PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No.: AB4403
Project Name / Kenya Agricultural Productivity & Agribusiness Project (KAPAP)- APL IIRegion / AFRICA
Sector / Agricultural extension and research (70%), agribusiness development (30%)
Project ID / P109683
Borrower(s) / KENYA GOVERNMENT
Government of Kenya
Nairobi, Kenya
Implementing Agency
Ministry of Agriculture
Kilimo House
P.O. Box 30028
Nairobi
Kenya
00100
Tel: 254-20-2720586 Fax: 254-20-2711149
Environment Category / [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / December 9, 2008
Estimated Date of Appraisal Authorization / March 31, 2009
Estimated Date of Board Approval / May 28, 2009
Agriculture remains the mainstay of the Kenyan economy and contributes directly 24 percent of Gross Domestic Product (GDP). The sector performance greatly affects the poor, as 67 percent of the population and 80 percent of the poor live in rural areas and depend on agricultural activities. Agriculture grew at an average annual rate of 3.5 percent in the 1980s, but declined to 1.3 percent in the 1990s. Recent Government efforts focusing on reversing the poor sector performance have started to bear fruits with the compound average growth rate (CAGR) in agriculture increasing by 5.0 percent between 2001 and 2007, with even a higher export growth of 8 per cent. The overall agricultural productivity has also increased in the last five years. Setting aside the unusual circumstances (post election crisis) of the first quarter of 2008, which are expected to affect this year’s growth, indications are that the recent dynamism will be maintained into the short and medium-term future. Unpredictable weather patterns, exacerbated by global climate change and the effects of escalating global fuel prices, may complicate growth as they affect agricultural productivity.
In May 2008, the Government launched “Vision 2030,” whose aim is to transform Kenya into “a newly-industrializing, middle income country, providing a high quality of life to all its citizens in a clean and secure environment”. The Vision will be implemented through five year rolling Medium-Term Plans (MTPs), starting with the first one which will cover the period 2008-2012. Agricultural sector is identified as one of the key sectors of the economic pillar in the Vision 2030 and MTPs, with an annual growth projection of 5-7 percent. The sector priorities were articulated in the “Strategy for Revitalizing Agriculture 2004–2014” (SRA), which aims to “provide a policy and institutional environment conducive to increasing agricultural productivity, promoting investments, and encouraging private sector involvement in agricultural enterprises”. In light of progress achieved and the recent global developments, and in response to the goals of the Kenya Vision 2030, the SRA has been revised as the Agricultural Sector Development Strategy (ASDS).
According to the findings of an Agricultural Policy Review (APR)[1] conducted by the Bank, agriculture remains a vital development tool in Kenya. This finding confirms the 2008 World Development Report’s main message. The APR also re-affirms the fact that agriculture led growth in Kenya is more than twice as effective in reducing poverty as compared to industry-led growth. In addition, the just concluded Kenya Poverty and Inequality Assessment (KPIA)[2] also indicates that inequality is a critical issue in the country and especially in rural areas. The APR points out that the key to better performance in agriculture is rapid increases in small-holder productivity. This requires not only increases in physical production volumes and values (through technology - the supply side), but also better linkages of farmers[3] to diversifying consumer markets (the demand side). The global food crisis has brought into sharp focus the centrality of enhancing agricultural productivity as a key developmental challenge.
The main Bank support to the sector has been through Kenya Agricultural Productivity Project (KAPP), which was designed as the first phase of an Adaptable Program Loan (APL). The KAPP development objective is to improve the overall technology system by supporting agricultural research, extension and farmer empowerment. The APL design was thought prudent given the need to have long term engagement to succeed with reforms of agricultural services. The first phase of the APL closes on December 31, 2008.
The support provided under KAPP has been instrumental in achieving a number of reforms in the sector. Through KAPP support, the sector has been able to review and formulate a new national extension policy and its implementation framework, a national livestock and dairy policy, a draft NARS policy, and implement reforms in coffee sub-sector. The support has also facilitated the carrying out of agricultural research resulting into the release of new crop varieties and other technologies, training of researchers and capacity building of their institutions, empowerment of farmers and their organizations to strengthen demand for services, and piloting with encouraging results on public-private partnerships (PPPs) in provision and financing of extension services.
