AFRICAN DEVELOPMENT FUND Language : English Original : English

MULTINATIONAL

COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA (COMESA)

AGRICULTURAL MARKETING PROMOTION AND REGIONAL

INTEGRATION PROJECT

APPRAISAL REPORT

AGRICULTURE AND RURAL DEVELOPMENT DEPARTMENT ONAR NORTH, EAST AND SOUTH REGIONS DECEMBER 2003

TABLE OF CONTENTS

Page PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF TABLES, LIST OF ANNEXES, LIST OF ABBREVIATIONS, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY, AND CONCLUSIONS AND RECOMMENDATION .................................................... (i)–(vii)

1. INTRODUCTION AND BACKGROUND....................................................................1

1.1 ORIGIN AND HISTORY OF THE PROJECT.......................................................................1 1.2 THE MISSION, VISION AND ACHIEVEMENTS OF COMESA.........................................2 1.3 INSTITUTIONAL FRAMEWORK OF COMESA...............................................................3

2. THE AGRICULTURAL SECTOR................................................................................5

2.1 SALIENT FEATURES.....................................................................................................5 2.2 AGRICULTURAL PERFORMANCE..................................................................................5 2.3 FOOD SECURITY..........................................................................................................6 2.4 POVERTY, GENDER, HIV/AIDS AND AGRICULTURE..................................................7 2.5 KEY AGRICULTURAL INSTITUTIONS............................................................................7 2.6 COMESA’S COMMON AGRICULTURAL POLICY .........................................................9

3. AGRICULTURAL MARKETING, SANITARY AND PHYTOSANITARY (SPS) SUB SECTORS ......................................................................................................................10

3.1 AGRICULTURAL MARKETING....................................................................................10 3.2 SANITARY AND PHYTOSANITARY MEASURES ...........................................................12 3.3 DONOR INTERVENTION IN THE SUB–SECTORS ..........................................................13

4. THE PROJECT .............................................................................................................14

4.1 PROJECT CONCEPT AND RATIONALE.........................................................................14 4.2 PROJECT AREA AND BENEFICIARIES .........................................................................15 4.3 STRATEGIC CONTEXT ...............................................................................................16 4.4 PROJECT OBJECTIVE .................................................................................................16 4.5 PROJECT DESCRIPTION..............................................................................................16 4.6 ENVIRONMENTAL IMPACT.........................................................................................22 4.7 PROJECT COSTS ........................................................................................................22 4.8 SOURCES OF FINANCING AND EXPENDITURE SCHEDULE...........................................23

5. PROJECT IMPLEMENTATION................................................................................24

5.1 EXECUTING AGENCY ................................................................................................24 5.2 INSTITUTIONAL ARRANGEMENTS..............................................................................24 5.3 SUPERVISION, IMPLEMENTATION AND EXPENDITURE SCHEDULES............................25 5.4 PROCUREMENT ARRANGEMENTS ..............................................................................26 5.5 DISBURSEMENT ARRANGEMENTS .............................................................................28 5.6 MONITORING AND EVALUATION...............................................................................28 5.7 FINANCIAL REPORTING AND AUDITING ....................................................................29 5.8 AID COORDINATION..................................................................................................29

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6. PROJECT SUSTAINABILITY AND RISKS.............................................................30

6.1 RECURRENT COSTS...................................................................................................30 6.2 PROJECT SUSTAINABILITY ........................................................................................30 6.3 ASSUMPTIONS AND MITIGATION MEASURES ............................................................31

7. PROJECT BENEFITS ..................................................................................................32

8. CONCLUSIONS AND RECOMMENDATIONS.......................................................33

8.1 CONCLUSIONS...........................................................................................................33 8.2 RECOMMENDATIONS.................................................................................................34

This report was appraised by Messrs. B.S. Kanu, Senior Agricultural Economist, ONAR.1 (mission leader) and a Consultant Sanitary and Phyto–sanitary Expert, following their mission to Zambia and Kenya in August/September 2003. Any further questions relating to the report may be addressed to Mr. A.D. Beileh, Manager, ONAR.1, Extension 2139 or Mr. B.B. Sidibe, Director, ONAR, Extension 2029.

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AFRICAN DEVELOPMENT FUND Temporary Relocation Agency

B.P. 323, 1002 Tunis Belvedere, Tunis, TUNISIA Tel: +216 71 335 511; Fax: +216 71 351 933; Website: www.afdb.org

PROJECT INFORMATION SHEET

Date : December 2003

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors, and all persons interested in the procurement of goods and services for projects approved by the Boards of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing agency. 1. COUNTRY/REGION : Common Market for Eastern and

SouthernAfrica (COMESA)

2. NAME OF PROJECT : COMESA Agricultural Marketing Promotionand Regional Integration Project

3. GRANT BENEFICIARY : COMESA Member States

4. LOCATION : COMESA Member States

5. EXECUTING AND : COMESA Secretariat, Comesa Centre

6. IMPLEMENTING AGENCY : Ben Bella Road, P. O. Box 30051 10101 Lusaka, Zambia

7. PROCUREMENT : National shopping for office and lab equipment and supplies/materials. Technical assistants/consultants via shortlist

8. TOTAL COST : Total: UA 6.164 million Foreign: UA 5.099 million Local: UA 1.065 million

9. ADF FINANCING (Grant) : UA 3.736 million

10. OTHER SOURCES OF FINANCE: COMESA Secretariat: UA 0.605 million COMESA Member States: UA 1.823 million

11. DATE OF APPROVAL : February, 2004

12. ESTIMATED STARTING : June 2004 for 36 Months

13. DATE AND DURATION

14. CONSULTANCY SERVICES REQUIRED: Marketing/Food Security Expert (36 person months), Sanitary and Phytosanitary Expert (36 person months) and Systems Analyst (36 person months)

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CURRENCY AND MEASURES

1 UA = US$ 1.39195 (Effective Rate in August 2003) 1 COM$ = US$ 1.0

THE COMESA SECRETARIAT’S FISCAL YEAR

1 January – 31 December

LIST OF TABLES Table 4.1 Summary of project cost estimates by component Table 4.2 Summary of project cost estimates by category of expenditure Table 4.3 Sources of finance Table 5.1 Expenditure schedule by component Table 5.2 Expenditure schedule by source of finance Table 5.3 Summary of Procurement arrangements LIST OF ANNEXES1 Annex 1a Map of COMESA Annex 1b Selected Macroeconomic Indicators of COMESA Member States 1 Annex 2 Project Organizational Chart Annex 3 Member States’ Contributions to COMESA & Receipts/Expenditure Details Annex 4 Project Implementation Schedule Annex 5 Summary of Donor–funded Projects Through the COMESA Secretariat Annex 6 Details on intra– and extra– COMESA Agricultural Trade Annex 7 Approach for Harmonizing SPS Measures and Details on Project Description Annex 8 Highlights on the Project Preparation and Review Process

1Additional annexes are included in Volume II (The Project Implementation Manual) and are available on request in original language. Annex I –– Terms Reference for Project Experts and Establishing FAMIS; Annex II –– Terms of Reference for Project Steering Committee; Annex III – Detailed Project Cost Tables; Annex IV – COMESA Secretariat’s Pipeline of Development Projects; Annex V – Survey of SPS Measures in COMESA; Annex VI – Criteria for Selection of Project National and Technical Focal Points; Annex VII – SPS Questionnaire; VIII –– Organizational Chart of the COMESA Secretariat.

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LIST OF ABBREVIATIONS

ACE Agricultural Commodity Exchange ACP African Caribbean and Pacific AEC African Economic Community ADB African Development Bank ADF African Development Fund AGOA African Growth Opportunity Act ASF African swine fever AU/IBAR African Union’s Intra–African Bureau for Animal Resources CAADP Comprehensive Africa Agriculture Development Programme CAC Codex Alimentarius Commission CBPP Contagious bovine pleuropneumonia CCP Contagious caprine pneumonias CET Common External Tariff COMESA Common Market for Eastern and Southern Africa CU Customs Union COM$ COMESA $, The COMESA Unit of Account DRC Democratic Republic of Congo EAC East African Community ECA East and Central Africa Hub FAMIS Food and Agricultural Marketing Information System FAO Food and Agriculture Organisation (of the United Nations) FMD Foot–and–mouth disease FTA Free Trade Area GSP Generalised System of Preferences HACCP Hazard Analysis and Critical Control Point HS Haemorrhagic septicaemia IFAD International Fund for Agricultural Development IGAD Inter–Governmental Authority on Development ILRI International Livestock Research Institute (Nairobi, Kenya) IOC Indian Ocean Community IPPC International Plant Protection Commission IPPSD Investment Promotion and Private Sector Development Division JICA Japan International Co–operation Agency LMO Living Modified Organism NCD Newcastle Disease NEPAD New Partnership for Africa’s Development OIE Office Internationale des Epizooties PTA Preferential Trade Area RATES USAID’s Regional Agricultural Trade Expansion Support Programme RPPOs Regional Plant Protection Organizations SADC Southern Africa Development Community SPS Sanitary and Phyto–Sanitary TBD Tick–borne diseases TBT Technical Barrier to Trade TTBD Ticks and tick–borne diseases UNDP United Nations Development Programme USAID United States Agency for International Development WFP World Food Programme WTO World Trade Organisation

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LOGICAL FRAMEWORK – COMESA AGRICULTURAL MARKETING PROMOTION AND REGIONAL INTEGRATION PROJECT

NARRATIVE SUMMARY OBJECTIVELY VERIFIABLE INDICATORS MEANS OF VERIFICATION IMPORTANT ASSUMPTIONS

SECTOR GOAL To promote economic growth and foster regional economic integration in COMESA member states

Enhanced intra– and extra– COMESA agricultural trade

Member states agric. trade reviews; Trade data and agric. sector performance assessment in annual COMESA trade bulletins and agricultural reports

PROJECT OBJECTIVE To enhance safe intra– and extra– COMESA agricultural marketing

3% or US$12 mill increase each year in value of intra–COMESA agricultural trade starting from end PY3 from the current less than 1%; 3% or US$56 mill increase each year in value of extra–COMESA trade by end PY3 starting from the current negative growth rate

Member states’ Bureaux of Statistics records on trade; COMESA annual trade reports; Impact assessment in Project Completion Report.

1. No major pests and disease outbreaks. 1. No major drought occurs. 1. Capacity of COMESA to execute project

maintained.

OUTPUTS Agricultural marketing information and agribusiness opportunities in COMESA improved

1.1 1 COMESA–wide Food and Agricultural Marketing

Information System established and functioning by end PY1 1.2 20 National & 100 Technical Focal Points for agric. marketing

information collection and dissemination established and functioning by end PY1.

1.3 Network and establish 20 new agric. marketing information collection points by end PY2.

1.4 Hold sensitisation w/shops for 300 s/holders per country in use of FAMIS by end PY2.

1.5 Agric. marketing information availability by print and electronic media enhanced by end PY2.

1.6 Studies on agric. export niches and tariff barriers conducted by end PY3.

2.1 Physical inspection of the FAMIS web site;

Increased COMESA agric. trade realized. 2.2 Supervision mission and Quarterly progress

reports 2.3 Supervision mission and Quarterly progress

reports. 2.4 Workshop and Quarterly progress reports. 2.5 Enhanced agric. trade reported in COMESA

annual reports and trade bulletins. 2.6 Study reports; Quarterly progress reports.

1. Current member states’ commitment to the

COMESA FTA sustained. 2. Governments and private stakeholders

willing to continue to co–operate. 3. Relevant technical staff retained in the

concerned institutions.

Agricultural marketing institutions in COMESA member states strengthened

2.1 4 Agric. commodity exchanges strengthened by end PY3. 2.2 Capacity of IPPSD to support agric. marketing in COMESA

and remove obstacles to FTA enhanced by end PY3. 2.3 160 technical focal point staff trained in early warning systems

and food security assessment and forecasting techniques by end PY1.

3.1 Quarterly progress and supervision mission reports; physical inspections.

3.2 Quarterly progress and supervision mission reports.

3.3 List of participants in training and workshop reports; Quarterly progress and supervision mission reports.

1. Member states’ commitment to the project sustained.

2. Relevant technical staff retained in the concerned institutions.

Sanitary and phytosanitary measures and food safety standards in COMESA improved and harmonized

3.1 61 SPS technical focal points and 60 national laboratory experts trained by end PY1.

3.2 Hold 4 w/shops on regulation & surveillance for 60 field staff; 1 stakeholder w/shop for 80 producers & processors; 1 w/shop on SPS legislation harmonisation for 140 staff; and 1 w/shop on surveillance and emergency preparedness for 80 staff by end PY3.

3.3 Focal points on SPS legislation, regulations and procedures in 10 member states; and on surveillance systems in 20 member states backstopped by end PY3.

3.4 Favourable conditions created for less pest and disease in COMESA by end PY3.

3.5 Improved environment from less agro–chemical use for pest and disease control in COMESA by end PY3.

3.6 1,500 copies of booklet on harmonized SPS measures in COMESA published and disseminated by end PY3.

1. List of participants in training and workshop reports.

2. Guidelines for harmonizing SPS measures in COMESA.

3. Quarterly progress and supervision mission reports.

4. COMESA SPS bulletin; member states assessment reports on agricultural pests and diseases.

5. Proceeds from SPS booklet sale; project audit reports.

1. Current member states’ commitment to SPS harmonization sustained.

2. Continued willingness by SPS experts in COMESA to collaborate.

3. Relevant technical staff retained in the concerned institutions.

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NARRATIVE SUMMARY OBJECTIVELY VERIFIABLE INDICATORS MEANS OF VERIFICATION IMPORTANT ASSUMPTIONS

Sanitary and phytosanitary institutions in COMESA member states strengthened

4.1 15 quarantine facilities and laboratories in member states assessed by end PY3.

4.2 3 SPS reference and 12 national laboratories rehabilitated and laboratory equipment for 15 labs procured by end PY3.

4.3 SPS surveillance equipment for 15 countries procured by end PY2.

4.4 COMESA SPS Technical Committee and electronic forum established by end PY2.

4.1 Assessment report including strategy on establishment of facilities.

4.2 Physical inspection reports; Quarterly progress reports.

4.3 Procurement and physical inspection reports. 4.4 Minutes of committee meetings: Quarterly

progress reports.

1. Current member states’ commitment to SPS harmonization sustained.

2. Continued willingness by SPS experts in COMESA to collaborate.

3. Relevant technical staff retained in the concerned institutions.

Gender Impact 5.1 At least 30% of all trainees and workshop participants will be eligible and qualified women.

5.1 Gender disaggregated data in Quarterly progress and supervision mission reports.

5.1 Adequately qualified and eligible women trainees and workshop participants exist.

Project is well managed 6.1 PCU executes project on schedule; audits and progress reports submitted on time.

6.2 Role of Steering Committee and stakeholders improved. 6.3 Project monitoring and evaluation enhanced. 6.4 HIV/AIDS prevented and controlled.

6.1 Quarterly progress and supervision mission reports.

6.2 Minutes of PSC meetings 6.3 Quarterly progress and Mid Term Review and

Project Completion Reports. 6.4 70% of target group reached by end PY3.

ACTIVITIES 1. Establish Food & Agricultural

Marketing Information System 2. Establish new marketing information

collection points 3. Hold stakeholder sensitisation

workshops 4. Agric. marketing studies and

investigations 5. Training in early warning systems and

food security assessment 6. Strengthen agricultural commodity

exchanges and IPPSD 7. Member states’ staff training on SPS

matters 8. SPS workshops on

legislation/regulation & surveillance/ emergency preparedness

9. Assess quarantine facilities and laboratories

10. Rehabilitate SPS reference and national laboratories

11. Backstop focal points on SPS legislation, regulations and procedures and on surveillance systems

12. Procure SPS surveillance equipment 13. Establish SPS Technical Committee

and electronic forum 14. Publish booklet on harmonized SPS

measures in COMESA 15. HIV/AIDS Prevention and Control

SOURCE OF FINANCE

(UA Mill) ADF Grant COMESA Secretariat COMESA member states

3.736 0.605 1.823

Total 6.164

TECHNICAL ASSISTANTS Marketing/Food Security Expert

Sanitary and Phytosanitary Expert, Systems Analyst

INPUTS (UA ‘000)

Agric. Mkt. Info. System SPS Measures Project Coordination Unit

825.51

3,764.86 889.55

Total Base Cost 5,479.92 Physical Contingencies Price Contingencies

547.99

137.00 Total 6,164.91

1. COMESA Reports. 2. Project M&E reports. 3. Mid Term Review and Project Completion

Reports. 4. Audit Reports.

1. Grant disbursement conditionalities met and

agreement signed within the expected timed frame.

2. Timely provision of goods, works and services.

3. Timely disbursement of ADF and counterpart funds.

EXECUTIVE SUMMARY, CONCLUSIONS AND RECOMMENDATION

1. PROJECT BACKGROUND

Agriculture is of strategic importance in the economic development of COMESA member states. This, not withstanding, the sector has expanded in most COMESA member states at a lower rate than their economies and populations. During the past three decades, COMESA’s agricultural production rose by an average of only 1.9% per annum in the face of a population growth rate of about 3% per annum. In the face of this, the GDP growth rate stood at barely 1.38%. The major challenge facing most COMESA member states is the achievement of sustainable economic growth and improved quality of life for their populations. The COMESA Secretariat is aware of these problems and is keen to assist member states in addressing them. Over the past five to ten years, the Secretariat has received development assistance to implement several donor–assisted development programmes across various sectors. The majority of donor support has been in trade and finance, transport and communications. Issues of food and agricultural marketing information and sanitary and phyto–sanitary measures have not been largely addressed, limiting both intra– and extra– COMESA trade and defeating the vision of the FTA in agriculture. In an effort to assist COMESA implement key elements of its agricultural policy, through supporting safe and increased regional trade in agriculture and enhancing regional food security, the Secretariat in 2001, requested Bank assistance to finance the proposed project. The project components emanated from the recommendations of COMESA’s common agricultural policy.

2. PURPOSE OF THE GRANT

Out of the ADF grant of UA 3.736 million proposed for the project, UA3.401 million (55.17% of total project cost) will be utilized to finance foreign costs, while UA0.335 million (5.43% of total project cost) will be utilized for local costs.

