Staple Crops processing Zone (SCPZ): Promoting sustainable agricultural value chains

Ethiopia, Zambia, Togo and Democratic Republic of Congo | African Development Bank (AfDB)

26 March 2018

Project/Programme Title: Staple Crops processing Zone (SCPZ): Promoting sustainable agricultural value chains

Countries: Ethiopia, Zambia, Togo and Democratic Republic of Congo

National Designated Authority(ies) (NDA):

DRC: National Coordination of the Green Climate Fund,

Ethiopia: Ministry of Environment, forest and climate Change,

Togo: Directorate of Environment, Ministry of Environment

Zambia: National Planning Department, Ministry of Finance

Accredited Entity(ies) (AE): _African Development Bank

Date of first submission/ version number: 2018-03-15 [V.0]

Date of current submission/ version number 2018-03-15] [V.0]

PROJECT / PROGRAMME CONCEPT NOTE GREEN CLIMATE FUND | PAGE 1 OF 4

A. Project / Programme Information (max. 1 page) A.1. Project or programme ☐ Project

☒ Programme A.2. Public or private sector

☒ Public sector ☐ Private sector

A.3. Is the CN submitted in response to an RFP?

Yes ☐ No ☒ If yes, specify the RFP: ______________

A.4. Confidentiality1 ☐ Confidential ☐ Not confidential

A.5. Indicate the result areas for the project/programme

Mitigation: Reduced emissions from:

☒ Energy access and power generation

☐ Low emission transport

☐ Buildings, cities and industries and appliances

☒ Forestry and land use Adaptation: Increased resilience of:

☒ Most vulnerable people and communities

☒ Health and well-being, and food and water security

☐ Infrastructure and built environment

☐ Ecosystem and ecosystem services

A.6. Estimated mitigation impact (tCO2eq over lifespan)

The preliminary estimates of mitigation potential through reduction in deforestation and agroforestry is estimated at 230 t/CO2 e/ha) for 5 years. Additional mitigation is expected from the use of renewable energy such as solar and biogas.

A.7. Estimated adaptation impact (number of direct beneficiaries and % of population)

About 230,000 beneficiaries

A.8. Indicative total project cost (GCF + co-finance)

Amount: 186.5 million USD

A.9. Indicative GCF funding requested

Amount: 93.5 million USD

A.10. Mark the type of financial instrument requested for the GCF funding

☒ Grant ☐ Reimbursable grant ☐ Guarantees ☐ Equity ☐ Subordinated loan ☒ Senior Loan ☐ Other: specify___________________

A.11. Estimated duration of project/ programme:

a) disbursement period: b) repayment period, if applicable:

A.12. Estimated project/ Programme lifespan

5 years

A.13. Is funding from the Project Preparation Facility requested?2

Yes ☐ No ☒ Other support received ☐ If so, by who:

A.14. ESS category3 ☐ A or I-1 ☒ B or I-2 ☐ C or I-3

A.15. Is the CN aligned with your accreditation standard?

Yes ☒ No ☐ A.16. Has the CN been shared with the NDA? Yes ☒ No ☐

A.17. AMA signed (if submitted by AE)

Yes ☒ No ☐ If no, specify the status of AMA negotiations and expected date of signing:

A.18. Is the CN included in the Entity Work Programme?

Yes ☒ No ☐

A.19. Project/Programme rationale, objectives and approach of programme/project (max 100 words)

GCF financing is sought to strengthen one of the project components of the Staple Crop Processing Zones project in Togo, Ethiopia, DR Congo and Zambia. The SCPZ development programme aims to transform agriculture production in regions experiencing high deforestation, poor agriculture yield and increasing poverty exacerbated by climate change in Zambia, Ethiopia, Togo and DR Congo.

1 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18). 2 See here for access to project preparation support request template and guidelines 3 Refer to the Fund’s environmental and social safeguards (Decision B.07/02)

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The programme comprises activities focused on climate change mitigation and adaption, and sustainability. The activities will among others: (i) increase carbon sinks in soil organic matter and above-ground biomass, (ii) avoid carbon dioxide or other greenhouse gas emissions from farms by reducing direct and indirect energy use, and (iii) increase renewable energy production from biomass that either substitutes for consumption of fossil fuels or replaces inefficient burning of fuel wood or crop residues, and so avoids carbon emissions, (iv) reduce incidents of bare soils, reduce soil erosion and increase water percolation thereby increasing resilience to climate extreme events like droughts and floods.

B. Project / Programme details (max. 8 pages) B.1. Context and Baseline (max. 2 pages) The countries of Togo, Ethiopia, DR Congo and Zambia are implementing national projects to establish Staple Crop Processing Zones (SCPZ). The SCPZ Programme objectives include: (i) improving access to seed capital through grants and matching grants; (ii) supporting to productivity enhancement through introduction of new technologies and agricultural inputs; (iii) improving access to infrastructure by supporting investment; (iv) improving the capacity of producer cooperative through training and TA, especially for targeted women and youth groups; (v) facilitating market linkages throughout-growers’ schemes; and (vi) facilitating on-farm value addition by targeting limited value chains and linking farmers to the supply chain. Creation of jobs along the value chains will be contingent to increased productivity, production, and improving processing and marketing of the targeted value chains.

