PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE
Report No.: AB5707
Project Name Agricultural Productivity and Diversification Project
Region AFRICA
Sector General agriculture, fishing and forestry sector (40%); Crops
(40%); Agricultural extension and research (20%)
Project ID P115886
Borrower(s) REPUBLIC OF BENIN
Republic of Benin
Benin

Implementing Agency
Ministry of Agriculture, Livestock and Fishery
Benin

Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)

Date PID Prepared July 13, 2010
Estimated Date of November 29, 2010
Appraisal Authorization
Estimated Date of Board February 24, 2011
Approval

1. Key development issues and rationale for Bank involvement

With a per capita income of US$690 in 2008, Benin ranks in the lower income group of
countries. The country has consolidated its democratic process since 1989. The country also
engaged since the 1990’s in important economic reforms which resulted in a sustained economic
performance with an average annual growth rate of 4.4% over 1990-2006. The development
outcomes of this positive growth have been limited due in part to the relatively high population
growth (3.2%), and in part to the vulnerability of the Beninese economy to external shocks.
Poverty has been reduced but remains relatively high. According to the latest estimates in 2007,
one-third of Beninese continues to live under the monetary poverty line, while approximately
40% of the population lives in structural (non-monetary) poverty. Access to basic social services
has been improved, in particular in the education, water and health sectors. However, achieving
MDG targets in some other sectors remain a significant challenge.

The economy of Benin is heavily dependent on the agricultural sector, notably cotton, as well as
on re-export trade, mainly to Nigeria. Cotton remains the major export commodity. It generally
represents 70% of total exports, although its share of exports declined from 75% in 1996 to 47%
in 2006 and further to 40% in 2008. Re-exports represent an average of 7% of GDP. The
economy remains poorly diversified and vulnerable to external shocks, as witnessed by a
significant deceleration of growth to 2.7% in 2009, from 4.6% in 2007 and 5% in 2008. This
vulnerability underscores the need to promote economic diversification (including exports) as
recommended in the 2009 Country Economic Memorandum for Benin.
2. Proposed objective(s)

The Project Development Objective is to strengthen the capacity of producers and agribusinesses
to increase productivity, agro-processing, and marketed volumes for five targeted value chains:
(i) cotton, cashew nut and pineapple for increased exports; and (ii) rice and fish for reduced
imports.

3. Preliminary description

The Agricultural Productivity and Diversification Project will support the development of the
targeted commodity value chains: cotton, cashew nut, pineapple, rice and catfish/tilapia. Project
interventions will follow a value chain development approach, with focus on addressing critical
bottlenecks to increased production and commercialization in the targeted value chains. These
interventions will contribute to strengthen agricultural productivity and diversification while
improving the country’s capacity to increase food production, reduce food imports, and boost
agricultural exports.

Project activities will be organized around the following four components: (i) adoption of
improved technologies and capacity building, (ii) development of market and production and
market infrastructure, including irrigation, (iii) facilitation of a sustainable access sustainable to
agricultural financing, and (iv) Project management and sector program coordination. Total
project cost is $35 million financed through a scheduled $15 million IDA allocation and a
$20 million grant from the Multi-Donor Trust Fund for Food Price Crisis Response Core.

The proposed project components will be as follows:

Component 1. Adoption of Improved Technologies (IDA: $3.5 million; GFRP: $7 million).

This component will finance adoption of improved technologies for the development of the rice,
pineapple, cashew and aquaculture value chains. Under this component, the Project will: (i)
develop a strong partnership with the Bank-financed West African Agricultural Productivity
Project (FY11) to generate improved technologies and management practices using the
competitive agricultural research grant system (CARGS); (ii) finance the multiplication systems
for rice seeds, cashew and pineapple plants and fingerlings, including the provision of the public
services for controlling the production of quality genetic materials; (iii) strengthen the
distribution systems for quality input delivery (including fertilizers, feed and packaging); (iv)
reinforce the capacity of services providers, producers and agro-processors for the mastery of
improved technologies; and (v) provide matching grants to strengthen producers and agro-
processors’ financial access to the improved technologies.