3. SECTOR GOAL AND PROJECT OBJECTIVE

The sector goal is to promote economic growth in COMESA member states. The project objective is to enhance safe intra– and extra– COMESA agricultural marketing.

4. DESCRIPTION OF PROJECT’S OUTPUTS

In order to attain its objective, the project will focus on three main components with the following outputs:

1. Agricultural marketing information and agribusiness opportunities improvement: including establish and operationalize the COMESA–wide Food and Agricultural Marketing Information System (FAMIS); 20 national & 100 technical focal points for agricultural marketing information collection and dissemination established and functioning; network and establish 20 new agricultural marketing information collection points; hold sensitisation workshops for 300 stakeholders per country in the use of the FAMIS website; undertake studies on agricultural export niches and tariff barriers.

2. Agricultural marketing institutions strengthening: including 4 agricultural commodity exchanges strengthened; capacity of the Investment Promotion and Private Sector Development Division (IPPSD) to support agricultural marketing in COMESA and

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remove obstacles to FTA enhanced; 160 technical focal points trained in early warning systems and food security assessment and forecasting techniques.

3. Sanitary and phytosanitary measures and food safety standards improvement and harmonization: including 61 SPS technical focal points and 60 national laboratory experts trained; hold 4 workshops on regulation & surveillance for 60 field staff; 1 stakeholder workshop for 80 producers & processors; 1 workshop on SPS legislation harmonisation for 140 staff; and 1 workshop on surveillance and emergency preparedness for 80 staff; focal points on SPS legislation, regulations and procedures in 10 member states; and on surveillance systems in 20 member states backstopped; favourable conditions created for less pest and disease in COMESA; improved environment from less agro–chemical use for pest and disease control in COMESA; 1,500 copies of booklet on harmonized SPS measures in COMESA published and disseminated.

4. Sanitary and phytosanitary institutions strengthening: including 15 quarantine facilities and laboratories in member states assessed; 3 SPS reference and 12 national laboratories rehabilitated and laboratory equipment for 15 labs procured; SPS surveillance equipment for 15 countries procured; COMESA SPS Technical Committee and electronic forum established.

5. Gender Impact: at least 30% of all trainees and workshop participants will be eligible and qualified women.

5. PROJECT COSTS

Total total project cost is estimated at UA 6.164 million, of which UA 5.099 million (82.71%) will be foreign and UA 1.065 million (17.29%) will be in local currency.

6. SOURCES OF FINANCE

The project will be financed by an ADF grant, the COMESA Secretariat and COMESA member states. The ADF grant of UA 3.736 million will finance 60.61% of total project costs. COMESA Secretariat financing amounts to UA 0.605 million or 9.81% of total costs, while COMESA member states financing amounts to UA1.823 million or 29.58% of total costs. The grant will finance technical assistance, equipment for regional laboratories, consultancies and studies, training, and 78% of the operating costs. It will not be used to finance project activities for COMESA’s ADB member states. The Secretariat and member states will finance the salaries and wages of their staff attached to the project, civil works (rehabilitation of 12 national SPS laboratories and upgrading of 3 regional SPS laboratories), equipment for rehabilitating national laboratories, SPS surveillance and emergency preparedness equipment, computers, office furniture for the PCU, travel and related expenses for training/workshop participants from ADB member states, and 22% of operating costs.

7. PROJECT IMPLEMENTATION

The project will be implemented over a three–year period beginning June 2004. The first year will be largely devoted to the sensitization and training of beneficiaries, recruitment of consultants and commencement of studies. The COMESA Secretariat will be the Executing Agency. A Project Co–ordination Unit (PCU) using some existing COMESA staff and few technical assistants will be established in the Secretariat’s IPPSD. A qualified and experienced institution to be recruited competitively will administer the training activities for the SPS technical focal points and laboratory specialists. Cooperating Ministries in member

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states will implement the project, collaborating with the private sector. National Project Co–ordinators from participating Ministries will link IPPSD, all Government Ministries and the private sector.

8. CONCLUSIONS AND RECOMMENDATION

Conclusions: The project is in conformity with the ADF Guidelines for Financing Multinational Operations. The project has been conceived out of the COMESA Common Agricultural Policy, which is the regional framework for agricultural development. The project will build capacity for member states to undertake safe and increased trade in agricultural and food items within and outside the region, with positive implications for regional integration, agricultural income generation and rural livelihoods. The implementation of the project will also assist COMESA member states address some of their national and regional food security problems.

Recommendation: It is recommended that the Fund consider extending an ADF grant not exceeding UA3.736 million to COMESA to implement the Agricultural marketing promotion and regional integration project as described in this proposal, subject to the conditions described herein.

1. INTRODUCTION AND BACKGROUND

1.1 Origin and History of the Project 1.1.1 Agriculture is the main economic activity in the majority of member states of the Common Market for Eastern and Southern Africa (COMESA) 2. The sector plays a key role in the region’s food security, trade and industrial development. Performance of agriculture has, however, been affected by unfavourable environmental conditions, including droughts and floods, with adverse implications for food security and export earnings. Nevertheless, there exists a huge potential market in the region which can be tapped with improved agricultural management and better market access, supported by the provision of marketing information and harmonized Sanitary and Phytosanitary (SPS)3 measures. Market access both within and outside the region has been severely limited in part by a number of constraints, principal among which are trans–boundary plant and livestock pests and diseases, policy and infrastructure constraints, and low agricultural productivity. In recognition of these constraints, COMESA Ministers of Agriculture, in November 2002, endorsed the COMESA Agricultural Policy, which is the region’s development framework.

1.1.2 COMESA is a regional organization established in 1994 to replace the Preferential Trade Area (PTA) for Eastern and Southern Africa, which was created in 1981. The objectives of COMESA include to: i) attain sustainable growth and development of member states through a more balanced and harmonious development of its production and marketing structures; ii) promote joint development in all fields of economic activity and the joint adoption of macroeconomic policies and programmes; iii) co–operate in the creation of an enabling environment for foreign, cross–border and domestic investment, including the joint promotion of research and adaptation of science and technology for development; iv) co–operate in the promotion of peace, security and stability among member states in order to enhance economic development; and v) co–operate in strengthening relations between the Common Market and the rest of the world.

1.1.3 The COMESA region embodies extensive diversity in socio–economic characteristics. Per capita Gross National Incomes (GNI) range from US$100 for Ethiopia to US$7,310 for Seychelles. According to the 2003 UNDP Human Development Report, of the 20 COMESA member states, only 2, i.e., Seychelles and Mauritius, and 5, i.e., Egypt, Namibia, Swaziland, Comoros and Sudan, are high and medium human development countries, respectively. This makes the majority 13–member states low human development countries, whose human poverty index ranges from a low of 34.3% in Djibouti, to a high of 56.0% in Ethiopia. The combined population of the COMESA region is approximately 379 million, with an average annual growth rate of 3.0%. Population ranges from about 768,000 in the Comoros to over 70 million in Egypt and Ethiopia. Selected macroeconomic indicators of COMESA are presented in Annex 1b.

2 The Member States, as per the COMESA Secretariat’s categorization, are: Low income (Angola, Burundi, Comoros, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Madagascar; Malawi, Rwanda, Sudan, Uganda, Zambia, Zimbabwe); Middle Income (Djibouti, Egypt, Namibia, Swaziland); and High Income (Mauritius and Seychelles). 3 SPS measures refer to all measures taken by a country to protect human, animal and plant life and health from risks associated with the introduction of food–borne hazards and animal and plant diseases or pests through trade.

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1.1.4 In an effort to respond to the needs of the COMESA Agricultural Policy, which include providing adequate marketing information and harmonizing SPS measures, so as to increase agricultural trade and enhance food security, the COMESA Secretariat, in October 2001, approached the Bank to consider financing the proposed project. A draft project proposal was submitted to the Bank in August 2002 for consideration. A Bank Group identification mission visited Zambia, where the headquarters of the COMESA Secretariat is situated, in November 2002, to discuss the project outline. This was followed by a Bank Group mission to prepare the project in June 2003. It recommended that the key issues that should be addressed by the project as a means of promoting regional integration in agriculture are the provision of agricultural marketing information and the harmonization of SPS measures. This recommendation was based on the findings and analysis that a number of related constraints identified in the COMESA Agricultural Policy and identified sector and sub–sector constraints that are not being addressed by the proposed project are being addressed by other development partners, notably EU and USAID, through national and regional programmes. The project was appraised in August/September 2003 with extensive visits to COMESA member states to consult public and private sector stakeholders, and development partners. Highlights of the project’s review and preparation process are summarised in Annex 8. The project builds on other Bank Group and donor–funded agricultural projects, which promote efforts to improve agricultural production and build capacity. It aims to address the key SPS and marketing information bottlenecks facing agriculture in the region.

1.2 The Mission, Vision and Achievements of COMESA

1.2.1 The mission of COMESA is to endeavour to achieve over the long–term, sustainable economic and social progress in member states through increased cooperation and integration in all fields of development, particularly trade, customs and monetary affairs, transport, communication and information, technology, industry and energy, gender, agriculture, environment and natural resources. COMESA’s vision is to create a fully integrated and internationally competitive and unified region in which people, goods, services and capital move freely4. This is to be achieved progressively through i) the creation of a Free Trade Area (FTA), ii) a Customs Union (CU) by 2004 with a common external tariff (CET), iii) a common market in which there is free movement of labour, capital and goods and services, and (iv) an economic community with a single currency, common monetary and fiscal policies, and free movement of people, including the right of establishment and the right of residence. The target is to achieve an Economic Community by 2025.

1.2.2 COMESA, one of the largest regional economic groupings in Africa, has made a number of achievements. In October 2000, COMESA member states launched the FTA, making it the only FTA in Africa5. A few of the members that have not signed the FTA agreement are extending preferential duty rates of about 90% tariff reduction for trade among themselves. Through the FTA, intra–COMESA trade has grown from US$834 million in 1985 to US$ 1.7 billion in 1994 and could potentially increase to about US$4 billion annually. Another positive example of the gains from the FTA is the fact that from 2001, Malawi’s trade balance with COMESA member states moved from negative to a positive

4 Regional integration is the unification of neighbouring states working within a framework to promote free movement of goods, services and factors of production, and to coordinate and harmonize their policies. 5 Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Namibia, Seychelles, Swaziland, Sudan, Zambia and Zimbabwe have adopted the Treaty, while Swaziland is due to ratify the Treaty in 2004.

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because of increased tobacco and sugar exports to FTA countries, including Egypt and Kenya. High value agricultural products are now being increasingly exported by Zimbabwe, Zambia, Uganda, Kenya and Mauritius to the EU and US. Due to COMESA traffic facilitation measures, transport costs have already been reduced by about 25%. All of these positive impacts of the FTA could be increased if the constraints imposed by SPS and marketing are removed. In 2001, the Bank Group approved the COMESA Public Procurement Reform project to harmonise public procurement rules and regulations in COMESA, improve national procurement systems and strengthen regional public procurement capacity. The project is being satisfactorily implemented. COMESA has also created institutions to promote regional co–operation and development, i.e., i) the COMESA Trade and Development Bank in Kenya; ii) the COMESA Clearing House in Zimbabwe; iii) the COMESA Association of Commercial Banks in Zimbabwe; iv) the COMESA Leather Institute in Ethiopia; and v) the COMESA Re–Insurance Company (ZEP–RE) in Kenya. A COMESA Court of Justice was operationalized in 1998.

1.3 Institutional Framework of COMESA 1.3.1 COMESA uses its organs, which are described below, to deepen and broaden the integration process among member states. The Authority of Heads of State and Government, the Council of Ministers, the Court of Justice, and the Committee of Governors of Central Banks have the power to take decisions on behalf of COMESA. The Intergovernmental Committee, the Technical Committees, the Secretariat and the Consultative Committee make recommendations to the Council of Ministers, which in turn make recommendations to the Authority.

1.3.2 The Authority of Heads of State and Government is the supreme policy organ of COMESA. It is responsible for general policy, the general direction and control of the performance of the executive functions of COMESA and the achievement of its aims and objectives. The Council of Ministers ensures the proper functioning and development of COMESA with regards to its technical programmes and takes policy decisions on the programmes and activities of COMESA, including the monitoring and reviewing of its financial and administrative management. It has legislative power to make regulations and issue directives that are binding on member states. The Court of Justice is the judicial organ. It ensures the proper interpretation and application of the provisions of the Treaty, and adjudicates any disputes that may arise among the member states regarding the interpretation and application of the provisions of the Treaty. The Committee of Governors of Central Banks manages the financial and monetary programmes of COMESA. The Intergovernmental Committee is made up of Permanent/Principal Secretaries from the member states and is responsible for the development and management of programmes and action plans in all sectors of co–operation, except in the finance and monetary sectors. The Technical Committees are responsible for the various economic sectors and for administrative and budgetary matters. The COMESA Secretariat is headed by a Secretary General who is appointed by the Authority for a five–year term and is eligible for re–appointment for a second term. The Secretary General is assisted by one Assistant Secretary General. The COMESA Secretariat’s mandate is to provide technical and advisory services to member states in the implementation of the COMESA Treaty. The Consultative Committee links and facilitates dialogue between the business community, other interest groups and other organs of COMESA.

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1.3.3 The Secretariat has a number of technical divisions, including trade, customs, and monetary harmonization, investment promotion and private sector development, infrastructure development and information networking. Divisions are headed by Directors, who report to the Assistant Secretary General. The Secretariat has a diverse technical skills base with a staff complement of 65, of which, 23 are professionals and 42 are general service staff. Professional staff include experts in Trade, Customs, and Monetary affairs, Agriculture, Infrastructure, Gender and Social affairs, Investment and Private Sector Development, Strategic Planning and Legal and Institutional affairs. Professional staff have first degrees and relevant professional qualifications, and many also have post–graduate qualifications in their respective fields. In addition, there are a number of technical assistants, financed by donor agencies to support specific projects. The COMESA Secretariat has, and continues, to execute various development programmes financed by bilateral and multilateral donors. Its capacity to take up additional responsibility under the proposed project, including coordination and supervision, and monitoring and evaluation at member states level, has been assessed and found to be satisfactory. However, based on the specific needs of the project, assistance is required with an SPS expert, a marketing/food security expert and a systems analyst, on a short–term basis. They will train requisite Secretariat staff and prepare them to take over the project after its investment phase.

1.3.4 In accordance with the agreement establishing COMESA, the Secretariat is financed by member states through an agreed formula of contributions determined on the basis of the country’s GDP, imports from non–COMESA countries, intra–COMESA exports, per capita GNP, and population. The COMESA Secretariat has a satisfactory financial position because of its low operating expenditures in the face of encouraging assets growth and capital reserves. Member states’ contributions finance mostly operating costs, with donors funding most capital costs through development programmes. Operating costs entail staff salaries, hosting meetings of member states, and consultancies. Member states’ contributions to COMESA and the Secretariat’s receipts and expenditure details are provided in Annex 3. From 1998–2002, member states contributed an average of COM$ 5.07 million annually, compared to an average annual budgetary requirement of COM$5.77 million, thereby meeting 88% of the Secretariat’s annual regular budgetary requirements6. This level of contribution is appreciably higher than member states’ contribution to many African Regional Economic institutions. It reflects a strong commitment of member states to COMESA and confirms the Secretariat’s financial readiness to take up the project’s responsibilities. A good number of COMESA member states are amongst the poorest in the world. Nonetheless, they made contributions not in spite of the harsh impacts on the region’s macroeconomic situation of recurrent droughts, floods and other natural disasters, political instability, the crippling debt burden, and the short–term revenue loss from eliminating customs duties by FTA members. Member states also finance their Government ministries to oversee the implementation of COMESA regional programmes at national level. The COMESA Secretariat is therefore in a sound position to meet its financial obligations to the project to ensure sustainability even beyond the project’s investment phase.

6 Comoros, Djibouti and the D.R.C. have been unable to make their regular contributions to the COMESA Secretariat. However, a payment plan has been prepared and agreed upon that will address this problem.

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2. THE AGRICULTURAL SECTOR

2.1 Salient Features

2.1.1 Agriculture is the main economic activity in most member states, especially for the rural poor, accounting for 31% of the region’s GDP. It employs 75% of the labour force, provides 50% of the raw materials for domestic industry, and for most member states, agricultural exports comprise the main source of foreign exchange. The sector remains the key engine of future regional economic growth. The most important agricultural exports to markets outside the region include coffee, tea and spices; edible vegetables and certain roots and tubers, fish, crustaceans, etc; live trees, cut flowers, etc; oil seeds, various grains, seeds and fruit; and cereals. Smallholders grow mainly food crops, including cereals (maize, rice, sorghum), pulses, root and tuber crops. Maize is the principal food crop grown; cassava is the second most important, especially in drought–prone areas. Paprika, burley tobacco, groundnuts, coffee, tea and cotton are also grown. Some smallholders are increasingly producing vegetables as out growers for large exporters. Commercial farmers grow mainly cash crops for export, particularly paprika, air and flue cured tobacco, tea, sugar cane, coffee, horticultural products and flowers. Horticultural crops have become profitable amongst commercial farmers in Kenya, Malawi, Mauritius, Seychelles, Uganda and Zambia and production and exports are growing. Livestock accounts for 35% of agricultural GDP. COMESA accounts for over 50% of cattle, 48% of sheep and 45% of goats on the African continent. Cattle production is the most significant livestock activity. Fresh and processed fish exports are providing good returns to Angola, Eritrea, Kenya, Madagascar, Malawi, Mauritius, Namibia, Seychelles, Uganda and Zambia. Organic farming is offering a viable opportunity for rural income generation and poverty alleviation in some COMESA member states. Several organic producers and traders export certified organic herbs and spices, essential oils, fresh produce, honey, and oil seeds and pulses to EU supermarkets from Kenya, Uganda, Zimbabwe, South Africa and Zambia.

2.1.2 Given the diversity of the region’s agricultural products and the fact that some of the constraints facing the sector are being removed through ongoing policy reforms, the agricultural structure of COMESA member states demonstrates tremendous potential for growth. With the harmonization of SPS measures and enhancement of marketing information promotion, the sector can be developed to significantly exploit market opportunities outside COMESA.