The Programme priority goals are: to exploit export potential, improve food security and enhance livelihoods. In the SCP zones, various agricultural services such as input supply, mechanisation, veterinary services, training, information and financial support, and social services such as schools, health centres and entertainment are regarded as important elements as well and are accompanied by the necessary investments in infrastructural development such as roads, energy, water and ICT. The shared facilities reduce transaction costs and will contribute to productivity and competitiveness of the area as well as attract more investment from outside, create employment and will lead to rural economic and social development. Support for low-emission, climate-resilient agriculture as part of this Programme will enhance the improvement of livelihoods, safeguard access to food and water, strengthen the resilience of ecosystems, and reduce pressures on forests (as land use change for agriculture is a major driver of deforestation) and reduce GHG emissions. The financial resources requested from GCF will therefore sustainability contribute to the mitigation and adaptation to climate change in the selected zones. The component will then be rolled out to other SCP zones.

Zambia

Climate variability and change has become a major threat to sustainable development in Zambia. The country is already experiencing climate induced hazards which include drought and dry spells, seasonal and flash floods and extreme temperatures4. Estimations suggests that mean annual temperature in Zambia has increased by 1.3°C since 1960, with an increased frequency in the number of hot days and hot nights across all seasons. Mean annual rainfall has also decreased by an average rate of 1.9mm per month since 1960 (McSweeney et al, 2010). Droughts and floods have increased in frequency, intensity and magnitude over the last two decades, having a negative impact on both food and water security (MoTENR, 2007).

Greenhouse gas emissions from Zambia were estimated at 364.17 MtCO2 eq in 2012. With its vast natural grasslands, a large component of agricultural GHG emissions in Zambia are associated with burning of savanna (59.4%), followed by enteric fermentation from livestock production (13.4%), cultivation of organic soils (10.4%) and manure left on pastures (10.2%). Savanna and grassland management (including fire management, shifting from slash and burn cultivation practice, and encroachment) will play an important role in Zambia’s GHG emissions reductions targets. Various agriculture and forestry-related climate change mitigation programmes are already reflected in Zambia’s Nationally Determined Contribution (NDC), the Nationally Appropriate Mitigation Actions (NAMA) and among others (Climate-Smart Agriculture Country Profile, 2017).

Rainfed agriculture is an important livelihood source and employs 85% of Zambia’s labour force. About 75% of Zambia’s energy needs is met by biomass energy, mainly being firewood, charcoal and agricultural waste. Most biomass energy is used by rural households, the urban poor and small businesses. Most farmers (66%) are unable to afford certain alternatives, such as those of agro-forestry or conservation. Difficulties in accessing markets, poor road infrastructure, fluctuating market prices, high costs and late deliveries of farming in -puts were found to be among the major challenges that farmers are facing in Zambia. There are also no systematic early warning systems in place against natural hazards and disasters. Because of gender-based inequalities in accessing critical livelihood assets such as land, credit,

4 http://www4.unfccc.int/submissions/INDC/Published%20Documents/Zambia/1/FINAL+ZAMBIA%27S+INDC_1.pdf

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technology, information, and markets, women tend to be the most exposed to climate change risks, confounding the existing challenges in building resilience (Cuthbert et al., 2014).

An assessment undertaken as part of the Zambia’s INDC preparation for the mitigation component revealed that mitigation policies/actions/programs converge into three programs which have mitigation and adaptation effects: Sustainable Forests, Sustainable Agriculture, Renewable Energy and Energy Efficiency. Interventions in the agriculture sector include: Conservation/ Smart agriculture - Rural biogas plants - Rural biomass electricity generating facilities. According to INDC implementation without support could reduce GHG emissions by 20 Mt CO2 eq and with support by 38 Mt CO2 eq by 2030 relative to business as usual (BAU).

Ethiopia

Agriculture is the backbone of Ethiopia’s economy with more than 85% of the population dependent on agriculture and it accounts for 45% of the GDP. Almost 90% of exports/foreign exchange earnings originate from the sector. However, only about 11.7 million hectares of land are currently being cultivated; just over 20 per cent of the total 51.3 million hectares of arable area. Nearly 55 per cent of all smallholder farmers operate on one hectare or less.

If current practices prevail, GHG emissions in Ethiopia will more than double from 150 Mt CO2 eq. to 400 Mt CO2 equiv. in 2030. On a per capita basis, emissions are set to increase by more than 50% to 3.0 t CO2 eq. and will thus exceed the global target to keep per capita emissions between 1 t and 2 t per capita in order to limit the negative effects on climate change. According to the Ethiopia INDC, the emissions reduction, which constitutes a reduction of 255 Mt CO2 eq Or 64% compared to ‘business—as—usual’ (BAU) emissions in 2030, includes 90 Mt CO2 eq from agriculture; 130 Mt CO2 eq from forestry; 20 Mt CO2 eq from industry; 10 Mt CO2 eq from transport; and 5 Mt CO2 eq from buildings. Ethiopia’s greatest emission reduction potential is in the agriculture and Forestry sectors, constituting 85% of emissions in 2010.Thus, an important component of Ethiopia’s contribution includes actions to build resilience and enhance adaptation to the impacts of climate change. Given that 80% of the population depends on agriculture for their livelihoods, increasing the resilience of agriculture is a priority for Ethiopia5.

In agriculture, GHG emissions are attributable to livestock and crops in that order. The current cattle population is more than 50 million and other livestock nearly 100 million. Livestock generate greenhouse gases mainly in the form of methane emissions arising from digestion processes and nitrous oxide emissions arising from excretions. Livestock emissions are estimated to amount to 65 Mt CO2 eq in 2010 – more than 40% of total emissions today. The cultivation of crops contributes to the concentration of greenhouse gases mainly by requiring the use of fertiliser (~10 Mt CO2 eq) as well as by emitting N2O from crop residues reintroduced into the ground (~3 Mt CO2 eq). In forestry, the impact of human activities is a large source of CO2 emissions amounting to almost 55 Mt CO2 equiv. in 2010. Forestry emissions are driven by deforestation for agricultural land (50% of all forestry-related emissions) and forest degradation due to fuel-wood consumption (46%) as well as formal and informal logging (4%).

