. The Calenga project site covers intensification of agricultural production on 26,000 ha of already on-going rain-fed agricultural production farming activities. It is predominantly rain-fed but water-harvesting facilities are based on spring sources up-hill draining down hill by gravity. Other main outputs and activities planned under the project are: (a) Strengthening of human and logistic capacities of MINADER and its line institutions through technical assistance support and staff training, and (b) regularisation of land ownership in Bom Jesus Commune in order to ensure land security to farmers, a majority of whom are women. The Project will thus give MINADER the opportunity to operate two development approaches – i.e. rain-fed farming in the high potential areas and smallholder irrigation schemes, with a view to replicating the successful findings to other parts of the country.

(A) Rural Infrastructure Development 4.5.2 Under this component, 7,150 ha of furrow irrigated land (gravity flow) with ancillary drainage and road network located in both sites will be developed. It will comprise two main activities; (a) Development of Bom Jesus Scheme - a 1,150 ha furrow irrigation scheme based on pumped pipe conveyance systems including farm drainage and road networks and (b) Rehabilitation of Calenga Community Schemes: 42 small community furrow irrigation schemes covering 6,000 ha with open canal conveyance systems, and including farm drainage and road networks. 4.5.3 Development of Bom Jesus Scheme: Two powered electric stations will be constructed at Kakila and Zambella to draw water to feed four reservoirs (each of 103,000 m3) further to be constructed uphill in order to irrigate five blocks totalling to 1,150 ha that make up the Bom Jesus site. The Kakila pumping station to be installed at the end of the Kakila canal will feed a reservoir from which two blocks of 210 ha will be irrigated under gravity. The Zambella pump station to be installed on the bank of Kwanza River near

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Zambela village, will indirectly feed three reservoirs using a booster to feed each of the reservoirs. All the pumping stations will include a store for spares and tools and shelter. Power will be provided to all pump stations from the national grid through 5 km of 0.4 KV transmission lines, including a transformer and stand-by generator for each station. 4.5.4 The pressurised pipe conveyance system consists of 16.6 km of 600-800 mm diameter steel pipes between pump stations and reservoirs, 45 km of 125-400mm diameter low-pressure uPVC/HDPE main and secondary distribution pipes and 96-km of 110 mm diameter tertiary pipes to supply the farmers’ fields. To protect areas prone to flooding from River Kwanza and surface runoff from the hills, 11.4 km of dykes/bunds will be constructed in addition to 166km of main, secondary and tertiary on-farm drainage works. About 19 km of feeder roads and 4 small bridges within the project area will be rehabilitated and 1.6 km of new roads constructed to link the pump stations. Farmers will carry out all on-farm works such as land smoothening and provision of furrows. Maintenance costs of the main irrigation works and channels will be carried out by SOPIR and recovered from farmers as part of their water user fees. The Project will contract out the construction of the irrigation scheme and it has made provision for TA, supervision and design of the irrigation infrastructure 4.5.5 To guarantee clean and safe water source for the communities and reduce time spent by women on house-keeping, the project will fund the construction of 6 boreholes and where found feasible /hand-dug wells with washing bays. The project will also provide basic maintenance kits to the community water maintenance committees to help kick start community maintenance efforts. In support of the project’s preventive health scheme including HIV/AIDS and malaria education campaigns, a health post will be constructed at Kakila to operate under the supervision of the Bom Jesus Health Centre. 4.5.6 Rehabilitation of Calenga Schemes: The works to reduce seepage loss within the irrigation system, include rehabilitation of the sides and beds of portions (about 21km) of 42 streams which convey water from the springs to the farm lands, about 25 km of main canals (i.e. 38 canals) and about 74 km of secondary canals (112 canals.). About 100 night storage reservoirs will also be de-silted and provided with vertical slide gates for water control. Headworks of the 42 streams and 308 off take structures within the main canal system will be provided/rehabilitated. On-farm roads (118 km) together with 8 small bridges/culverts will be rehabilitated/re-constructed to improve access to main road and rail networks and markets. To guarantee clean and safe water source for the communities and reduce the housekeeping workload of women, the project will fund the construction of 70 boreholes/wells with washing bays. The project will also provide basic maintenance kits to the community water maintenance committees to help kick start community maintenance efforts. In support of the project’s preventive health scheme including HIV/AIDS and malaria education campaigns, one health post in Calenga will be rehabilitated and operated under the supervision of the Caala Health Centre. Farmers will carry out on-farm works such as land smoothening and provision of furrows and pay an affordable fee for the maintenance of the wells to be determined by the Farmers Groups. The project will also provide about 24 person-months of TA to up-date and carry out the required detailed survey and design of the civil works including irrigation, potable water supply systems and roads. He/she will also undertake construction supervision.

(B) Agricultural Development 4.5.7 The project will help consolidate and expand the gains using the traditional crops now under cultivation. Technology packages to be advanced will be developed in close

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collaboration with research and extension as well as farmers. The range of crops that will be grown by beneficiaries is largely based on current practices resulting from farmer’s indigenous knowledge on local soils and climatic conditions. To this end, the project will invest in the expansion of capacity for seed and food crop production, storage and processing. It will also train public officials and farmers to facilitate the adoption of new technologies, support studies and development of viable strategies for improved land, water and irrigation management. To achieve the above, below is the proposed sequence of activities. 4.5.8 The project initial activities shall include sensitisation workshops for farmers and farmer organisations. The Project will thus establish the number, the status, strength profile and any other information that may be relevant in regard to farmer groups or associations. Within this context, the Project will support the legalisation and government recognition of farmer groups and more particularly farmer apex organisations. The sensitisation workshops will also re-fresh and seek beneficiary commitment to implementation of project activities. These workshops will be organised at two levels, a) at Municipal level, with all local authorities and b) at farmer level, where farmers and farmer organisations will be explained the implementation modality of the Project and hence their input and role. Arising then, the following will be undertaken. 4.5.9 Group Formation and Registration: The Project will support MINADER to ensure that 545 farmer groups will be formally and legally recognised. This will involve a selected service provider, working to strengthen these groups and introducing a request to MINADER for on-ward transmission to Ministry of Commerce and Marketing and eventually to Ministry of Justice for legal registration. In so doing, the service provider will ensure that these groups though self forming have democratically elected executive and memorandum that ensures its election periodically. The groups will also be assisted to underscore the importance of gender. For this matter, they will be requested to have an agreed percentage of women in the executive. As described below, these groups will be trained in all aspects governing group dynamics, management, planning, book keeping etc 4.5.10 Farmer Support Facilities – In support of strong farmer apex groups and marketing, the Project will construct 20 farmer support centres (meeting/office/marketing), 16 in the Calenga communities and 4 on the Bom Jesus Scheme. In support of women, and particularly widows associations that are in agricultural processing, adding value to farm produce, the project will support the re-construction of 20 milling facilities and provide the existing and registered associations with 20 maize milling machines i.e. 15 in the Calenga commune and 4 in Bom Jesus commune. This will be provided as seed capital to the widows associations on once and for all basis. The running, operation and maintenance costs of these mills will be derived from the grain milling service they will provide to the community as well as other membership and group fees. One input store belonging to MINADER, just next to a railway line/stop in Calenga will be fully rehabilitated and refurbished for stocking some critical input supplies for farmers. The beneficiary associations under capacity building support will receive training in business management and organisation so that they can effectively manage their milling business. 4.5.11 Seed Development & Extension Support : Given the unregulated nature of the seed industry, the project will support the Department of Agricultural Development and Institute for Agriculture Research (IDA & IIA) in Shianga in Huambo to develop certified mother and breeder seeds for maize, potatoes and beans. To speed up seed multiplication, the IIA in partnership with a selected NGO, will implement a “contract farmer model”. Under this approach, suitable farmers, primarily among those that are already involved in seed

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production in the commune will be contracted to produce seeds. The Project, through IIA and in partnership with the NGO (service provider to be selected) will provide to the selected contract farmers’ basic seeds and all the necessary technical support and know how to access credit, inputs, equipment, fertilizer, agrochemicals, and tractor hire services. Upon multiplication, the service provider will work to enable smallholder farmers to acquire basic potato, maize and bean seed at a minimal cost to be used for further multiplication and distribution. In the first year of the project, a selected service provider will select 30 contract farmers, doubling the number each year so as to build a critical mass of seed multipliers to meet the demand at local and national level and as well turning contract farmers into a skilled lot. 4.5.12 The mechanism for seed multiplication will work to closely link extension services to farmers and to research. The Project will buy the mother/starter seeds from a certified eternal source upon advice from the IIA. These seeds will be given to the first 30 contract farmers as in kind credit through the service provider (NGO) to be recruited. IIA as research institute, while working together with EDA and NGO staff will provide all the necessary extension advice to the contract farmers. The Project through IIA will provide the basic fertiliser, pesticides and herbicides to the contract farmers. In cases where contract farmers have opened more acreage than agreed, the NGO will work to help them access the required credit and other inputs from the credit institutions and other input suppliers. On second multiplication, the Project will no longer buy seeds from the external market. The Project will recover the actual amount of seeds from the first generation contract farmers and distribute them to the second generation contract farmers. The number for the second generation contract farmers will be doubled to 60 as the NGO will have prepared them. Support to the second generation contract farmers will be similar to the one provided to the first generation contract farmers. The third and fourth generation will follow the same principle, with number doubling each project year. Following income increase in the community, the next generation of seeds will be bought by the community themselves from the contract farmers. Angola is deficient in good quality seed, and excess production will naturally be distributed by the market forces nationally through other input dealers who will have been introduced to the contract farmers by the selected NGO. 4.5.13 Within IIA, the Project will adopt and implement “on-farm and adaptive farm approach” to farmer extension, training and support to seed multiplication and increased food crop production. The Project will support IIA with a set of farm machinery, specifically a tractor for land preparation, weeding, harvesting, and fertiliser application and harvesting. Along with provision of fertiliser, pesticides, herbicides and basic irrigation equipment, the said set of farm machinery will be used to train farmers as well as permanently keep under cultivation 20 ha for potato seed production, 160 ha for production of maize seeds and 300 ha for been seeds for sale to small holder farmers at a minimal cost to ensure continuous multiplication nationally in order to meet national seed requirements. 4.5.14 Farmer Organization and Input Supply: The Project will use the selected contract farmers as farmer/field extension representatives (FER) to institute support to adoption of better farming methods and practices as well as promotion of animal traction. The Project has set aside resources to provide 2 pairs of bullock ploughs in the Calenga area and 2 tractors and accessories in the Bom Jesus scheme, including inputs to be used for teaching and demonstration. For ease of maintaining the oxen, two lead farmers who already have their own pair, will be selected to take care of them at a fee. The demonstration oxen will be hired out for ploughing to pay for the cost of their upkeep. Similarly the demonstration tractors will

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be managed by the project EDA technical team and will be hired out at cost for ploughing to cover operational and maintenance costs. 4.5.15 The FAO preparation report as well as the appraisal mission confirmed that there is sizeable amount of loan fund in various Banks in the country. Many of these banks, (Bank Sol, Bank Keve, and BPC) including a number of private sector financial institutions are directly or indirectly supported by Government to run loan farms for smallholder entrepreneurs in agriculture, industry, transport using solidarity group model. The Project will work within the already established NGO group solidarity model to strengthen farmer groups and where found required further organize farmers into producer groups and aid them in their farm production systems to access credit from the formal banking system and to market their farm produce. Estimates for farmer credit needs stands at about USD 4.5 million over the Project period i.e. USD 0.9 million per annum. Discussion with Bank Sol alone indicates that such money is available with them; let alone what is in other commercial banks and Government Development Funds. Overall, however, the market lending rate is between 10-20%, which is rather fair considering the level of inflation and the administrative cost of delivering credit and where possible micro-finance service. (Details of farmer credit needs is further elaborated in volume II of this report)

(C) Capacity Building 4.5.16 To address the weaknesses highlighted in chapter 2 and particularly section 2.5, the project will undertake to improve; (i) access to farmers by extension workers, (ii) the ability of MINADER to collect, collate and disseminate agricultural data, (iii) the capacity of MINADER to plan and develop effective policy interventions, including monitoring and evaluation, (iv) support basic seed multiplication in Huambo IIA within the contract farmer approach and (v) upgrade EDA offices in Bom Jesus and Calenga communes, IIA in Huambo and to provide selected training and office equipment to MINADER as an institution. To achieve this, the project will provide TA, training, transport and research capacity at three levels, namely MINADER, Provincial and Beneficiary levels. 4.5.17 At MINADER and Provincial level, institutional support will involve staff training, provision of office equipment and transport particularly for field/extension staff and also TA for studies. The Project will provide MINADER with 3 TAs to develop its, (a) Agricultural Policy, Planning and Coordination responsibility; (b) establish its Agricultural Statistics, Planning and Management Information System (M & E); and (c) development of Irrigation and Agricultural Water Use Policy. Eleven officers will be trained abroad at Masters Level in Agricultural Planning and Statistics, Monitoring and Evaluation, Project Management, Soil & Water Engineering, Agronomy and Extension, courses which are relevant also to the project. In addition 4 technical staff will undergo specialised internal training in AutoCAD and surveying (GPS/TPS) while 12 other secretarial and management staff at HQ and 36 from all provinces undergo various levels of computer training. Four Directorates and Departments of MINADER (IDA, IIA, DNDR and DNHAER) will be provided with 4 vehicles, 8 motorcycles, office equipment and running expenses for studies or supervision roles under the project. IDA extension staff at provincial level will also be provided motorcycles (40) on a higher purchase basis. DNDR will be provided specialised engineering survey equipment to survey and parcel out land in Bom Jesus site. IIA offices and staff quarters at Huambo will be rehabilitated to provide accommodation and to facilitate total availability of IIA staff in the institute so as to keep track of on-farm and adaptive work on seed development, research, extension and distribution. While EDA offices in Calenga and Bom Jesus will be rehabilitated and expanded to provide office and training accommodation for project staff.