2.2 Agricultural Performance 2.2.1 Despite the strategic importance of agriculture in the region’s economic development, the sector has expanded in most COMESA member states at a lower rate than their national populations. During the past three decades, agricultural production in the region rose by an average of only 1.9% per annum, in the face of a population growth rate of about 3% per annum. This has partly led to a reduction in per capita food and agricultural production, thus worsening the food security situation. From 1994–2002, total cereal production in COMESA, which averaged 46.2 million tonnes annually, dropped by 3% from 41.4 million tonnes in 1994, but picked up thereafter to reach 47.6 million tonnes, maintaining the same level of output since then, except for 2001 when it recovered slightly to 50,000 tonnes. Cereal yields are estimated at an average of 1,392 kg/ha compared to a world average of 2,000 kg/ha, or 1,230 kg/ha for Africa, 3,090 kg/ha for Asia, 3,040 kg/ha for Latin America, and 5,470 kg/ha for the EU. Coffee production was generally constant, ranging from a minimum of 632,520 tonnes in 2001 to a maximum of 820,807 tonnes in 1996 and averaging 695,992 tonnes

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annually. Tea production rose steadily from 292,00 tonnes in 1994 to 350,000 in 1996, declined by 7% in 1997, registered a sharp recovery of 24% in 1998, but remained on the decline since then until 2002 when it achieved an all time high of 409,000 tonnes. Cattle production in COMESA has, on the whole, been increasing progressively from 106 million head in 1994 to 128 million head in 2001 and 2002, averaging 119 million head annually. Total annual fishery production in COMESA which averaged 2.2 million tonnes from 1994–2001, was generally steady at about 2.0 million tonnes from 1994–1997, but picked up since, attaining an all time high of 2.6 million tonnes in 2000 and 2001. In 2002, exports of all agricultural commodities outside COMESA amounted to US$1.9 billion, while intra–COMESA exports of all agricultural products amounted to barely US$400 million. For all member states, excluding Namibia and Swaziland, which export mainly to South Africa, the EU and the Middle East constitute major export markets and major suppliers of imports. Annex 6 provides details on intra – and extra – COMESA agricultural trade. Among the challenges facing the region, the enhancement of rural incomes and food security through increased and safe intra– and extra– COMESA agricultural trade are critical for poverty alleviation.

2.2.2 The performance of agriculture in COMESA has been affected by a number of constraints. Key among these constraints that relate to the project include poor marketing information, weak SPS measures, weak human and institutional capacity, recurrent droughts and floods, inadequate advance preparedness for food emergencies, inappropriate land tenure and land use policies, poor technology adoption, limited availability of credit, high population growth, limited supply of affordable inputs, HIV/AIDS and sporadic civil unrest in some countries. Among many challenges facing the region, two are key on a regional basis and which this project will seek to address. They concern the enhancement of rural incomes and food security through increased and safe intra– and extra– COMESA agricultural trade.

2.3 Food Security 2.3.1 Food security concerns exist in COMESA, especially in the face of recurrent droughts, and civil unrest in some countries. Food imports are increasing at a rate of about 8% a year. COMESA countries in Southern Africa are more vulnerable to drought because of the single rainfall that they experience per year, while those in the equatorial region enjoy two rainfall seasons per year and are therefore relatively less vulnerable. With a rapidly increasing population that is estimated to double in the next quarter century, the level of food insecurity in COMESA is likely to rise further unless effective mitigating measures are put in place.

2.3.2 In 2003, Southern Africa’s cereal production is forecast to increase by 7% over last year's average level to 21.8 million tonnes. Notable production increases are expected in Malawi, Zambia, and Zimbabwe. In Eastern Africa, serious food shortages persist in Eritrea, with 67% of the population severely affected due to last year's drought. Of these, some 1.4 million need emergency food aid. Recent fighting in northern and eastern Uganda has displaced over 820,000 people, with about 1.9 million in need of food aid. Ethiopia’s outlook is improving. Serious food shortages have emerged in parts of Sudan; 1.9 million people in southern Sudan will need food assistance until the next harvest. A serious humanitarian situation persists in the D.R.C. due to inter–ethnic violence. Around 483,000 people will receive emergency food assistance from WFP. In Burundi and Rwanda, rains in late April and May improved conditions for the second season of 2003, and as such, good crops are in prospect. However, localized crop losses exist in some provinces due to poor weather.

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2.3.3 Safer regional trade in agricultural and food items and capacity building for improved food and agricultural marketing information provision could provide increased agribusiness opportunities, stimulating agricultural development, food security enhancement and income generation. At the national level, crop diversification, irrigation development and water harvesting, and advance food security planning through improved monitoring and forecasting may promote food security.

2.4 Poverty, Gender, HIV/AIDS and Agriculture

2.4.1 The incidence of poverty in most COMESA member states is high and growing and is becoming more widespread in rural areas. With 30–40% of labour unemployment or underemployment in the informal sector or in agriculture, an estimated 30% of COMESA’s population is poverty–stricken, based on the measure of the Human Poverty Index. COMESA characterizes 14 of the 20 member states as low income. Poverty is more rife in Burundi, Eritrea, Ethiopia and Malawi. Accordingly, their respective human poverty indices are estimated at 46.3%, 41.8%, 56.0% and 47.0%, respectively. Civil conflicts in the first three countries, poor governance, droughts and floods compound the socio–economic situation in these countries. Poverty is aggravated by the decline in public expenditures on social services, including health, education and public utilities. Due largely to poverty, nutritional status has worsened and mortality is increasing. Governments are, however, showing goodwill in their efforts to reduce poverty and enhance their people’s social well being. Some 8 of the lesser–developed COMESA countries have formulated Poverty Reduction Strategy Papers (PRSP).

2.4.2 Female–headed households make up almost 30% of all rural agriculture households in COMESA. Generally, they are economically poorer and have a high dependency ratio. Women play a critical role in subsistence agriculture, agro–processing for household consumption and micro–marketing. They are overwhelmingly responsible for family care and its associated tasks, such as fetching water, collection and wood fuel conservation, etc. Some of the constraints facing rural poor women and men in agriculture are limited access to affordable credit; inadequate extension services and lack of female extensionists; inadequate access to farm technology; specifically in the case of women, the inadequate land tenure systems; and civil conflicts in some countries in the region. The COMESA Secretariat’s Gender Policy guides the mainstreaming of gender issues in its development programmes, with special attention to promoting women in business and vocational skills development. These priorities are being considered under the proposed project.

2.4.3 HIV/AIDS is one of the greatest challenges facing the region. The COMESA region has one of the highest rates of infection in Sub–Saharan Africa; as high as 30% of the population in some countries. In the majority of COMESA countries there are high rates of prostitution, and consequently, high HIV/AIDS infection rates in some areas active in trans–boundary trade. HIV/AIDS impacts negatively on agriculture and other economic sectors by eroding labour productivity, threatening agricultural extension services, credit provision and repayment, as well as land management practices, leading to environmental degradation.

2.5 Key Agricultural Institutions

2.5.1 Main Institutions Involved in Promoting Marketing Within COMESA: In general, Governments, through their Ministries of Agriculture and Trade promote agricultural marketing by formulating and enforcing policy and standards, building capacity through training, undertaking research, attracting foreign investment, and collecting, managing and

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disseminating information and data on the sector. These institutions liase with the Bureaux of Statistics, Customs Authorities, export growers associations and export boards. The private sector is increasingly participating in the marketing of food crops, especially in peri–urban farms with satisfactory road infrastructure. Several generally well organized export boards/councils and export growers associations exist in Egypt, Kenya, Malawi, Mauritius, Uganda, Zambia, and Zimbabwe. They assist in input provision to small farmers, as well as in the purchase and export of their cash crops. Export boards have assisted in organizing agricultural trade fairs and trade missions. The Zimbabwe Agricultural Commodity Exchange (ACE) was established in 1994, becoming Africa's first agricultural commodity exchange. The Kenya ACE was launched in 1997. The Zambia ACE was established in 1998. These ACEs are constrained by unavailability of appropriate legal frameworks for their operations, limited publicity of their activities, limited capacity to collect and process marketing information, and inadequate electronic linkages with one another. A number of donor–supported development programmes that have a direct bearing on the project’s marketing information activities exist in COMESA. FAO’s Global Early Warning System on food and agriculture provides information on food supply and demand, including information bulletins and situation reports on food crop production and markets. USAID’s Famine Early Warning System (FEWS) identifies acute food security threats that can worsen malnutrition, morbidity and mortality, monitors and facilitates access to food security information; recommends and advocates critical actions to stopping famine before it develops; provides regular food security assessments; and disseminates food security information to the public. The USAID Regional Agricultural Trade Expansion Support Programme (RATES) is designed to increase agricultural trade in East and Southern Africa and between the region and the rest of the world, harmonize policies and procedures, create an efficient regional market information and intelligence system and promote advocacy and networking on trade policies. The IGAD7 (Italy/CIDA–financed) Regional Marketing Information System aims to provide market information, so as to promote intra–regional trade in food items and enhance regional food security.

2.5.2 Main Institutions Involved in Promoting SPS Within COMESA: In most COMESA member states, the Government Departments responsible for Crops and Veterinary Services within the Ministries of Agriculture conduct research, formulate policy and design and implement national programmes focusing on SPS issues. They routinely collaborate with the Ministries of Health (Food and Drugs Control Laboratories), Trade/Commerce and Environment. As a follow–up to their consultation held in Harare in September 2000, SADC8 convened a workshop on SPS/Food Safety Issues in Namibia in November 2000. The workshop discussed SPS constraints, how they impede trade between SADC member states, and proposed practical steps to deal with them. The workshop produced an action plan for SPS, which includes undertaking an SPS inventory, developing a regional SPS information system, and a SADC Protocol on SPS and food safety. With regard to international organizations, the Office International des Epizooties (OIE) is the main technical reference and standards setting body for animal health matters associated with trade in livestock and livestock products. It publishes the International Animal Health Code and Manual of Standards for Diagnostic Tests and Vaccines for land and the equivalent documents for water animals. The International Plant Protection Commission (IPPC) was formed to facilitate the formulation of international standards for phytosanitary measures, through which the SPS 7 The member states are Djibouti, Eritrea, Ethiopia, Kenya, Somalia, Sudan and Uganda. 8 Member states are Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

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agreement can be implemented in the plant protection area. The IPPC produces guidelines for Pest Risk Analysis (PRA), pest surveillance, determination of pest status in an area, pest eradication and the establishment of pest free areas. The Codex Alimentarius Commission (CAC) is the principal body responsible for standards, guidelines and recommendations for trade in food products. It harmonizes food safety standards through Codex Alimentarius (the Food Code). The Cartagena Protocol on Biosafety was adopted in January 2000 to provide adequate protection in the safe transfer, handling and use of Living Modified Organisms (LMOs) resulting from modern technology.

2.5.3 The capacity of public and private institutions in COMESA member states to collaborate and implement the project has been assessed and found to be satisfactory. They will, however, be strengthened by the project for them to better meet its specific needs and ensure sustainability.

2.6 COMESA’s Common Agricultural Policy 2.6.1 In November 2002, the COMESA Ministers of Agriculture endorsed the COMESA common Agricultural Policy. The Policy aims to harmonize national policies where feasible, and where national policies impinge directly on other member states, while enabling other member states to freely pursue their own national agricultural policies other than a harmonized regional policy, for the region to fully exploit the potential of the FTA and CU. The Policy, whose key elements are outlined below, classifies policy areas into three groups. The Policy is not meant to undermine national Policies and Strategies already drafted by member states, but to complement them.

2.6.2 Group 1: National: For the following national level policy areas: i) rural finance, ii) land reform, iii) gender, iv) rural infrastructure, and v) farm input and output pricing, there will be no explicit agreement to harmonise policies or systems and no agreement for extensive regional co–operation. However, there will be a general undertaking to exchange information on experiences.

2.6.3 Group 2: Intermediate (National and Regional Cooperation): Comprises a) the negotiation of agreements to adopt particular environmental protection methods, wildlife management, sharing of water resources, and food security measures; and (b) the negotiation of agreements to co–ordinate national activities and/or develop extensive programmes of joint activities that exploit economies of scale in research and extension, and result in expediting marketing and market information provision.

2.6.4 Group 3: Regional Harmonization: Entails the harmonization of national policies on a COMESA–wide basis to maximize the gains from the FTA and CU. This will comprise only agricultural trade (domestic support, market access, and export subsidies) and SPS standards. Regional market integration (trade liberalization leading to free trade area, a customs union and eventually, an economic community) has been reaffirmed as COMESA’s preferred path to full integration. Market integration will facilitate the free movement of goods, services, capital and labour within a unified economic space, and create a favourable environment for domestic and foreign investment.

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3. AGRICULTURAL MARKETING, SANITARY AND PHYTOSANITARY (SPS) SUB SECTORS

3.1 Agricultural Marketing 3.1.1 Overview: Agricultural marketing in COMESA can be categorised into crop, livestock, fish, and input marketing. Food crops are mainly produced for domestic consumption with surpluses occasionally exported within the region, while cash crops are mainly grown for export. As is the case with livestock and livestock products, fish and fisheries products are marketed both within and outside COMESA. Several COMESA member states qualify for preferential quota exports of agricultural products to the EU and trade opportunities within the Middle East, but often cannot take full advantage of these market opportunities due to disease problems, insufficient volumes, poor quality and failure to meet export standards and norms.

3.1.2 More identifiable marketing systems exist in the crop sub–sector, compared to livestock, where marketing is relatively less organised. Although cattle auctions are organised from time to time in most major cattle producing countries, livestock marketing systems are less predictable. In addition, livestock and livestock products are subject to more stringent SPS inspection measures than crops. Past Bank–Group financed livestock marketing projects in a some COMESA member states have assisted in raising awareness on the importance of marketing information and systems, promoted policy reforms and built capacity in livestock marketing.

3.1.3 Over the past 5–10 years, some progress towards market liberalization in COMESA has been made, given the continued commitment of member states to regional integration. However, substantial work, including harmonization of trade and tax policies, customs procedures and legislation, still needs to be completed. The private sector, including farmers’ unions are increasingly undertaking the functions that hitherto, were carried out by quasi–government institutions. In all COMESA member states, Export Boards and Export Promotion Farmers’ Associations exist. Private companies also now promote the growing and marketing of cotton, tobacco, coffee, tea, sugar, and high value horticultural crops through provision to smallholder farmers of extension, credit and even markets for their crops.

3.1.4 Constraints: A number of key marketing constraints stand in the way of the development of intra– and inter– COMESA agricultural marketing. They include lack of marketing information, unharmonized SPS and customs procedures, technical barriers to trade, poor certification mechanisms, poor storage and processing facilities, poor road infrastructure, poor packaging, low production levels, weak private marketing institutions, and weak regulatory frameworks. For the region’s huge market potential to be tapped, these constraints need to be relaxed. The project’s activities constitute a highly participatory combination of efforts that will assist in addressing some of these constraints.

3.1.5 Opportunities: The COMESA region offers a number of opportunities for agricultural development. With a population of about 379 million people, the region represents a major market in Africa. This large and varied regional market is an opportunity for member states to improve their economies through cross–border trade promotion. With a harmonized market, the quality of goods should improve. Timely access to agricultural marketing information and the harmonization of SPS measures will assist in increasing the intra– and extra– COMESA flow of agricultural products, as entrepreneurs become better informed about market opportunities, and the threat of disease transmission is minimized.

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3.1.6 The vast amounts of rich agricultural land and water resources in the region, good climate and the limited market–based policies being embraced by some member states are creating a dynamic opportunity that could elicit a conducive investment environment. The emergence of small–scale vegetable growers for the export market has created over 15,000 jobs in Zambia, thus making a significant contribution to poverty reduction. Zimbabwe, Uganda, Kenya, and Mauritius are also making good progress in this area. Floriculture by commercial farmers is increasing exports of non–traditional products, with substantial foreign exchange earnings realized in Kenya, Mauritius, Uganda, Zambia and Zimabwe. Agricultural export opportunities are further strengthened by the emergence of private Export Growers Associations that facilitate smallholder production. They have furnished training, farm inputs, packaging, marketing information and assisted in exporting high value agricultural commodities largely to the EU and North America.

3.1.7 Within the livestock sub–sector, there are possibilities for satisfying minimum OIE requirements through the promotion of zoning and compartmentalization to ensure export within COMESA and access to developed markets. Effective livestock movement control can further assist in the creation of export zones. If well examined, these issues may guide member states in making informed decisions as to whether to concentrate on the export of livestock products or live animals.

3.1.8 COMESA member states can exploit export opportunities provided under the Cotonou Agreement, successor to the Lome Convention, which is between the EU and 77 countries in Africa, the Caribbean and the Pacific (ACP) States. The Agreement provides for the progressive removal of barriers between parties and enhancing cooperation trade, including the formation of free trade areas within a transitional period. Special quota access at prices higher than world levels are offered. COMESA countries export a number of agricultural products (such as sugar, rice, fruits, vegetables and flowers) to the EU under this agreement.

3.1.9 COMESA member states can also take advantage of the preferences provided under the U.S. Africa Growth Opportunity Act (AGOA) and the Cotonou Agreement. AGOA offers unlimited duty–free and quota–free access to U.S. markets to some manufacturing products (e.g., fabric, yarn or thread) originating in African countries until September 2008. To qualify, countries must establish market–based economies, develop political pluralism and respect the rule of law and human rights, and establish a visa system to prevent illegal shipments and counterfeit documentation. D.R.C., Djibouti, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland, Uganda and Zambia meet AGOA preconditions, except that most agricultural commodities are still not on the AGOA list, due to lengthy inspection procedures by the U.S. Department of Agriculture (USDA). AGOA is opening up the continent to more investment. Kenya’s exports of textile and textile products stood at only US$ 8 million and US$7.8 million in 1998 and 1999, respectively. With AGOA, Kenya’s textile exports to the U.S. rose dramatically to US$70 million (Jan 2001– Feb 2002), compared to a paltry US$ 10 million in 2000. About 100,000 new jobs have also been created in participating COMESA member states as a result of AGOA. A key constraint that is restricting eligible African countries in taking advantage of AGOA is the requirement that the raw materials used to manufacture the eligible products also predominantly originate from eligible African countries which meet USDA requirements. By enhancing safer intra–trade via harmonized SPS measures, the project will provide country options where to source cotton and use it to increase exports under AGOA.