Agro-processing industry constraints include (i) lack of infrastructure to support supply to processors, (ii) limited knowledge on the part of farmers regarding best agricultural practices, (iii) long supply chain, (iv) procurement of appropriate quantity and quality of raw materials due to the fragmented nature of the Ethiopian agricultural system (iv) post-harvest losses of 40% in fresh products and up to 20 per cent in cereal crops, contributing to unnecessarily high prices (Agricultural Sector Policy and Investment Framework 2010-2020).

The SCPZ Programme aimed at eradicating the above mentioned constraints is in line with Ethiopia’s Agricultural sector Policy and investment Framework (PIF) 2010-2020 that has the following objectives: (i) achieving a sustainable increase in agricultural productivity and production, (ii) accelerating agricultural commercialisation and agro-industrial development, (iii) reduction of degradation and improvement of productivity of natural resources. The SCPZ Programme will be located in Southern Nations, Nationalities and People's Region (SNNPR). The total area of the region estimated to be 110,931.9 Km2 which is 10% of the country and inhabited by a population size of about 15,760,743 accounting nearly 20% of the total population of the country.

DR Congo

According to their submitted INDC, the DRC commits to reduce its emissions by 17% by 2030 compared to business-as-usual emissions (430 Mt CO2 eq), or a reduction of slightly more than 70 Mt CO2 eq avoided (Ministry of the environment, 2009)

5 http://www4.unfccc.int/submissions/INDC/Published%20Documents/Ethiopia/1/INDC-Ethiopia-100615.pdf

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The DRC’s agricultural potential is comprised of 80 million hectares of farm-land, of which five million hectares can be irrigated. Currently only about 10 percent of available agricultural land is being farmed. Estimates suggest, that deforestation across the country could release up to 34.4 billion tonnes of CO2 between 2010 and 2050 ()

With 80 million hectares of extensive arable land, 4 million hectares of irrigated land, and many rivers with important fishery resources, the DRC has the bulk of the major assets needed to become a global agricultural power. Today, although the agricultural sector contributes 18 % of GDP and accounts for over 60 percent of new jobs, it still fails to ensure food independence and to generate sufficient revenues and sustainable employment. Biomass energy causing deforestation accounts for over 85 % of domestic energy. Main obstacles include: (i) Farmers are in shortage of knowledge and skills, (ii) limited access to financial services and lack of infrastructure to support agriculture, and (iii) High prices of imported inputs due to so many unofficial taxes and checkpoints along the supply chain. To cope with food shortage, the implementation of agro-industrial parks is underway in different areas of the DRC (Smoes, 2012). The Programme will be implemented in Bukanga Lonzo SCPZ in Bandundu province. The SCPZ will comprise include 65,000 ha of farmed area and about 20,000 beneficiaries.

Togo Togo’s Third National Communication (TCN) reveals an overall average annual temperature increase in Togo fluctuating between 0.60°C and 0.71°C higher than current levels in 2025, and between 3.6°C and 4.5°C higher in 2100. Togo’s arable land is estimated at close to 3.4 million hectares (64% of the country) but only 55% was cultivated in 2010. Total irrigable land covers approximately 86,000 hectares, and the country’s exploitable shallows span 175,000 hectare. The rate of deforestation stands at around 15,000 ha/year, compared with a pace of reforestation that barely exceeds 3,000 ha annually. The Kara SCPZ is the first of the SCPZs programme that the Government of Togo has embarked to foster agricultural transformation. The Kara SCPZ Programme will cover an area of 165,000ha inhabited by over 720,000 people (2015 census data) of which 57% depend on agriculture for their livelihoods.

According to their INDC, Togo intends to contribute to the fight against climate change by strengthening the resilience of its production systems and means by embarking on a carbon-lean development path. Agriculture is the sector that holds the greatest potential for accelerating Togo's economic growth while strengthening its food security and creating jobs. The agricultural policy for 2016-2030 adopted by the Government of Togo has selected the establishment of SCPZs (i.e SCPZ) as the main strategy to grow the agricultural sector. Togo's commitment to sustainable development is demonstrated by numerous adopted policy instruments such as the National Environmental Action Plan (NEAP), the National Environmental Management Programme (NEMP), the National Sustainable Development Strategy (December 2011), the National Environmental Management Capacity-building Strategy (October 2008), the National Programme for Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation (REDD+) 2010-2050, the National Strategy for Reducing the Risk of Catastrophes in Togo (December 2009), the National Medium Term Priority Framework (NMTPF) for Togo (2010-2015), and the National Action Plan for Marine and Coastal Environmental Resources Management.