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4.5.18 At beneficiary level, two service providers will be selected to train, strengthen and organise about 10,900 farm families (900 in Bom Jesus and 10,000 in Calenga Communes) into 545 Farmer Groups i.e. 500 in Calenga and 45 in Bom Jesus, with whom about 40% of the membership will be women. This is to enable them obtain credit and technical advice, as well as build their capacity to fully operate, maintain and manage the schemes as business enterprises. To improve the farmers capacity to run the schemes, the project will provide training in the following areas: (i) participatory training and extension for farmer water management (water users associations, farmer groups and lead farmers), (ii) water and environmental management, (iii) group formation and team building, (iv) basic book keeping, (v) marketing and credit management, and (vi) technical and business aspects of project management for the Farmer Apex Organization. Environmental training will be conducted or supervised by the Ministry of Urban and Environment. Each farmer would undergo 24 training days per year in PY2 to PY5. Two farmer field tours will be undertaken each year for technical and marketing exchange and contacts. 4.5.19 HIV/AIDS prevalence in Angola is high and on the increase (from 4.1% in 2003 to 6% in 2004). To forestall its negative impact on an already labour-strapped situation, the project will support EDA/MINADER by enhancing its capacity to promote AIDS control activities in the project sites in collaboration with the Ministry of Health. As for malaria, which incidence is even higher on irrigated fields and thus constituting a serious disincentive to agriculture, the project will support EDA, in collaboration with the Ministry of Health, to run awareness campaigns in the project sites. The project will also improve access to drugs and preventive inputs such as impregnated mosquito nets. The project will target farmers, and particularly women and children who currently make up 80% of all outpatient cases in the country, resulting into 40% of all deaths of children below the age of five. This will be achieved by incorporating training modules on the subject in the courses that will be organised for the various target groups.

(D) Project Management

4.5.20 The overall responsibility of the project implementation will be assumed by MINADER. Project management will be entrusted to an autonomous Project Implementation Unit (PIU), located within MINADER premises. The unit will be responsible for carrying out and coordinating all the activities required for implementing the project. It will enjoy financial and management autonomy, and will be headed by an experienced coordinator. Four full-time professional officers (Project Co-ordinator, Monitoring and Evaluation (M&E), Accountant and Procurement Officer), a Secretary and two support staff will form the PIU in Luanda. The four full-time PIU professional officers will be selected on competitive basis and process that will be reviewed and approved by the Bank. Technical Assistants (M&E, MIS, and Environmentalist) will be recruited to provide 8.5 person-months of services to the PIU. The project co-ordinator (PC) will be assisted by two projects Site Coordinators (SPC) selected also on competitive basis, one to be located in Bom Jesus and the other in Calenga. The Site Coordination Offices will be staffed by professional staff namely; (Agronomist, Irrigation Engineer, Gender/Training expert, Social Mobiliser/Extensionists, an Accounts Assistant) and three support staff with their salaries paid by the Government. At Bom Jesus 10 pump attendants/electricians/mechanics/water bailiffs will also be deployed. The project will bear all management costs with the exception of staff salaries for the Site Coordination Offices and office rental that will be borne by GOA. The project will support the project team with operating and maintenance costs for the PIU, including Site Coordination office as well as costs associated with travel and field trips. In order to effectively coordinate the project

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activities in the project area that encompass the two provinces of the country (Bengo and Huambo) and to implement the activities mentioned above, the project will require mobility. The Project has made provision for the purchase of four 4-wheel drive wagons for the PC, 2 Site Coordinators and one each for field operations in Bom Jesus and Calenga respectively. Also to be provided by the Project will be two motor cycles for Bom Jesus field technicians and, a set of 2 computers, 2 printers and a photocopier for each of the Site Offices, office furniture, audio-visual training equipment, standby generators and other equipment and materials. 4.6 Production, Market and Prices

4.6.1 Angola has agricultural potential to meet most of its food needs from local resources and generate surpluses for export. This is evident from the fact that only two years after the conflict, production of all food crops is higher than before the war and per capita production for cereals and beans is twice the 1974 figures. The exception is roots and tubers whose per capita production doubled in the period. However Angola is running a huge deficit in food production, which is being met through food aid and imports, at high foreign exchange costs. With regard to cereals, domestic supply (721,000 tons in 2004) is 709,000 tons short of national requirements and about 1.4 million people (10% of the population) still require food assistance. Substantial amounts of fruits and vegetables consumed in the major towns is also imported, mainly from neighbouring South Africa and the 93,000 ton incremental production from the project is expected to appreciably offset the inflow. Incremental productions of potatoes (17,400 tons) and beans (12,500 tons) represent only 0.3 and 16% respectively of current national production and would not appreciably affect the shortfall and would easily be absorbed in the market. The situation with maize is more significant since the incremental production (697,000 tons) would almost make up the annual shortfall and thereby almost eliminate imports of maize. 4.6.2 Agricultural products, including cereals, beans, vegetables and fruits are traded throughout the country in small local markets in the rural areas and bigger markets in towns. Fruits and vegetables are also sold in open spaces and in the streets of towns. The post-war situation is that, marketing channels are gradually being reinstated; middlemen have started to purchase agricultural products in the rural markets for re-sale in smaller towns and/or in commune centres, where they are assembled in larger quantities and sold to bigger merchants in the main towns. Some cooperatives are also organizing themselves to assemble their own produce and sell directly to the main consumption centres such as Lobito, Bengeula and Luanda. 4.6.3 Under the Farmer Group Model that has been adopted by the Project, the Service Provider to be recruited will work to strengthen the Marketing and Credit Committees of the Groups. As is often the case, farmer groups working in solidarity will only accept to guarantee credit to its members if they have assurance that their planned farm output will be bought. Before therefore a service provider gets to link the farmer groups to a credit provider, it will work to ensure that a potential market exists. For this matter, the service provider will undertake market analysis, market research and dissemination of market information prior to production. It will further work to link the farmer producer groups to marketing outlets, and where possible enable the farmer groups engage in contract production with designated buyers. 4.6.4 The main marketing constraint however is the poor road and rail transport network. This has effect on the quality of perishable crops and also market prices of all commodities. Thus the price of maize varies from About KZ 21,000 per ton in the markets of the main

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ports to as high as KZ 33,000 per ton in the hinterland. The price of the most used compound fertilizer, NPK 12-24-12 and that of Urea vary in the project areas between USD 700 and USD 800, more than double of the CIF prices in the major Angolan ports such as Lobito. Again, the transport cost from Lobito port to Huambo city, a distance of about 500 km, varies from USD 200 to USD 300 per ton, because of the bad state of the roads but it is expected to drop to USD 25 per ton when the rehabilitation of the Lobito-Huambo rail network is completed at the end of the year. Prices of both agricultural products and inputs are therefore not expected to shoot up, since they will be moderated by the combined effect of increased supply and reduction of transport costs, overtime. The planned and on-going improvements in major and intra-scheme road and rail networks should help improve access for produce and inputs. The Lobito-Huambo railway, which passes through the Calenga area is under repair and would be in full operation by December 2005. The main Huambo road is also scheduled for rehabilitation in 2005-2006. Coupled with improvements to be undertaken by the project within the scheme areas, these planned works will greatly improve links between project sites and major marketing and input centres e.g. Port of Lobito, Huambo town and Luanda, and act as catalyst for regeneration of the private sector trade in farm produce and inputs. 4.6.5 Imputed financial price of produce and inputs based on starting CIF price in an Angolan port to farm gate price in the project areas has been adopted in the determination of economic prices and calculation of ERR. 4.7 Environmental Impact

4.7.1 Positive Impacts: The project is classified as Category II under the Bank’s Environmental and Social Assessment Guidelines. The project aims mainly at intensifying rain-fed agricultural practices including improved water harvesting (in Calenga project site) and the development of a small-scale irrigation scheme (in the Bom Jesus project site) for increased cereal, vegetable and horticultural production. Positive impacts which are likely to accrue from the project include: a) a beneficial effect on soil fertility by the use of improved rotation including increased use of leguminous crops, (b) increased employment thereby reducing rural-urban drift; (c) improvement of the capacity of farmers and agricultural officers through training, (d) improvement of sanitation and health through the provision of social and economic infrastructure and better access to markets for farmers and women in particular. This has a positive income effect and thus living standards of the farming communities. In Calenga, rehabilitation and efficient improvement measures of the traditional irrigation network will per-se have a positive impact on the environment, while in Bom Jesus flood prone farmlands will be protected by dykes. 4.7.2 Negative Impacts: Some negative impacts may result from the physical development of land and inappropriate crop production practices. Poor land levelling and water management may accelerate soil erosion and declining soil fertility. Poor drainage and the pollution of surface water and ground water resulting from agrochemical runoff could cause water logging and subsequently salinization. Improper maintenance of irrigation canals clogged with weeds will cause siltation and also provide breeding ground for disease vectors. However, potential negative environmental impacts in terms of water control from irrigation infrastructure both in Bom Jesus and Calenga are not significant and can be avoided through sound design and adoption of good practices. In certain areas of the basin, high sediment loads pose a risk to head works, off-takes, and primary canals and will result in increased operation and maintenance costs. 4.7.3 Mitigation Measures: The project will promote, through the FFS, integrated production and pest management systems that combine appropriate erosion control, land

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preparation techniques, tree planting, application of organic manure, use of green manure and ad hoc replenishment with mineral fertilizers and suitable rotations and low nutrient demanding crop varieties. These techniques will benefit the environment by increasing land productivity and improving soil root-zone moisture levels. To promote efficient use of water, prevent water logging, and reduce the risk of water borne diseases, the project design provides in Calenga, rehabilitation and extension of lined sections of canals and improved numbers of water control structures. In Bom Jesus the water supply system up to the farmers’ fields is piped thereby reducing water loss and the environment for water borne diseases. 4.7.4 Dykes will also protect flood prone farmlands just as direct drainage from the farmers’ fields into the Cambi Lagoon is prevented. Further, farmers will be trained in the efficient use of water, farmer water-bailiffs identified and trained to operate and manage the irrigation and drainage system. Malaria control campaigns will also be integrated into the training programme. To reduce the impact of land preparation in Calenga the project will train farmer groups in the efficient use of bullock ploughs and build their capacity to access credit provided by micro-finance institutions in order for them to expand the current stock of bullock ploughs. In Bom Jesus, where bullock ploughing is non-existent, the project will contract Mechanagro, a state land preparation company with professional staff, to prepare the land and maintain the main drain and flood control works and the few large water channels. The project will also provide a few tractors for demonstration purposes. Intensification of crop use will also reduce the pressure to open up new lands and increase crop coverage thereby reducing the risk of soil erosion. For prevention of water pollution through chemical inputs, the training of farmers in safe utilization of chemical fertilizers and pesticides will be included in the training programme. 4.7.5 Environmental Monitoring :) An environmental expert will be contracted by the Project to undertake site-specific surveys and supervise environmental monitoring on the basis of indicators defined in Environmental and Social Management Plan (ESMP) implementation schedule, which will be integrated in the project implementation Annual Work-Plans and Budgets. The Ministry of Urban and Environment (MUE) will be associated with the overall ESMP implementation, especially in the periodic analyses on irrigation and drainage water, and soil residues (in terms of salinity, nutrients and other polluting elements) will be made, as well as random tests for agrochemical residues on agricultural produce. A budgetary allocation of UA 0.16 million has been made for environmental mitigation and monitoring activities. 4.8 Project Costs

4.8.1 The total cost of the project, exclusive of custom duties and taxes but including physical and price contingencies, is estimated at UA 19.776 million (about KZ 2.64 billion). The foreign exchange portion is estimated at UA 14.707 million representing 74.37% of the total project cost. The local cost portion is UA 5.069 million equivalent to 25.63% of the total cost. A summary of costs by component and by category of expenditure is provided in the Table below.

