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AFRICAN DEVELOPMENT FUND
Rural Enterprises Programme III (REP III) COUNTRY: Ghana
APPRAISAL REPORT Date: October 2012
Appraisal Team
Regional Director : Mr. Janvier K. LITSE
Sector Ag. Director: Mr. Abdirahman BEILEH
Resident Representative: Mrs. Marie-Laure AKIN-OLUGBADE
Sector Manager: Mr. Dougou KEITA
Mission Leader: Jonas Nwankwo CHIANU, Principal Agricultural Economist, OSAN.2
OSAN DEPARTMENT
November 2012
TABLE OF CONTENTS
Page
CURRENCY EQUIVALENTS, FISCAL YEAR, WEIGHTS AND MEASURES, ACRONYMS AND
ABBREVIATIONS, LOAN/GRANT INFORMATION, PROGRAMME SUMMARY,
RESULT-BASED LOGICAL FRAMEWORK, PROJECT TIMEFRAME i – vii
I – STRATEGIC THRUST & RATIONALE ....................................................................... 1 1.1. Programme linkages with country strategies and objectives ..................................... 1 1.2. Rationale for Bank’s involvement ............................................................................. 1
1.3. Donors’ coordination ................................................................................................. 2 II – PROGRAMME DESCRIPTION ..................................................................................... 2
2.1. Programme components ............................................................................................ 2 2.2. Technical solution retained and other alternatives explored ..................................... 3
2.3. Programme type ........................................................................................................ 4 2.4. Programme cost and financing arrangements ........................................................... 4 2.5. Programme’s target area and population ................................................................... 6
2.6. Participatory process for programme identification, design and implementation ..... 7 2.7. Bank Group experience, lessons reflected in the programme design ........................ 7
2.8. Key performance indicators ...................................................................................... 9 III – PROGRAMME FEASIBILITY ...................................................................................... 9
3.1. Economic and financial performance ........................................................................ 9 3.2. Environmental and social impacts ........................................................................... 10
IV – IMPLEMENTATION .................................................................................................... 13
4.1. Implementation arrangements ................................................................................. 13 4.2 Monitoring ............................................................................................................... 15
4.3. Governance .............................................................................................................. 16
4.4. Sustainability ........................................................................................................... 16
4.5 Risk management .................................................................................................... 17 4.6 Knowledge building ................................................................................................ 17
V – LEGAL INSTRUMENTS AND AUTHORITY ........................................................... 18 5.1. Legal instrument ...................................................................................................... 18 5.2. Conditions associated with Bank Group intervention ............................................. 18
5.3. Compliance with Bank Policies .............................................................................. 18 VI – RECOMMENDATION ................................................................................................. 18
Appendix I. Ghana Country’s comparative socio-economic indicators ....................................... I Appendix II. Table of ADB’s On-going Portfolio in the Ghana ................................................. II Appendix III. Key related Projects Financed by the Bank and Other Development partners in
the country ........................................................................................................................ IV Appendix IV. Map of the Programme Area ................................................................................ V
Appendix V. Procurement Arrangements of the project ............................................................ VI