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3.1.10 Another window that COMESA member states can take advantage of is the New Partnership for Africa’s Development (NEPAD). The priorities of NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP) are extending the area under sustainable land management and reliable water control systems, improving rural infrastructure and market access and increasing food supply and reducing hunger.

3.2 Sanitary and Phytosanitary Measures 3.2.1 Overview: COMESA member states do not adequately access international markets for agricultural products due largely to weak adoption and implementation of harmonised SPS measures, in spite of established WTO requirements. Ineffective SPS measures put countries at risk of being affected by transboundary plant and livestock pests and diseases and these hinder agricultural trade. The WTO, the international body dealing with rules of trade between nations, addresses these issues through the agreement on SPS measures. WTO aims to liberalize and expand international trade in goods and services in an environment of non–discrimination, transparency, predictability and contractuality. WTO’s SPS agreement concerns the application of regulations to deal with matters of food safety, animal health and plant protection in trade. It aims to ensure that measures established by Governments to protect human, animal and plant life and health prohibit arbitrary or unjustified discrimination in trade between countries where the same conditions prevail, and are based on international standards.

3.2.2 A number of COMESA countries with potential to export meat, live animals and other livestock products and plants have either lost lucrative markets or failed to capture these markets due to the constant outbreaks of animal and plant diseases/pests in the region. COMESA member states have recognized the socio–economic significance of safe trade in agricultural and food items. They seek to harmonize their SPS measures at a level that will not militate against trade in food and agricultural items. Many states and Regional Plant Protection Organizations (RPPOs) have now started to address compliance with WTO’s SPS agreement.

3.2.3 COMESA member states are at different levels of harmonization of their SPS measures in the three SPS areas of food safety, plant protection and animal health. In some member states, the three SPS areas have updated their legislation and enforcement and compliance are high. Appropriate institutions have also been established and are adequately manned by qualified staff, the SPS systems and entry ports are well manned, sufficient laboratory facilities exist, approval and certification procedures are not cumbersome, and regular staff training is conducted. Other countries have not fully implemented SPS measures in the three SPS areas. Furthermore, among the three SPS areas within one and the same country, marked variations exist in the level of update of legislation, organisational structures and operations, adequacy of trained personnel, inspection, approval, and certification procedures, laboratory analytical capacities, and equipment. Information flow is inadequate. Finally, there is need in COMESA to comprehensively study SPS regulatory, surveillance and emergency preparedness systems in COMESA so as to formulate a strategy on how they can be developed.

3.2.4 Constraints: The failure to effectively implement SPS measures in most COMESA member states stems from constraints, including i) outdated legislation and regulations on SPS measures; ii) insufficiently specified and respected SPS procedures; iii) limited knowledge of modern control procedures (inspection, identification and diagnosis of pests and diseases, pest risk analysis and surveillance, Epidemiology and quarantine) by SPS

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experts and lack of equipment; iv) limited information on SPS, coupled with poor networking to facilitate information exchange and notification; and v) inadequate regional cooperation and coordination on disease/pest outbreaks. Harmonization of SPS measures therefore should be accelerated if increased and safe agricultural trade is to be realized. This would also contribute to improving the natural environment as a result of less agro–chemical use for pest and disease control in COMESA.

3.2.5 Opportunities: Due to recent economic losses caused by the importation of plant and animal pests and diseases into the region, there is growing awareness and acceptance among policymakers that the harmonization of SPS measures will relax a key bottleneck to increasing safe intra– and extra– COMESA trade in agriculture. Regional efforts are also being made to improve disease/pest surveillance and control systems.

3.3 Donor Intervention in the Sub–Sectors 3.3.1 The main donors that have provided marketing and SPS related support to COMESA are the EU and USAID. EU assistance has been in regional harmonization of customs statistics, regional trade promotion, investment promotion and private sector development. The focal areas of the 9th European Development Fund’s indicative programme for the period 2002–2007 are supporting economic integration and trade liberalisation, the development of the transport and communications infrastructure, and the sustainable management of the region’s natural resources. Since 1998, USAID’s assistance to COMESA focused on development of regional trade, public–private sector business partnerships, regional telecommunications policy harmonisation, institutional strengthening, and governance and conflict resolution. USAID established an Eastern and Central Africa Global Competitiveness Hub (ECA Hub) in 2002. The objective of the Hub is to strengthen the capacity of the countries to participate more effectively in the multilateral trading system. COMESA is the main partner of the ECA Hub and the Hub’s activities have specific focus on the COMESA FTA and CU.

3.3.2 In 1992, FAO assisted COMESA in formulating a regional food security programme, whose recommendations could not be systematically addressed due to financial constraints. FAO, UNDP, and CFC have provided assistance in fisheries development. In 1999, ADB signed a Cooperation Agreement with COMESA to mutually promote activities targeted at economic integration and development in the COMESA region, having regard to the respective objectives and functions of both the Bank Group and the COMESA Secretariat. The main areas of cooperation in the Agreement are i) trade and industry, ii) investment promotion, monetary harmonization and development of finance, iii) infrastructure and services, iv) food security, land and agriculture, v) human resource development, particularly private sector development, vi) natural resources and environment, and vii) other areas as may be agreed upon between the two parties. ADB financed fisheries and irrigation development studies, as well as institutional support for private investment promotion. COMESA is also receiving assistance from the EU under the Standards, Quality, Metrology and Testing project, which started in 1999. The project aims to improve food quality and safety control. In 2001, COMESA received assistance from USDA to train plant protection and veterinary officers from COMESA member states on SPS issues. As part of the process of preparing the COMESA Agricultural Policy, in 2002, FAO and UNDP supported the review of member states’ agricultural policies and strategies.

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4. THE PROJECT

4.1 Project Concept and Rationale

4.1.1 In spite of the diversity of COMESA’s agricultural products and the market opportunities existing in and out of the region, the full potential of intra– and extra– COMESA agricultural trade is not being exploited. This has a bearing on the economies of COMESA member states and well being of the majority of their largely agrarian rural populations. The project’s investments in agricultural marketing information, and controlling the spread of plant and animal diseases through support for the harmonization of SPS measures, will contribute to increasing farm incomes for its clients, enhancing regional food security and increasing revenue from increased and safe agricultural trade. By assisting to relax the constraints that hamper the development of increased and safe intra– and extra– COMESA agricultural trade, the project will assist COMESA to better exploit opportunities offered by AGOA and EU. The project concept is based on the recommendations of the COMESA common Agricultural Policy, which was endorsed by COMESA in 2002. In designing the project, private sector interest groups, Governments, agricultural research and training institutions, farmers and civil society in the region were closely consulted and their views taken into account. In order to determine the interest and nature of private sector participation, especially in supporting the marketing information activities, an informal participatory assessment of selected export boards, commodity exchanges and farmers’ organizations was conducted. Additional guidance on project design was obtained from bilateral and multilateral donors in COMESA member states visited, especially those who had provided agricultural development and related assistance to COMESA. The project’s design is oriented to provide an enabling SPS and marketing environment for increased and safer extra– and intra– COMESA trade in agricultural and food items, thereby contributing to national and regional poverty reduction. Moreover, the project has been structured based largely on an existing network of collaboration and functions between member states on the one hand, and COMESA and the private sector, on the other.

4.1.2 The project design draws on the recommendations of a number of agricultural sector studies in the region, as well as member states’ stakeholder workshops pertaining to marketing information and facilitation of SPS harmonization. The project will not directly address the identified constraints to agricultural production, as these are being addressed by other projects and national and regional efforts. The project’s value–added to the region will be realized through its facilitation of the relaxation of constraints to the harmonization of SPS measures and agricultural marketing information dissemination in COMESA, with a view to enable member states to enhance intra–regional agricultural trade and better exploit their trade quotas under the EU and AGOA. In view of the inadequate information exchange and transparency amongst experts on SPS measures and marketing information in COMESA that was confirmed at appraisal, the project will use training and workshops as a key instrument for facilitating dialogue, information sharing, and mutual cooperation on both marketing and SPS among member states. Consistent with the COMESA Gender Policy’s emphasis on mainstreaming of gender issues in development, for all project training, particular emphasis and priority will be given to training female agricultural entrepreneurs, national/focal points, and field staff, as appropriate. Given the complexity of SPS regulatory, surveillance and emergency preparedness systems and the fact that no comprehensive study on them in COMESA currently exists, the project will carefully study these facilities first before they can be considered for future financing at the national or regional level. The project design is also based on the results of an ADB and other donor–funded projects and studies in COMESA.

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4.1.3 Lessons learned from agricultural marketing information systems and food security early warning initiatives in the region funded by USAID and FAO pertain to the need to cater for traceability parameters for agricultural products, adequately trained information nodes in data collection and analysis, and strategic involvement of the private sector. These have been examined and addressed in the project. The project will expand the activities of the IGAD Marketing Information System, and harmonize them, in the spirit of the FTA, such that the remaining 14 COMESA member states that are not covered by IGAD can receive marketing information. Similarly, the project has noted the focus of the RATES programme on the development of commodity–specific regional trade and exports to the U.S. under AGOA. The project will complement these activities through mutual synergies. The results of the SADC consultative workshop on SPS and food safety have been examined. Since only 9 SADC member states are also member states of COMESA, the project will complement the SADC SPS activities by covering 11 more countries that will otherwise not benefit from the SADC activities.

4.1.4 The 1984/85 COMESA studies on the production potentials of major staple grains and tubers, and additional work by COMESA in 1987 that examined agricultural and food items that are important for increasing regional agricultural trade recommended actions such as the need to i) develop a regional programme to strengthen the agricultural marketing information system, ii) set up agricultural commodity exchanges, and iii) promote the production and export of strategic agricultural items based on comparative advantage. One of the main outputs of the 1992 ADB–funded COMESA Project Pre–investment Unit was a fisheries trade directory. Some of the data in the fisheries trade directory will be evaluated and utilized to develop the food and agricultural marketing information system under the proposed project.

4.1.5 The 2000 COMESA/Commonwealth Secretariat–financed study attempted to promote exports of high–value agricultural commodities and develop research in the horticultural industry, partly through the improvement of SPS measures. The key recommendations of this study were used in the proposed project’s design. The study recommended harmonization of the code of practice among all stakeholders, promotion of tropical fruits, out of season fresh vegetables, flowers, ornamental plants and spices, promotion of horticultural research and training in pest risk analysis, assisting national associations in negotiating reasonable air freight charges, researching the region’s horticultural produce and gaining market access, and harmonizing phytosanitary measures.

4.2 Project Area and Beneficiaries

4.2.1 The project area will be the COMESA region with 20 member states and a population of 379 million. The direct and immediate beneficiary of the project will be the COMESA Secretariat, which will be strengthened in terms of capacity to implement its mandate of promoting regional economic integration and trade facilitation among member states. The secondary beneficiaries will be COMESA member states whose national institutions will be strengthened in the techniques of collection, management and dissemination of marketing information, multilateral trade negotiations within the framework of the WTO, and use of SPS and food standards, etc. The ultimate beneficiaries will be agricultural entrepreneurs, including women, (farmers, processors, manufacturers, exporters, importers) whose intra– and extra– COMESA trade would be facilitated and rendered safer.

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4.3 Strategic Context 4.3.1 The project is consistent with the strategic plans of COMESA, in particular, the common Agricultural Policy, which is the region’s comprehensive agricultural development framework. Moreover, the project offers a suitable means of administering Articles 130, 131 and 132 of the COMESA Treaty, i.e., co–operation in specific fields of agriculture, the supply of staple foods and the export of agricultural commodities, respectively. The project is a top priority under COMESA’ regional integration agenda. It will contribute to the sector goal of promoting economic growth and regional economic integration in COMESA, as well as reducing poverty, which are all consistent with COMESA’s vision and mandate. Although COMESA has not prepared a regional PRSP, the project’s objectives are consistent with the priority areas of most COMESA national PRSPs, especially within the context of rural income generation and poverty alleviation. The project’s objective and activities have positive linkages with NEPAD’s framework for agricultural development in Africa. The project is in line with the Bank Group’s Agriculture and Rural Development Policy. It is also consistent with the requirements of the ADF Guidelines for Financing Multinational Operations by facilitating cooperation among member countries in addressing common problems, deepening regional integration and assisting to remove non–tariff barriers to trade. Finally, the project strategy is the most appropriate means of addressing the identified constraints.

4.4 Project Objective 4.4.1 The sector goal is to promote economic growth and foster regional economic integration in COMESA member states. The project objective is to enhance safe intra– and extra– COMESA agricultural marketing.

4.5 Project Description 4.5.1 In order to attain its objective, the project will focus on three main components with the following outputs:

• Agricultural marketing information and agribusiness opportunities improvement: including establish and operationalize the COMESA–wide Food and Agricultural Marketing Information System (FAMIS); 20 national & 100 technical focal points for agricultural marketing information collection and dissemination established and functioning; network and establish 20 new agricultural marketing information collection points; hold sensitisation workshops for 300 stakeholders per country in the use of the FAMIS website; undertake studies on agricultural export niches and tariff barriers.

• Agricultural marketing institutions strengthening: including 4 agricultural commodity exchanges strengthened; capacity of the Investment Promotion and Private Sector Development Division (IPPSD) to support agricultural marketing in COMESA and remove obstacles to FTA enhanced; 160 technical focal points trained in early warning systems and food security assessment and forecasting techniques.

• Sanitary and phytosanitary measures and food safety standards improvement and harmonization: including 61 SPS technical focal points and 60 national laboratory experts trained; hold 4 workshops on regulation & surveillance for 60 field staff; 1 stakeholder workshop for 80 producers & processors; 1 workshop on SPS

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legislation harmonisation for 140 staff; and 1 workshop on surveillance and emergency preparedness for 80 staff; focal points on SPS legislation, regulations and procedures in 10 member states; and on surveillance systems in 20 member states backstopped; favourable conditions created for less pest and disease in COMESA; improved environment from less agro–chemical use for pest and disease control in COMESA; 1,500 copies of booklet on harmonized SPS measures in COMESA published and disseminated.

• Sanitary and phytosanitary institutions strengthening: including 15 quarantine facilities and laboratories in member states assessed; 3 SPS reference and 12 national laboratories rehabilitated and laboratory equipment for 15 labs procured; SPS surveillance equipment for 15 countries procured; COMESA SPS Technical Committee and electronic forum established.

• Gender Impact: at least 30% of all trainees and workshop participants will be eligible and qualified women.

In addition, the project will provide financing for the project coordination and management, including setting up a Project Coordination Unit at the COMESA Secretariat. The strategy for implementing the components includes participatory training, institutional strengthening and collaboration, data and information collection and dissemination, studies, and policy harmonization.

A. FOOD AND AGRICULTURAL MARKETING INFORMATION SYSTEM (FAMIS)

4.5.2 Developing and Establishing the Food and Agricultural Marketing Information System: Using the services of a highly qualified and experienced consulting firm to be recruited competitively, the project will finance the design, with a hub at the COMESA Secretariat, establishment, and operationalization of FAMIS and user training. FAMIS will comprise a computerized COMESA–wide network of national and regional databases with linkages through the internet. The databases will be linked through electronic data transmission systems. In order to differentiate the type of data and information that will be provided, the potential users of such information, and the associated costs, the information databases will be categorized into two. Information collected by the public sector (production, weather, policy, research in agricultural marketing, trends in tariff barriers, SPS requirements and infrastructure, plant pests/diseases and animal disease status of each country), and information collected by the private sector (prices, crop varieties, volumes traded, offers and bids, transportation, storage, production sites, supply and demand trends, packaging and labeling). The national focal points will receive information from the technical focal points on agricultural marketing and SPS and disseminate it to the hub through e–mail data transmission systems. The technical focal points will be supported for them to be in contact with markets for the agricultural items covered, and links will be maintained with public institutions, and the private sector, including export growers associations. Twenty computers and 20 faxes procured under the project by COMESA for use in data collection, management and transmission will be located at the offices of national focal points in member states and linked to the FAMIS website. Two more computers, and 1 fax machine procured by COMESA will be allocated to the FAMIS hub; the computers will be used to directly link the network and clean and collate data and information, while the fax will support information exchange between the hub and national focal points.

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4.5.3 The Marketing/Food Security Expert, SPS Expert and a Systems Analyst, three COMESA staff closely associated with the project (the Project Coordinator, a Senior Statistician and a Data and Information Manager), and 20 national focal points will be trained on how to operate and maintain FAMIS. The national focal points will also be trained as trainers on FAMIS. They will ultimately train 100 technical focal points from member states plus 4 data analysts from the 3 existing Agricultural Commodity Exchanges in Kenya, Zambia, and Zimbabwe, as well as Uganda (to be established). The technical focal points will include a Food Safety Specialist, a Plant Protection Specialist, an Animal Health/Imports and Exports Specialist, an International Trade Officer from the Ministry of Trade and an Officer from an Export Board. During the design of FAMIS, a reporting format that will be integrated into it will be developed, in close collaboration with concerned project staff and the private sector. All of the above individuals will receive training on how to complete these forms and transfer the information into the databases. There will be a 1–month training of trainers course. Thereafter, the trainers will return to their countries and train the technical focal points for 2 weeks on the use of FAMIS, with subsequent follow–ups by the national focal points in order to complement the training activities of technical focal points.

4.5.4 Networking and Establishing Information Collection Points: In order to enhance the private sector’s ability to access accurate market information, the project will use national focal points to strengthen selected technical focal points as information collection and dissemination points. The project will also establish new agricultural market information collection points in order to expand the FAMIS coverage in terms of information collection and dissemination. New collection points will include Agricultural Commodity Exchanges and Farmers’s Unions.

4.5.5 National Sensitisation Workshops: A main element of the project will be to finance 20 national sensitisation workshops in the member states for key project stakeholders (about 300 per member state), including farmers’ unions, export growers associations, agricultural commodity exchanges, agro–processors and transporters, in the use and benefits (particularly those that relate to food and agricultural marketing) of FAMIS. Formats of leaflets and bulletins on FAMIS, as well as forms to be used for information gathering under the project will be distributed and explained. The workshops will be conducted by the national focal points with assistance from the technical focal points.

4.5.6 Studies and Investigations: The project will finance 3 regional analytical studies in the following areas: i) supply and demand trends of the major tradable agricultural products in all member states in order to reinforce findings and reporting on the potential for intra–COMESA trade; ii) market opportunities for exportable commodities produced in COMESA that can be imported from third countries under preferential and non–reciprocal trade agreements; and iii) remaining tariff barriers to agricultural trade among COMESA member states and policy options to remove them, for consideration by the COMESA governing body.