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Table 4.1: Summary of Project Cost Estimates by Component

KZ '000 UA '000 % FC COMPONENT Local Foreign Total Local Foreign Total

1. Rural Infrastructure Devt 193,177 1,186,299 1,379,476 1,447 8,886 10,333 86% 2. Agricultural Development 49,796 140,311 190,107 373 1,051 1,424 74% 3. Capacity Building 189,840 381,816 571,656 1,422 2,860 4,282 67% 4. Project Management 179,561 31,372 210,933 1,345 235 1,580 15% Total Base Cost 612,374 1,739,798 2,352,172 4,587 13,032 17,619 74% Physical Contingences 16,822 95,053 111,875 126 711 837 85% Price Contingences 47,527 128,562 176,089 356 964 1,320 73% Total Project Cost 676,723 1,963,413 2,640,136 5,069 14,707 19,776 74%

Table 4.2: Summary of Project Estimates by Category of Expenditure

KZ '000 UA '000 % of FE CATEGORY Local Foreign Total Local Foreign Total

A. Works 199,318 1,364,124 1,563,442 1,493 10,218 11,711 87% B. Goods 20,827 132,033 152,860 156 989 1,145 86% C. Services 238,302 429,074 667,376 1,784 3,214 4,998 64% D. Operating Costs 218,276 38,182 256,458 1,636 286 1,922 15% TOTAL PROJECT COST 676,723 1,963,413 2,640,136 5,069 14,707 19,776 74% 4.8.2 All project costs were estimated on the basis of the prevailing prices in Angola as of June 2005. The prices of imported goods and services were obtained in both Kwanzas and US Dollars and then converted to Units of Account (UA) using June 2005 exchange rates. Cost for civil works is based on ongoing similar works. Rates of 10% and 5% for physical and price contingencies respectively, were applied to the costs of civil works and goods to be purchased under the project. Since the project accounts would be denominated in UA and given the stability of the UA, it is anticipated that effects of inflation (31% in 2004 and projected to be 15% in 2005) in Angola would be compensated for. It is therefore unnecessary to separate the effect of price contingencies into local and foreign expenditures. A flat rate of 5% was applied to both imported and local goods and services. 4.9 Sources of Financing and Expenditure Schedule

An ADF Grant, the Government of Angola (GOA), will jointly finance the project and beneficiaries as indicated in paragraph 4.8.1 above. The financing plan of the project is shown in Table 4.3 below.

Table 4.3: Project Sources of Finance

KZ '000 UA '000 % Total SOURCE OF FINANCING Local Foreign Total Local Foreign Total

ADF 432,681 1,863,554 2,296,235 3,241 13,959 17,200 87%Government 154,329 99,859 254,188 1,156 748 1,904 10%Beneficiaries 89,713 0 89,713 672 0 672 3%

TOTAL 676,723 1,963,413 2,640,136 5,069 14,707 19,776 100%

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5. PROJECT IMPLEMENTATION

5.1 Executing Agency

The Government of Angola will be the recipient of the grant and MINADER will be responsible for the implementation of the project. Studies and detail engineering designs will be contracted out by MINADER to consulting firms/experts just as construction of land development and socio-economic infrastructure will be contracted. In Bom Jesus site, SOPIR, the newly formed public-state partnership institution will play an increasing role during the life of the project and would assume full control of the scheme with the involvement of private sector, government and farmers.

5.2 Institutional Arrangements

5.2.1 The Project will be managed by a PIU under the supervisory authority of MINADER. The PIU will be based within the Department for Agricultural Development (IDA) in Luanda. It will be headed by a Project Coordinator (PC) who on day-to-day basis will be overseen by the General Director of the IDA. Each Project site will have a site coordination office in each of Bom Jesus and in Calenga. These site coordination offices will be headed by Site (Assistant) Project Coordinators (SPC), who will directly answer to the Project Coordinator for day to day implementation of respective site activities. The PC shall be a specialist in any of the following fields: agricultural economics, agronomy, irrigation and or rural development. S/he will also be a specialist in management of development projects or programmes. The SPC will be equally professionals as above with considerable experience in management and implementation of agricultural and rural development projects/programmes. The Bank will finance the four positions in the PIU, namely the PC, Procurement Officer, Accountant Officer and Monitoring and Evaluation officer along with support staff – secretary and driver. All PIU staff shall be recruited nationally and on competitive basis using Bank shortlist procurement mode. Recruited staff shall sign “performance based” contracts which shall be reviewed on a yearly basis. The three TAs that are internationally recruited, will work under the supervision of the PC. The three TA, in addition will work with other donors and development partners to bring synergy and complimentarity to the sector interventions. 5.2.2 The PIU will be the focal point for the project, hence the depositary of all project related documents, and will assume responsibilities for liaising with other GOA agencies and with the financing institutions. It will also be responsible for the procurement of goods and services required by the project, which will be undertaken in line with the rules and procedures of the Bank and GOA. It will also (a) assist MINADER in preparing a project implementation plan, (b) ensure that project activities are initiated and budgeted adequately, (c) implement approved annual work plans and related budgets in collaboration with the SPCs and the concerned line directorates of MINADER and (d) assemble the information on project implementation from the two project site offices and prepare quarterly progress reports. National technical staff to be seconded by GOA to the two site offices; namely: Agronomist, Irrigation Engineer, Gender/Training expert, Social Mobiliser / Extensionist; Accounts Assistant; Secretary and Driver. At Bom Jesus 10 pump staff comprising of attendants/electricians/mechanics/water bailiffs will also be deployed. 5.2.3 At policy level, the Project will have a Policy Steering Committee (PSC). The PSC will be established by Government to: a) review and approve the project Annual Work Plans and Budget (AWP & B) as submitted by the PIU; b) discuss and resolve any issues related to

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overall project implementation, c) resolve any policy obstacles and provide policy and strategic guidance to project management; c) address any inter-agency constraints and advise Government of the need for possible policy changes, particularly in relation to credit for small-scale farmers, farm inputs; seed development, irrigation, land and water use management, agricultural planning and statistics and e) review regular project progress reports, including M&E reports, from the PIU. 5.2.4 The PSC shall be chaired by the Minister of MINADER or his representative and shall consist of: Department Heads of MINADER (DNAPF, DNDR, IDA and DNHAER), and representatives from the Ministries of Finance; Planning; Public Works; Urban and Environment and Farmer Apex Associations (4 members – 2 from each project site and of which two shall be female farmers). The Project Coordinator will serve as the Secretary. The PSC will meet at least twice a year and will be provided secretariat services by the PIU. It will operate autonomously under the overall guidance of the Deputy Minister for all policy, technical and operational matters. 5.2.5 At the actual site/implementation level, the Site Coordinators (SPC) will be answerable to the PC and will be based in Bom Jesus and Calenga respectively and will be in charge of overseeing the implementation of the respective site activities under the overall guidance of the PC including implementation of the survey and design of the engineering works, as well as the establishment of the infrastructure. The SPCs will be specialists in irrigation engineering/agronomy and agricultural economics. For the purposes of supervising the different irrigation and drainage works and other infrastructure, the SPC will benefit from the services of consultants, who will be specifically recruited for this reason by the project. 5.2.6 Local Coordination Committee: For the purposes of harmonizing the project activities, a Local Coordination Committee (LCC) will be established at each site. The LCC will provide a forum for all concerned institutions to share ideas and experiences, address implementation issues and facilitate implementation of project activities as planned. The frequency of LCC meetings will be occasional, as and when required, but at least twice a year. The LCC will be chaired by the PC or by SPC in his/her absence. The LCC shall be comprised of two farmer representatives (one of whom shall be female), a representative of the Commune administration, the Leader of the NGO Team, Provincial Director of Agriculture, Municipal EDA and IIA. 5.2.7 The following MINADER Institutions will be directly involved in project implementation: a) Agricultural Development Unit (IDA) - IDA being responsible for agricultural development among subsistence farmers will provide all agronomic, extension, marketing and land/soil management services to the project. It will also carry out monitoring and evaluation services. IDA will be assisted by the Hydraulic Service Department of MINADER with the support of a consultant to carry out mapping and parcelling of land in the Bom Jesus. IDA will also implement the HIV/AIDS and Malaria prevention activities in collaboration with the Ministry of Health, which would provide technical assistance to EDA to integrate these campaigns into normal extension activities of the extension officers and farmers’ programme, to ensure sustainability and community ownership. b) Institute of Agricultural Research (IIA) being responsible for coordination and implementation of research and technological development will support the potato, maize and bean seed multiplication as well as link research to extension and farmer needs. Using its

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Shianga field station in Huambo, it will undertake soil analysis and test and certify all seed produced for national dissemination and farmer use. c) Directorate for Rural Hydraulics and Engineering (DNHAER) of MINADER being responsible for irrigation and coordination of rural infrastructure will coordinate the preparation of irrigation policy, carry out detailed irrigation studies and supervision of construction and represent GOA on engineering issues. The project will finance the activities of DNHAER related to the drawing up of structural plans and conducting land surveys and titling of land in Bom Jesus project site. 5.2.8 Other institutions that will be involved in Project Implementation include: a) Mechanagro is a divested state company, which supplies support services at competitive market prices. It has 2000 staff nationwide. Its fleet of equipment comprises 250 tractors enough to prepare 73,000 ha annually and heavy equipment to rehabilitate 1,050 km of feeder roads. It has obtained Chinese assistance to replace and revamp the stock of equipment. It already operates in the Bom Jesus area and will be contracted to provide tractor hire services and maintenance of civil engineering infrastructure such as the canals, drains and feeder roads at Bom Jesus; b) The Ministry of Urban and Environment (MUE) will supervise the consultant to be appointed to undertake the environmental study and preparation of the Environmental and Social Management Plan (ESMP). It will also monitor the environmental impact and adopted mitigating measures during project implementation, and; c) NGOs: Under the overall supervision of the SPCs, two NGOs to be contracted will provide the farmers with all the necessary technical support and know how to access credit and other production and marketing inputs.