V-1: Procurement Arrangements (UA million) ......................................................................... VI
Appendix VI. Project Activities by Components .................................................................... VIII
i
Currency Equivalents
As of October, 2012
1 UA = GHS 3.10
1 USD = GHS 1.98
1 UA = USD 1.54
Fiscal Year 1st January – 31st December
Weights and Measures
1 metric tonne = 2204 pounds (lbs)
1 kilogramme (kg) = 2.200 lbs
1 metre (m) = 3.28 feet (ft)
1 millimetre (mm) = 0.03937 inch (“)
1 kilometre (km) = 0.62 mile
1 hectare (ha) = 2.471 acres
Acronyms and Abbreviations
ADF African Development Fund
AGI Association of Ghana Industries
ACPI Agricultural Commodity Processing Infrastructure
AgSS Agricultural Sector Strategy of the African Development Bank
ARB Association of Rural Banks
ARI Agricultural Research Institute
ASSI Association of Small-scale Industries
BAC Business Advisory Centre
BDO Business Development Officer
BDS Business Development Services
BoG Bank of Ghana
CRI Crop Research Institute
CSP Country Strategy Paper
DA District Assembly
DoTI Department of Trade and Industry
EA Executing Agency
EIA Environmental Impact Assessment
EBE Enabling Business Environment
EIRR Economic Internal Rate of Return
EPA Environmental Protection Agency
FAO Food and Agriculture Organisation of the United Nations
FRI Food Research Institute
GDP Gross Domestic Product
GHS Ghana Cedi
GaHS Ghana Household Survey
GoG Government of Ghana
GPRS-I Ghana Poverty Reduction Strategy-Phase I
GPRS II Growth and Poverty Reduction Strategy-Phase II
ii
GRATIS Ghana Regional Appropriate Technology Industrial Service
GSGDA Ghana Shared Growth and Development Agenda
HRD/MoFA Human Resource Directorate of MoFA
IFAD International Fund for Agricultural Development
IITA International Institute of Tropical Agriculture
IIR Institute of Industrial Research
JICA Japan International Cooperation Agency
LBA Local Business Association
METASIP Medium Term Agriculture Sector Investment Plan
MM Malnutrition Matters
MGF Matching Grant Fund
MLGRD Ministry of Local Government and Rural Development
MoFA Ministry of Food and Agriculture
MoWAC Ministry of Women and Children’s Affairs
MoFEP Ministry of Finance and Economic Planning
MoTI Ministry of Trade and Industry
MSE Micro and Small-scale Entrepreneur
MSME Micro Small and Medium Scale Enterprise
MTS Medium Term Strategy
NBSSI National Board for Small-Scale Industries
NEPAD New Partnership for Africa Development
NDPC National Development Planning Commission
NPV Net Present Value
NRGP Northern Rural Growth Programme
NVTI National Vocational Training Institute
PCMU Programme Co-ordination and Management Unit
PEF Private Enterprise Foundation
PFI Participating Financial Institution
PPP Public-Private Partnership
PSC Programme Steering Committee
RAFiP Rural and Agricultural Finance Programme
RBLF Result-Based Logical Framework
REDF Rural Enterprise Development Fund
REP III Rural Enterprise Programme, Phase III
RTF Rural Technology Facility
RECOMEP Regional Committee on MSE Promotion
SDC Swiss Agency for Development and Cooperation
SESA Strategic Environmental and Social Analysis
SME Small and Medium Enterprise
SSE Small Scale Enterprise
TVET Technical and Vocational Education Training
UA Unit of Account
iii
Loan/Grant information
Client’s information
______________________________________________________________________
RECIPIENT: Government of Ghana
EXECUTING AGENCY: Ministry of Trade and Industry
Financing plan
Source Amount (million)
Instrument
UA GHS African Development Fund (ADF) 49.69 151.61 Loan /Grant
International Fund for Agricultural Development (IFAD) 20.64 63.57 Loan
Government of Ghana (GoG) 15.85 48.35 Counterpart cont.
District Assemblies (DAs) 25.82 78.74 Counterpart cont.
Beneficiaries/Clients 7.57 23.08 Own fund
Participating Financial Institutions (PFIs) 5.68 17.31 Own fund
TOTAL PROGRAMME COST 125.25 382.66 -
ADF’s key financing information
Loan currency UA
Tenure 50 years
Grace period 10 years
Commitment fee 0. 5% (50 basis points)
Other fees 0. 75% (service fee)
Timeframe - Main Milestones (expected)
Government Request for Bank Support July, 2011
Identification Mission December, 2011
Preparation Mission January, 2012
Concept Note Approval August, 2012
Appraisal Mission September, 2012
Programme approval December, 2012
Effectiveness March, 2013
Completion December, 2017
Last Disbursement March, 2018
iv
Programme Summary
1. Programme Overview: The sector goal of the Rural Enterprises Programme III (REP
Phase III) is to improve the livelihoods of rural micro and small-scale entrepreneurs (MSEs).