Matching grants will be provided to eligible beneficiaries for the financing of production,
processing and marketing activities in the cashew nuts, pineapple, rice and aquaculture value
chains. The matching grants will be managed following explicit guidelines and procedures that
will be detailed in the Project Implementation Manual (PIM). The guidelines will define the
eligibility criteria for beneficiaries and subprojects, funding ceilings, and cost sharing
arrangements. Beneficiaries will include individual producers and agribusiness enterprises.
Component 2. Development of Production and Market Infrastructure (IDA: $4 million;
GFRP: $8.5 million).

(a) Sub-Component 2.1. Development of Irrigation Infrastructure (IDA: $0 million;

GFRP: $7.5 million). This sub-component will be implemented in close coordination with the
Bank-financed Emergency Support to Enhance Food Security Project. The development of
irrigation system under this Project uses simple techniques that are rapidly and easily
implementable by beneficiaries and local entrepreneurs. This sub-component will target in
priority the development of irrigation lands under the National Private Irrigation Promotion
Project (Project National de Promotion de l’Irrigation Privée - PNPIP). The sub-component will
specifically finance the expansion of the successful small-scale irrigation infrastructure activities,
including complementary studies1, works, small equipments, and capacity building to ensure
proper use of irrigation facilities. The development of private irrigation lands and community
irrigation infrastructure will benefit from matching grants according to clear guidelines (as in
Component 1).

(b) Sub-Component 2.2. Development of Market Infrastructure (IDA: $4 million;

GFRP: $1 million). This sub-component will support the construction and rehabilitation of
market infrastructure and provide critical market information and services. For improved market
facilitation, the sub-component will finance the construction or rehabilitation of critical (hard)
infrastructure for input and product storage and marketing. Infrastructure construction and
rehabilitation will be planned taking into account ongoing initiatives, such as those supported by
the Competitiveness and Integrated Growth Opportunity Project (CIGOP). The sub-component
will also finance soft infrastructure such as market information system, quality control systems,
and grades and standards, including food safety. In addition, the Project will work with CIGOP
under this sub-component to pilot the grouping of these support services. The sub-component
will also finance the promotion of Benin’s products (through participation in trade fairs and
related events, specific packaging, advertizing) and market prospection at regional and
international level.

Component 3. Facilitation of a Sustainable Access to Agricultural Financing (IDA:

$2.5 million; GFRP: $1 million). This component aims at helping improve the access to
financial services. It will address critical supply and demand constraints to the provision and
access to credit and financial services in agriculture. The component will seek to develop
partnerships between the Project and selected microfinance institutions and commercial banks
with a significant presence in rural areas. It will provide technical assistance to these financial
institutions to support instruments such as input credit, inventory credit, contract and trade
financing, and possibly leasing for equipment financing. Many of these mechanisms will be built
around processing units for rice, cashew nuts, and pineapple value chains. For aquaculture,
financing mechanisms will be built around the fingerlings and feed supply units. On the demand
side, technical assistance will be provided to agro-enterprises and producers organizations to
access the financial services. In order to ensure sustainability in the provision of critical value
chain coordination and market facilitation functions, the component will also finance studies and

1
Key studies for the realization of the irrigation infrastructure have been completed in 2002 and updated in 2009.
broad consultations toward the establishment of value chain development funds which could
either be self-standing funds or integrated as financing windows under existing funds.

Component 4. Institutional Development and Sector Program Coordination

(IDA: $5 million; GFRP: $3.5 million). This component has three sub-components: (i) building
value chain coordination institutions, (ii) strengthening the capacities of the Ministry of
Agriculture in coordinating the agriculture sector program, and (iii) supporting Project
management and monitoring and evaluation.