5.3 Supervision and Implementation Schedule

5.3.1 Supervision - The day-to-day supervision of the project will be done by the PIU, according to the AWP/B submitted to ADF for review and approval prior to implementation three months before the beginning of each year. It will supervise all the project activities including those to be undertaken by contractors, suppliers, consultants and seed producers and will report, quarterly, to the PSC on all aspects of the project including financial and progress of project activities based on reports received from the M&E officer. It will also prepare a project completion report (PCR) capturing all aspects of the project including achievements, constraints, problems and lessons learnt. The PSC will hold semi-annual meetings to ensure that work plans and procurement schedules are achieved as planned. 5.3.2 The ADF will supervise the project bi-annually and in accordance with Bank procedures, to evaluate the progress of project implementation and discuss with PIU, MINADER, beneficiaries, other officials and stakeholders regarding relevant activities, achievements, problems, constraints, and any changes that may be necessary. A mid-term review mission will take place towards the end of the third year of project implementation. 5.3.3 Implementation Schedule - The project will be implemented over a period of 5 years (Mid 2006 – Mid 2010). GOA will establish the PIU as described above. Once established, the PIU will carry out the preparation of a project implementation plan, beneficiary sensitisation, establishment of baseline data, preparation of TORs for procurement of TAs

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(M&E, O&M and detailed engineering designs), MOUs and bids documents for vehicles and office equipment, prepare and agree MOUs with implementing/research agencies and establish an accounting and financial system. It will launch the project in Luanda and in the two sites. Up-date of detailled design studies for land development (and rural infrastructure) will take place in the first half of PY1 as well as the process of procurement for contractors. Rehabilitation of project management offices in Bom Jesus and Calenga will take place in the PY1. 5.3.4 In Calenga, project implementation will commence with recruitment of a training and implementation service provider and a baseline and needs assessment survey. Farmer organisation will then commence concurrently with training of frontline extension staff, and lead farmers to be followed by farmer training. Between PY2 and PY5 farmer group numbers to be formed and trained shall be 50, 118, 168 and 164 respectively. Rehabilitation of irrigation infrastructure for 26,000 ha of land located in the 52 communities within the project area including access roads and bridges will take place over two years (mid-PY1 to mid-PY3). Rural infrastructure (marketing outlets, milling structures, boreholes/hand-dug wells, health posts, etc) will be established over four years (mid-PY1-mid-PY5). Farming activity will continue to take place but with greater effectiveness as farmer groups get trained to access credit for inputs (seeds, agrochemicals, bullock ploughs etc). 5.3.5 In Bom Jesus land development will take place in three lots – (a) 210 ha in Zone 1 and Zone 2a in PY2, (b) 178 ha in Zone 5 between mid-PY2 - mid PY3 and (c) 741 ha in Zones 3, 4 and 2b between start of PY3 to mid-PY4. Rural infrastructure (farmers’ storage/marketing/meeting sheds milling structures, boreholes/hand-dug wells, a health post, etc) will take place in PY2. Training in the Bom Jesus site will be similar to that at Calenga except that group formation and training will be tied to the land development phases from PY2 to PY5. 5.3.6 For effective management of the project frequent monitoring, mid-term review, and completion missions are planned. Details of the implementation schedule summarised in Table 5.3-1 and detailed out in Annex 3.

Table 5.3-1: Implementation Schedule

Activities Responsibility Period Duration 1. Board approval ADF By Oct-05 1 day 2. Entry into force of the loan and first

disbursement MINADER/ADF By Mar-06 6 months

3. Recruitment of Coordinator MINADER By Jun-06 6 months 4. Project launching mission ADF Jun-06 10 days 5. Mobilisation and sensitisation PIU/EDA July-Sept 06 3 months 6. Design and tender documents IDA/TA By Dec-06 6 months 7. Training EDA/NGO 2006-2010 5 Years 8. Construction works – Calenga Contractors 2007 & 08 2 Years 9. Construction works – Bom Jesus Contractors 2007-09 3 Years 10. Land Cultivation – Calenga Farmers 2007-2011 4½ Years 11. Land Cultivation - Bom Jesus Farmers 2008-2011 3 Years 12. Mid-term review ADF Jan-Mar 2009 3 months 13. Project Completion June 2011 14. ADF completion mission report GOA/ADF Sept-Oct 2011 2 months

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5.4 Procurement Arrangements

5.4.1 All procurement of goods, works and services financed by the Bank Group 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. The Project Implementation Unit will prepare and process all the procurement documents. The goods, Works and Services for the project will be procured according to the modes shown in Table 5.2 below. 5.4.2 Works: Procurement of civil works comprising of Land Development (irrigation infrastructure) at the two subproject areas amounting to UA 9.498 million will be procured through International Competitive Bidding (ICB). The ICB procedure has been selected because of the amount, scope, and nature of the works involved. The rehabilitation of road infrastructure amounting to UA 0.75 will be procured through NCB. Miscellaneous rural infrastructure (mill-structures, storage and collection centres, day-care centres, a health centre and rehabilitation of project management offices and staff housing) amounting to UA 0.156 million will be procured through NCB. 5.4.3 Goods: National Competitive Bidding (NCB) procedures will be used for the procurement of; (a) various types of office and field equipment valued at UA 0.729 million and (b) vehicles and motorcycles amounting to UA 0.239 million. An adequate number of local agents of international suppliers are available in the country and this will ensure competitive prices. 5.4.4 Services: Procurement of consulting services and technical assistance will be undertaken on the basis of shortlists of qualified consultants, in accordance with the Bank's "Rules of Procedure for the Use of Consultants". These will include: a) Contract services for 3 TA positions (Policy, Planning and Coordination; Irrigation and Water Management and; Agricultural Statistics, valued at UA 0.765; b) Consultancy services for training, MIS design, monitoring, EMSP amounts to UA 2.578 and, c) Studies and surveys, Mid-Term review, PCR preparation, annual audit amounting to UA 1.656 million 5.4.5 Operating Costs: Operation and maintenance amounting to UA 0.388 million, staff cost and honoraria amounting to UA 0.323 million, and field allowances amounting to UA 0.117 million shall be procured using GoA procedures. 5.4.6 National Procedures and Regulation: Angola’s national procurement laws and regulations have been reviewed and determined to be acceptable. MINADER’s Procurements Committee will review all bid evaluation reports before they are finally submitted for Bank approval. The project unit will be responsible for the initiation of all tender documents required for the procurement of works, goods and service contracts. 5.4.7 The Executing Agency: MINADER will be responsible for the procurement of goods, works, consulting, and training services. However, the project will employ a procurement specialist because of MINADER’s inadequate experience with ADF Rules of Procedure for the Procurement of Goods, Works and Services. 5.4.8 Procurement Documents: The text of a General Procurement Notice (GPN) will be agreed with MINADER and the Bank will issue it for publication in the Development Business upon approval of the Grant Proposal. The documents subject to review and approval by the Fund before promulgation will include: i) Specific Procurement Notice; (ii) Tender

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Documents or Requests for proposal for Consultants; and (iii) Tender Evaluation Reports or Reports on Evaluation of Consultants’ Proposals, including recommendations for contract award. Draft contracts will also be subject to Fund approval if they have been amended from the drafts included in the tender documents.

Table 5.2: Summary of Procurement Arrangements

UA’000 CATEGORY ICB NCB Other SL NB TOTAL

1. Works 1.1 Civil Works(Land Develop’t) 9,497.6 1,385.1 671.6 11,554.3 (9,497.6) (750.4) (10,248.0) 1.2 Office/Staff Accom. Rehab 156.3 156.3 (156.3) (156.3) 2. Goods 2.1 Equipment 277.2 277.2 (277.2) (277.2) 2.2 Vehicles and Motorcycles 416.2 416.2 (239.2) (239.2) 2.3 Others (Agric. Inputs) 451.5 451.5 (451.5) (451.5) 3. Services 3.1 Technical Assistance 764.6 764.6 (764.6) (764.6) 3.2 Training 2,578.2 2,578.2 (2,578.2) (2,578.2) 3.3 Surveys, Designs & Reviews 1,655.9 1,655.9 (1,655.9) (1,655.9) 4. Operating Costs 4.1 Operations and Maintenance 388.8 388.8 (388.8) (388.8) 4.2 Staff costs and honoraria 323.2 810.4 1,133.6 (323.2) (323.2) 4.3 Rent (Office/Accomm.) 282.3 282.3 (0.00) 4.4 Field Allowance 117.1 117.1 (117.1) (117.1)

TOTAL PROJECT COST 9,497.6 2,686.3 829.1 4,998.7 1,764.3 19,776.0 (9,497.6) (1,874.6) (829.1) (4,998.7) (0.00) (17,200.0)

Note: Figures in bracket indicate ADF Financing, Other included – Direct Purchase and National Shopping

5.5 Disbursements Arrangements

The Project funds will be disbursed according to the expenditure schedule by component and by source of finance shown in Table 5.3 and Table 5.4, and Table 5.5 respectively. The Government will open a separate account in the name of the project for the funds provided by ADF. The contribution of the Government to the project costs will also be deposited in a separate special account. The opening of these accounts will be a grant condition. The ADF funds will be disbursed according to an annual work programme, which will be approved beforehand by the Government and ADF. The initial request for disbursement of the special account will be

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submitted to the Bank for approval and shall cover a period of four months. The first disbursement from the ADF account will be made after entry into force of the loan and fulfilment of conditions precedent to first disbursement from the loan. An initial advance will therefore be lodged in the ADF special account, in accordance with disbursement rules of the Bank. Disbursement of subsequent funds will be subject to justification of the utilization of the preceding funds. The settlement of expenses relating to the services of consultants, contractors and suppliers will be effected by direct payment in accordance with relevant rules of the Bank. Signatories for use of the accounts as well as method of payments for the project works, goods and services shall be by cheque duly signed by authorised signatories, namely the Coordinator with either the Director of IDA or the Deputy Minister.

Table 5.3: Expenditure Schedule by Component

UA '000 COMPONENT PY1 PY2 PY3 PY4 PY5 TOTAL

% of Total

1. Rural Infrastructure Development 991 2,384 4,758 2,941 434 11,508 58% 2. Agricultural Development 307 968 188 75 38 1,576 8% 3. Capacity Building 1,285 1,171 881 802 734 4,873 25% 4. Project Management 460 307 334 350 368 1,819 9% Total cost 3,043 4,830 6,161 4,168 1,574 19,776 100%

Table 5.4: Expenditure Schedule by Source of Finance

UA '000 SOURCE OF FINANCE PY1 PY2 PY3 PY4 PY5 TOTAL

ADF 2,547 4,140 5,615 3,611 1,287 17,200Government 496 485 314 322 287 1,904Beneficiaries 0 205 232 235 0 672

TOTAL 3,043 4,830 6,161 4,168 1,574 19,776

Table 5.5: Summary of Expenditure by Category and Source of Finance UA '000

CATEGORY ADF GOVERN'MENT BENEF. TOTAL A. Works 10,404 635 672 11,711 B. Goods 968 177 0 1,145 C. Services 4,998 0 0 4,998 D. Operating Costs 830 1,092 0 1,922 TOTAL PROJECT COST 17,200 1,904 672 19,776

5.6 Monitoring and Evaluation

5.6.1 Monitoring and Evaluation will be an important management tool to effectively assess progress of the project activities, identify problem and constraints, 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; this would facilitate assessment of the rationale of the set objectives and proposal of readjustment, if need be; (ii) the aspects relating to support to groups, associations and national institutions; and (iii) the budgetary aspects and use of

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human and material resources by comparing the planned activities to those carried out. Monitoring and Evaluation activities will include a) a baseline survey; b) on-going internal monitoring; c) external monitoring and evaluation; d) mid-term review; e) environmental monitoring; and f) reporting. 5.6.2 Internal Monitoring and Evaluation: The internal Monitoring and Evaluation will be conducted on a permanent basis by the project management through its monitoring and evaluation service. The PIU will be responsible for monitoring and evaluation (M&E) of the project and ensure the flow of information necessary for assessing implementation performance and impact evaluation of the project. Its M & E specialist will do this through the SPCs, but will seek the cooperation of the EDA staff. The PIU should establish early on, a base line survey through information gathering, analysis, compiling and dissemination methods. The internal M&E system will comprise performance monitoring, beneficiary assessment and impact evaluation. Monitoring of project progress, or performance monitoring, should enable project management to compare project activities with planned targets including financial and physical inputs, project outputs and timeliness of accomplishing the defined tasks. The PIU will endeavour to produce information that will be essential for providing a clear picture of project progress in such a way that it becomes a useful decision making tool. Monitoring of project progress will be carried out at the site level under the auspices of the SPCs. The latter will collect the basic data, compile the information and forward it to the PC on a quarterly-basis. The PC will then consolidate all the information provided by the SPC into a project level document, and provide an analysis of the overall performance of the project in a structured report. Such reports will be distributed to all members of PSC as well as the ADB and all implementing agencies. Start-up workshop will be organized in order to provide a forum for beneficiaries and other stakeholders to participate in the project before the start of the implementation and to familiarize themselves with the project objectives and implementation modalities. 5.6.3 External monitoring and evaluation will be conducted by MINADER through its Directorate of Statistics and Planning, which has an Unit of Programming, Monitoring and Evaluation of projects, on the basis of objectively verifiable performance indicators: physical infrastructure constructed, areas under cultivation, production yields, adoption rate of disseminated technologies, participation rate of beneficiaries in the works, number of functional groups, number of persons trained, amount of credit mobilized, efficiency of delivery services, including extension advice and input supply etc. Adequate resources have been earmarked for this task (2 missions per year); at the end of each mission, a report will be prepared and transmitted to ADF. The project will also be supervised by the ADF through periodic supervision missions (1 mission every 6-9 months). Impact evaluation will also be conducted periodically to determine the extent to which the project contributes to sector development objectives. Both beneficiary assessments and impact evaluations will be carried out under contract with independent institutions. The project will finance the services of the consultant specialist of M & E to assist the PIU in establishing and organizing the monitoring and evaluation mechanism. 5.6.4 A mid-term review will be conducted at the start of the third year of the project. The evaluation will take stock of the outputs and prospective impact of the project, and where necessary, take measures to facilitate achievement of the objectives. An engineering and agricultural development-consulting firm will conduct the review. The primary concerns of the population and their views on project activities will be taken into account; in this connection, provisions will be made for surveys and discussions with the beneficiaries during the mission.