The development objective is to increase the number of rural micro and small-scale
enterprises that generate profit, growth and employment opportunities. The current phase aims
at scaling up the impact and outcome results of earlier phases (REP I and II). It is the Bank’s
response to meeting Ghana’s Shared Growth and Development Agenda (GSGDA) and
emphasizes inclusive growth, youth employment, and women economic empowerment. It has
four components: (1) Creation of Business Development Services (BDS); (2) Development of
Agricultural Commodity Processing Infrastructure (ACPI); (3) Creation of Enabling Business
Environment (EBE); and (4) Programme Coordination and Management (PCM). REP III is
part of the Government of Ghana’s efforts to reduce poverty and improve living conditions in
rural areas, by promoting the infrastructure, technologies, and skills needed for private sector
development. It will create 100,000 new jobs, through its various activities. The total
programme cost is estimated at UA125.25 million (GHS382.66 million). It will be financed
by the African Development Fund for UA49.69 million (39.7%); GoG, UA15.86 million
(12.7%); IFAD, UA20.64 million (16.5%); Districts Assemblies, UA25.82 million (20.6%);
Participating Financial Institutions (PFIs), UA5.68 million (4.5%); and beneficiaries, UA7.57
million (6.0%). It will be implemented in 161 out of 170 rural districts of Ghana. ADF funded
activities will be implemented over five years (2013–2017).
2. Needs Assessment: The GSGDA places emphasis on the promotion of MSEs by
strengthening the capacity of the private sector to be an engine of economic growth and
poverty reduction. It does this through strengthening the competitiveness of enterprises and
agro-industry promotion. Ghana’s agriculture is characterized by subsistence production
units; low technology, productivity, and returns; and weak linkages to the industry.
Agricultural transformation through agro-based industrial development, value addition,
expansion of employment and technological capacity, and promotion of spatial distribution of
industrial development to reduce poverty and income inequalities are among the key
development objectives of Ghana. The formulation of REP III followed a participatory
process. Its design also took into account the findings and recommendations of two studies
financed by the Bank in 2012: Promotion of Youth Employment in Agriculture; and
Competitiveness of the Products of Rural Technology Facilities (RTFs).
3. Banks’s Added Value: Through REP III, the Bank will contribute to agriculture
transformation through infrastructure development and capacity building, following a value
chain approach. The Bank will provide the Government of Ghana with finance and technical
assistance needed for sustainable MSE promotion. It will develop synergy with on-going
Bank and other donors-funded projects such as the Support to Development of Skills for
Industry and the Northern Rural Growth Programme.
4. Knowledge Management: The programme will facilitate the creation and transfer of
knowledge in sustainable farm and agro-processing businesses as well as the design and
fabrication of machinery, equipment and spare parts related to the agricultural sector. All
major stakeholders will participate in the monitoring and evaluation system. Provision has
also been made for periodic impact assessment. Through these and the Bank’s supervision
missions, the knowledge generated will be captured, disseminated, and used.