4.5.7 Early Warning Systems and Food Security Assessment Course: In order to assist member states build capacity to make reliable food projections and plan appropriate interventions, so as to cope with food deficits and emergencies, the project will support a two–week training course on early warning systems and food security assessment techniques for 2 trainers of trainers (officers responsible for crop forecasting/food security) from each member state, amounting to a total of 40 participants. Upon return to their respective countries, the trainers will, over a 2–week period, train from each member state, 6 key

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officers from the project’s public and private participating institutions responsible for crop forecasting and food security matters.

4.5.8 Strengthening Agricultural Commodity Exchanges: In order to address the opportunities emerging due to the collapse of public sector marketing institutions in some countries, the project will promote the activities of existing ACEs and encourage the emergence of new ones. The project will support 3 existing ACEs in Zambia, Kenya, Zimbabwe and 1 that is about to be established in Uganda. It will assist these countries to develop legal frameworks for the operation of ACEs, and build the capacity of the exchanges through training. It will also provide 4 computers and software to be purchased by COMESA (for marketing information collection and transmission to the hub), facilitating electronic linkages between the 4 ACEs, publicizing the 4 ACEs through COMESA/FAMIS publications, and financing study tours by member states where exchanges do not exist, but there is a felt need for them, to the 4 countries where they exist. In the case of the latter, travel for 4 individuals (2 each from the public and private sectors) will be financed.

4.5.9 Strengthening the Investment Promotion and Private Sector Development (IPPSD) Division at the COMESA Secretariat: The project will strengthen IPPSD for it to effectively support agricultural marketing among member states and remove obstacles to the implementation of the FTA for agricultural items. This will be done by financing i) the production of regular agricultural trade publications, ii) policy monitoring and reviews, iii) identifying weaknesses that may develop in FAMIS and rectifying them, and iv) publicity on agricultural and related investment options in COMESA.

B. HARMONISATION OF SPS MEASURES 4.5.10 Human Resource Capacity Building (Training Courses in SPS Matters):

a) Technical Focal Points: The project will provide 3 separate 1–month intensive training courses in SPS issues for the SPS technical focal points. These focal points will be the 3 designated from each of the 3 areas of SPS, i.e., animal health, plant protection and food safety, from each member state. The project’s SPS expert will attend these courses to enable him/her have the same understanding of the issues as the SPS technical focal points, as well as to enable him/her to effectively assist the SPS technical focal points in training other categories of staff for effective implementation of COMESA’s SPS harmonisation programme in their respective countries.

b) Laboratory Specialists: Three separate training courses will be conducted concurrently, each for a period of 1 month, covering laboratory techniques, each for the relevant SPS area. These courses will improve the capacity of COMESA laboratory specialists to deal with SPS issues effectively. Each course will train 20 laboratory specialists, one from each member state, in the relevant SPS area.

c) Middle Level Field Staff: The project will finance 4 sub–regional training workshops for middle level field staff after completion of the courses for SPS technical focal points and laboratory specialists and the regional workshops on harmonization of SPS measures and harmonization of surveillance systems, respectively. These workshops will enable SPS technical focal points to transfer the knowledge acquired from their training to the actual operative staff in the field and to ensure the effective operationalization of the SPS

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harmonization programme. Each workshop will last for 2 weeks and cover topics similar to those for the SPS technical focal points and laboratory specialists, but have a more practical approach. One national focal point each from the three distinct SPS areas will conduct the workshops with assistance from the SPS expert.

d) Stakeholders’ Workshop: A training workshop to be attended by about 80 participants (largely agricultural entrepreneurs will be supported. Stakeholders will be sensitised in product quality, packaging and standards and compliance with SPS regulations and procedures, so as to assist them to comply with the SPS requirements for international trade. Member states will send 3 private sector representatives from each of the SPS areas of animal production, plant production and food production and the national focal points; at least one member of the private sector will be a female entrepreneur. The workshop will have 3 sessions running concurrently, each dealing with livestock and livestock products, plant and plant products and food products, respectively.

4.5.11 Regulatory and Operational Capacity Building:

a) Workshop on Legislation and Regulation: The first workshop will be attended by 120 participants. Each member state will be represented by the three SPS technical focal points (as defined above), a legal expert, the national focal point and a trade expert. This workshop will enable participants to review their countries’ SPS legislations, regulations, procedures and import and export certification and formulate appropriate plans for harmonisation of their countries’ SPS legislation. The workshop will finalize the terms of reference and operational modalities for the COMESA SPS technical committee. Member states will be encouraged to form national SPS committees. After this workshop, technical focal points will be in a better position to assist in facilitating their respective countries’ reform of the requisite SPS legislation. Each national delegation to the workshop will make a presentation on the status of SPS legislation and regulatory systems in their respective countries, including handouts for participants as per formats to be provided by the project.

b) b) Workshop on Surveillance and Emergency Preparedness: This workshop will be attended by the same participants as in the first, excluding the legal and trade experts. It will review member states’ disease/pest monitoring and surveillance systems and procedures, trace–back systems, information management and exchange and emergency preparedness, including review of SPS information exchange formats to be used in the FAMIS. The workshop will equip national focal points to influence the upgrading of SPS systems in their respective countries. Each national delegation will make a presentation on the status of surveillance, emergency preparedness measures and trace–back systems in their respective countries. At the end of the workshop, participants will devise appropriate plans for upgrading their SPS systems.

4.5.12 Institutional Capacity Building:

a) Enhancement of National and Regional Laboratory Facilities: With funding from COMESA member states, the project will purchase laboratory equipment for 12 member states, based on needs prioritized by the study to be undertaken

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by the SPS Expert. It will also rehabilitate these national laboratories with member states’ financing to upgrade them to the appropriate standards. Using ADF funds, the project will facilitate the establishment of 3 regional reference laboratories, one for each of the SPS areas. The laboratories to be upgraded will be identified from the studies below.

b) Enhancement of Regulatory, Surveillance and Emergency Preparedness Systems: The project will facilitate the upgrading of SPS regulatory, operational, surveillance, emergency preparedness and trace–back systems by supporting 20 backstopping missions to member states, to guide the review of legislation, enhancement or establishment of SPS institutions and surveillance, emergency preparedness and trace–back systems. The project, using funding from member states, will purchase 15 sets of computers, software and Geographical Positioning Systems (GPS) for these activities, for distribution to member states. The SPS expert will study the needs of COMESA member states on quarantine facilities and produce a strategy on how to set up regional quarantine facilities, for the establishment of a regional quarantine system in the three SPS areas. The SPS expert will study the needs of 15 national laboratories in the region. Of these, 12 will be rehabilitated and 3 upgraded to international standards for them serve as regional reference laboratories for each of the three SPS areas. This is ensure that the region has internationally accredited laboratory facilities in the 3 SPS areas, capable of carrying out the appropriate analyses needed for ensuring that agricultural and food exports are safe from the point of view of the life and health of humans, animals and plants.

4.5.13 Enhancement of Coordination and Information Exchange:

a) National and Regional SPS Technical Committee Meetings: The project will support the inaugural meeting of the regional SPS technical committee and attended by 1 technical representative of each member state, as defined in the terms of reference establishing the committee. The project will encourage the formation of national SPS technical committees and the establishment/identification of national enquiry and notification points using the SPS expert.

b) Discussion Fora: The project, using the SPS expert, will support the establishment of a COMESA SPS electronic mailing list and discussion forum, via which member states will exchange information on SPS issues, including adoption of common positions in trade negotiations and standards.

c) Publication of an SPS Booklet: The project will finance the preparation and publication once of a booklet on the harmonized legislation, regulations, procedures and operations, in COMESA, which will be distributed to member states for public and private stakeholders.

C. PROJECT COORDINATION

4.5.14 The project will provide limited resources for management and coordination, including training, public awareness, monitoring and evaluation, supervision, preparation of audit and progress reports, studies and equipment. The project will be coordinated directly from the IPPSD through the establishment of a Project Coordinating Unit. Training is the main strategy for building capacity under the project. Under the ADB’s Agricultural Management Training for Africa (AMTA) Programme, training will be provided to the PCU.

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4.5.15 Given the need to modify high risk behaviour and create HIV/AIDS awareness along border posts and key intra–COMESA agricultural transportation routes, the project will promote mainly primary prevention of HIV/AIDS using IEC methods. Railway workers, truck drivers, commercial sex workers, staff of customs, immigration, border police and other vulnerable groups will be targeted. The most popular stopping centres for resting and over–night stops for vehicle crews and key border posts in COMESA will be the areas of intensive project activity. Project activities will entail selection of target groups; design of appropriate training programmes, including the training of peer educators in HIV/AIDS and STD prevention; design and distribution of information, education and communication material through appropriate channels such as mass media and inter–personal means; erection of high visibility HIV/AIDS prevention message billboards on the main transit routes; social marketing and distribution of condoms; and coordination with existing government and NGO programmes, particularly those directed towards commercial sex workers. These activities will be carried out using existing mechanisms of the National AIDS Control Programmes and NGOs in member states.

4.6 Environmental Impact 4.6.1 The project has been classified as category III according to the Bank’s environmental guidelines. The thrust of its activities, which are aimed at meeting SPS standards and improving food safety measures before agricultural commodities can cross borders, will have no direct negative environmental impact. All COMESA member states have enacted laws to protect the environment and established Environmental Impact Assessment regulations that are implemented by their national environmental management Agencies. The involvement of the Ministry of Environment in the PSC will ensure that the project’s environmental concerns receive due consideration. By its design, the project has mitigation measures against some risks that increased agricultural activity, resulting from the emergence of new business opportunities through enhanced agricultural marketing information provision, may generate. Firstly, the largest portion of the project budget will support the harmonization of SPS measures to prevent the spread of diseases and pests, thereby ensuring safer agricultural trade. Also, project activities pertaining to food safety standards are designed to protect consumers, and as such, prescribe maximum allowable levels of harmful chemical and biological residues. Harmonisation of SPS measures will standardize the rules and regulations governing the movement of plant, animal and food items in COMESA. The national and regional laboratories that will be strengthened will, in collaboration with the national environmental authorities in member states, be responsible for minimizing the entry of new pests and diseases as a result of increased trade.

4.7 Project Costs

4.7.1 Total project cost including contingencies is estimated at UA 6.164 million, of which UA5.099 million (82.71%) will be in foreign exchange and UA 1.65 million (17.29%) will be in local currency. All costs were estimated using the prevailing market prices in US dollars at the time of appraisal and converted to UA using the August 2003 exchange rates. Physical and price contingencies were estimated at 10% and 2.5%, respectively. The level of price contingencies applied is based on the most recent estimates of projected increases in the world commodity prices. Tables 4.1 and 4.2 summarise the project costs by components and expenditure categories, respectively.

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Table 4. 1: Summary of Project Cost Estimates by Components

US$ ('000) UA ('000) % Component Foreign

Cost Local Cost

Total Cost

Foreign Cost

Local Cost

Total Cost

Foreign Cost

Food and Agric. Marketing Information System 1,149.07 0.00 1,149.07 825.51 0.00 825.51 100.00%Harmonisation of Sanitary &Phytosanitary Measures 4,485.49 755.00 5,240.49 3,222.45 542.40 3,764.86 85.59%Project Coordination Unit 674.60 563.61 1,238.21 484.64 404.90 889.55 54.48%Total Base Cost 6,309.16 1,318.61 7,627.77 4,532.61 947.31 5,479.92 82.71%Physical Contingency 630.92 131.86 762.78 453.26 94.73 547.99 82.71%Price Contingency 157.73 32.97 190.69 113.32 23.68 137.00 82.71%

Total 7,097.81 1,483.43 8,581.24 5,099.18 1,065.72 6,164.91 82.71%

Table 4. 2: Summary of Project Costs by Category of Expenditure

US$ ('000) UA ('000) % Category of Expenditure Foreign

Cost Local Cost

Total Cost

Foreign Cost

Local Cost

Total Cost

Foreign Cost

A. Goods Vehicle 0.00 40.00 40.00 0.00 28.74 28.74 0.00%Equipment 2,502.50 120.00 2,622.50 1,797.84 86.21 1,884.05 95.42%Supplies/materials 165.00 150.50 315.50 118.54 108.12 226.66 52.30%Furniture 0.00 1.30 1.30 0.00 0.93 0.93 0.00%

Sub Total 2,667.50 311.80 2,979.30 1,916.38 224.00 2,140.38 89.53%B. Works

Civil works 0.00 450.00 450.00 0.00 323.29 323.29 0.00%

Sub Total 0.00 450.00 450.00 0.00 323.29 323.29 0.00%C. Services

Training (focal points & key stakeholders) 1,533.27 90.00 1,623.27 1,101.53 64.66 1,166.18 94.46%Workshop (Other than training W/shops) 400.09 0.00 400.09 287.43 0.00 287.43 100.00%Technical Assistance 351.00 0.00 351.00 252.16 0.00 252.16 100.00%Consultancies 783.00 0.00 783.00 562.52 0.00 562.52 100.00%External audit 30.00 0.00 30.00 21.55 0.00 21.55 100.00%AMTA Training for PCU 30.00 0.00 30.00 21.55 0.00 21.55 100.00%

Sub Total 3,127.36 90.00 3,217.36 2,246.75 64.66 2,311.41 97.20%E. Miscellaneous

Operating costs 514.30 256.70 771.00 369.48 184.42 553.90 66.71%Salaries & wages (COMESA secretariat) 0.00 140.11 140.11 0.00 100.66 100.66 0.00%Salaries & wages (member states) 0.00 70.00 70.00 0.00 50.29 50.29 0.00%

Sub Total 514.30 466.81 981.11 369.48 335.36 704.84 52.42%Total Base Cost 6,309.16 1,318.61 7,627.77 4,532.61 947.31 5,479.92 82.71%Physical Contingency 630.92 131.86 762.78 453.26 94.73 547.99 82.71%Price Contingency 157.73 32.97 190.69 113.32 23.68 137.00 82.71%

Total 7,097.81 1,483.43 8,581.24 5,099.18 1,065.72 6,164.91 82.71%

4.8 Sources of Financing and Expenditure Schedule

4.8.1 The project will be financed by an ADF grant, the COMESA Secretariat and COMESA member states. The ADF grant of UA 3.736 million will finance 60.61% of total project costs. COMESA Secretariat financing amounts to UA 0.605 million or 9.81% of total costs, while COMESA member states’ financing amounts to UA1.823 million or 29.58% of total costs. The grant will finance equipment to establish 3 regional SPS laboratories, supplies/materials, training, technical assistance, consultancies and studies, and 78% of operating costs. ADF financing of operating costs is warranted by the fact that despite some member states’ inability, from time to time, to meet their annual contributions to the

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COMESA Secretariat’s operating budget, the Secretariat still uses its limited operating budget to fund participation of its technical experts in WTO meetings and NEPAD consultations, as well as their routine involvement in regional policy harmonization and investment promotion initiatives. The Secretariat therefore requires assistance in meeting some of the operating costs of a number of development projects including the proposed. In accordance with ADF Policies, ADF funds will not, however, be used to finance project activities for ADB COMESA member states. The Secretariat and member states will finance the salaries and wages of their staff attached to the project, all civil works (rehabilitation of 12 national SPS laboratories and upgrading of 3 regional SPS laboratories), equipment for rehabilitating national laboratories, SPS surveillance and emergency preparedness equipment, one vehicle for the PCU, computers, office furniture for the PCU, travel and related expenses for training/workshop participants from ADB member states, and 22% of operating costs. Table 4.3 presents the sources of finance.

Table 4. 3: Sources of Finance (UA’1000)

Source ForeignCosts

LocalCosts

TotalCosts %

ADF Grant 3,401.63 335.01 3,736.64 60.61%COMESA Secretariat 391.31 213.46 604.76 9.81%COMESA Member States 1,306.24 517.26 1,823.50 29.58%

TOTAL 5,099.18 1,065.72 6,164.91 100.00

5. PROJECT IMPLEMENTATION

5.1 Executing Agency

5.1.1 The COMESA Secretariat will be the project executing agency. Within the Secretariat, the Investment Promotion and Private Sector Development Division (IPPSD), will coordinate and monitor the project’s activities. IPPSD is the Division responsible for administering agricultural development projects. IPPSD is also solely responsible for promoting investment and private sector development in member states. Having successfully overseen the implementation of various donor development programmes over the years, IPPSD has acquired experience in performing this role. However, it requires strengthening and some specialized staffing in agriculture and marketing, as envisaged under the project, especially to ensure project sustainability.

5.2 Institutional Arrangements

5.2.1 In member states, the project will be implemented by the Ministries of Agriculture, collaborating closely with the Ministries of Commerce, Health (Food and Drugs Control Laboratories), Environment, and Bureaux of Statistics, as well as the private sector, including farmers’ unions and agricultural commodity exchanges. Member states will designate national and technical focal points from co–operating Ministries and the private sector who will be directly responsible for day–to–day project implementation. For each member state, a national project co–ordination committee comprising national and technical focal points will be set up and chaired by the national focal point from the Ministry of Agriculture, who will also be the national project co–ordinator. The technical focal points to be based in their respective Ministries and private institutions, will comprise 1 food safety specialist, 1 plant protection specialist, 1 animal health/import and export specialist, 1 international trade officer and 1 officer from an Agricultural Commodity Exchange or a Farmers’ Union. The

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establishment of these committees by COMESA and submission of a comprehensive list of their contact details will be retained as other conditions of the grant.

5.2.2 A Project Steering Committee (PSC) will be established to provide strategic and policy guidance for project implementation. Its membership will comprise the COMESA Assistant Secretary General (chair), one official per member state not below the rank of Commissioner/Director in collaborating Government agencies of the project, as well as the COMESA Gender Expert and an agricultural entrepreneur from one member state with extensive experience in the project activities. The PSC will meet once every six months at project expense. The establishment of the PSC by COMESA shall constitute a condition for first disbursement of the grant.