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5.6.5 The environmental monitoring will be conducted under the responsibility of the PIU, which will receive assistance from the Directorate of Environment of MUE and use the services of a consultant to determine and describe the indicators. 5.6.6 Reporting: The Project Implementation Unit (PIU) 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, it will prepare a completion report in line with the Bank’s model. The project annual progress reports should include the physical progress, procurement activities, expenditures, and evaluate the representation of men and women as beneficiaries according to the requirements of ADF. The various technical and financial partners and the specialized technical operators in the implementation of project components will submit quarterly, half-yearly and annual reports to the Project Management Unit. At project completion, the ADF will organize a specific mission for the preparation of a completion report. Below is a summary table of key project activities.

Summary Table of Key Project Activities

Component/ output Main activity Monitoring indicator and target Component 1 – Land & Infrastructure Dev. • Gravity flow irrig. • Pump irrigation • Domestic water • Health clinics • Feeder Roads

• Develop. furrow irrigated land • Rehabilitate community schemes • Construct reservoirs and water pipes • Drilling of boreholes and hand-dug

wells • Renovate/up-grade two clinics

• 7,150 ha • 42 schemes covering 20,000 ha • 4 reservoirs to feed 1,150 ha • 76 wells/boreholes provided • 2 Health clinics • 137 km rehabilitated & 4

bridges re-built Component 2 – Agricultural Development. • Group formation &

registration • Farmer support Facilities • Seed development &

extension • Research enhanced

• Formation, training and registration

of farmer groups • Support to farmer centres • Support to widows associations • Agro-processing • Rehabilitation of one field station,

including initiation of adaptive and on-farm demonstration and extension

• Provision of farm equipments and machinery.

• 545 groups and linked to eternal

credit market • 20 farmer apex organisations

linked to marketing, input and output markets

• 20 milling facilities provided • 3,000 tons of maize, potato and

bean mother and breeder seeds multiplied and distributed

• Animal traction introduced • Graduate at least 90 Farmer

Extension Representatives through contract farmer approach.

Component 3 – Capacity Building • MINADER • Beneficiary farmers

• Training • TA support for policy development,

agricultural statistics & irrigation and water use

• Re-tooling • Office rehabilitation • Training • Extension support • Support to microfinance services,

HIV and malaria control

• 11 staff trained in professional

and certificate course • Functional ministry • Computers, vehicles, survey

equipment • 10,900 farm families

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5.7 Financial Reporting and Auditing

5.7.1 The PIU will keep financial records in accordance with sound international accounting practices and will ensure that an independent auditor, acceptable to the government of Angola and ADF, audits all project accounts annually. The corresponding audit reports will be regularly submitted to ADF for review. The project coordinator will be responsible for timely submission of annual financial statements. Fully audited and certified financial statements for the preceding financial year shall be submitted to ADF not later than six months after close of the financial year. The auditor's report will include comments on the adequacy of the accounting system and internal controls. Reporting will be set against annual work plans and organized by component and activities.

5.8 Aid Co-ordination

5.8.1 The ECP, which was approved by GOA in February 2005, constitutes the general intervention framework for donors in Angola. Apart from the Bank Group, other multilateral and bilateral donors and NGOs intervene in rural sector under the coordination of the Ministry of Planning. However, the discussions with development partners are underway to ensure that MINADER undertakes technical coordination of donor’s interventions in rural sector. Presently, its office of International Cooperation is responsible for co-ordinating donor assistance in the Agricultural sector. The Project will strengthen this office through the provision of TA support and as well as office equipment and training to better play this role and ensure that donor coordination results in effective synergies between various donor interventions. This coordination will further be enhanced through the involvement of donors within the project area and sector during project launching and annual consultative meetings. Activity reports will also be reported. 5.8.2 Representatives of the key donors - FAO, the World Bank, USAID and the EU – and NGOs - World Vision International, CLUSA, BPC and ADRA were consulted and briefed on the proposed project during appraisal. Support to the proposed project was expressed. A few bilateral donors such France, Italy, Spain also channel funds through major development partners or directly invest such as in the case of China, India and Israel.

6. PROJECT SUSTAINABILITY AND RISKS

6.1 Recurrent Costs

6.1.1 Recurrent expenditures under the project are estimated at UA2.35 million over the five-year project duration. The major cost items under the ADF financing estimated at UA1.22 million include operating costs for the project offices, operation and maintenance of vehicles and motorbikes for extension workers and field allowances. The cost items to be borne by the Government comprise salaries, office utilities and part of running and maintenance of motorbikes, valued at UA1.15 million. The operations and maintenance of water control and management infrastructure developed by the project would be the responsibility of the beneficiaries and would be recovered as part of normal farm operating costs. Recurrent costs appear high because of the result of the war and an over valued currency. Secondly, qualified staff needs to be provided with field allowances to live under the difficult conditions in the rural areas.

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Table 6.1: Summary of Recurrent Costs (UA’000)

Source of Finance 2006 2007 2008 2009 2010 Total ADF 149 304 356 231 180 1,220Counterpart 177 190 218 264 304 1,153 6.1.2 At the end of project implementation, the PIU will be phased out and farmers will take full charge of the schemes especially in Calenga. Farmers in Bom Jesus will need another 3-5 years to fully bear the cost of O&M giving the relatively high unit investment and operational costs. SOPIR will provide support in the transition period. Operation and maintenance costs associated with installations, electricity and operational staff is estimated at USS$ 200/ha/yr, at Bom Jesus. At Calenga, the O&M cost is estimated at US$ 20 ha/yr. These O&M costs are to be borne by farmers as part of their water user fees managed by the user groups. In the case of Bom Jesus, full cost recovery might take longer than the project life and the support of SOPIR will be required. SOPIR will ensure the maintenance of the infrastructure with the participation of the beneficiaries through their Apex associations. Costs associated with the wells will also be borne by farmers on pay-per-use basis. The mills will be run on commercial basis under the auspices of the farmer groups. The Government’s involvement will be limited to the salaries and vehicle and office operational expenses of the EDAs in Bom Jesus and Calenga who will continue to provide advisory support to farmers. 6.2 Project Sustainability

6.2.1 Beneficiary farm families, both in Bom Jesus and in Calenga have been involved in the identification and planning of the project investment. At Calenga farmers are already on the land and only need to be assisted with inputs and training. Participation of farmers is key to successful implementation of the project and the bulk of the project activities including training, collaborative engagement among farmers in input supply, credit, marketing of produce and water management are highly participatory. Farmers will be assisted to form farmer and apex groups in each of the project areas. They will also be represented on the PSC, and LCC and hence in planning, monitoring and evaluation of project activities as this will be built-in as part of routine activities. This participatory system of work will greatly enhance transparency and the sense of project ownership by the farmers, which are important elements for sustainability. 6.2.2 Farmers in the Calenga already operate their irrigation systems and will be assisted to improve water use and further develop a maintenance culture. They will also be assisted to institute an appropriate water user fee for maintenance during the training sessions. Meanwhile Bom Jesus farmers will initially pay user fee of US$ 60/ha/year or as will be discussed and agreed with them. Farmers already operate on pay-user principle and their participation in the management of the project will ensure that new levels of fees required provide adequate maintenance. However, the amount of user fee to be charged will be discussed in a transparent manner. The government’s newly established umbrella public-private sector association - SOPIR is aimed at involving the private sector and farmers in the funding and management of large and medium scale irrigation projects with substantially complex systems. The project, through SOPIR, will build upon the public-private partnership in training farmers in the management of particularly Bom Jesus irrigation system. 6.2.3 The on-farm land and water management works to be undertaken are all based on simple low cost traditional technology, which is already familiar to most of the farmers

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especially in the existing Calenga site, which constitute about 85% of the project’s irrigable land. New entrants will easily master this technology through the training provided by the project. At Bom Jesus, which has a more integrated irrigation supply system requiring higher levels of coordination, the project will employ pump attendants and water bailiffs during the 5 year project period to ensure efficient operation and maintenance of the supply system. Adequate training will also be provided to the farmers to run their own on-farm systems. 6.2.4 Crop budgets indicate that income gains from the crop mix with improved management are substantially higher than traditional practices, which makes it very attractive thus providing adequate incentives for farmers to further invest in soil conservation and expand production. Further the selected crops are indigenous to the project and therefore their cultural requirements are well known to farmers, and there is already a substantial local market for the produce. The project will assist farmers with better quality seeds, improved cropping pattern and cultural practices to improve soil fertility and structure, leading to sustained production and productivity. 6.2.5 Farmers will be trained and assisted to operate the socio-economic infrastructure to be provided and will pay for the maintenance of theses facilities. The wells and mills will be managed by small community O&M committees to be formed under the umbrella of farmer groups with a majority being women. Members of the committees will be trained and provided basic kits to provide some community level maintenance and link up with the Directorate of Water for any likely major repair/rehabilitation works. Fees will be charged for the use of the facilities and a maintenance fund established to ensure their continued maintenance. For ease of collection of user fees, market outlets will be maintained for water user fees at farmers’ meeting sheds/offices. 6.2.6 Planned improvements in major and intra-scheme road and rail networks should help improve access for produce and inputs. The Lobito-Huambo railway, which passes through the Calenga area, is under repair and would be in full operation by December 2005, while the main Huambo road is also scheduled for rehabilitation in 2005-2006 at a cost of KZ 7.1 billion. Coupled with improvements to be undertaken by the project within the scheme areas, these planned works will greatly improve links between project sites and major marketing and input centres e.g. Port of Lobito, Huambo town and Luanda, and act as catalyst for regeneration of the private sector trade in farm produce and inputs. Critical Risks and Mitigating Measures. 6.3 Critical Risks and Mitigating Measure

6.3.1 Crop Production and Marketing: Angola is a food deficient country; hence project production would not face difficulties related to an over-supplied market, at least in the foreseeable future. However, localized over supply of products may result in depressed prices. In order to obviate such a snag, the project will organize farmers into groups and associations and assist them to establish relations with major traders, thereby enabling them to trade in bulk under an enhanced bargaining power. Prices of agricultural commodities are now attractive and are expected to remain so until the agricultural sector starts to grow in a sustainable manner in the long-term. In any case, even if prices drop moderately, the return to farmers will still be reasonable. Because, being quite high, they can sustain significant drops in prices and crop yields before they become unattractive. The current attractive returns to producers may also be affected by a rise in the real exchange, i.e. the appreciation of the Kwanza due to inflation, thereby reducing the competitiveness of the Angolan products vis-à-vis imports. The Ministry of Trade is studying the matter carefully with a view to introducing measures to safeguard eventual loss of competitiveness of domestic produce.

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6.3.2 Land Tenure: The question related to land tenure in Bom Jesus, could potentially affect the project by delaying or hindering its start-up. Being the most important issue raised against the project, GOA is addressing it in a decisive manner, by promising to provide the entire beneficiary small holder farmers with land titles. Already MINADER has secured full rights to Bom Jesus land. It has a detailed number of smallholder farmers who till the land. With the support to be provided to DNHAER, the Bom Jesus area will be surveyed and land sub-divided on titular basis to the advantage of the smallholder farmers with women representing 23% of household heads. Fortunately, there are no land tenure problems in Calenga who are farming the land given to them under customary law. 6.3.3 Financial Services: The existing financing institutions are not keen to lend to individual small farmers (unless in a group) because they do not meet the loan security requirements, which are tangible collateral. Besides, they consider credit administration of small farmers costly and cumbersome to handle, however, they are willing to lend to farmer groups. The project following the accepted MINADER – NGO group model will work to enable farmers’ access credit for purchase of the necessary agricultural inputs. The group system as proposed minimizes the administrative costs and avoids any cumbersome operation because most of the work will be done by the farmers’ organization, viz., filing of applications, guaranteeing credit and collection of credit. 6.3.4 Project Implementation: In spite of the relatively simple project design, there will be, nevertheless, a special PIU that will be engaged full time in support of project implementation and in backstopping all the concerned parties. This is expected to ensure smooth implementation and coordination of the project activities. Besides, project activities are straightforward, and they should not present major difficulties during implementation. In Calenga, there is practically nothing new being proposed in farming, both rain fed and irrigated, if not injecting modern technical know-how and resources to improve what they are doing now. In Bom Jesus, however, there is a need for the project to convert rain fed farmers into irrigators for the production of high value crops. This will require a lot of efforts from project management. For this purpose, the project will provide a heavy input of training in farming and water management and demonstrating the proposed practices on the ground. These efforts are expected to enable farmers to become competent in irrigation farming after project completion.