Even though a significant mitigation potential exists in the agriculture sector, realizing this potential is not easy and may not be possible unless the existing social, economic, and institutional barriers are addressed6. The Programme aims at addressing the following barriers climate adaptation and mitigation:

(I) Lack of infrastructure development including ready markets for agricultural production. A lack of market is related to lack of appropriate storage facilities for farm produce in the villages. This weakens the price negotiating power of small scale farmers who may not be able to store their produce. Low prices a may result into farmers being unable to honour their current loans and hence unable to contract future loans. Lack of markets is also associated with poor physical infrastructure such as roads in the villages. The Programme will create the market for the increased production through investing the agro-processing centre (agro-park). The physical infrastructure including roads, electricity, water supply and sanitation

(II) Technological barriers. Access to technology including new crop varieties, early warning systems as well as irrigation technology are critical to climate adaptation. Lack of advanced technology may constrain the adoption opportunities and capabilities of households that would have enhanced food security and related livelihoods. The Programme will provide the necessary farming skills and infrastructure to farmers around the SCPZ to increase agricultural production such that they are able to realise the market opportunities brought to their farm gate by the agro-park. In particular, the Programme will introduce best practices in irrigation and water resource management, in sustainable soil fertility management, in production and use of renewable energy, and in responsible waste management.

6 “Dulal, Hari Bansha; Brodnig, Gernot. 2010. Social and Institutional Barriers to Climate Change Mitigation in Agriculture. Social Development Notes; No. 125. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/11093 License: CC BY 3.0 IGO.”

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(III) Financial barriers: Small scale farmers are considered poor. Every form of adaptation entails some direct or indirect financial cost. For resource poor farmers facing capital constraints, high transaction cost could mean little gains. There is a need for farmers to access credit facilities among others.

(IV) Institutional barriers: Institutions play a critical role in enhancing the capacity of local communities to cope with climate variability and providing mechanisms that help to shape the social interactions within societies. Extension workers are supposed to link farmers with scientific communities to access scientific and innovative ways of farming. However, in many cases the extension officers are overwhelmed by the number of communities they serve and fail to attend to their needs.

(V) Social barriers: Strong held beliefs, cultural practices and value systems of individuals and groups influence the way communities perceive climate change and their subsequent adaptation strategies. For example culture practices in the Programme areas are the reasons why women are more exposed to climate shocks than men.

(VI) Insufficient know-how. Many smallholder farmers in the focus countries and indeed sub Saharan africa, lack the requisite knowledge to participate effectively in agricultural mitigation projects

(VII) Land tenure insecurity. In the Programme focus countries, implementing carbon sequestration projects would require a significant upfront investment for land-use modifications or improvements. In the absence of secure tenure, resource-poor farmers do not have enough incentives to make long-term investments.

B.2. Project / Programme description (max. 3 pages)

This proposal is an opportunity for the African Development Bank to partner with Green Climate Fund to strengthen community climate resilience through low carbon and climate resilience interventions. The Staple Crop Processing Zone Programme and will cover the following SCP zones: Kara SCPZ in Togo, Luswishi SCPz in Zambia, SNN SCPZ in Ethiopia and Bukanga Lonzo SCPZ in DR Congo. GCF financing will be used for activities to reduce the production and release of greenhouse gases throughout the agricultural production chain, minimize the alteration of the land cover and improve small scale farmer’s livelihood. The activities will help: (i) Increase agriculture productivity, production and sustainability through the promotion of diversified agro ecological systems thereby improving the livelihoods of small scale farmers; (ii) Reduce greenhouse gas emissions that emanate from poor waste management and fossil energy sources by introduction of low energy demand technologies and replacement with clean energy sources along the entire agricultural production chain. The Programme will minimize gender-related risks and safeguard women’s rights through supporting women’s capabilities and their enjoyment of rights, reduction of women’s unpaid care burden and embracing women’s equal and meaningful participation as actors, leaders and decision makers.

Component I: Promotion of Diversified agro ecological systems for resilience to extreme weather and climate change thereby improve the livelihood of small scale farmers

- Farmers will be trained in managing agroecosystems and climate smart agriculture to boost agricultural production and meet the demand of the agro-park through sustainable improvements in productivity and profitability, building resilience and reducing greenhouse gases. Improving productivity per hectare will reduce encroachment on new farm areas and subsequently control of deforestation, enhancing the resource base and the environment.

- The Programme will establish the technical capacity for testing seed quality, soil fertility, and food product quality to ensure high performance and compliance with internationally accepted quality and safety standards.

- Agroforestry and Community woodlots: The Programme will assist farm households to create sustainable managed forests for income generating from timber and cashew nuts, macadamia, bee keeping and for carbon sequestration. They will help increase farm incomes and diversify production, thus mitigating production and market risk associated with any one commodity.

- The Programme will introduce water management techniques to enable irrigation and fish production for increasing agricultural yields and dietary protein supply. Water management, combined with other practices such as crop rotation and use of cover crops, will optimize soil respiration in addition to improving soil carbon, leading to the triple win of enhanced agricultural productivity, adaptation, and mitigation. Improved yield and better market prices will increase livelihoods of the targeted communities.

Diversification through varied crop associations or rotations (involving annual or perennial crops including trees) will increase and build up the soil’s resilience to climate change. Diversification will both increase efficiency of farming systems and build their resilience to climate change. It will spread the risks, increasing economic resilience at the farm and local level. Crops, fish and livestock producers will be trained to increase their productivity so that their revenues from their land holding can be increased through selling to the agro-park.

The training will include environmental conservation and climate change mitigation and adaptation principles. Increased revenues will serve as an incentive to introduce new production and conservation technologies which improve quality and quantity of produce. Food processing will allow surplus food to be stored for low production years and allow staggered sales. This ensures greater availability of food and income throughout the season and in years of low production. Food processing creates jobs and income opportunities especially for women.

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Component II: Reduction of GHG emissions through application of Green technologies in Waste Management and Low Carbon Energy sources.