The proposed KAPAP will focus on the productivity agenda while embracing diversification, value addition and linkage to markets, and promotion of PPPs in service delivery and agribusiness development. Through this proposed second phase of the Project, the Bank will support the Government to address medium to long term supply response related issues linked to agricultural technology/research, implementation of reforms in extension service delivery, and farm inputs. Lessons learned from the implementation of the first phase of the APL indicate that in order to have a greater impact from the productivity growth, farmers have to be supported to link better to both input and output markets and through agribusiness development. According to the KPIA report, rural households have shown a very strong upward trend in diversification (both on- and off- farm) of economic activities in the last decade. The report also indicates that diversification as a strategy is a key driver out of poverty. The proposed second phase of the program will therefore support and encourage households to diversify into high payoff on- and off- farm activities. The Government is in the process of finalizing the ASDS and its investment plan that will facilitate and enhance the sector-wide approach. The Bank, being a major player in the sector, is being called upon to spearhead and catalyze activities that will eventually lead to the sector-wide approach. Activities that will promote sector-wide approach will be factored in the design of the proposed second phase of the program.
The design of the second phase of KAPP will assure strong governance features, focusing on four principal areas: (i) results orientation; (ii) accountability; (iii) transparency; and (iv) participation. The results orientation activities include areas such as targeting and monitoring and evaluation against socio-economic indicators reflecting production, sales, employment, investments, etc. For accountability, the Project will include capacity building in institutional risk management, financial engineering and procurement monitoring. For transparency, it will address information dissemination and communication about Project targeting and objectives, documentation, such as a comprehensive operational manual, complaints mechanisms, and supervision and quality control of Project activities. For participation, it will support the consultation processes with the communities, decision-making processes, and social accountability.
1. Proposed objective(s)
The Project Development Objective (PDO) is to empower stakeholders to transform smallholder agricultural[4] production and marketing systems for increased productivity and incomes in the Project areas. To achieve this objective, the Project will support:
· Improved linkages of agricultural research and extension systems to national, local and regional[5] sector priorities though the implementation of ASDS, NASEP and NARS policies, including improved planning, coordination, funding and implementation;
· The empowerment of producer and other public and private stakeholders and their organizations to plan, design and deliver extension and agribusiness services, aimed at sector transformation/growth, including production, value-addition and linking farmers to input and output markets; and
· The setting-up of appropriate funding and risk mitigation systems which would lead to the development of on- and off- farm diversification and promote private investment in the sector.
2. Preliminary description
The Project will be implemented over a five year period (2009-2014). This is to enable up-scaling and consolidation of KAPP Phase I activities, and to give sufficient time for implementation of the agribusiness development activities. The indicative IDA allocation is US$ 80 million with the Government co-financing estimated at US$10 million. At this stage, it is proposed that the Project be a follow-on phase to the Adaptable Program Loan (APL) in line with the original KAPP design.
The proposed Project will support four components that complement one another. These are:
(i) Support for Policy, Institutional and Project Implementation
(ii) Support to Agricultural Research
(iii) Support to Agricultural Extension and Farmer/Stakeholder Empowerment
(iv) Support to Agribusiness Development
Component 1: Policy/Institutional and Project Implementation Support (About US$7 million - IDA)
Strategically, this component will support activities that will lead to better coordination of the sector with an aim of creating the necessary impetus for sector-wide approach. These activities will be undertaken both at the national and lower levels. At the national level, the Project will support the development of the ASDS investment plan, its implementation, activities that will facilitate harmonization of both Government and donor supported programs, and activities to align them with ASDS. At the district and lower levels, the proposed Project will support joint programming and create the necessary capacity and institutional framework for it. It will also support policy reviews, design and implementation of sector-wide M&E and MIS systems, and support the project implementation structures.