v
Result-Based Logical Framework (RBLF)
Country and project name GHANA – Rural Enterprise Programme – Phase III (REP III)
Purpose of the project: To improve the livelihoods of rural micro and small-scale entrepreneurs (MSEs)
Result chain Performance indicator Means of verification Risk/mitigation measures
Indicator (2012) Baseline (2012) Target (2017): Disaggregated by gender & age
IMP
AC
T
S
Increased
economic
growth and
reduction in
poverty
Growth rate in Annual Real
Gross Domestic Product (GDP)
4.5% GDP 6% GDP Ministry of Finance and
Economic Planning and
Institute of Statistical and
Social Research (ISSER)
reports
Incidence of poverty as % of
population
28.7% 22%
OU
TC
OM
ES
Income generation and
sustainable
agribusiness establishment
% change in income of targeted beneficiaries
GHS 1217/HH/Yr. (GLSS,2000) 30% increase in household income Ghana Living Standards and National H-hold Expenditure
Surveys;
Client Profile and Poverty Analysis
Risk: Government decentralization derail
Mitigation: Advocacy and dialogue
on agenda of decentralization
Number of formal and functional
MSEs created
76,693 MSEs are installed in rural areas of
which only 27,677 (36%) are agro-based. 767 (1%) of the established businesses were in
rapid growth stage
903 (1.18%) are registered and 3,960
businesses are members of LBAs
85,561 new MSEs are created in rural areas of which 60,231
(70.4%) are agro-based. Women are involved in 40% of these enterprises.
20,000 of the established businesses (23.4%) are in rapid
growth stage.
59,892 (70%) are registered and 32,200 businesses are
members of LBAs
NBSSI, GRATIS, DAs, REP,
National Development Planning Commission,
Business associations (ASSI,
AGI), Registrar General’s
Department reports
Risk: Exposure of rural formal
MSEs to the current enterprise taxation
Mitigation: Deliberate tax policy
improvement in favor of rural
MSEs.
Number of wage jobs created 54,683 wage jobs created in 66 districts 100,000 new wage jobs create in 161 new districts (40%
women and 20% youth, 5% disabled people & PLWHA)
OU
TP
UT
S
Output 1:
Creation of
Business
Development
Services (BDS)
Number of BACs established and
training institutes strengthened
10 regional and 66 district-based BACs; zero
farm institutes
10 regional and 161 (66 old + 95 new) district-based BACs;
3 farm institutes + 1 animal traction centre strengthened
NBSSI, REP, BACs, DAs,
HRDMD/MOFA, ONGs, CSIR, LBAs and business
associations (ASSI, AGI)
reports.
Risk: Government counterpart and
DAs funds not paid in time; Mitigation: Continued close
collaboration and partnership with
government and DAs.
No. of BAC staff trained; No. of LBA members trained
No. of ToTs at Farm Institutes
132 BAC staff trained 3,882 LBAs members trained
No farm institute TOT
164 BAC staff trained (30% women) 2000 new LBAs members trained (30% women)
30 Farm Institutes Trainers trained
Number of beneficiaries of CBST 108,893 beneficiaries of CBST of which
33 846 in non- agro-based businesses.
293,000 beneficiaries of CBST of which 3818 in non- agro-
based businesses (50% are women)
Number of agro-based and
connected rural businesses
established
The number of agro-processing, farm-based
and other connected businesses installed are
7,610; 20,067 and 33,846, respectively.
The number of new agro-processing, farm-based and other
connected businesses created are 25,231 (30% women);
35,000 (50% women) and 2,500 (60% women),
respectively.
No. of MSEs counseled by BACs 30,714 MSEs counseled by BACs 74,000 MSEs counseled by BACs, Farm Institutes and
Champion LBA members
Number of start-up kits provided
to agro-processing and farm-based businesses
Zero start up kits for agro-processing and
2,090 startup kits for farm-based business
4,050 startup kits for agro-processing (40% for women
groups; 5% for disabled & OLWHA) & 4,200 startup kits for farm-based businesses (50% for women groups)
Output 2:
Development of
Agricultural
Commodity
Processing
Number of RTFs constructed and
equipped
21 RTFs established and equipped with
workshops machines and tools
30 new RTFs are constructed & equipped with machines
and agro-processing prototypes.
GRATIS, REP, RTFs, DAs, TCC, CSIR, ONGs, IITA,
LBAs and Business
Association (ASSI, AGI)
Risk: Failure of partners to play assigned roles
Mitigations: MOU supported with
incentives to participating partners.