- Industries will be trained in installation of biogas digesters as an option to waste disposal and hence reduction on greenhouse emissions from waste. The sustainable production and use of bio-energy presents a major opportunity to address climate change by reducing carbon dioxide emissions.

- Industries will be trained and systems put in place to encourage recycling, and biomass gasification technology - Efficient harvesting and early transformation of agriculture produce will reduce post-harvest loss and preserve

food quality, quantity and nutritional value. It will ensures better use of co-products and by-products either as feed for livestock, to produce renewable energy in integrated systems or to improve soil fertility.

- Promote the establishment of legislation for cleaner production and energy efficient processes according to industry best practices for all agro-industrial operators and inside the agro-park;

- Clean energy sources like biogas, wind and solar energy will be promoted by the Programme. Biofuels, especially small-scale production, will strengthen resilience to climate change and variability.

- Farming households will be trained in installation of biogas digesters to reduce reliance on fuel wood or charcoal for cooking

- Developing small scale run-of-the-river hydropower schemes on small perennial rivers in the countries where appropriate.

Component III: Coordination, Programme Management & Institutional Support - Institutional setup at community level - Capacity building at community level - Strengthening of SCPZ regulation and enforcement for resilience and adaptation - Programme coordination, M&E and reporting

B.3. Expected project results aligned with the GCF investment criteria (max. 3 pages)

.Impact Potential Impact 1: Increased resilience and enhanced livelihood of about 55% of highly vulnerable people and communities.

The Programme will, through agroecological systems approach, will improve livelihoods and bring new opportunities to over 200,000 people (both women and men).

Impact 2: Increased resilience to health and wellbeing, and food and water security to over 100,000 beneficiaries.

The Programme will improve food security for over 200,000 people. In addition, provision of alternative sources of energy will relieve households, especially women who collect firewood for cooking, the effects of polluting from firewood and charcoal. The healthier energy sources will reduce their exposure health hazards like cooking smoke.

Impact 3: Increased resilience of ecosystems and ecosystem services in forests and savannas.

Agriculture expansion has impacted ecosystems including soils, rivers and forests. The Programme by increasing productivity and providing alternative sources of energy will reduce on the encroachment of forests and promote regeneration of degraded savannas and other areas identified as providers of important ecological services.

Impact 4: Reduce emissions through low-emission energy access and power generation.

The Programme will contribute directly to the reduction in emission by promoting energy efficient technology including biogas, promotion of small hydropower generation and solar energy.

Impact 5: Reduced emission due to improved waste management

By recycling of waste, use of waste in biogas systems, the Programme will reduce emissions that are a result of traditional waste management methods.

Impact 6: Reduction of emissions from landuse, deforestation, and enhancement of forest carbon stocks.

The Programme will contribute to the reduction of emissions from landuse degradation and deforestation. It will also enhance forest carbon stocks by preservation and promotion of forest regeneration.

Paradigm Shift Promotion of Diversified agro ecological systems for resilience to extreme weather and climate change thereby improve the livelihood of small scale farmers This component will employ a fundamentally different model of agriculture based on diversifying farms and farming landscapes, replacing chemical inputs, optimizing biodiversity and stimulating interactions between different species, as

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part of holistic strategies to build long-term fertility, healthy agro-ecosystems and secure livelihoods, i.e. ‘diversified agro-ecological systems’.

There is growing evidence that these systems keep carbon in the ground, support biodiversity, rebuild soil fertility and sustain yields over time, providing a basis for secure farm livelihoods.

These systems can compete with current agriculture systems in terms of total outputs, performing particularly strongly under environmental stress, and delivering production increases in the places where additional food is desperately needed. Diversified agro ecological systems can also pave the way for diverse diets and improved health.

It will also enhance political incentives shift in order for these alternatives to emerge beyond current margins.

Promotion of Green technologies in Waste Management A lot of waste is produced along the whole chain of farming, processing, distribution, retail, consumption, and excretion that ends up contributing to the GHG emissions, air pollution and nutrients percolating into the aquifer or runoff into surface water. The Programme aims at reducing waste as much as possible, promote reuse and recycling, then valorizing and if nothing else works eliminate. The Programme will promote the development of biogas from livestock and other waste, recycling, and biomass gasification technology. This will demonstrate and promote the approaches based on the drivers below:

(i) Direct economic benefits by replacing fossil fuels with cheaper and clean energy from biogas sources; (ii) Enhanced knowledge base and motivation of the private sector to invest in sustainable and efficient energy

use; (iii) Provision of income to farmers through the sale of previously highly polluting waste products, which were

turned into fuel and fertiliser. Promotion of Low Carbon Energy sources and reduction of carbon foot print Agriculture, forestry, and land use are responsible for close to 25% of global GHG emissions, predominantly from deforestation and agricultural emissions. The whole chain from farming, processing, distribution, retail, to consumption uses a lot of energy for thermal treatments, drying, and transportation. The Programme will demonstrate that environmentally friendly energy sources and energy-efficient installations and maximal use or recycling of different waste streams and by-products is an economically viable and sustainable approach in agro-parks in addition to reduction of GHG emissions. Needs of the recipients, country ownership, efficiency and effectiveness: Zambia

The Programme proposal aligns with the Government of Zambia’s key development goals, defined in Zambia’s Seventh National Development Plan and Vision 2030 Strategy, which identify the agriculture sector as critical for achieving the objective of becoming a prosperous middle-income country by the year 2030. The proposal is anchored in the country’s National Adaptation Programme of Action on Climate Change (NAPA, 2007), National Climate Change Response Strategy (2010), National Strategy for Reducing Emissions from Deforestation and Forest Degradation (REDD, 2015) and contributes to the implementation of the Nationally Determined Contributions (NDC, 2015). It is in line with the following policies: (i) National Climate Change Response Strategy, (ii) National Forestry and Energy Policies, (iii) National Strategy for REDD+, (iv) National Adaptation Plan of Action on Climate Change, (v) Nationally Appropriate Mitigation Actions.