7. PROJECT BENEFITS

7.1 Financial Analysis

7.1.1 Beneficiary Farmers and Area Covered: A financial analysis has been carried out for the project and it is expected a total of about 27,150 ha of land (26,000 ha in Calenga and 1,150 ha in Bom Jesus) would be brought under improved production, benefiting some 11,000-farm families i.e. over 55,000 people (50,000 in Calenga and 5,000 in Bom Jesus). The average cultivated land per farm family under the project would be 2.6 ha, with cropping intensity of 135%, in Calenga (including 0.85 ha under traditional irrigation) and 1.0 ha of technically irrigated land, with cropping intensity of about 200 % in Bom Jesus. 7.1.2 The improvement in farming would come about as the result of introducing enhanced cultivating practices, including the use of modern agricultural inputs, as well as ensuring farmer’s access to credit (in order to purchase such inputs), and market outlet for their produce. In Calenga, farmers would produce food crops for their own consumption such as

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maize and beans, and vegetables notably Irish potato, onions and carrots for sale to the major markets in the country through their cooperative organization. In Bom Jesus, fresh vegetable and fruits such as banana, papaya and mango will be sold primarily to the next-door market of Luanda, also through their cooperative association spearheaded by the marketing committee. 7.1.3 The main factors for the increased project production and thus benefits are: a) expansion of cultivated area and cropping intensity in Calenga; and b) conversion of under-utilized land into productive agriculture with the possibility of irrigating it the whole year round. The increased cropping intensity in Calenga will be due to improved farm power and to the rehabilitation of the traditional irrigation system. In fact, better water management, which will result in reduced water losses, will allow more irrigated area, particularly during the dry season. It goes without saying that the improvements of crop yields will be derived from the use of selected seeds, and higher level of fertilizer application and adoption of better cultural practices.

Table 7.1: Financial Results

Area Cultivated Production (MT) Estimated Income Present/Without

Project With Project Present/Without

Project With Project Total Per day

Model Farmer

Wet season

(ha)

Dry season

(ha)

Wet season

(ha)

Dry season

(ha)

Wet season (MT)

Dry season (MT

Wet season (MT)

Dry season

(MT/nr)

US$ KZ US$ KZ

BOM JESUS

Tomato 0.02 0 0.026 0.1 0.06 0 0.52 2 570 50160 2.4 211 Pepper 0.02 0 0.026 0.1 0.03 0 0.21 0.8 328 28864 1.7 150 Cucumber 0.02 0 0.026 0.1 0.06 0 0.52 2 524 46112 2.3 202 Onion 0.02 0 0.026 0.1 0.06 0 0.39 1.5 704 61952 2.6 229 Cabbage 0.02 0 0.026 0.1 0.16 0 0.65 2.5 465 40920 2.1 185 Beans 0 0 0.5 0 0 0 1.25 0 170 14960 2.8 246 Maize (green cob)

0 0 0 0.2 0 0 6 000

543 47784 8.6 757

Banana 0 0.125 0 2.5 535 47080 3.6 317 Papaya 0 0.125 0 2.5 617 54296 4.25 374 Mango 0 0.05 0 0.74 120 10560 2.7 238 Total 0.1 0 0.93 1 4576 402688 33 2909 CALENGA Maize 0. 4775 0.0775 1.1375 0.1375 0.295 0.155 2.8625 0.4125 686 60368 6.8 598 Beans 0. 3775 0.0775 1.1375 0.1375 0.152 0.062 1.1375 0.2063 490 43120 5 443 Potato 0. 04 0.04 0.1 0.1 0.16 0.2 1 1.5 412 36256 2.2 194 Onion 0. 04 0.04 0.1 0.1 0.16 0.2 1 2 649 57112 3.14 276 Carrot 0. 04 0.04 0.1 0.1 0.16 0. 16 1 1 355 31240 2 176 Other mixed vegetables)1/

0. 075 0.175 0.075 0.275 1.125 1.875 1.875 5.25 873 76824 4.65 409

Total 1.05 0.45 2.65 0. 85 3465 304920 24 2096 1/ Includes cabbage, onion, garlic, potato, etc., and all have been represented by potato for valuation purposes. 7.1.4 From the table below, it can be seen that the farmers’ incomes from both Bom Jesus and Calenga are attractive. At full project development, return per farm family would be KZ 402,700 (USD 4,575) in Bom Jesus and KZ 304,920 (USD 3,465) in Calenga per ha respectively. These incomes compare very favourably with the per capita income of about USD 900 of 2003. The income per family labour is also several folds higher than present rates of about KZ 150.00 per day. Since the Bom Jesus site is more capital intensive, returns are relatively higher there than Calenga. In Bom Jesus, maize cob production provides higher return per labour day i.e. (KZ 757) while pepper production the lowest (KZ 150). Maize cob provides the highest return in per Labour Day in Calenga, and carrot the lowest. In spite of the lower incomes of some crops, they have been included in the project analysis, because under present practice, farmers like to produce them, very likely to minimize risks by

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diversifying their crop mix. In any case farmers will no doubt shift to more remunerative crops overtime, when they become more confident about their skills on irrigated agriculture, particularly in Bom Jesus. 7.2 Economic Analysis

7.2.1 Assumptions, Approach and Methodology. An economic analysis of the project was carried to assess its impact on the country’s economy. Increased crop production has been used as the main quantifiable benefit. The economic benefits arising from the proposed project are quantified by comparing “with” and “without” project cases to identify incremental benefits. The project analysis is based on conservative yield assumptions and modest prices. 7.2.2 The economic analysis was carried out over a 20-year period. All transfer payments and price contingencies were removed from the analysis. The financial values of local costs and benefits have been converted to border prices using a standard conversion factor of 0.8. For maize and fertilizer the import parity prices have been used, while for the other commodities financial prices have been used after they are converted into border prices. 7.2.3 The economic rate of return (ERR) for the entire project, calculated over 20-year period, is about 30 percent. However, the two project sites, separately, yield about 20% and 60%, respectively for Bom Jesus Project site and for Calenga Rain-fed Agricultural Development Project site. The ERR for Calenga is much higher because the investment costs in rain-fed farming and rehabilitation of traditional agriculture per ha is much lower compared to Bom Jesus. In addition, the benefits in Calenga start to accrue already in the first year, as opposed to Bom Jesus, which would start in year three, with a slow build up. 7.3 Social Impact

7.3.1 The project will generate a broad range of benefits, viz., increase in domestic supply of food, substitution of imports, as well as improvement in the standard of living. All beneficiaries would be smallholder farmers, and a large majority of these would be displaced farmers who recently returned to their places of origin after the end of the war. The project will directly benefit about 11,000 households (55,000 individuals) from production development and create 75,000 seasonal jobs. The main impact will be in terms of increased food security and incomes derived from agriculture. The annual incremental crop production per ha at full project development over the project area (2-3 cropping seasons) is estimated at 2.5 tonnes for beans, 30,000 tons for maize, 20 tonnes for tomato, 20 tonnes for onion, 15 tonnes for cucumber and 25 tonnes for cabbage. 1 ha crop models were used to evaluate the incremental revenue accruing from the project. Incomes were found to range between USD 300 for tomato farmers and USD 800 for cucumber farmers per hectare without the project, while with project incomes will vary between US $ 600 and US $ 6,000 respectively per hectare. This will lead to an average increase of income in USD by 30% per ha without the project to 193% per ha with the project. 7.3.2 The project investment in social infrastructure (roads, water, health infrastructure and improved community markets sheds) will generate enormous benefits. Roads will improve access to input and output markets. They will further open the community to access other improved services in the nearby urban centres. Improved water and sanitation will cause a reduction in a number of water-borne diseases and thereby reducing morbidity. Improved health services will cause enormous improvement to labour productivity, increased acreage and agricultural production, thus improving food security. Improved market access along

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with handling at the market sheds will improve the state and quality at which farm produce enter the marketing chain thus improving economic returns to farmers. Milling facilities will kick-start agro-processing activities. 7.3.3 The all-inclusive participatory approach adopted under the project will enhance efficient use of the water resources by the community. Capacity building will in particular benefit women by: i) enhancing their opportunity to participate on equal basis with men and thus improving their level of organisation; ii) augmenting their bargaining position in the typically rural male dominated communities through improved productivity and profitability of their enterprises; iii) increased access to markets, especially for petty trading activities in which women dominate; iii) increased awareness in respect of HIV/AIDS, malaria, tuberculosis and other epidemics. All these improvements will contribute to poverty reduction. Health centres will help farm families with the health of their children. In addition, the provision of extensions services for improved production practices will help to ease the workload on farmers, particularly women in undertaking their multiple production roles in the household. 7.4 Sensitivity Analysis

Sensitivity analysis was carried out for the project using switching values as shown below. The switching values depict the project as not particularly sensitive to realistic increase in costs or decrease in benefits. A 10 percent increase in costs would yield an ERR of 28 percent; while a 10 percent reduction in benefits would cause a decrease of ERR to 27 percent. These ERR values are still attractive. Even in a very unlikely scenario of 20 percent increase in costs or 20 percent decrease in benefits, the ERR would still be favourable. However, the project is relatively more sensitive to reduction of benefits rather than increase in costs.

Sensitivity Analysis Table

Scenario ERR(%) Baseline 36 10% increase in costs 28 20% increase in costs 20 10% reduction in benefits 27 20% reduction in benefits 17

8. CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions

8.1.1 The project will directly benefit about 11,000 households (55,000 individuals) and create 75,000 seasonal jobs. About 545 farmers’ groups, women representing about 54% of their membership will be created and/or strengthened and trained by the project. The project will lead to a substantial increase in agriculture production; contribute to poverty alleviation and improved food security at household level. Increased maize, vegetable, fruit and beans production will induce increased employment and income generation opportunities in backward and forward-linked industries. The provision of extension services for improved production practices, as well as the supply of modern agricultural inputs will boost yields significantly from the present low levels. Furthermore, GOA’s commitment to give the private sector a greater role in the economy, and development of policies and favourable institutional, legal and economic environment will lead to the realisation of this potential,

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especially in agriculture. This will lead to self-sufficiency in food, while generating income out of the market surplus to improve living standards. Group formation and training will facilitate technology adoption, access to inputs and marketing. The project, as designed, is socially desirable, environmentally sound, technically feasible, and financially and economically viable. The economic return determined is 30%. The resulting improvement in communication would facilitate beneficiaries’ access to social and other services reduce drudgery in transporting essentials such as fire wood and water and transporting goods to and from markets. 8.1.2 The technical assistance that will be provided to various departments of MINADER will enhance staff performance in project and irrigation management, planning, monitoring & evaluation, extension advice, research and technology dissemination. Overall about 65 MINADER staff will be trained in various fields. The proposed project remains a high priority in the agricultural development policy of the Government of Angola and it is consistent with the Bank Group’s vision and strategy for the country. 8.2 Recommendations

In view of the expected project outputs, it is recommended that an ADF Grant of not more than UA 17.20 million be given to the Government of Angola for the purpose of implementing the project as described in this report, subject to the fulfilment of conditions stipulated in the loan and grant agreement. A. Conditions Precedent to Entry into Force The Protocol of Agreement shall enter into force upon its signature. B. Conditions Prior to First Disbursement Prior to first disbursement, the Beneficiary shall provide to the Fund and to the Fund’s satisfaction

(i) Evidence of having established a Project Steering Committee, chaired by the Minister of Agriculture or his representative, to provide policy guidance to the project and oversee the implementation of project activities. The PSC shall comprise of the Minister of Agriculture and Rural Development, Chairperson and the following members: Department Heads of MINADER (DNAPF, DNDR, IDA and DNHAER), and representatives from the Ministries of Finance & Planning and Public Works; and farmers associations (4) at least two of which are female farmers. The Project Coordinator will serve as the Secretary (Paragraphs 4.5.20 and 5.2.1)

(ii) Evidence of the establishment of a Project Implementation Unit within the

MINADER (Paragraph 4.5.20 & 5.2.1);

(iii) Evidence of Government staff seconded to fully work for the project at each respective Project site, namely: Agronomist, Irrigation Engineer, Gender/Training Expert, Social Mobiliser/Extensionists, Accounts Assistant and support staff. (Paragraph 4.5.20 and 5.2.2).