Number of hostels constructed at
RTFs and Resource centres
constructed at BACs
Zero hostels at RTFs and zero resources
centres the BACs
40 hostels & 42 resources centres constructed at selected
RTFs and BACs
vi
Infrastructure
(ACPI)
No. of trainees in workshops activities
4,393 master craftsmen, 15,170 traditional apprentices, and 38 technical apprentices
(3years training) trained and supported with
3,430 startup kits.
39,691 new master craftsmen and traditional apprentices and 1,712 technical apprentices trained & supported with 6,000
startup kits (10% women; 20% youth; 5% disabled people &
PLWHA).
reports. Steady interactions among partners. Use of participatory approach
initiated during formulation.
Risk: Government counterpart and
DAs funds not paid in time;
Mitigation: Continued close collaboration and partnership with
government and DAs.
No. of trainees on agro-
processing and farm equipment
and implement.
7,610 persons trained in agro-processing and
farm equipment and implement
32,841 persons trained on agro-processing and farm
equipment and implement (30% women)
Number of workshop businesses
established
15,170 workshops installed
22,830 workshop businesses created of which 10% are
owned by women.
No. of l RTFs under PPP or
private management
The 21 old RTFs of REP I & II are managed
by DAs and GRATIS
The 21 RTFs are managed with PPP or private sector.
Output 3:
Creation of
Enabling
Business
Environment
(EBE)
No. of Financial Institutions participating in the Rural
Enterprises Fund (REDF)
40 rural and community FIs are participating in REDF
100 rural and community FIs participating in REDF REP data base
Bank of Ghana, ARB Apex
Bank, RAFiP reports;
Sub-committees on MSEs
promotion reports;
MoTI reports
Risk: PFIs charge high interest rates because perceive borrowers as
high risk clients
Mitigation: BACs provides services that reduce the perceived
risk of clients, ensuring that MSE
sub-committees, RECOMEP and ASSIs have reflective
representation of women, the youth,
disabled people & PLWHA
No. of MSEs accessing the Matching Grant Fund (MGF) and
REDF and total credit
disbursement
267 MSEs accessed MGF amount of USD563,425; 6,900 MSEs accessed REDF
amount of USD 225,340
7,000 MSEs access MGF amount of USD1.9 million; 27, 000 MSEs accessed REDF amount of USD4,850 million
No. of DOTIs , district (DAs) and regional (RCC) sub-
committees on MSEs and ASSI
strengthened
0 DoTI, 66 district sub-committee and 0 Regional Committee on MSEs promotion
(RECOMEP/ RCC) and 0 district ASSI are
functional
161 DoTI, 161 MSE sub-committees, 10 RECOMEP and 161 district ASSIs are functional.
No. of policy dialogue and
specific MSEs related fiscal,
market or credit legislation
Zero policy dialogue on fiscal, market and
credit related to MSEs initiated by the
Directorate of SME and technology of MoTI, REP and LBAs.
Two policy initiatives emanating from the SME Directorate
of MoTI, REP and other stakeholders on taxation, marketing
and financing of MSEs.
Output 4:
Programme
Coordination
& Management
- Counterpart fund mobilization
- Rate of execution (financial,
work plan) and disbursement
- REP I and II in all cases
100% in all cases at the end of the programme
Programme reports;
Supervision reports; Audit
reports; Mid-Term Review.
Risk: Weak procurement capacity at
the RTF and BAC levels
Mitigation: Provision has been made
to build the at this level in line with
Public Procurement Act663, 2003
KE
Y A
CT
IVIT
IES
AC
TIV
ITIE
S
Component 1: Creation of Business Development Services (BDS)
Community based skill training BST will be provided to 293 000 clients in 161 BACs (66 old+95 new). Of these 62,731 will established their business.
Intensive training will be provided to 6000 graduate youth in the farm institutes and supported with start -up kits to establish their group and communal businesses
Component 2: Development of Agricultural Commodity Processing Infrastructure (ACPI)
Construction and equipment with metal and carpentry machines of 30 new RTFs
Training of 39,691 master craftsmen, traditional and technical apprentices in the construction, maintenance and spare parts of farm based, agro-processing machines.