DR Congo

The Programme is fully aligned with DRC Government comprehensive National Climate Change Policy, Strategy and Action Plan (PSPA-CC) 2016-2020 and DRC’s vision of cutting emissions by 17% by the year 2030. PSPA-CC is structured around four pillars – a climate change resilient economy, realizing adaptation and mitigation efforts, strengthening innovative technologies, and a financing strategy. Adaptation efforts identified by this plan include four different but interdependent areas of intervention: (i) Promoting resilient livelihoods in the face of climate change; (ii) Disaster risk reduction to minimize the impact of climate hazards; (iii)Building the capacity of local civil society and provincial and local government institutions to better support communities, households and individuals in their adaptation efforts;(ix) Advocacy and social mobilization to understand the underlying causes of vulnerability.

The country is also aiming to achieve sustainable agricultural development so as to preserve its productive assets, which form the foundation of its economic recovery. The following objectives are being pursued in this sector: (i) to improve market access and the value added of the country's agricultural production; (ii) to improve the productivity of the agricultural sector: food crops, fruit and vegetables, fisheries and livestock; (iii) to promote decentralized financial systems that are in keeping with the nature of the agricultural sector's activities; (iv) to build up the technical and organizational capacity of public and private production support institutions; (v) to encourage the development of

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self-management structures; (vi) to support the promotion of culture (change of mentalities); (vii) to improve access to basic social services (drinking water, health, education); and (viii) to improve basic socioeconomic infrastructure.

Togo

The SCPZ agriculture transformation programme is a government driven programme, it is in line with the country’s Development Plan SCAPE and the country’s NDC. The Government of Togo through its Nationally Determined Contribution (NDC) outlines priority areas to build resilience against climate change and bring the country on a low carbon pathway in line with the Paris Agreement objectives while supporting the implementation of Togo’s development strategy, the Strategy for Accelerated Growth and Employment Promotion (SCAPE) 2013-2017. Among them is the need to strengthen climate resilience of agricultural production systems and value addition in responses to changing climatic patterns. The Programme area, the Kara Region, despite being endowed with agricultural potential - large arable land, adequate ground water resources and sufficient labour force; it has the second highest poverty rate in the country because of poor farming practices, poor water resource management; and underinvestment in agriculture. This situation has been exacerbated by increasing drought conditions. The Government of Togo, through a Cabinet decision, endorsed a Strategic Plan for the development of SCPZs (i.e SCPZ) for the period (2017-2030). SCPZ are spatial development areas where public and private investments are concentrated to increase agricultural productivity, value addition and commercialization through the integration of the activities of various stakeholders in targeted agricultural value chains. Ethiopia The Climate-Resilient Green Economy (CRGE, 2013) identified agro-industrial development as one initiatives which could help the country achieve its development goals while limiting 2030 GHG emissions to around today’s 150 Mt CO2 eq – around 250 Mt CO2 eq less than estimated under a conventional development path. The overall targeted growth rate for the Agriculture sector is 8.6% sustained for 15 years as per the Growth and Transformation Plan, GTP. Building the green economy requires an estimated total expenditure of around USD 150 billion over the next 20 years (CRGE, 2011). The Programme is in line and supported by the following policies and plans: (i) Climate Resilient Green Economy Strategy (2013), (ii) National Adaptation Programme of Action, (iii) Ethiopia Programme of Adaptation to Climate Change, (iv) Agriculture sector Policy and Investment Framework (2010-2020), (v) Growth and Transformation Plan II, (v) Rural Development Strategy 2003. C. Indicative financing / Cost information (max. 3 pages) C.1. Financing by components (max ½ page) Budget Estimates Amount (in million USD): Details in Annex 1

Component/Output Indicative cost (USD)

GCF financing Co-financing Amount (USD)

Financial Instrument

Amount (USD)

Financial Instrument

Name of Institutions

Component 1: Promotion of Diversified agro-ecological system 129 Million

- Ethiopia - DR Congo - Togo - Zambia

20.0 Million 50.0 Million 24.0 Million 35 Million

10.0 Million 25.0 Million 12.0 Million 17.5 Million

Senior Loan Senior Loan

Grant Senior Loan

10.0 Million 25.0 Million 12.0 Million 17.5 Million

Senior Loan Senior Loan

Grant Senior Loan

Africa Development Bank / African Development Fund

Component 2: Application of Green Technology in Waste Management to reduce GHG emission 42. 0 Million

- Ethiopia - DR Congo - Togo - Zambia

7.0 Million 17.5 Million 8.5 Million 9.0 Million

7.0 million 17.5 Million 8.5 Million 9.0 Million

Senior Loan Senior Loan

Grant Senior Loan

7.0 million 17.5 Million 8.5 Million 9.0 Million

Senior Loan Senior Loan Grant Senior Loan

Africa Development Bank / African Development Fund

Component 3: Coordination, Programme Management and Institutional Support 15.5 Million

- Ethiopia - DR Congo - Togo - Zambia

2.8 Million 6.0 Million 3.2 Million 3.5 Million

2.8 Million 6.0 Million 3.2 Million 3.5 Million

Grant Grant Grant Grant

2.8 Million 6.0 Million 3.2 Million 3.5 Million

Grant Grant Grant Grant

Africa Development Bank / African Development Fund

Indicative total cost (USD)

186.5 Million

C.2. Justification of GCF funding request (max 1 page)

PROJECT / PROGRAMME CONCEPT NOTE GREEN CLIMATE FUND | PAGE 9 OF 4

Investing in the resilience of agriculture and those who depend on it for their livelihoods is a key target for the African Development Bank, within the Feed Africa Strategy— Strategy for Agricultural Transformation In Africa 2016-2025 7. The opportunity to partner with the GCF is critical to this Programme.