(iv) Evidence of opening a) a Special Account in a Bank acceptable to the Fund,

where disbursements from the ADF Grant proceeds will be deposited, and b) a

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Special Account with a bank acceptable to the Fund, where the Government of Angola counterpart funds shall be deposited (Paragraph 5.5.1);

(v) Evidence of the Borrowers’ decision to allocate in a transparent manner, the 1,150

hectares in Bom Jesus, to smallholder farmers, as well as a description of the process and criteria that will be used for such allocation (Paragraphs 2.2.3 & 4.2.15);

C. Other Conditions

(i) The Government shall within twelve (12) months of the signing of the Protocol of Agreement, submit the list of the beneficiaries in Bom Jesus project area (Paragraphs 2.2.3 & 4.2.5);

(ii) The Government shall within thirty-six (36) months of the date of the Protocol of

Agreement, have SOPIR and the Beneficiaries sign an undertaking for future management of Bom Jesus Irrigation Scheme (Paragraph 3.2.7 and 6.2.2).

Annex 1

Republic of Angola

BOM JESUS – CALENGA SMALLHOLDER AGRICULTURAL DEVELOPMENT PROJECT

MAP OF PROJECT AREA

Annex 2

Republic of Angola

Bom Jesus - Calenga Smallholder Agricultural Development Project

Project Organisation And Management

Ministry Agriculture & Rural Development

(MINADER)

Project Steering Committee (PSC)

Project Implementation Unit (PIU)

LCC Calenga Subproject PIU Bom Jesus Subproject PIU LCC

Institute of Agricultural Research (IIA)

Agricultural Development Unit (IDA/EDA)

Provincial Extension

Directors Agents

Smallholder Farmer Groups/Associations

Farmer Support Agencies

& Contract Seed Farmers Micro-Finance Inst., NGOs,

Mechanagro

Annex 3 Republic of Angola


Work Schedule Project Year Y 1 Y 2 Y 3 Y 4 Y 5

Calendar Year 2005 2006 2007 2008 2009 2010 2011 Quarters 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Project Components and Major Activities Preparatory Phase for Start-up 0.1. ADF Appraisal Report 0.2. Project Approval by ADF 0.3. Signing of ADF grant agreements 0.4. Recruitment of Coordinator 0.5. Effectiveness of ADF Grant/loan 0.6. MOU with implementing/research Agencies 0.7. Launching of project and implementation docs Development and Environmental Protection Calenga 1.1. Detailed studies and Bids – Land Development 1.2. Procurement of contractors by ICB 1.3. Construction of works – Land Development 1.4. Works supervision Bom Jesus 1.5. Detailed studies and Bids – Land Development 1.6. Procurement of contractors by ICB 1.7. Construction of works – Land Development 1.8. Works supervision General 1.9. Recruitment of Consultants 1.10. Diagnostic study on environmental activities 1.11. Environmental protection activities 1.12. Irrigation Policy Studies 1.13. Agricultural Statistics and Planning Studies Agricultural Production and Training 2.1. Preparation of agreement with credit institutions 2.2. Disbursement of Credit 2.3. Basic Seed/Planting Material Production (IAA) 2.4. Recruitment of training institutions by short list 2.5. Preparation of training plans 2.6. Baseline resources assessment (PRAs) 2.7. Farmer Group Formation 2.8. Implementation of Training Plan

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Project Year Y 1 Y 2 Y 3 Y 4 Y 5 Calendar Year 2005 2006 2007 2008 2009 2010 2011

Quarters 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 - Training of Trainers (Extension Staff) - Training of Lead Farmers - Training of Farmers - Farmers exchange visits & market promotion - Internal Staff Training - External Staff Training

2.9. HIV/AIDS and malaria Campaigns 2.10. Supply of oxen (on credit) - Calenga 2.11. Land Cultivation – Calenga 2.12. Land Cultivation – Bom Jesus (17.5, 67, 100% …) Project Management 3.1. Recruitment of Project Management Unit staff 3.2. Establishment of accounting and financial system 3.3. Preparation of Bids for vehicles and equipment 3.4. Procurement of vehicles and equipment 3.5. TOR Preparation & Procurement TA s (M&E, O&M) 3.6. Design & installation of MIS & O&M Systems 3.7. Supervision missions 3.8. Project mid-term supervision mission 3.9. End of project ▼ 3.10. Project completion mission

Annex 4


ENVIRONMENTAL AND SOCIAL MANAGEMENT SUMMARY Project Title: Bom Jesus – Calenga Smallholder Agricultural Development Project Project Number: P-A0-A00-001 Country: Angola Department: OCAR Division: OCAR.2 ________________________________________________________________________ a) Brief description of the project The project aims at creating a small-scale irrigation and drainage scheme for modern horticultural production over about 1150 ha near Luanda (through the Bom Jesus Smallholder Irrigation Subproject); and at intensifying rain fed agricultural practices over some 26 000 ha including the rehabilitation of traditional irrigation networks of rural roads and by equipping rural areas of water supply infrastructure in the Central Highlands (with the Calenga Rain fed Agriculture Development Subproject). b) Major Environmental and Social Impacts Many of the traditional schemes in the river basins are characterized by a lack of adequate drainage. In some of the larger schemes, this has been demonstrated to be a significant factor in contributing to water logging and soil salinization. This is also a problem in the smallholder schemes. Nevertheless, improved water management as a consequence of project investments, through control gates, drainage, leveling, and more accurate assessment of water charges, is expected to reduce the problem and increase the area of land wider production. Poor to non-existent drainage is also likely to be a factor in contributing to standing water and presence of disease vectors particularly as breeding areas for Anopheles sp., the carrier of malaria. A reduction of breeding habitat would likely contribute to a reduction, albeit localized, in the incidence of malaria and other water-borne diseases. Increases in agricultural production are likely to occur through cropping intensification, improved water management, and yield increases from more intensive agricultural practices supported by agricultural research and extension. Possible adverse impacts and issues include water logging and subsequent salinization caused by poor drainage and pollution of surface and ground water resulting from agrochemical runoff. Improper maintenance of drains clogged with weeds will cause siltation and also provide breeding ground for disease vectors. Potential water quality conflicts which will need to be evaluated on a scheme-specific basis are: (i) the use of contaminated "upstream" water which may pose a human health risk dependent on the crop under irrigation, and (ii) "downstream" impacts associated with system drainage discharge characterized by high salinity and the presence of agro-chemicals. In addition to the aforementioned impacts, improved water control and the likely expansion of irrigable area and/or crop intensification resulting either from more intensive cropping and/or a shift to higher yielding varieties/cash crops, there is a risk of increased use of agro-chemicals, particularly fertilizers and their potential "off-site" impacts on soils and surface and groundwater.

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It should be noted that no new schemes would be supported under the project such as dislocation of people, impediments to movements, destruction of primary habitat, and impacts on cultural resources, are not likely to occur in this project. Through the increase in domestic supply of food, substitution of imports, the project will improve the standard of living of many farmers. In addition, the project would positively affect the rural areas concerned by creating farm and related employment and providing entrepreneurs and the private sector in general with opportunities for expanding their businesses. In Bom Jesus site beneficiaries will have a legal right to land through the attribution of land titles over irrigated land. In both sites, beneficiaries will have their capacity built along with improved incomes and living standards. In addition, the project investment in social infrastructure (roads, water, health and community markets sheds) will generate enormous benefits. Roads will improve access to input and output markets. They will further open the community to access other improved services in the nearby urban centres. Improved water and sanitation will cause a reduction in a number of water-borne diseases and thereby reducing morbidity. Improved health services will cause enormous improvement to labour productivity, increased acreage and agricultural production, thus improving food security. The project will be of particular benefit to women farmers in that: i) through the capacity building and improved delivery of extension services the project will offer women the opportunity to participate on equal basis with men and thus improve their level of organisation and hence augment their bargaining position in the typically rural male dominated communities; ii) improve the productivity and profitability of their enterprises through increased access to markets, especially downstream farming activities in which women dominate; iii) improve their awareness in respect of the prevention of HIV/AIDS, malaria, tuberculosis and other epidemics. All these improvements will contribute to poverty reduction. c) Enhancement and mitigation program The positive and negative impacts were identified per project intervention area, and mitigation measures were defined accordingly. The analysis determined that, given the availability of land and water and a strong interest from the local population, the positive impacts of irrigation far outweighs the negative impacts. On the Bom Jesus site, the adopted solution of pumping water and disposing excess irrigation flows directly from and to the river Kwanza (leaving the fragile environment of the Cambi Lagoon intact), serves as a major mitigation measure. In Calenga, the agricultural practices for crop intensification will follow IPM/IPPM methodologies that are respectful of the environment. The rehabilitation and efficiency improvement measures of the traditional irrigation network will per-se have a positive impact on the environment by improving water use and land management. Improved agriculture practices will allow for proper soil fertility management. Improved rotations with increased proportion of leguminous crops would also have a beneficial effect on soil fertility by fixing nitrogen and by contributing organic matter content when used as green manure. The project would ensure that the method of clearing should be environmentally friendly; this would be achieved by utilizing manual clearance outside the rainy season, in order to minimize soil disturbance or erosion. The project will promote through the Participatory Training and Extension the following: Farmer Water Management and integrated production and pest management systems all that combine appropriate erosion control and land preparation techniques, tree planting, application of organic manure, green manuring and ad hoc replenishment with mineral

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fertilizers. These techniques will benefit the environment by increasing land productivity, in reducing the rate of deforestation, increasing ground water levels and improving surface water availability. At the same time, safety of pesticide use, and prevention of environmental contamination by agrochemical residues will be also promoted. The design of the works coupled with mitigation measures will also include training on the proper water management and control to prevent stagnation, thus contributing to a reduction in the incidence of water-related diseases. d) Monitoring Programme and Complimentary Initiative To ensure compliance with national environmental and social policies and standards as well as with the Bank’s policies and guidelines, the PIU would put in place a monitoring system for the implementation of environmental and social mitigating measures during project execution. A site-specific survey will be conducted to fine-tune the Environmental and Social Management Plan (ESMP) implementation schedules. For both subprojects but particularly for the Bom Jesus scheme, periodical analyses on irrigation water, drainage water and soil residues (in terms of salinity, nutrients and other polluting elements) would be made. Random tests for agrochemical residues on agricultural produce would also need to be carried out e) Institutional arrangements and capacity building requirements As part of the initial project activities, an ESMP implementation schedule taking into account all activities related to the proposed (enhancement and mitigation) measures, the Monitoring Programme, consultations, complementary initiatives and institutional arrangements. Moreover, the implementation schedule shall be developed in co-ordination with the overall project implementation plan will be prepared and integrated in the project Annual Work Plan and budget. For that purpose, an agreement will be signed between the Project Implementation Unit (PIU) and a consultant to prepare an implementation work plan and schedule. All relevant Government bodies and institutions as well as NGOS will be associated to that exercise. f) Public Consultations and Disclosure Requirements Public consultation and disclosure requirements will be done in accordance with the existing government policy as being run by the Ministry of Environment. Secondly, the project by design and implementation is participatory in nature. So, all project activities will be implemented in close collaboration with local communities. An environmental analysis has been carried out during project preparation during which a considerable emphasis was put on determining the reactions of the affected population. Also, extensive consultations were organized with NGOs in the project areas. g) Estimated Costs The cost for the ESMP implementation monitoring has been estimated at 50 000 UA for duration of the project. Environmental monitoring and supervision activities are foreseen as part of the project management activities. Costs for implementation of mitigating measures are estimated at UA 110 000. The total budget amounts to UA 0.156 million. h) Implementation Schedule and Reporting Implementation schedule for environment activities is fully emerged into the daily project activities. Reports on monitoring activities done by the PIU will be provided to the Project Steering Committee (PSC), the Bank, and will also be available to the public.