(a) Sub-Component 4.1. Building Value Chain Coordination Institutions

(IDA: $2 million; GFRP: $1 million). Sector coordination requires that value chain participants
develop a common understanding and a relative control over the flows of goods and services in
order to improve the input and financing need assessments, marketing and input credit repayment
as well as overall productivity and competiveness of the value chain. This sub-component will
therefore support the organization of value chain participants into a well structured
interprofession and the organization of producers around structuring activities, such as rice
milling, cashew nut pineapple packaging and processing and fingerlings and fish feed
production. The sub-component will specifically support the creation and/or strengthening of
public-private partnerships for improved coordination among the key links of the targeted value
chain. For the cashew, pineapple, rice and aquaculture value chains, it will specifically support:
(i) the creation or strengthening of commodity interprofessions to allow them to develop or
improve their framework agreements; and (ii) the improvement of the legal and regulatory
environment for value chain coordination. For the cotton value chain, the sub-component will
support the implementation of the sector’s governance reform plan aimed to reinforce the
managerial capacity of producers’ groups, the self-governance of the Cotton Interprofessional
Association (Association Interprofessionnelle du Coton—AIC), and the regulatory and oversight
roles of the State. This component will finance studies, trainings, workshops and small
equipment to support the functioning of the value chain coordination bodies.

(b) Sub-Component 4.2. Sector Program Coordination (IDA: $1.5 million;

GFRP: $0.5 million). Through this sub-component, the project will strengthen the capacity of
MAEP to coordinate the implementation of the Strategic Plan to Revitalize the Agricultural
Sector and the related National Agricultural Investment Plan. The sub-component will finance
studies and consultant services to support: (i) the implementation of sector coordination tools
(planning, monitoring, evaluation, dialogue with other sectors), (ii) the strengthening of fiduciary
capacities (procurement, financial management), and (iii) the improvement of the quality and
targeting of public expenditures in agriculture.

(c) Sub-Component 4.3. Project Management, Monitory and Evaluation

(IDA: $1.5 million; GFRP: $1 million). This sub-component will finance costs associated with
Project management, monitoring and evaluation. These include: (i) incremental costs associated
with the staff of the Project Coordination Unit (at central and departmental levels), including
training costs; (ii) equipment and operating costs, including costs associated with the Project’s
financial management system (including external audits, periodic activity planning and
budgeting at departmental and national levels); and (iii) costs for establishing and running the
Project’s monitoring and evaluation system.
4. Safeguard policies that might apply
Safeguard Policies Triggered Yes No TBD
Environmental Assessment (OP/BP 4.01) X
Natural Habitats (OP/BP 4.04) X
Forests (OP/BP 4.36) X
Pest Management (OP 4.09) X
Physical Cultural Resources (OP/BP 4.11) X
Indigenous Peoples (OP/BP 4.10) X
Involuntary Resettlement (OP/BP 4.12) X
Safety of Dams (OP/BP 4.37) X
Projects on International Waterways (OP/BP 7.50) X
Projects in Disputed Areas (OP/BP 7.60) X

The project Environmental Assessment category would be “B”. The borrower will prepare an
Environmental and Social Management Framework (ESMF), a Pest Management Plan (PMP),
and a Resettlement Policy Framework (RPF), which will be disclosed in-country and at the
Infoshop prior to appraisal. The borrower capacity for safeguards is good and there is an
environmental protection agency (ABE) that is familiar with the Bank safeguards policies and
has good working relationship with the Bank and Bank-funded projects. The project coordination
team will either hire an Environment and Social Specialist or a consultant that will follow up
environmental and social issues; especially the implementation of the safeguards instruments as
and when necessary during project implementation. In addition, the safeguards specialists in the
Bank team will guide and provide guidance to the PMU and the TTL as project evolves.

5. Tentative financing
Source: ($m.)
BORROWER/RECIPIENT 3.5
International Development Association (IDA) 15.0
Trust Fund for Food Price Crisis Response Core 20.0
Beneficiary Communities 3.2
Total 41.7

6. Contact point
Contact: Kofi Nouve
Title: Agric. Economist
Tel: (202) 458-4649
Fax: (202) 473-8229
Email: knouve@worldbank.org