5.2.3 A Project Coordination Unit (PCU) comprising a Project Coordinator (head), a Project Accountant, a Procurement Officer, a Marketing/Food Security Expert, an SPS Expert and a Systems Analyst will be established. The qualifications and experience of these staff shall be subject to prior written approval of the Fund. The establishment of the PCU by COMESA will constitute another condition for first disbursement. The PCU will be based at the COMESA headquarters in Zambia and be responsible for coordinating and supervising project implementation. In order to effectively execute the project and build capacity within COMESA for sustainability, a few COMESA Secretariat staff will be seconded to the project, with some of them serving as members of the PCU. The seconded COMESA Secretariat staff will be the Project Coordinator, a Senior Statistician, an Accountant, a Procurement Officer, a Data and Information Manager, an Administrative Secretary, a Data Entry Clerk and a Driver. The designation of support staff to the project will be retained as other condition of the grant.

5.2.4 The project will encourage private sector participation, including representatives of farmers unions, and civil society, for them to influence their Governments to rapidly harmonize SPS measures. NGOs would disseminate information on the project’s opportunities and activities, including HIV/AIDS. ACEs and farmers unions collecting and disseminating FAMIS information will be strengthened for effective establishment and operationalization of the project’s FAMIS.

5.3 Supervision, Implementation and Expenditure Schedules

5.3.1 The project will be implemented over a 3–year period starting June 2004. The Bank will undertake intensive coaching of project staff on its procurement, monitoring and evaluation, and accounting and financial reporting policies and procedures. On a routine basis, the project’s annual work programme, including counterpart contribution, will also be carefully reviewed and evaluated by the Bank in line with the benchmarks of the project MPDE matrix. Given the project’s multinational and complex nature, close and frequent supervision will be required, especially during the initial stage of implementation, and has therefore been catered for. The Fund will supervise the project at least 1.5 times a year. One of the supervision missions in PY2 will be enlarged and intensified to constitute a full review. This review will assess the participatory process and performance of project activities in accordance with current ADB norms. Project Completion Reports (PCR) will be prepared by COMESA and ADB in PY3. The detailed indicative project implementation schedule is provided in Annex 4. Tables 5.1 and 5.2 present the Expenditure Schedule by Component and by Source of Finance, respectively.

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Table 5. 1 Expenditure Schedule by Component (UA 1,000)

Component 2004/5 2005/6 2006/7 Total

Food and Agric. Marketing Information System 456.68 283.88 84.95 825.51Harmonisation of Sanitary & Phytosanitary Measures 620.71 2,859.99 284.15 3,764.86Project Coordination Unit 338.81 275.37 275.37 889.55Total Base Cost 1,416.19 3,419.25 644.48 5,479.92Physical Contingency 141.62 341.92 64.45 547.99Price Contingency 35.40 85.48 16.11 137.00

Total UA 1,593.22 3,846.65 725.03 6,164.91

Table 5. 2: Expenditure Schedule by Source of Finance (UA 1,000)

Source 2004/5 2005/6 2006/7 Total

African Development Fund 1,182.76 1,926.61 627.27 3,736.64COMESA Secretariat 317.09 208.77 78.90 604.76COMESA Member States 93.38 1,711.27 18.86 1,823.50

Total UA 1,499.84 2,135.38 706.18 6,164.91

5.4 Procurement Arrangements

5.4.1 The procurement arrangements are described in Table 5.3. Procurement of goods, works and consulting services financed by the Bank will be in accordance with Bank's Rules of Procedure for Procurement of Goods and Works, or as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents.

5.4.2 Civil Works: Procurement of civil works amounting to a total of UA 0.36 million will be carried out via existing practices used by the COMESA Secretariat, which have been examined and found acceptable to the Fund. Such contracts will be awarded for rehabilitation of 12 national SPS and 3 regional SPS reference laboratories. COMESA procurement is carried out through open competition, with purchases and contracts executed after at least 3 quotations are received and evaluated.

5.4.3 Goods: Goods for the COMESA Secretariat will be procured through National Shopping (NS). Procurement of miscellaneous laboratory equipment (UA 0.77 million) and supplies/materials (UA 0.25 million) in various lots, will also be procured through NS. The goods required can be acquired in COMESA member states, as there is an adequate number of national suppliers and agents of qualified foreign suppliers to ensure competitive prices.

Table 5. 3M Summary of Procurement Arrangements

(UA1,000) Categories of Expenditure

Other* Short List Non–Bank

Funded Total

1. Works 1.1 Civil Works 363.69(0) 363.69(0)

2. Goods 2.1 Vehicles 32.32(0) 32.32(0) 2.2 Equipment 2,119.55(777.10) 2,119.55(1,113.32 2.3 Supplies/Materials 254.99(254.99) 254.99(254.99) 2.4 Furniture 1.05(0) 1.05(0)

3. Consulting Services 3.1 Training (stakeholders & field

staff) 1,311.95(1,025.72) 1,311.95(1,025.72)

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(UA1,000) Categories of Expenditure

Other* Short List Non–Bank

Funded Total 3.2 Workshops (other than training

workshops) 323.36(232.02) 323.36(232.02)

3.3 Technical Assistance 283.68(283.68) 283.68(407.34) 3.4 Consultancies 632.83(558.31) 632.83(558.31) 3.5 External Audit 24.24(24.24) 24.24(24.24) 3.6 AMTA Training of PCU 24.24(24.24) 24.24(24.24)

4. Miscellaneous 4.1 Operating Costs 623.13(556.29) 623.13(556.29) 4.2 Salaries & Wages (COMESA

Sec.) 113.23(0) 113.23(0)

4.3 Salaries &Wages (member states)

56.57(0) 56.57(0)

Totals 4,657.24(2,870.39) 940.75(866.24) 566.89 6,164.91(3,736.64)

Amounts in brackets are funded by ADF; * Include LIC, International or National Shopping, Direct Purchase or Force Account

5.4.4 Consultancies, Training & Technical Assistance: Procurement of consulting services, technical assistance and local training of focal points and stakeholders will be undertaken in accordance with the Bank’s “Rules of Procedure for the Use of Consultants” on the basis of short–listing, following the selection procedure of technical quality with price consideration. Management and operational training of PCU staff will be carried out by the AMTA programme via single source procurement, in view of AMTA’s comparative advantage and track record in this field. Project audit services will be procured on the basis of a shortlist. The selection procedure will be based on establishing the comparability of technical proposals and selection of the lowest financial offer. The Project experts to be financed using the grant will be recruited through Special Service Contracts following a short list of individual consultants in line with Fund procedures. Contracts will be awarded at an estimated total value of UA 0.63 million for consultancies (including the design, establishment, operationalization of the FAMIS and user training, as well as execution of the SPS activities), UA 1.02 million for training, UA 0.23 million for workshops and UA 0.28 million for technical assistance. Signature of MOUs and contracts with the firms that will establish FAMIS and execute the SPS activities will be retained as other conditions of the grant.

5.4.5 Miscellaneous: Operating costs, salaries and wages of COMESA Secretariat staff and salaries and wages of member states staff attached to the project amounting to UA 0.62 million, UA 0.11 and UA 0.05 million, respectively will be procured via existing practices used by the COMESA Secretariat, which have been examined and found acceptable to the Fund.

5.4.6 Executing Agency: The COMESA Secretariat will be responsible for the procurement of goods, works, consulting and training services. The Secretariat’s Financial Manual of 2002 contains the relevant principles and procedures that govern its practices in relation to the procurement of goods and services. Its provisions accord the Secretariat’s Procurement Unit responsibility for all procurement and contract award decisions. The Unit receives, registers, opens and records tenders. The Unit is limited in its capacity to solely carry out procurement as envisaged under the project. It will therefore cooperate with the project management unit for all procurement under the project.

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5.4.7 Review Procedures: The following documents are subject to review and approval by the Bank before promulgation: General Procurement Notice (GPN), Specific Procurement Notices (SPN), Tender Documents or Requests for Proposals (RFP) from consultants, Tender Evaluation Reports on evaluation of consultants' proposals, including recommendations for contract award, and draft contracts, if these have been amended from the drafts included in the tender documents.

5.5 Disbursement Arrangements

5.5.1 The special account method and the direct disbursement method will be used for disbursement. COMESA will open one (1) Special Account (SA) in foreign currency and two (2) Local Currency Accounts (LCAs) in a bank acceptable to the ADF. The first LCA will be used to receive transfers from the Special Account for operating costs, while the second LCA will receive COMESA’s counterpart contribution. Funds to be utilised for procurement of consulting services (Project experts) would be disbursed via direct payment. Funds to be utilised for other activities financed by ADF would be disbursed into the special account, as will proceeds from public use of the FAMIS outputs and sale of the SPS booklet. The ADF will replenish the SA after the project has used at least 50% of the previous deposit and provide valid justifications for its use to the Bank. The PCU will maintain records at all times of all disbursements made by the Bank and COMESA. The opening of the SA and the two LCAs will be a condition precedent to first disbursement of the grant. The Bank will closely monitor the management of these accounts by COMESA through routine desk review, effective technical supervision and prompt and thorough annual audits.

5.6 Monitoring and Evaluation 5.6.1 The monitoring and evaluation of project activities, including implementation progress and expenditure will be the responsibility of the COMESA Secretariat as a regular management function through the PSC. As part of their routine functions, national and technical focal points will provide regular inputs to the COMESA Secretariat on project progress. The COMESA Secretariat will submit to the Fund on a quarterly basis, reports on progress made on the implementation of the project and reports on project expenditures in the Bank’s format.

5.6.2 The Fund will closely monitor the implementation of the project through regular follow–up, review and supervision missions; the latter would be undertaken at least 1.5 times a year. These missions will verify implementation progress to ensure that key impact indicators related to the project outputs such as the establishment and operationalization of FAMIS by end PY1, the establishment and functioning of the project’s 20 national and 100 technical focal points in member states by end PY1, and harmonized SPS legislation by end PY3, etc, are realized. An intensified project supervision mission involving a thorough review of the project will be undertaken in PY2. The means of verification are physical inspection of the FAMIS website, increased COMESA agricultural trade recorded in COMESA annual and trade reports, and improved SPS measures reported in COMESA SPS and food quality and safety bulletins. The review will examine progress made in achieving project objectives in accordance with the implementation plan, as well as examine the need for project revision.

5.6.3 To facilitate the review, COMESA will prepare and submit to the Fund, prior to the review mission, an interim report on the utilisation of the grant and progress made in carrying out project activities. When the grant is fully disbursed and the project has ended, COMESA

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will prepare and send to the Fund, a PCR indicating costs, benefits, achievements, and lessons learned from implementation the Project. A PCR would also be prepared by ADF after the project ends, so as to evaluate project impact and the lessons learned from its implementation.

5.7 Financial Reporting and Auditing 5.7.1 The Executing Agency will maintain the project’s accounts by category of expenditure and source of funding and put in place a system of internal control to ensure prompt recording of transactions, timely production of accounts and reports and safeguard project assets. Financial records will be maintained in accordance with internationally acceptable accounting procedures. The COMESA Secretariat will prepare monthly financial statements that will be consolidated by them into quarterly financial statements to be included as a section of the Quarterly Progress Reports. An independent audit firm acceptable to the Fund will audit the financial statements of the project annually. The Secretariat will submit the audit report to the Fund for review and comments within six months after the end of each financial year in December. An allocation has been made in the project to cater for the costs of engagement of an independent external auditor. The Bank will closely monitor project activities and ensure that the Executing Agency unequivocally complies with the Bank’s Guidelines for Financial Reporting and Auditing.

5.8 Aid Coordination 5.8.1 At least 9 donors have greatly assisted the COMESA in promoting economic development in the region. These are the EU, USAID, ADB, World Bank, FAO, UNDP, IDRC, Commonwealth Secretariat, the UNDP/Perrez Guerero Trust Fund. Of these, EU, USAID and France have technical assistance based at the COMESA Secretariat to support specific donor–financed development activities. Join COMESA–donor coordination meetings are held once a month in Zambia by the committee of Ambassadors of COMESA countries that are represented in Zambia and Permanent Representatives of donor agencies, including U.S.A. and France. These meetings review coordination of ongoing pipeline projects and monitor their compliance with development priorities in the region, as well as examine and vet the introduction of new projects into the COMESA pipeline of development projects. As an important development partner in COMESA, the Bank Group closely coordinates its interventions with those of other development partners. During project identification, preparation and appraisal, the Bank Group consulted widely with all of COMESA’s concerned development partners involved in the focal areas of the project. The information obtained from these consultations was used productively in designing the project, by ensuring mutual complementarily, while avoiding duplication of efforts and wastage of scarce resources. The Project Coordinator will, during project implementation, liase with donors on the financing of national and regional programmes related to the project’s focal areas. Bank Group launching, supervision and review missions will routinely consult with and brief donors in the said committee on project implementation progress This liaison will ensure that the outputs from the present project benefit other donors that intend to support similar interventions.

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6. PROJECT SUSTAINABILITY AND RISKS

6.1 Recurrent Costs 6.1.1 The total recurrent costs for the project include costs of three (3) incremental project staff, salaries of the consultants to be hired to implement the project, and operation and maintenance of limited civil works and equipment. Total recurrent costs amount to UA 1.07 million, of which UA 0.84 million or 78.0% will be financed from ADF grant resources. The COMESA Secretariat and member states will finance the remaining recurrent costs in the amounts of UA 0.18 million and UA 0.05 million, respectively. This will be in respect of staff salaries for seconded project staff, and running costs for the PCU at the Secretariat and national implementation units in member states. The recurrent costs are expected to decline during the implementation period to reach UA 0.33 million by end PY3. The salaries of the TAs will end with the completion of the project, and their duties will be taken over by suitably qualified COMESA staff who would have understudied these TAs and acquired relevant experience. The total recurrent costs that will remain after PY3 when full responsibility for managing the project would have been passed on to the COMESA Secretariat will be less than UA0.17 million. This cost can be accommodated within the Secretariat’s and member states’ annual budget, especially as most of it is part of their recurrent expenditures for salaries of existing staff. The Secretariat’s financial position has been examined and confirmed to be satisfactory.

6.2 Project Sustainability 6.2.1 From the design standpoint, in order to ensure project sustainability, its preparatory activities confirmed that there is a strong need for its outputs. In addition, there will be a strategic balance between public and private sector participating institutions (farmers’ unions and commodity exchanges) involved in the project, with strong linkages to be established with existing National Agricultural Information Systems.

6.2.2 Although the project funds will not directly support activities in ADB member states of COMESA, project viability and sustainability. Firstly, only 5 of the 20 COMESA member states are ADB member countries. As such, only a handful of countries will be affected by this Bank policy. The Secretariat has assured the Bank that given COMESA member states’ strong commitment to promoting agricultural development and regional integration, they are willing and ready to provide their counterpart contributions on a timely basis to finance the relevant expenditures under the project. Secondly, the project will support a wide range of human and institutional capacity enhancement activities that will create and retain a sound knowledge base both at the COMESA Secretariat and the member states levels. This will put in place a mechanism for continuity of the project’s activities beyond the investment phase. Furthermore, during the project investment phase, the PCU will liase with donors and member states to encourage all member states to effectively utilize the national implementing structures within the context of focal points and their support systems in order to systematically internalise and operationalize the gains from the project and reinforce sustainability.

6.2.3 COMESA member states have demonstrated a strong commitment to the COMESA Secretariat, as evidenced by their impressive support to the institution’s budget through regular financial contributions. This, together with the Secretariat’s record of maintaining low operating costs over the years, have and continue to put the Secretariat in a satisfactory

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financial position, including readiness to meet its financial obligations under the project even after the investment phase.

6.2.4 Project operating costs will be kept low over the life of the project and beyond PY3. The overhead costs of the PCU have been kept low, with an emphasis on effective and efficient project coordination. The project’s recurrent costs after PY3 amounting to UA0.17 million are largely self–sustaining and entail limited expenditures mainly for salaries that are already under COMESA’s regular payroll and recurrent budget.

6.2.5 The informal surveys conducted in a number of member states confirmed that the strategic involvement of farmers’ unions and commodity exchanges in the project, both of which have established good and strong relationships with agricultural entrepreneurs, will assist in ensuring that the industry which will benefit from the FAMIS data and information will have confidence in the institution disseminating it.

6.2.6 Realistic revenue generation measures by the COMESA Secretariat have been put in place to ensure the sustainability of the FAMIS. Proceeds from the project’s marketing information services will be costed as follows: i) placement fees to advertise to sell or buy an item – US$5–100 based on the nature and value of the item and duration of the advertisement; ii) a maximum of 2% of the value of a transaction in respect of commissions for successful transactions; and iii) subscription fees ranging from US$65–125 per year for use of the database to access information collected by the private sector. These fees have been determined based on consultations during project preparation with private Agricultural Commodity Exchanges in the region. COMESA will undertake to review these charges annually to ensure that they reflect cost of production and market realities. Proceeds from these activities will be managed by the COMESA Secretariat using the project’s special account.

6.2.7 Appropriate steps to enhance the sustainability of the SPS component have also been put in place. The agreement on SPS measures that will result from the project’s workshops will include modalities by member states on charges to be levied for inspection, risk analysis, certification, quarantine, etc. Proceeds from these charges and the increased volume of intra and extra agribusiness that will result from safer, harmonized and more WTO–compliant SPS measures will generate financial and socio–economic gains within the public and private sectors that will promote project sustainability. The project’s SPS booklet on harmonized legislation, regulations, procedures and operations in COMESA will be sold at a cost of US$5 per piece, and its proceeds to be also managed by the COMESA Secretariat through the special account, used for sustainability.

6.3 Assumptions and Mitigation Measures 6.3.1 There is a possibility that the agricultural sector’s vulnerability to drought and floods in the region could bring about a risk that may affect the project. COMESA’s collaboration with the SADC regional food security and early warning unit in Zimbabwe through the project’s Marketing/Food Security Expert will assist in providing appropriate guidance to member states that will mitigate against this risk. The Expert will draft relevant guidelines and provide routine advise to member states that will help in agriculture–related emergency preparedness and disaster mitigation.

6.3.2 The project has been conceived around the assumptions that the COMESA Agricultural Policy and past and on–going regional integration and agricultural market

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liberalization efforts will be sustained. The Agricultural Policy is the product of broad–based consultations with member states and their buy–in into it is assured. The satisfactory progress made in agricultural market liberalization and regional trade integration efforts so far indicate all good reasons for this assumption. Furthermore, given the realization by COMESA leaders of the economic loss that importation of plant and animal pests and diseases has caused the region through unsafe trade in agriculture and their increasing awareness that harmonizing SPS policies could increase safe trade in agriculture, some member states have already started harmonising their SPS measures. This process will be speeded up through the project. The benefits from harmonization that have been realized by these countries will influence others to harmonize their SPS measures also.