Annex 5 REPUBLIC OF ANGOLA

BOM JESUS –CALENGA SMALLHOLDER AGRICULTURAL DEVELOPMENT PROJECT

List of Bank Group Operations in Angola at the date of 24/08/2005

(Amounts in UA million)

Projects by Sector Date of

Approval Signature date

Effectiveness date

Loan Amount (million UA)

Amount cancelled (million UA)

Net Loan Amount (million UA)

Amount disbursed (million UA)

Disbursement Rate

Disbursement deadline

1. AGRICULTURE Artisanal Fisheries Development Project (ADF)

30/10/02 20/01/03 17/11/03 7.00

0.00 7.00 0.382 5.46 31/12/09

National Environmental Management Plan (ADF)

09/07/03 29/04/04 29/04/04 0.85

0.00 0.85 0.184 2.17 31/12/05

Total 7.85 0.00 7.85 0.566 7.21 2. SOCIAL Health services Rehabilitation Project (ADF)

13/11/02 23/02/03 12/09/03 6.50

0.00 6.50 0.388 5.96 31/12/07

Basic Education & skill project- Education II (ADF)

05/12/01 28/03/02 27/11/02 8.73

0.00 8.73 0.403 4.61 31/12/07

Basic Education & skill project- Education II (ADF Grant)

05/12/01 28/03/02 27/11/02 0.90

0.00 0.90 0.056 6.20 31/12/07

Total 16.13 0.00 16.13 0.847 5.25 Grand Total 23.98 0.00 23.98 1.413

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BOM JESUS – CALENGA SMALLHOLDER AGRICULTURAL DEVELOPMENT PROJECT PROJECT MATRIX


EXPECTED RESULTS BY CORRESPONDING SECTORS AND

THEMES

REACH PERFORMANCE INDICATORS SOURCE METHOD

INDICATIVE TARGETS TIMEFRAME ASSUMPTIONS AND RISKS




Increase farmers’ food security and incomes

Contribute to increasing the current 9% contribution of agriculture to GDP to its pre-war status of 15% with emphasis on food production (maize, beans and potato production).

70% of the population that is dependent on agriculture and specifically, 11,000 farm families

(55,000 subsistence producers) in the communes of Bom Jesus and Calenga of which 60% are women

• National statistics on economy and agriculture • Provincial reports • Project Reports

By PY5, 11,000 farm families (55,000 farmers of which 33,000 are women) in Bom Jesus & Calenga will have an equivalent per capita income of USD 4,575 & $ 3,465 respectively from the current per capita base of US $ 380 for Bom Jesus farmers and US $ 300 for Calenga Increase production of target food

crops: Crop From To PY (Mt/ha) (Mt/ha) Potato 8 15 5 Maize 1 4.5 5 Bean seed 0.6 2 5

• The prevailing peace process is consolidated • The Government macro-economic reform process remains on track

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THEMES






Objective: Increase agricultural output and farmers incomes.

Open up 27,150 ha of agricultural land (26,000 in Calenga and 1,150 Bom Jesus Communes) through installation of rain-fed and gravity flow irrigation infrastructure. Increased production and

multiplication of mother and breeder potato tuber (from 8 tons/ha to 15 tons/ha annually), maize (1 ton/ha to 4.5 tons/ha annually) and been seeds (0.6 tons/ha to 2 tons/ha annually) through contract farmer, adaptive

and on-station model in Huambo Research Institute to meet farmer seed needs Emergence of viable farmer

associations and organisations, capable enough to sustain agricultural production at: maize 3 tons/ha annually, beans 1.5 tons/ha annually & potatoes 12 tons/ha annually.

11,000 rural farm families (55,000 farmers of which 33,000 are women)who till on average 2.6 ha plots MINADER as ministry

and its institutions at Provincial & Municipality level Total population of

about 55,000 people (of whom 33,000 are women) living in Bom Jesus and Calenga Communes

Mid term out figures: 20,000 ha put into use with

cropping intensity of 100% (double current intensity) Put 750 ha into use with

cropping intensity 120%

Opening up 20 ha of potatoes with an annual yield of 15 tons/ha Opening up 160 ha of maize

with an annual yield of 3 tons/ha Opening up 200 ha of beans

with an annual yield of 1.5 tons/ha 545 farmer associations

(comprising of 55,000 farmers of whom 33,000 are women) strengthened and institutionally capacitated to run as business enterprises Means of Verification Project Monitoring &

Evaluation reports Ministry Reports

Bring the cropping intensity to 135% of the present in Calenga and 200% in Bom Jesus by the end of YR5 Open 20 ha for potato tuber, 160

ha for maize and 800 ha for bean seed multiplication in Huambo Research Station to provide farmers with seeds Create 545 farmer associations (of

which 320 are for women) and 20 farmer apex organizations (of which 12 are for women), fully linked to credit and output marketing facilities 20-farmer apex association

strengthened to sustain irrigation facilities and agricultural production.

National seed policy will evolve that will enable further multiplication of better quality seed to meet farmer domestic and market demand

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THEMES






Component 1: Rural Infrastructure Development.

0. 27,150 ha of land brought under intensive smallholder agriculture by Yr.5 through development of irrigation infrastructure in Bom Jesus and rain-fed agriculture in Calenga Commune 0. 137 km of feeder roads rehabilitated to gain access to input and output markets. 0. 13 bridges rebuilt to facilitate market and production linkages 0. 76 water wells drilled to provide safe domestic water to over 11,000 farm families (55,000 farmers of which 33,000 are women). 0. 2 Health Centers (HC) rehabilitated to provide basic preventive and curative health services to 11,000 farm families (55,000 farmers of which 33,000 are women)

• 11,000 rural farm families (55,000 farmers of which 33,000 are women) who till on average 2.6 ha plots. • Directly targeting other benefits like improved water supply, health services and road network to 55,000 people (of whom 33,000 are women) in Bom Jesus and Calenga, though these benefits cut across entire community of Bom Jesus and Calenga Communes.

1a) 42 km of main streams and channels protected 1b) 2 water pumping stations constructed; 1c) 4 big water reservoirs constructed 1d) 60 reservoirs de-silted and rehabilitated 2) The following number of kilometres and bridges repaired: 2a) 58 km of class 1 feeder roads2b) 79 km of class 2 feeder roads 3a) 4 class 1 bridges 3b) 9 class 2 bridges 4a) 16 boreholes 4b) 60 hand-dug wells drilled 5a) A Health unit each in both Bom Jesus and Calenga

1.a) 14 km annually effective PY2 and 28 km by PY3; 1b) Two stations constructed by PY2 1c) 1 reservoir constructed each year effective PY2; 1d) 15 each year effective PY2; 2a) 12 km rehabilitated in PY1 and 23km in PY2 & YR3; 2b) 30 km rehabilitated in PY2 and PY3 each and 19 in PY4; 3a) 1 bridge in PY1 and 3 in PY2; 3b) 3 bridges each year, effective PY2; 4a) 3 boreholes drilled in PY1, 10 in PY2 & 3 in PY4; 4b) 5 wells dug in PY1, 15 each in PY 2-4 & 10 in PY5; 5a) 2 HC in PY2 rehabilitated / up-graded.

The De-mining programme to rid some key access roads of unexploded ammunitions will go on schedule.

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THEMES






Component 2: Agricultural Development.

0) One IIA Research Station in Shianga – Huambo technically supported to develop through adaptive and on-farm research to produce and multiply potato, bean and maize mother and breeder seeds for farmers 0) Technical support to research and farmer extension linkages are created within IIA that can be replicated to other institutes 0) Farmer support infrastructure provided.

11,000 rural farm families (55,000 farmers of which 33,000 are women) who till on average 2.6 ha plots, including IIA, MINADER and farmers

1a) 2,000 tones of certified seed potato produced and distributed to farmers 1b) 300 tones of maize seeds produced through farmer contract arrangement and distributed to farmers 1c) 640 tones of bean seeds produced through farmer contract arrangement and distributed to farmers 2a) Farm equipments and accessories provided to IIA 2b) Demonstration oxen provided to IIA but managed by Farmer organizations 2c) Staff housing rehabilitated in IIA 3) Milling, storage and collection of farm produced enhanced

1a) 20 ha of land opened at IIA to produce 2,000 tones of potato seed in each pf PY1 & 2; 1b) 160 ha of land for maize seed multiplication developed through contract farmer arrangement in PY1 & PY2; 1c) 800 ha of land for bean seed multiplication developed through contract farmer arrangement in PY1 & PY2 with an average of 200 ha / year 2a) One farm machinery unit and equipment provided to IIA and 2 tractors to Bom Jesus for preparation and demonstration PY2; 2b) 2 pairs provided to Farmer Apex Organization in PY1; 2c) 4 staff houses rehabilitated in YR1 3a) 19 milling structures developed in PY2; and 3b) 18 collection and storage centers rehabilitated in PY2.

1 National Seed Policy is quickly developed to regulate the seed sector 2. Government commitment to support IIA continues

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THEMES






Component 3: Capacity Building.

1) MINADER institutionally and technically supported to discharge its constitutional duties and responsibilities. 2) Institutional support and capacity building for the local beneficiary community

MINADER and its institutions at Provincial and Municipal level in Luanda, Huambo, Calenga and Bom Jesus. Farm families involved in the Project

• Technically more proficient Ministry capable of discharging its field (extension) services & functions to meet the demands of farmers. • Irrigation Policy developed • Agricultural Database set up and operational • Planning, Monitoring & Evaluation systems, mechanisms and procedures established. 2) Emergence of capable community institutions capable of sustaining project activities

1a) 10 complete sets of computers and office equipments bought for MINADER & its institutions in PY1; 1b) 4 units of vehicles provided to field staff in PY1; 1c) 60 units of motorcycles bought for field extension staff PY1; 1d) 61 staff re-trained locally & abroad in various fields in PY1 – PY5. MTR target is 30 staff trained; 1e) 1 TA provided each in areas of irrigation, agric. statistics and planning, environmental & project management & M&E in PY1 to PY5 and target database established in PY3; 1f) MINADER offices rehabilitated in Huambo, Bom Jesus, Calenga and IIA in PY1; 1g) 1 set each of soil testing and survey equipment bought for the Dept. of Lands and Survey and IIA 2a) 930 farm families (about 5,000 farmers of which 4,000 are women) organized, trained and enabled to access micro finance services in YR1 – YR5 2b) 545 farmer groups (comprising of 55,000 farmers of whom 33,000 are women) trained in various fields in PY1 – PY5; and MTR target is 300 farm groups (comprising of 30,000 farmers of which 18,000 are women) trained 2c) 20 Farmer Apex Associations formed, organized and trained in PY1 – PY5; with MTR target of 10 associations trained; 2d) 500 FFS selected and trained, 150 each year of PY3 & 4 and 200 in PY5

Government will able to retain trained staff.

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THEMES






Component 4: PROJECT MANAGEMENT ACTIVITIES 1) Rural Infrastructure 0. Land and Irrigation Infrastructure 0. Feeder Road Dev 0. Rural (Water & Health) Infrastructure 2) Agricultural Development ( ) Seed Multiplication ( ) Farmer Support ( ) Agricultural input 3) Capacity Building ( ) Institutional Building at MINADER ( ) Capacity Building at Provincial level ( ) Capacity Building at Farmer level 4) Project Management ) Recruitment of project staff ) Prepare Reports and conduct audit ) Agreement with participating service providers Undertake Mid-term review

Project management team established and operational RESOURCES/PROJECT BUDGET SOURCES: (UA million) ADF Grant: 17,200 GOA: 2.576 TOTAL: 19,776 BUDGET (UA million) Rural Infrastructure: 11,508 Agric Development: 1,576 Capacity Building: 4,873 Project Management: 1,819 TOTAL PROJECT: 19.776

MINADER and its institutions at Provincial and Municipal level in Luanda, Huambo, Calenga and Bom Jesus.

Strong and effective PMU capable to follow Bank rules and procedures as well as follow implementation.

A full fledged PMU consisting of a Coordinator, M & E, Accountant, 3 TA’s and support staff recruited in YR1

Availability of technically proficient candidates/staff