Component 3: Creation of Enabling Business Environment (EBE)
Improved access to credit (MGF and REDF) and Building capacity of stakeholders
Two policy initiatives on taxation, marketing and financing of rural MSEs.
Component 4: Programme coordination and Management REP II PCMU continue but strengthened
Project cost (UA million) by
category of expenditure
Category
Works: 4.60
Goods: 13.47 Services: 40.88
Operating costs: 30.14
Miscellaneous: 13.56
Total Project Cost: 125.25
vii
Programme Timeframe
Task Name
2012 2013 2014 2015 2016 2017
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Negotiations
Board approval
Signature of Loan and Grant Agreement
Appointing remaining PCMU team members
Satisfaction of conditions for effectiveness and first
disbursement
Programme launch
Finalization and validation of procedures manuals
Conducting baseline studies
Preparing, signing agreement/protocols with implementing
partners
Prepare, approve and float Bid docs and contract awards for Goods, Works & Services
Contracts execution for Goods, Works and Services
Quarterly reports submission
Annual reports submission
Programme Work plans and Budgets
Steering committee meetings
Bank’s supervision missions
Audit
Mid-term review
Programme Completion Reporting
Impact assessment and technical audit
1
REPORT AND RECOMMENDATION OF MANAGEMENT
TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN AND GRANT
FOR THE RURAL ENTERPRISES PROGRAMME III (REP III) IN GHANA
Management submits the following report and recommendation on a proposed loan of UA26.69
million and grant of UA23.00 million to finance the Rural Enterprises Programme III (REP III) in
Ghana.
I – STRATEGIC THRUST & RATIONALE
1.1. Programme linkages with country strategies and objectives
1.1.1 The proposed Rural Enterprises Programme is designed within the context of the agricultural
modernization and micro and small-scale enterprises development priorities of Ghana. It supports
Ghana’s Shared Growth and Development Agenda (GSGDA, 2010–2013) which focuses on poverty
reduction; skills improvement; promotion of the use of appropriate technologies; improvement of
access to capital resources for the rural entrepreneurs; and capacity building in agricultural commodity
processing. It also supports Ghana’s Industrial Policy, which addresses the need to grow micro, small
and medium enterprises (MSMEs) to foster diversification of the economy and employment creation.
The GSGDA identified the agriculture sector as an engine of inclusive growth and source of
employment. REP III will strengthen the linkages between the agriculture sector and the industry and
services sectors. It is considered pivotal in the implementation of the decentralisation of the Ministry
of Trade and Industry (MoTI) and is linked to its Private Sector Development Strategy.
1.1.2 REP III conforms to the key policies of the Bank and its assistance strategy for Ghana. It falls
under Pillar 1 (Improving productivity in Ghanaian enterprises, particularly in the micro, small and
medium agribusinesses) of the Ghana Country Strategy Paper (2012–2016).
1.2. Rationale for Bank’s involvement
1.2.1 The Bank has a comparative advantage in supporting rural enterprises programme in Ghana.
This is a follow-up phase and the Bank was instrumental to the success recorded in the preceding
phase as captured in the PCR ratings: 3.0 for the Overall Project Outcome, 3.5 for Overall Bank
Performance, and 3.57 for Overall Borrower Performance (all out of a maximum of 4). These
translated into effective coverage of 66 districts in REP I and II, with 95 more districts planned in
REP III due to the enthusiasm of the District Assemblies, self-employment creation, increased food
security and household income, and enhanced ability of households to pay tuition for children and
health services. The current phase aims at scaling up the positive impact and outcomes of earlier
phases (REP I and II). It constitutes one of the ways through which the Bank is supporting Ghana as it
pushes through its new industrial development and sustainable food security agenda. It also provides
an opportunity for the Bank to implement its new approach to agriculture transformation – the Value
Chain Development (VCD) approach, involving collaboration with non-traditional partners (private
sector and MoTI, in particular). The performance of farm-based businesses established under REP II
will be enhanced in REP III through the harnessing of the opportunities provided by the existing
training and extension institutions of Ministry of Food and Agriculture (MoFA).