6.3.3 The ability of the COMESA Secretariat to execute a project of this nature may raise concerns about its sustainability. COMESA’s capacity has been carefully assessed and the few areas in which additional specialized skills are needed catered for. COMESA has strongly assured the Bank that requisite Secretariat and member state staff, already identified, will be promptly assigned to the project. In addition, over the past 5–10 years, at least forty–four studies and programmes financed by donors have or are being successfully executed by the Secretariat. The ADB/COMESA pre–investment unit was generally satisfactory and some of its outputs will be used under the proposed project.

6.3.4 The project has been designed assuming that the national public and private structures to be used to implement it continue to work together as traditionally established in synergy and reinforce the programme approach adopted. Extensive direct and indirect consultations have been held with all key project stakeholders in most member states, including private interest groups, to assess their institutional strengths, publicize the project concept and receive guidance from them on its design, institutional modalities and sustainability. The findings of these consultations, including the willingness of private groups to work together, have guided the project outcome. The benefits that will flow to COMESA as a result of this project will reinforce the adhesion of stakeholders and member states to collaborate and support COMESA’s vision of regional integration.

6.3.5 The training and equipping of COMESA Secretariat staff and focal points, and the wide publicity of project’s activities via the FAMIS website, gazettes, COMESA annual reports, trade, food security and SPS bulletins, will ensure that relevant agricultural information reaches the required private and public end users and translates to better investment decisions. The COMESA public at large will thus be widely informed of the opportunities that the project will bring and how to tap them.

7. PROJECT BENEFITS

7.1.1 The project will have positive impacts on the economies of COMESA member states by assisting to build and retain capacity for agricultural marketing information collection, analysis, and dissemination, as well as relaxing plant and animal health constraints to trade, thereby promoting safer agricultural trade, creating job opportunities, generating incomes and increasing foreign exchange earnings. Intra– and extra– COMESA agricultural trade is demanding more from member states’ inspection and quarantine services, due to the risk of importing exotic pests. Improved phytosanitary measures will limit the introduction and spread of pests, increase savings from grain storage losses, and contribute to food security and poverty alleviation. With food security, COMESA is more likely to enjoy civil and political stability, and hence, a favourable investment and growth environment.

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7.1.2 The project covers agriculture, which represents the main economic activity in most member states. The project will enhance income and assist in reducing poverty through its investments in the promotion of safe intra– and extra– COMESA agricultural marketing. Marketing links agriculture to manufacturing and processing, and therefore, stimulates demand. The expanded COMESA market will create confidence in agriculture and encourage settlement and investment on farmland. Since agriculture in COMESA is mostly rural and smallholder based, the project, through its income generation spin–offs, would promote rural development and smallholder well being. The project also aims at promoting regional food security. Food and nutritional well being are important in the maintenance of human health and promotion of labour productivity, both of which are key elements of social livelihood. HIV/AIDS prevention and control activities will contribute to efforts to halt the spread of epidemic, save lives and preserve the work force.

8. CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions

8.1.1 Agriculture is the backbone of most economies of COMESA member states. Performance of agriculture has been affected by unfavourable natural conditions, including drought and floods, affecting national and regional food security, as well as export earnings.

8.1.2 The project seeks to enhance regional integration by promoting safer intra– and extra– COMESA agricultural marketing and food security. It addresses this by benefiting small, medium and large scale agricultural entrepreneurs in the region through investments in the establishment of an agricultural marketing information system, review and harmonization of SPS systems, measures and related regulations, and capacity building in SPS. By rendering agricultural trade safer, the project will minimize market losses, with positive implications for agricultural income, regional food security, personal human health and livelihood. Readily available and accessible agricultural marketing information will make it easier for deficit countries to purchase food from surplus ones much quicker, rather than only relying on domestic production and/or food aid.

8.1.3 The project has been designed through broad member state consultation, needs assessment and prioritisation and member states’ participation in implementation is confirmed. Civil society through their respective umbrella organizations will endeavour to influence policy changes through their national governments for rapid harmonization of SPS measures. NGOs will assist in implementing the HIV/AIDS activities. Private agricultural commodity exchanges and farmers unions involved in the collection, management and dissemination of agricultural marketing information will be strengthened for them to support the functioning of the project’s agricultural marketing information system.

8.1.4 The project is technically feasible, socially sound and environmentally safe. It is a high priority in COMESA’s agricultural policy. The project’s objectives and activities are in line with the Treaty establishing COMESA, the ADF IX guidelines for financing multinational operations, the Bank Group’s poverty alleviation strategy and the Bank Group’s Agriculture and Rural Development Policy.

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8.2 Recommendations 8.2.1 It is recommended that the Fund consider extending an ADF grant not exceeding the sum of UA 3.736 million to COMESA to implement the agricultural marketing promotion and regional integration project as described in this proposal, subject to the following conditions:

A. Conditions Precedent to Entry into Force of the Grant Agreement

The grant Agreement shall enter into force on the date of signature by the Recipient and by the Fund.

B. Conditions Precedent to First Disbursement of the Grant

Prior to first disbursement of the Grant, COMESA shall have:

i) Constituted a Project Steering Committee (PSC) chaired by the Assistant Secretary General of COMESA and comprising one official per COMESA member state not below the rank of Commissioner/Director in cooperating Government Ministries of the project in COMESA member states, i.e., Agriculture, Health, Environment, Commerce and Bureaux of Statistics, as well as the COMESA Gender Expert and an agricultural entrepreneur from one member state with extensive experience in the project activities (para 5.2.2);

ii) Provided written evidence of having established the Project’s Coordination Unit comprising the Project Coordinator (Head), a Project Accountant, a Procurement Officer, an SPS Expert, an Agricultural Marketing/Food Security Expert and a Systems Analyst. The qualifications of these individuals will be subject to prior approval by the Fund (para 5.2.3); and

iii) Opened one Special Account (SA) and two Local Currency Accounts (LCA) in a Bank acceptable to the Fund. The first LCA will be used to receive transfers from the Special Account, while the second LCA will receive COMESA’s counterpart contribution (section 5.5).

C. Other Conditions

COMESA shall:

i) Within three (3) months from the date of effectiveness of the Grant Agreement, provide written evidence of having established the project’s coordinating committee at the member states level comprising national and technical focal points from the project’s Government and private cooperating agencies and appointed national project coordinators at the member states level (para 5.2.1);

ii) Within three (3) months from the date of effectiveness of the Grant Agreement, prepare and submit a final and comprehensive list of Implementing Agency national focal points, including full contact details, based in the project’s Government cooperating agencies in COMESA member states (para 5.2.1);

iv) Within one (1) month from the date of effectiveness of the Grant Agreement, provide written evidence to the Fund of having designated other COMESA support staff to the project to assist in the execution of the project (para 5.2.3);

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iii) Within six (6) months from the date of effectiveness of the Grant Agreement, sign memoranda of understanding and contracts with the institutions to be selected through competition to assist COMESA in executing the project SPS component and design and operationalize FAMIS on terms and conditions acceptable to the Fund (para 5.4.4); and

v) Within four (4) months from the date of effectiveness of the Grant Agreement, prepare and submit to the Fund an acceptable training programme, implementation schedule and budget for all training to be undertaken under the project.

D. Undertakings

Prior to commencement of project implementation activities, COMESA hereby undertakes to:

i) Ensure that in line with the ADF IX Policy Guidelines, project funds will not be used to finance activities (such as infrastructure development and training) within and for ADB member countries of COMESA, i.e., Egypt, Namibia, Swaziland, Mauritius and Seychelles (section 4.8);

ii) Conduct an annual review of the fees to be charged for the project’s marketing information, data and the SPS booklet to reflect market conditions and cost of production (para 6.2.6); and

iii) Ensure that counterpart contribution to the project for each year of project implementation is made in accordance with the approved financing plan and evidence is provided to the Fund each financial year of COMESA having made adequate budgetary contributions to the project.

Annex 1a

Annex 1a: Map of COMESA

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

Annex 1b

Annex 1b: Selected Macroeconomic Indicators of COMESA Member States

Country HDI Rank 2003

Human Poverty Index (HPI–1) in %

Pop (Mid 2003) Thousands

Area (000km2)

GNI Per Capita (US$)

GDP (Bn US$)

Angola 164 ––– 13,625 1,246.7 240.0 8.7

Burundi 171 46.3 6,825 27.8 110.0 0.7

Comoros 134 31.5 768 2.2 380.0 0.2

Congo, DR 167 42.9 52,771 2,344.9 420.0 4.5

Djibouti 153 34.3 703 23.2 840.0 0.6

Eritrea 155 41.8 4,141 117.6 170.0 0.6

Egypt 120 30.5 71,931 1,001.5 1,490.0 98.3

Ethiopia 169 56.0 70,678 1,104.3 100.0 6.3

Kenya 146 37.8 31,987 580.4 360.0 10.4

Mauritius 62 11.1 1,221 2.0 3,800.0 4.5

Madagascar 149 35.9 17,404 587.0 260.0 4.0

Malawi 162 47.0 12,105 118.5 170.0 1.7

Namibia 124 37.8 1,987 824.3 2,050.0 3.5

Rwanda 158 44.5 8,387 26.3 250.0 1.8

Seychelles 36 ––– 81 0.5 7,310.0 0.6

Sudan 138 32.2 33,610 2,505.8 320.0 11.2

Swaziland 133 ––– 1,077 17.4 1,290.0 1.3

Uganda 147 36.6 25,827 241.0 310.0 6.3

Zambia 163 50.3 10,812 752.6 300.0 2.9

Zimbabwe 145 52.0 12,891 390.8 480.0 7.4

Source: Compiled from UN and World Bank Documents

Annex 2

Annex 2: Project Organizational Chart

1. Ministry of Agriculture is the National Focal Point. It leads the National Coordinating Committee (NCC). The NCC is co–chaired by the Ministry of Agriculture, Ministry of Livestock and the Private Sector (National Farmers’ Union or Agricultural Commodity exchanges) Para. 5.2.1.

2. Private sector comprises the Agriculture Commodity Exchanges and the National Farmers’ Unions. Para 5.2.1.

3. The Public Sector comprises the Ministries of Agriculture, Commerce, Health/Bureau of Standards, Environment and the National Bureaux of Statistics. Para. 5.2.1.

4. Non–Governmental Organisations, Community Based Organisations and Agricultural Trusts. Para. 5.2.4.

COMESA SECRETARIAT

INVESTMENT PROMOTION & PRIVATE SECTOR DEVELOPMENT (IPPSD)

PROJECT STEERING COMMITTEE

PROJECT COORDINATION UNIT

NATIONAL FOCAL POINT 1

PRIVATE SECTOR2

PUBLIC SECTOR3 NGOs4

Annex 3

Member States’ Contributions to COMESA and Receipts and Expenditure Details

a) Contribution to the Secretariat’s Regular Budget (COM$) by Member States, 1998–2002

Financial Year Approved Budget Amount Received Percentage

2002 5,819,468 5,392,062 93

2001 5,639,300 5,422,797 96

2000 5,936,000 4,177,710 70

1999 5,740,000 6,219,472 107

1998 5,731,383 4,119,320 72

b) COMESA Secretariat’s Receipts and Expenditure (COM$) for the Year Ending 31

August 2003

50% RECEIPTS RECEIPTS TOTAL YEAR 01.01.03 TO DATE 31.08.03 FUNDS BALANCE B/F FROM YEAR 2001 2,004,829 BUDGET 5,842,678 2,921,339 4,187,136 221,479 4,187,136 USAID FUNDS 653,262 REFUNDS FROM PROJECTS 374,289 TOTAL FUNDS 7,219,516 OPERATIONAL EXPENSES 2,982,597 PRIOR YEAR OBLIGATIONS 93,255 USAID PROJECTS 558,763 GRATUITY 81,240 ADVANCES TO PROJECTS 332,553

TOTAL EXPENSES 4,048,408

BALANCE 3,171,108

Annex 4 Page 1 of 2

Project Implementation Schedule

ACTIVITY SCHEDULING

1. ESTABLISHMENT OF FAMIS IN COMESA PPP1 D2 2004/5 2005/6 2006/7

1.1 Develop & Establish FAMIS (Training & Supply of Equip.) 1 2 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 121.1.1 Training COMESA, Proj. staff and Nat. F.P. in FAMIS in Lusaka

1.1.2 Training focal point staff and Establishment of FAMIS

1.2 Networking and Establishing new information points

1.3 National Stakeholder Sensitisation W/shops in 20 states

1.4 Studies and Investigations

1.4.1 Studies/analyses on supply and demand trends

1.4.2 Studies on market opportunities for exportable commodities

1.4.3 Identification of remaining tariff barriers to trade

1.5 Early Warning System & Food Sec. Assessment Training

1.5.1 Training of trainers in Food Security Assessment Techniques

1.5.2 In country Training in Food Security Assessment Techniques

1.6 Strengthen Existing Agricultural Commodity Exchanges

1.6.1 Update or develop legal frameworks in 4 member states

1.6.2 Training for capacity building

1.6.3 Provision of computer equipment & software

1.6.4 Promotional publications

1.6.5 Study tours to encourage states without ACEs

1.6.6 Facilitation of electronic linkages between ACEs

1.7 Strengthening the IPPSD at COMESA Secretariat

2. HARMONISATION OF SPS MEASURES

2.1 Human Resource Capacity Building

2.1.1 Training for Animal Health Technical Focal Points

2.1.2 Training for Plant Protection Technical Focal Points

2.1.3 Training for Food Safety Technical Focal Points

2.1.4 Training for Animal Health Laboratory Specialists

2.1.5 Training for Plant Protection Laboratory Specialists

2.1.6 Training for Food Safety Laboratory Specialists

2.1.7 Middle level Field Staff Training workshops (in all 3 SPS areas)

2.1.7.1 Group 1(1) In Swaziland or Malawi

2.1.7.2 Group 2(2) In Mauritius or Seychelles

2.1.7.3 Group 3(3) In Burundi or Djibouti

Annex 5 Page 2 of 2

ACTIVITY SCHEDULING

1. ESTABLISHMENT OF FAMIS IN COMESA PPP1 D2 2004/5 2005/6 2006/7 2.1.7.4 Group 4(4) In Kenya or Uganda

2.1.8 Stakeholder Training/Sensitisation Workshop, Lusaka

2.2 Regulatory and Operational Capacity Building 2.2.1 Legislation & Regulation Review Workshop, Nairobi 2.2.2 Surv., Inform. and Emergency Preparedness W/shop, Kampala 2.3 Institutional Capacity Building 2.3.1 Enhancement of National laboratories 2.3.2 Establishment of Regional Reference Laboratories 2.3.3 Backstopping for legislation to selected countries 2.3.4 Backstopping for surveillance to selected countries 2.3.5 Study for quarantine facilities in selected countries 2.3.6 Study laboratories in selected countries 2.3.7 Enhancement of Surveillance and Emergency Preparedness 2.4 Enhancement of Coordination and Information Exchange 2.4.1 Formation of Regional SPS Technical Committee 2.4.2 Establishment of discussion Forum 2.4.3 Publication of SPS Booklet 3 PROJECT COORDINATION UNIT 3.1 Fulfilment of Grant Conditions 3.2 Recruitment of Project Staff 3.3 Project Management 3.4 Project Steering Committee Meetings 3.5 Recruitment of Consultants ADB ACTIVITIES Grant Approval Publication of the General Procurement Notice First Disbursement of the grant AMTA Training for PCU Bank supervision missions Project Review by ADB Project Completion Report

1. PPP– Refers to Pre–project Period Feb. to May 2004. Months 1…..12 refer to relevant months in each project year and not calendar months 2. D– Is month in which first disbursement is expected to be made (April 2004)

Annex 5 Page 1 of 2

Annex 5: Summary of Donor–financed Projects Through the COMESA Secretariat

PROJECT/STUDY DONOR FUNDING COUNTRIES REMARKS

1. Rules of Origin EU N/A COMESA Ongoing

2. WTO Rules & Regulations USAID US$221,000 COMESA Ongoing

3. African Trade Insurance Agency (ATI) IDA/EU EUR740,000; IDA: credit for insurance

4 member states Launched in 2001. Operational in Kenya

4. Regional Harmonization of Customs & Statistics Systems (RHCSSP)

EU EUR12.6 mill COMESA ASYCUDA Installed in 13 member states & EUROTRACE in 19 during phase I. Phase II will finalize installation of both systems in all member states, harmonizing customs procedures and legislation and establishing common CET for the CU

5. COMESA PPIU ADF US$3.2 mill COMESA Completed

6. Fisheries Dev. Study ADF US$0.15 mill COMESA Completed

7. Irrigation Dev. Study ADF US$0.19 mill COMESA Completed

8. Second Round Table Forum for Women in Business

ADF US$0.13 mill COMESA Completed

9. Public Procurement Reform ADF UA1.17 mill COMESA Ongoing

10. RIFF EU N/A 14 member states Ongoing

11. NTBs EU/UNCTAD N/A COMESA Study completed. Council decided trade & customs committee to monitor NTB elimination

13. FTA Expansion EU/USAID N/A COMESA Study on FTA implications conducted in 3 member states. Uganda & Ethiopia undertaking independent studies

