Name: CASHEW INFRASTRUCTURE DEVELOPMENT PROJECT (CIDP)
Approval date: 04-Nov-2015
Task Manager: BANGWE Lewis Mupeta, RDGS4
Total cost: 36301440 Currency: UAC
Source(s) of financing AfDB: 29170583.09 Government: 6754610.57
Implementing Agency: MINISTRY OF AGRICULTURE - WATER DEVELOPMENT
The development objective is to contribute to economic growth and food security. The Project objective is to contribute to the country's poverty reduction and improved household incomes through improved cashew production, processing and marketing. Enhanced household incomes will lead to improved household food security. The Project will (i) increase cashew tree productivity and production, (ii) contribute to improved household income and food security, (iii) increase foreign exchange earnings from cashew products, and (iii) improve rural employment for men, women and youths.
The Project has 3 components: (a) Support to Cashew Value Chain with 3 sub-components, (i) infrastructure for cashew nursery and gardens, (ii) infrastructure for agro-processing and marketing, and (iii) cashew plantation rejuvenation and establishment; (b) Capacity Building with 3 sub- components, (i) training, (ii) technical support, and (ii) matching grant; and (c) Project Management with 2 sub-components, (i) project coordination, and (ii) monitoring and evaluation (M<(>&<)>E). The Project aims to establish a competitive cashew nut industry able to compete on the local and international markets and to raise incomes of local producers/smallholder farmers.The Project cost, including physical and price contingencies, is USD 55.42 million which will be financed by (i) ADB Loan of USD 45.00 million (81.2%) covering all major Project activities, (ii) the GoZ contribution of USD 8.31 million (15.0%) through cash contribution of USD 6.14 million for rehabilitation of some feeder roads and in-kind monetary value for existing GoZ staff salaries, office space and utilities (USD 2.17 million), and (iii) beneficiaries in-kind contribution of USD 2.11 million (3.8%) through specific labour for cashew tree planting. The Ministry of Agriculture and Livestock (MAL) will be the Executing Agency (EA) for the Project which will be implemented through the Director of Agriculture, over a period of 5 years given the long gestation period of cashew-trees. Due to MAL staff capacity constraints, a Project Coordination Unit (PCU) will be set up, in Mongu District, for day to day effective implementation of the Project activities. Based on Bank's rules and procedures, the Project will competitively recruit the following national Experts to form the core PCU team (i) Project Coordinator (PC), (ii) Accountant, (iii) Monitoring and Evaluation (M<(>&<)>E) Specialist, and (iv) Procurement Specialist. In addition, the Project will recruit support staff including Administrative Assistant, Messenger/Office Assistant, and 2 Drivers.The Project has made provision to competitively recruit (a) an international Cashew Technical Adviser to the PCU from PY1 to PY4 (max 4 years) and (b) the Gender Specialist on full time basis from PY1 to PY3 and 3-month-inputs per year from PY4 to PY5, and will both be based in Mongu District. The PCU will work closely with the Provincial Agriculture Coordinator (PACO-Western Province) and GoZ staff from key/parent MAL Departments/Institutions.The Provincial Planning Unit, under the Provincial Permanent Secretary, will carry out a monitoring and coordination function of all activities under the CIDP in the Western Province while the District Planning Office, under the District Council, will be the focal point for supporting implementation at District level.The Project activities will be closely monitored by a multi-sectoral Project Steering Committee (PSC) for policy guidance which will comprise 12 members. The PC will be the PSC's secretary. Prior to recruitment of the PC, the MAL-Director of Agriculture will coordinate the CIDP activities.Environmental Issues: According to the Bank's Environmental and Social Assessment Procedures (ESAP), the CIDP was classified as Category II and was validated on 6th November 2014. The potential environmental impacts from the planned activities will be localized, minimal, short term, manageable, reversible and can be mitigated. The Project will mainly focus on rejuvenating the existing cashew trees and planting new cashew trees within the existing cashew hub. The infrastructure to be developed will be small-scale in nature and will not induce any potential, significant or irreversible environmental and social impacts. Irrigation systems, for nurseries, will utilise groundwater which is readily available due to recharge from perennial Barotse plain and Zambezi River. CIDP will focus on handling and use of agricultural chemicals and also promote integrated pest management. The Strategic Environmental and Social Assessment (SESA) report including Environmental and Social Monitoring Plan (ESMP) were produced by the Environmental Specialist (Consultant) in June 2015. The SESA summary was cleared by the Bank, for disclosure, on 29th June 2015. Climate Change: According to country assessments carried out under the PPCR, Western Province is prone to a wide range of climatic risks such as floods, short rains and dry spells. These risks negatively affect agricultural production, surface water quantity