Togo

The CGF financing is sought in form of grant to the Government of Togo considering its fiscal condition. Togo’s average score from the Country Policy and Institutional Assessment (CPIA) of the AfDB and the World Bank has never exceeded 3.2 out of 6 from 2008 to 2016. This score means that Togo is still a country facing conditions of fragility. From 2011 to 2016, the Government of Togo made an extensive use of debt to fund major capital expenditure especially in the area of transport infrastructures. As a result, the country's debt level increased from 46.9% of GDP in 2011 to 79.2% in 2016. According to the IMF/World Bank joint analysis of debt sustainability, the country's debt distress risk is high since 2016. In order to mitigate this vulnerability, the program pursued by the Government of Togo with the IMF support as part of the Extended Credit Facility (ECF 2017-2019) aims at reducing the level of indebtedness gradually from 79.2% in 2016 to 69.9% in 2019, i.e. below the WAEMU convergence threshold, (less than 70%) after 3 years. According to this ECF program, the government has committed to no longer contract any new nominal external debt on non-concessional terms and to impose substantial supervision to concessional borrowing. In these circumstances, grant financing would be the best GCF instrument to accommodate the current program under ECF and to further mitigate the effects of country’s fragile situation while accelerating its transition to resilience. Based on this analysis, the GCF financing is requested as grant.

Ethiopia

The government of Ethiopia considers climate change as one of its priorities in responding to the country’s long-term development needs. The nation’s widely acclaimed Climate Resilient Green Economy strategy has called for annual spending of $7.5 billion. With federal budgetary resources for climate change relevant actions estimated to be in the order of $440 million per year, much more effort needs to be exerted to mobilise additional resources both domestically and externally. According to the World Bank (2016)8, Ethiopia requires 150 billion USD to implement its INDC activities.

Ethiopia’s current savings-investment gap is large. While the country expects to invest 27.5% of GDP over the coming five years, average domestic savings will equal only 11.9%. The projected levels of foreign direct investment, grants, and transfers will not be sufficient to fund the required additional investments. Moreover, 55% of the investment will be denominated in foreign currency, requiring a large inflow of international capital. Consequently, finance mobilisation is identified in the Growth and Transformation Plan (GTP) as one of the major constraints on economic development: ‘Low mobilisation of domestic financial resources was another implementation challenge encountered (GTP, 2010: p. 19). Mobilising private international capital will play a fundamental role, but public finance, such as climate finance, will contribute significantly to close the funding gap.

DR CONGO

According to Collaborative Africa Budget Reform Initiative (CABRI)9, the GDP growth rate (excluding inflation) of DR Congo decelerated to 6.9% in 2015, then to 2.4% in 2016, its lowest point since 2001. This slump is mainly due to declining prices and a shrinking global demand for raw materials exported by the country, particularly of copper and cobalt, which account for 80% of its export revenue. This economic shock led to deterioration in external accounts and a downturn in the country’s exchange rate in 2016, as well as a 31% drop in the exchange rate of the Congolese franc against the dollar, which fuelled runaway inflation of almost 24%. In 2017, growth is expected to reach 2.6%, driven by the moderate increase in commodity prices and national mining production. However, the national currency is expected to continue its decline against the dollar as the rate of inflation increases.

CABRI states that public finances also deteriorated in 2016, with a growing fiscal deficit of -1.6% of GDP against -0.2% in 2015. The drop in export revenue was reflected in a decrease in State revenue. Lacking access to domestic and international financial markets, the Government had to drastically reduce public expenditure to contain the deficit and limit monetary financing by the Central Bank of the Congo. The limit on public expenditure has affected the Government’s appropriation for climate change related public expenditures and consequently the need to explore other sources of financing for its climate action (CABRI, 2018).

The high level of inflation, together with the significant depreciation in the Congolese franc (all manufactured goods, as well as most foodstuffs, are imported), will have a serious downwards impact on the purchasing power of Congolese households, meaning that household consumption (74.8% of GDP in 2015) is expected to decline in 2018. Public expenditure in mostly (52%) allocated to wages. Compliance with the budget is essentially dependent on operating costs

7 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Feed_Africa-_Strategy_for_Agricultural_Transformation_in_Africa_2016-2025.pdf 8 http://spappssecext.worldbank.org/sites/indc/PDF_Library/et.pdf 9 http://www.cabri-sbo.org/en/countries/drc

PROJECT / PROGRAMME CONCEPT NOTE GREEN CLIMATE FUND | PAGE 10 OF 4

(28% of spending), which exceeded the budget forecasts by 152 percentage points in 2016 and by 52 points in the first nine months of 2017 (CABRI, 2018).