14. Employment of Mkting/Outreach/PR Advisor in COMESA Bankers Assoc

USAID US$56,814 COMESA Seconded Advisor employed in Sept 2001

15. Revitalization of COMESA Bankers Assoc EU N/A COMESA Funds disbursed

16. Region Payment and Settlement System EU N/A COMESA Ongoing

17. Banking Fraud & Money Laundering EU N/A COMESA Ongoing

18. Extending & Enhancing the Yellow Card Scheme

USAID US$650,000 COMESA Ongoing

20. Regional Integration Phase II EU EUR 8.5 mill COMESA Ongoing

21. Advance Cargo Information System Phase I EU US$ 330,000 6 member states Phase I completed and is being evaluated

22. COMTEL USAID, ADB, NTOs & Private Sector

US$1.05 mill COMESA Ongoing

23. Telecommunications Regulatory Programme USAID US$490,000 COMESA Phase I completed. Phase II ongoing

24. CNS/ATM System EU N/A COMESA On–going

Annex 5 Page 2 of 2

PROJECT/STUDY DONOR FUNDING COUNTRIES REMARKS

25. Liberalization of Air T/port Services EU EUR745,000 COMESA Ongoing

26. Investment Opportunities UNECA Tech. Asst. 14 member states Ongoing

27. Regional Investors Roadmap USAID US$850,000 COMESA Completed

28. Women in Business Information Centres UNDP N/A COMESA ongoing

29. Standardization, Quality, Metrology and Testing Programme (SQMT)

EU EUR 2.0 mill COMESA Ongoing

30. Upgrading quality and safety of fisheries products

FAO US$397,400 COMESA Ongoing

31. Production of High–Value fish products CFC, FAO, COMESA US$504,525 3 member states Ongoing

32. Common framework for managing shared inland fisheries

PGTF/UNDP US$38,000 COMESA Ongoing

33. Harmonization of agric policy in COMESA PGTF/UNDP US$60,000 COMESA Ongoing

34. Policy networking & communications systems

USAID US$210,000 COMESA Ongoing

35. Peace & Security Protocol USAID UA453,000 COMESA Phases I & II completed. Phase III to commence soon

36. Regional Integration Research Network II IDRC/EU US$ 260,000 COMESA Ongoing

37. Institutional Strengthening to the Secretariat USAID US$590,000 Secretariat Ongoing

Summary of the Key Areas Supported by the Main Donors

Donors Areas Supported 1. EU, USAID, DFID, World Bank, ACBF Trade and Customs Facilitation and Monetary Affairs 2. EU, USAID, FAO, ADB, NORAD, BADEA, CFC, India, UNDP, UNECA Investment Promotion and Private Sector Development 3. ADB, USAID Legal and Institutional Affairs 4. CIDA Strategic Planning 5. EU, USAID, UNDP, UNAIDS Gender Issues 6. USAID Institutional Strengthening

Annex 6 Page 1 of 3

Annex 6: Details on intra– and extra– COMESA Agricultural Trade Page 1 of 3

Tables 1 and 2 illustrate intra– and extra– COMESA trade in agricultural commodities. Intra–COMESA agricultural trade from 1997–2002 ranged from a minimum of US$339 million in 1999 to a maximum of US$ 410 million in 1998, averaging US$ 370 million during the period. Growth in intra–COMESA agricultural trade was negative in 1999 and 2001, but averaged 11% annually for the rest of the period. On the other hand, extra–COMESA agricultural trade ranged from a minimum of US$ 1.9 billion in 2001 and 2002 to a maximum of US$ 3.3 billion in 1998, averaging US$ 2.5 billion over the same period. Annual growth rate in extra–COMESA agricultural trade remained negative during 1999, 2001 and 2002, but averaged 9% annually during the remaining period. This analysis confirms the low level of agricultural trade among member states, compared to their trade with countries outside the region. For meaningful regional integration and economic development to be realized, there is need to increase trade amongst member states. The activities of the proposed project have been designed to facilitate this. With agriculture being the largest sector in the economies of most COMESA states, it is the single most viable investment option to assist COMESA pursue its regional integration objectives. Tables 3 and 4 illustrate selected agricultural indicators and the key agricultural items exported by member states, respectively. Table 1. Intra–COMESA Exports (US$) of Agricultural Commodities, 1997 – 2002

Description 1997 1998 1999 2000 2001 2002*

Live animals 1,641,366 5,183,084 4,190,114 5,901,531 3,319,240 1,602,088

Meat and edible meat offal 3,833,158 5,831,221 3,176,834 5,787,241 968,091 5,974,747

Fish and crustaceans, molluscs and other aquatic invertebrates 4,124,875 8,745,237 5,517,886 7,733,742 8,249,868 19,949,193Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included 11,610,302 6,593,212 6,338,030 12,290,844 3,979,791 13,351,152

Products of animal origin not elsewhere specified or included 442,581 231,650 427,617 314,768 179,978 214,208Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage 1,501,940 1,157,850 1,025,224 1,010,800 1,209,407 2,549,634

Edible vegetables and certain roots and tubers 18,026,896 7,362,644 7,868,978 8,463,946 12,028,695 15,978,912

Edible fruit and nuts; peel of citrus fruits or melons 3,693,117 3,005,276 2,665,029 2,712,644 2,337,248 12,789,982

Coffee, tea, mate and spices 141,973,241 177,682,580 176,107,000 187,206,377 212,158,100 232,384,010

Cereals 57,101,595 73,113,960 39,869,569 31,767,791 27,874,943 24,261,805Products of the milling industry; malt; starches; inulin; wheat gluten 41,093,262 53,107,516 28,085,584 21,145,183 15,109,519 12,708,052Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medical plants; straw and fodder 27,052,423 22,736,774 20,106,012 43,142,458 22,525,173 26,325,286

Lacs; gums, resins and other vegetable saps and extracts 4,052,379 331,904 357,156 1,486,867 623,580 445,694Vegetable plaiting materials; vegetable products not elsewhere specified or included 39,788,083 44,934,700 43,256,235 37,081,099 37,738,036 31,377,594

Total 355,935,219 410,017,608 338,991,267 366,045,288 348,301,671 399,912,357Source: National Statistical Offices Note: (*) for the year 2002, data refers to the following reporting countries; Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Ethiopia, Comoros, Rwanda, Swaziland, Uganda, Zambia and Zimbabwe only.

Annex 6 Page 2 of 3

Table 2. Extra–COMESA Exports (US$) of Agricultural Commodities, 1997 – 2002

Description 1997 1998 1999 2000 2001 2002*Cereals 101,626,225 136,854,049 99,680,847 110,036,729 152,334,657 120,276,964Coffee, tea, mate and spices 1,556,397,990 1,511,438,972 1,242,339,507 1,110,669,729 495,214,708 550,600,296Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included 20,451,491 17,664,821 26,275,855 15,650,722 16,583,052 18,960,440Edible fruit and nuts; peel of citrus fruits or melons 144,575,656 134,680,986 137,605,499 129,817,237 70,670,018 94,171,055Edible vegetables and certain roots and tubers 202,010,104 216,836,944 224,745,668 247,319,777 250,403,890 259,011,278Fish and crustaceans, molluscs and other aquatic invertebrates 267,976,344 383,422,724 359,236,588 306,734,766 427,079,187 259,921,103Lacs; gums, resins and other vegetable saps and extracts 35,238,812 22,224,025 20,787,668 33,236,755 38,784,706 33,274,707Live animals 67,395,562 72,696,196 41,880,942 66,244,791 68,235,677 116,908,731Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage 141,457,219 155,257,332 158,721,019 155,186,240 186,473,603 177,494,502Meat and edible meat offal 46,626,110 488,085,606 50,730,519 66,898,010 52,804,627 49,587,366Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medical plants; straw and fodder 104,740,857 115,965,608 81,191,990 195,962,612 167,102,551 154,149,689Products of animal origin not elsewhere specified or included 8,401,680 10,623,221 8,024,509 7,707,883 5,398,023 5,180,905Products of the milling industry; malt; starches; inulin; wheat gluten 18,344,839 14,504,183 7,848,745 9,507,675 11,848,118 9,725,967Vegetable plaiting materials; vegetable products not elsewhere specified or included 7,934,397 11,270,806 26,994,534 41,599,788 20,629,666 19,875,125

Total 2,723,177,286 3,291,525,473 2,486,063,890 2,496,572,714 1,963,562,483 1,869,138,128Source: National Statistical Offices Note: (*) for the year 2002, data refers to the following reporting countries; Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Ethiopia, Comoros, Rwanda, Swaziland, Uganda, Zambia and Zimbabwe only. Table 3: Selected Macroeconomic Indicators for COMESA Member States Parameter Ang Bur Com DRC Dji Egy Eri Eth Ken Mad Mal Mau Nam Rwa Sey Sud Swa Uga Zam Zim GDP (US$' Billion) 16.90 3.80 0.44 34.00 0.62 268.00 3.30 50.60 32.00 12.60 7.20 13.20 12.60 9.00 0.63 52.90 4.80 31.00 8.90 27.00 Real Growth Rate (%) 9.0 2.1 2.0 3.5 3.5 1.7 2.0 5.5 0.8 –11.9 1.2 3.8 3.2 4.0 1.5 5.1 1.6 5.5 4.2 –12.1 Agric GDP (%) 8.0 50.0 40.0 55.0 3.5 17.0 17.0 52.0 24.0 25.0 37.0 6.0 11.0 45.0 2.4 43.0 17.0 43.0 22.0 18.0 Population (Millions) 10.77 6.10 0.63 56.63 0.46 74.72 4.36 66.56 31.64 16.98 11.65 1.21 1.93 7.81 0.08 38.11 1.16 25.63 10.31 12.58 Agric. Labour Force (%) 85 80 29.00 80.00 80.00 77.50 86.00 14.00 47.00 90.00 10.00 80.00 82.00 85.00 66.00 Export Value (US$ Billion) 8.60 0.03 0.02 1.20 0.07 7.00 0.02 0.43 2.10 0.70 0.44 1.60 1.21 0.07 0.24 1.80 0.82 0.48 0.71 1.57 "Extra"1 Exports (%) 82.8 83.6 75.2 79.5 91.0 46.8 25.8 27.6 31.5 70.4 56.5 93.5 83.0 42.5 83.9 68.7 93.4 46.1 42.4 72.3 "Intra"2 Exports (%) 17.4 7.4 4.0 53.7 13.2 12.0 7.8 Import Value (US$ Billion) 4.10 0.14 0.04 0.89 0.26 15.20 0.50 1.63 3.00 0.99 0.51 1.80 1.38 0.25 0.38 1.50 0.94 1.14 1.12 1.74 "Extra"3 Imports (%) 50.2 52.5 45.1 52.3 44.0 38.4 48.2 47.4 32.7 44.1 65.5 53.2 81.0 25.1 57.8 30.4 95.4 24.4 71.2 55.7 "Intra"4 Imports (%) 6.2 6.7 10.0 2.5 22.1 41.0 6.5 1. The proportion of exports to major trading partners outside the COMESA Region; 2. The proportion of exports to major trading partners within the COMESA Region 3. The proportion of imports from major trading partners outside the COMESA Region 4 The proportion of imports from major trading partners within the COMESA Region. Source: CIA World Fact Book 2003

Annex 6 Page 3 of 3

Table 4: Key Export Crops of COMESA Member States

Ang Bur Com DRC Dji Egy Eri Eth Ken Mad Mal Mau Nam Rwa Sey Sud Swa Uga Zam Zim

Coffee x x x x x x x x x Sisal x Fish and fish products x x x x x x x x x x Timber and wood products x x Cotton x x x x x x x x x Tea x x x x x Sugar x x x x x x Hides and skins x x x x Vanilla x x Ylang–ylang x Cloves x Copra x x Textiles and clothing x x x x x X Livestock x x x Sorghum x Food x Qat x Leather products x Live animals x Oilseeds x Horticultural products x Tobacco x x X Peanuts x x Wood products Cut flowers x x x x X Molasses x Spices x Fruits and fruit products x Sesame x Gum Arabic x

Source: CIA World Fact Book 2003

Annex 7 Page 1 of 2

Annex 7: Approach for Harmonizing SPS Measures and Details on Project Description

1. Approach for Harmonizing SPS Measures: Key constraints to SPS harmonization in COMESA are inadequate information sharing and dialogue among member states on SPS and limited analytical capacity. This leads to a failure to meet WTO requirements. Ineffective SPS measures put countries at risk of being affected by trans–boundary plant and livestock pests and diseases and this is most often a hindrance to agricultural trade. This also makes it difficult for member states to adequately access international markets for agricultural products and fully exploit EU and AGOA quotas. The WTO, the international body dealing with rules of trade between nations addresses these issues through the agreement on SPS measures, and 15 of the 20 COMESA member states are members of the WTO. All COMESA member states have also agreed to cooperate in harmonizing agricultural policies and strategies (including SPS measures) within the framework of the COMESA Agricultural Policy.

2. The project’s SPS activities via human, regulatory, operational, and institutional capacity building aim to relax some of the key constraints that hamper the harmonization of SPS measures in COMESA so as to promote safe agricultural trade and regional integration. In the spirit of transparency and mutual collaboration, the project will bring together, amongst others, its technical focal points (animal health, plant protection and food safety experts) in the 20 member states to dialogue on steps taken to date in harmonizing SPS measures in their respective countries, as well as to map out a sustainable way forward. This will be done in the context of workshops on the cardinal issues of SPS regulation and legislation, and on surveillance and emergency preparedness. Both workshops will ensure that the implementation of SPS measures by different countries is synchronized and moving at equivalent speeds and in the same direction. These workshops will discuss the differences that exist in the legislation, regulation and implementation capacities with regards to SPS, and produce guidelines on the process of harmonization of SPS measures in COMESA, including modalities and a harmonization timetable. Relevant authorities in member states will subsequently comment on and indicate their acceptance of the workshop reports. These reports will be communicated to the COMESA Secretariat. When a pre–agreed number of member states have accepted the reports so by an agreed date, COMESA will adopt the document, through its usual mechanisms, as a binding instrument for implementing SPS measures in the region. During project implementation, the SPS expert will follow up to ensure that the guidelines are implemented by member states as agreed. Backstopping missions will also be carried out by project consultants to provide technical guidance in the review of legislation, enhancement or establishment of SPS institutions and surveillance, emergency preparedness and trace–back systems. Countries that may be experiencing problems in upgrading their pest/disease surveillance systems will be assisted. An inventory of risk management facilities such as quarantine facilities will be carried out with a view to upgrade them in member States where they are not adequate. Although the above workshops will review each member state's legislation and compare it with the international frameworks for SPS related legislation (provided by the OIE, IPPC and CAC), the intention is not for all member states to have one piece or exactly the same legislation, but for each to use the general WTO framework to enact or amend its SPS legislation in accordance with each country's conditions, being mindful that whatever provisions are included do not hinder the free flow of trade, but facilitate it in accordance with the SPS agreement.

Details on Developing and Establishing the FAMIS: FAMIS will be managed by the COMESA Secretariat in conjunction with relevant institutions in member states. Information collected by the public sector will be disseminated through the FAMIS internet website at a

Annex 7 Page 2 of 2

nominal fee, while that collected by the private sector will be provided at a commercial fee. This is intended to recover the cost of producing such information and ensure project sustainability. The databases will accommodate traceability requirements necessary for products to enter EU markets, including origin of production, production regimes and certification.

Details on SPS Training for Middle Level Field Staff: Each member state will send 1 middle level field officer from each of the 3 SPS areas to these workshops. Due to the large number of participants, workshops will be split into 4, each to be held separately in a different sub–region and catering for a group of officers from that sub–region. The grouping will be based on the geographical proximity of the countries, their trade relations and language inclinations. Group 1 will comprise officers from Angola, Malawi, Swaziland, Zambia and Zimbabwe and this workshop will be held in Swaziland or Malawi. Group 2 will comprise officers from Comoros, Madagascar, Mauritius and Seychelles, and will be held in Mauritius or Seychelles. Group 3 will comprise officers from Burundi, D.R.C., Rwanda, Djibouti and Eritrea, and will be held in Eritrea or Djibouti. Group 4 will comprise officers from Egypt, Ethiopia, Kenya, Sudan and Uganda, and will he held in Ethiopia or Sudan. For each workshop, 3 sessions will be conducted concurrently, each for the three SPS areas. The first and last sessions of the workshop will be a plenary for all groups. The workshops will be held at different times to enable the project SPS expert to participate in each of them.

Annex 8

Annex 8: Highlights on the Project Preparation and Review Process

1. Project Identification: The project was identified in November 2001 by an Agricultural Economist. The expert visited the COMESA Secretariat in Zambia, consulted extensively with the Secretariat, public and private stakeholders, including various donors and discussed the project outline with them. The mission obtained first hand knowledge on the project’s sector and sub–sectors, their potential and underlying constraints. This assisted the Bank Group in making an informed determination about the quality of the proposed operation in conformity with the requirements of the Agricultural and Rural Development Policy, and the ADF IX Policy for Financing Multinational Operations vis a vis COMESA’s regional agricultural development priorities.

2. Project Preparation: The project was prepared in June 2003 by a multidisciplinary team of experts comprising an Agricultural Economist, a consultant Sanitary and Phyto–sanitary expert and a consultant Agricultural Marketing expert. The mission visited Zambia and Egypt. In order to ensure project quality and entry, the mission conducted an informal participatory appraisal of the priority constraints and needs of the project’s target beneficiaries and sought and obtained their views on how to best to address these problems. The mission also obtained guidance from public, private and donor partners on roles that they could play in the project, as well as how to ensure its sustainability. These ideas guided the project’s design. The mission determined the project’s capability from a technical, socio–economic, institutional, and environmental point of view, of achieving its objective, with the least possible risk. It analyzed of all factors that will help in project appraisal.

3. Project Appraisal: The project was appraised in August/September 2003 by a team comprising a consultant Sanitary and Phyto–sanitary Expert and an Agricultural Economist. The mission visited Zambia and Kenya and continued its broad consultative and participatory process that was commenced at identification. Public and private interest groups, as well as donors that have assisted COMESA in implementing its agricultural trade promotion and regional integration agenda were closely consulted. A systematic review and verification of all aspects of the project was conducted by the mission, including preparing appropriate ADF grant recommendations on which Board approval can be based. The draft grant conditionalities were discussed and agreed on with the COMESA Secretariat.

4. Internal Working Group Review: The internal review meeting that considered the project appraisal report was held on 26 September 2003. The report was carefully revised based on all comments received and processed further in accordance with the requirements of the Bank Group’s Operations Manual.

5. Interdepartmental Working Group Review: The project appraisal report was reviewed at the interdepartmental level on 7 October 2003. The report was fully revised based on the insightful comments received and processed further as required by Bank Group policy.

6. Senior Management Committee Review: Following interdepartmental clearance, the project appraisal report was first considered by an informal Senior Management Committee comprising ONAR management and ONVP. This was followed by a formal Senior Management Committee review on 12 December 2003. Both meetings provided ONAR with comments pertaining to important strategic issues such as cross–cutting and project sustainability, with a view to improving the project’s quality at entry. The report was revised comprehensively based on comments received from both meetings.