and quality, human health and energy.The Project will promote and contribute to building climate change resilience and promote adaptation technology that will improve agricultural production, household income and food security. CIDP will develop the existing and new cashew plantations (total 60,000 ha) which will (i) contribute to green growth with positive effect on the environment, and (ii) sequester carbon dioxide from being released to the atmosphere as greenhouse gases. Land Issues: Land ownership in Western Province falls within customary land or State land categories, with freehold and leasehold tenure systems.The State land is leased to individuals through a title deed (leasehold) for maximum period of 99 years, and the leaseholder pays annual ground rent to the State. Customary land ownership is most common in Western Province (Barotseland) and is held in-trust by the "King of the Barotse people"(Litunga). Individual people acquire land through the village chief (Induna) who represents the Litunga. The landowners' heirs can inherit it but they cannot sell, transfer or assign any customary land without the consent of the Litunga or the Barotse Royal Establishment's council (Kuta). In relation to the CIDP, the Kuta made an assurance that access to land and associated security would not be a constraint to any farmer/cashew producer wishing to expand the area under cashew trees. Gender: Feminization of poverty remains the broad characteristic of Zambian poverty profile and statistics show that of the 68% poverty levels, 80% of these are women mainly small-scale farmers. In cashew industry, women are mainly involved in the lower scales of the value chain and mostly collection and mechanically crashing the cashew nuts (50% at production and 90% at processing levels) while men are responsible for the actual farm management and all other tasks. Lack of gender equality limits a woman farmer's access to agricultural inputs, credit services and markets. Taking into account the specific constraints faced by women in the cashew sub-sector, the gender mainstreaming strategy in the Project will focus on increasing access to planned activities for women as well as increasing their participation in implementation, community representation and decision making. CIDP will support both male and female households with deliberate efforts to reach out, build capacity and empower about 30,000 women beneficiaries. Social Issues: The social impact of the CIDP is expected to be positive since it will (i) enhance gender-balanced household incomes and improve livelihoods for rural men, women and youth participating in the cashew value chain, (ii) create jobs in the rural areas for men, women and youth, (iii) generate foreign exchange from export of cashew kernels, (iv) enhanced economic value of marginal lands which have poor fertility (Kalahari sands), and (v) rehabilitate rural feeder road network within the Kalahari sands which will improve vehicle-tyre traction, agro-trade, and also provide access to amenities like schools, hospitals etc. The increased economic activities will boost local development and generate positive multiplier effects on social stability by retaining the youth, within Western Province, who could have otherwise migrated to cities/urban areas. HIV/AIDS is a social, economic and health problem. CIDP will use the existing MAL HIV/AIDS campaign messages which will be distributed to all Project beneficiaries including consultants and contractors. Inclusive Growth: In the context of broad-based and pro-poor growth, the Project will promote inclusive growth with equitable allocation of resources to activities which will benefit all levels of the participating communities. In particular, CIDP will be implemented in Western Province which (i) is the poorest province in Zambia, (ii) is frequently affected by drought, (iii) has poor Kalahari sandy soils, (iv) has food shortages during some months of the year, and (v) is delinked from markets. The Project will assist poor rural men, women and youth to own cashew trees for enterprise diversification, job creation, and income generation. The cashew-processing activities will allow rural men, women and youth including Private Sector to participate in off- farm activities including marketing. Transition to Green Growth: The Project is designed to contribute to green growth through planting of perennial cashew trees which will provide soil cover, stabilise the soil, ensure environmental conservation, and increase cashew production. Involuntary Resettlement: There will be no involuntary resettlement or land acquisition envisioned during implementation of the Project activities.The proposed Project activities will be carried out within the existing cashew hub, in Western Province, which was already demarcated by the local communities/GoZ and BRE with no known land disputes. Project - Fragility Analysis: According to the Operational Guidelines for the implementation of the Bank Group Strategy for addressing Fragility and building Resilience in Africa (2014-2019), Zambia is classified under Category 3, that is "country where risks of violence or societal breakdown are considered to be relatively low and/or where capacity of social and political institutions to manage challenges within a legitimate/inclusive framework is relatively high".