Component 2: Agricultural Research Systems ( About USD 25 million- IDA)
This component will focus on supporting the research system in the country and in the East African region[6]. It will have three sub-components, namely:
Support to the National Agricultural Research System (NARS);
Support to Kenya Agricultural Research Institute (KARI); and,
Support for the East African Agricultural Productivity Program (EAAPP).
Component 3: Agricultural Extension and Farmer/ Stakeholder Empowerment (About US$33 million - IDA)
This component will have two sub-components; (i) support to extension, and (ii) support to empowerment of farmers and service provider’s. The overall objective of extension sub-component is to support the Government to implement the NASEP, focusing on empowering the extension clientele through sharing of information, imparting knowledge, skills and changing attitudes, so that they can efficiently manage their resources for increased productivity, improved incomes and standard of living. The empowerment sub-component will support the empowering and organization of farmers/clients and service providers towards the transformation of subsistence farming to commercial agriculture trough their mobilization, and empowerment to form foras, and producer business groups.
Component 4: Agribusiness and Market Development (about US$15 million – IDA)
The objective of this component is, to empower all public and private stakeholders along commodity chains to plan, design and deliver agribusiness services aimed at value-addition, and linking producers to input and output markets. Building on existing experiences, the Project will promote further coordination within the sub-sector with the relevant ministries, the private sector, and involve development partners to enhance synergies with on-going agribusiness activities.
Implementation Arrangements: KAPAP will build upon the efficient and effective institutional and implementation structures adopted under KAPP I. However, these institutional arrangements will be improved to make them consistent with a sector-wide approach envisaged under ASDS, and mainstream them within the existing Government structures. The memberships of the Project Steering Committee will be expanded to include strategic partners in the agribusiness. Project implementation will be undertaken by the relevant ministries within the Agriculture sector and KARI. Overall coordination of Project implementation will be assumed by the KAPAP Coordination Secretariat (KS). The KS will work closely with ASCU and the implementation agencies, to ensure stronger linkages between the farmers/producers, extension, agribusiness and research for the achievement of Project.
For the activities supported under extension and farmer empowerment, it is proposed that a phased approach will be adopted. The first two years of the project implementation will concentrating on up-scaling activities in all the divisions in the 20 districts covered by KAPP phase I (the original 20 districts have increase due to sub-division to around 48). A review will be done during the mid-term review to recommend further geographical targeting.
3. Safeguard policies that might apply
World Bank Safeguard Policies / Yes / TBD / No / Handling /Environmental Assessment (OP/BP 4.01) / [X] / [ ] / [ ] / EA/ESMF
Natural Habitats (OP/BP 4.04) / [ ] / [ ] / [X] / -
Forests (OP/BP 4.36) / [ ] / [ ] / [X] / -
Pest Management (OP 4.09) / [X] / [ ] / [ ] / PMP
Physical Cultural Resources (OP/BP 4.11) / [ ] / [ ] / [X] / -
Indigenous Peoples (OP/BP 4.10) / [X] / [ ] / [ ] / ESMF/IPPF
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] / -
KAPP Phase I was a category C Project as it did not trigger most of the safeguards policies. Nevertheless, the proposed Project will have more intense implementation of technologies that might trigger several social and environmental safeguards. As such, the Team is proposing a category B rating, subject to confirmation.
4. Tentative financing
Source: / ($m.)BORROWER/RECIPIENT / 10
International Development Association (IDA) / 80
Total / 90
5. Contact point
Contact: Andrew Mwihia Karanja
Title: Sr. Agricultural Economist
Tel: 5368+6410
Fax: 254-20-3226384
Email:
- Location: Nairobi, Kenya (IBRD)
[1] World Bank (2008) - Agricultural Policy Review: Current trends and future options for pro-poor growth (draft).
[2] World Bank report - Kenya Poverty and Inequality Assessment, June 2008.
[3] Farmer is being used for men and women being involved managing natural resources for crop production, livestock husbandry, fish raising and local agro-processing and value addition.
[4] The term ‘agricultural’ covers all aspects relating to crops, livestock and fisheries.
[5] Covers Eastern Africa.
[6] Kenya, Uganda, Tanzania and Ethiopia