According to its INDC, DR Congo will require up to 21.622 billion US dollars to finance its INDC activities (USAID, 2016). It will be very difficult for DR Congo to fund the Programme from its resources which are and are likely to continue to dwindle.

ZAMBIA

Zambia’s program of action on climate change outlined in the NDC include the following (i) Constructing rural biomass electricity generating facilities; (ii) Transitioning from diesel to biodiesel and coal to biomass; (iii) Increasing rural solar PV and wind usage; (iv) Promoting Climate Smart Agriculture (CSA); and (v) Developing National Land Use Planning Guidelines. Total cost of implementation is estimated at over US$50 billion. The INDC estimates that US$35 billion will go towards mitigation, while approximately US$20 billion will be necessary to implement adaptation actions. Of this, USD 15 billion will be unconditional support provided by the Zambian Government and USD 35 billion will be conditional support to be sourced externally (INDC, 2015). This programme provides the opportunity to mobilize external financial support through the GCF to meet the country's NDC target. C.3. Sustainability and replicability of the project (exit strategy) (max. 1 page) Sustainability will be ensured through entrenching the agroecological system, strengthening of public institutions to undertake M&E, enhancement of socio/community capital and establishment of sound business logic for the private sector. From the ecological perspective, agroecological systems establish agricultural practices that are environmentally sound, preserve resources and integrate natural biological cycles. These touch land use practices, spatial arrangements, water use efficiency, nitrate presence, groundwater levels, crop types, soil nutrient content, the amount of fertiliser and organic manure used per unit of cropped land, as well as the amount of pesticides, herbicides and fungicide used. Economically, when the farming system is well established, it ensures consistently high crop productivity and increased net farm income. Additionally, costs from purchasing inputs (e.g. seeds, agrochemicals, fertiliser, etc.) and the dependence on other external inputs are considerably reduced. Farmers will maintain their activities as long as the net profits in short terms but more importantly in the long term are more than other existing alternatives. With continuous support that will be attached to the SCPZs long term management, farmers will be provided with the necessary technical support after the Programme. Equally, activities like waste recycling will be based on a profit based business of which private investors will have interest even after the completion of the Programme. Other activities will be designed to be embedded in the SCPZ management which is a long term activity supported by governments. From the social perspective, agroecological systems enhance agricultural practices on the communities; preserve indigenous knowledge, livelihood support and social well-being. They also protect the health and welfare of farmers, their workers and the surrounding community. Creation of community seed banks, community nurseries, collective management of processing machinery and storage facilities, swapping of knowledge and genetic materials, strengthens community cohesion and institutional capital. The Programme will promote self-governance structures based on social trust and cohesion, and therefore capable of surviving beyond the Programme period. Public and Private Partnerships Crowding in private investment is a key challenge in the battle against climate change, in the fields of both mitigation and adaptation. Within this Programme, PPP will be a very useful tool to draw in funding from the private sector and provide an important financing opportunity for the Programme. There are opportunities in particular for the PSF to focus on private investment in the agriculture and forestry sectors, which are more suited to the private sector’s needs. The Programme will thus be implemented in a public-private-community partnership. The Governments will invest in the basic infrastructure required to make the agro-park attractive to agro-industrial investors and in water management and training required by the farming community to increase their productivity. The agro-industrial investors will bring agro-processing units to the agro-park and will buy the produce from the farming community around the agro-parks. The latter will use their training and improved infrastructure to supply agro-processors with increasing quantities of high quality raw materials. Governance system shall be put in place to ensure that the initiatives result in a win-win-win situation for producers, agro-processors and public institutions. The Programme, which will last for five years, will build the capacity of producers, producers' organizations and local administrators and enhance their performance in the new agricultural system. Success indicators will be identified and an M&E system shall be established with clear criteria to trigger corrective actions. At the end of the Programme, the national SCPZ/ SCPZ coordination institutions will take over the M&E function and will continuously assess the performance of SCPZs and recommend appropriate actions to ensure that products from the SCPZ remain competitive on the market. The continuous monitoring and the ability to take corrective actions when needed will contribute to the sustainability and efficient management of the SCPZs. The Programme will be replicated in other SCPZs initially before expanding it to other parts of the countries and other countries. C.4 Engagement among the NDA, AE, and/or other relevant stakeholders in the country (max ½ page)

PROJECT / PROGRAMME CONCEPT NOTE GREEN CLIMATE FUND | PAGE 11 OF 4

Please describe how engagement among the NDA, AE and/or other relevant stakeholders in the country has taken place and what further engagement will be undertaken as the concept is developed into a funding proposal. The African Development Bank has informed the NDA/ focal points of the focal countries and has informed them of sharing the concept note with them for their inputs. The consultations with a view to confirming it is in accordance with the country’s strategic framework and priorities. The NDA No-objection letters will be submitted together with the Full Funding Proposal D. Supporting documents submitted (OPTIONAL) ☐ Map indicating the location of the project/programme ☐ Diagram of the theory of change ☐ Financial Model ☐ Pre-feasibility Study ☐ Evaluation Report of previous project

Self-awareness check boxes

Are you aware that the full Funding Proposal and Annexes will require these documents? Yes ☒ No ☐ • Feasibility Study • Environmental and social impact assessment or environmental and social management

framework • Stakeholder consultations at national and project level implementation including with

indigenous people if relevant • Gender assessment and action plan • Operations and maintenance plan if relevant • Loan or grant operation manual as appropriate • Co-financing commitment letters Are you aware that a funding proposal from an accredited entity without a signed AMA will be reviewed but not sent to the Board for consideration? Yes ☒ No ☐