Project Areas: The potential for cashew production lies along the cashew hub in the Western Province (Barotseland). The Project will be implemented in 10 out of 16 Districts of the Western Province, namely Mongu, Limulunga, Senanga, Kalabo, Nalolo, Sikongo, Shangombo, Sioma, Lukulu, and Mitete which were selected, during the Stakeholders' Workshop, based on (i) high potential for cashew production, (ii) less frost problem, and (iii) high incidence of poverty, food insecurity and malnutrition. The infrastructure in the Western Province, like rural feeder roads etc, is generally very poor and the area has dominant Kalahari sandy soil that can hardly support conventional crops. Project Beneficiaries: According to 2010 census, the Western Province has total population of 902,974 out of which 469,469 (52%) are female.The Province has high poverty level (80.4%) and about 70% of those in the poor category are women. The primary beneficiaries of the Project are smallholder cashew farmers/producers and processors (farmer groups and Private Sector). The Project will directly benefit 60,000 smallholder farmers including 30,000 (50%) women and 7,000 youths, each planting 1 ha (100 cashew trees). The labour input for the farming operations is equivalent to 25,000 jobs. However, the Project will generate about 6,000 full time jobs (3,000 of which will be for rural women and 1,000 for youths) in cashew nursery, production, processing and marketing operations. Financial Analysis: At full maturity (that is, from the 6th year after planting), each household with a new 1ha-plantation (crop budget) will be making an income of ZMW 3,223 (USD 429) per year. This is made up of ZMW 1,995 profit and imputed labour fees of ZMW 1,227 which represents 69 person-days (if provided by the household). This works out to ZMW 46.71 per person-day compared to the going rate ranges between ZMW 10.00 and ZMW 17.50 within the Project area. The FIRR is estimated at 16.0% and NPV of ZMW 237 million (USD 31.5 million). The EIRR is 25% and NPV of ZMW 440 million (USD 58.6 million). In addition to this, other benefits such as employment generation, environmental benefits from the reforestation, and spin off effects of the investment to boosts local economy, which could not be quantified, further justifies the financing of the Project.
The Bank's comparative advantage and added value is derived from its cumulative experience and positive achievements in the implementation of Agriculture Sector operations in Zambia and other Regional Member Countries. The Bank is among the main and active Cooperating Partners (CPs) involved in the Agriculture Sector in Zambia and has been supporting the R-SNDP (2013-2016) and the NAIP (2014-2018). The CIDP will further strengthen and consolidate gains achieved from similar agriculture-related value chain development interventions. Some notable Bank-funded operations, in Zambia, include Small-scale Irrigation Project (SIP), Agriculture Sector Investment Programme (ASIP), Lake Tanganyika Integrated Regional Development Programme (PRODAP), Livestock Infrastructure Support Project (LISP), GAFSP funded-Agriculture Productivity and Market Enhancement Project (APMEP), and Pilot Programme on Climate Resilience (PPCR). The CIDP is aligned to one of the Bank's Ten Year Strategy (TYS: 2013-2022) core operational areas of infrastructure and also areas of special emphasis namely agriculture and gender in that it will enhance cashew infrastructure development, cashew production, household income, food security and gender mainstreaming.Gender mainstreaming is also in line with Pillar II of the Gender Strategy (2014-2018). In addition, the Project will promote green growth by improving ground cover through cashew plantations while ensuring inclusiveness of rural men, women and youths as direct beneficiaries.The Project will facilitate the linkage between the farmers and the Private Sector entities and will improve Private Sector participation in cashew processing, marketing, and skills development for infrastructure management through matching grant. The Private Sector will be the off-takers of cashew value chain, and would pay smallholder farmers pre-agreed best price for supply of raw materials. The 2013 Country Portfolio Performance Review (CPPR) assessed the overall performance of the Zambia portfolio as Satisfactory, with Implementation Objectives (IO) and Development Outcomes (DO) of 2.19 and 2.52 respectively. The CPPR rated GoZ's performance as Moderately Satisfactory since there are challenges in existing project implementation including procurement, contract management, and monitoring & evaluation (M&E). The CPPR recommended that the Bank should continue improving portfolio quality through advisory services to project implementation agencies. The Bank's active portfolio, in Zambia, justifies the continued support to the Agriculture Sector.