1.2.2 The programme has a great potential as an engine of inclusive growth. According to one of the
studies that fed into its formulation, REP III holds a great potential in enhancing the role of agriculture
and agro-enterprises in this inclusive growth, youth employment, and the attenuation of rural-urban
migration. This is especially important to the Bank, given its current attention to contributing in
building the skills of the youth for productive employment.
2
1.2.3 REP III avails the Bank another opportunity to participate in the implementation of the six
programmes of the Medium Term Agriculture Sector Investment Plan (METASIP: 2011-2015) of
Ghana. METASIP is also linked to NEPAD’s Comprehensive African Agricultural Development
Programme and the Millennium Development Goals and is consistent with the ECOWAP plan and
framework and provides the framework and opportunity for expanded cooperation with regional
programmes and joint actions with neighbouring countries.
1.2.4 The programme supports increase food security and reduction in poverty. It also promotes
inclusive growth in line with the Bank’s own priorities as stated in its Medium-Term Strategy (MTS)
of 2008-2012, the Bank’s Agricultural Sector Strategy (AgSS) for 2010 – 2014, which emphasizes the
need for the Bank to invest in agricultural infrastructure development, and the Bank’s draft Long
Term Strategy (2013-2022). The programme is indeed in line with the Long Term Strategy (LTS)
under preparation regarding inclusive growth objective through the involvement of youth, women and
skills development.
1.3. Donors’ coordination
Donor coordination mechanisms for the Agriculture Sector in Ghana are effective.
Coordination under the Agriculture Sector Working Group (ASWG) began in 2002 and provides a
platform for sharing information on ongoing and planned future activities with the aim of harmonizing
interventions. The group holds annual joint sector reviews where donors, Government,
implementation partners, civil society organizations (CSOs), and the private sector review the
performance of the sector to inform planning and decision making. The ASWG is an open group of
donors; quasi donors; implementers including NGOs, CSOs, private sector, etc.; and Government
Ministries. A matrix of interventions by donors is presented in Annex A1 of the Technical Annexes.
The coordination of aid through the ASWG is enhancing aid effectiveness through harmonization and
alignment of development partner support. DPs and GoG signed the “Ghana-Development Partner
Compact” in 2012 to support the GSGDA implementation. In addition to the Bank, other multilateral
organizations active in Ghana’s agricultural sector include: IFAD, the World Bank, FAO, USAID, and
JICA.
II – PROGRAMME DESCRIPTION
2.1. Programme components
The sector goal of the REP III is to improve the livelihoods of rural micro and small-scale
entrepreneurs (MSEs). The development objective is to increase the income of rural MSEs for profit,
growth and employment creation. The expected outputs results include: (i) establishment of 95 new
BACs, 30 RTFs and 20 resource centres; (ii) training of 293,000 beneficiaries in agribusinesses and
76,000 clients on fabrication and repairs of agro-processing machines and tools; (iii) support the
establishment of women and youth-owned businesses; (iv) technical assistance in institutional and
individual capacity building; and (v) the strengthening of the PCMU. The development model of REP
III is presented in Annex C12 of the Technical Annexes. Table 2.1 below describes the programme
components.
3
Table 2.1: Programme Components (see details in the Technical Annex)
No Component & Amount
(Base costs)
Component Description
1 Component 1: Creation of
Business Development
Services (BDS)
(Amount: UA 40.16 million)
The 161 BACs (66 old and 95 new) installed within the DAs will be backstopped by
NBSSI to implement the BDS through:
Community based skill training relevant in farm-based, agro-processing and others
rural businesses for 293,000 clients;
Support and counseling of 55,000 established businesses to move them from
survival to profit;
Provision of 8,250 start-up kits (small animal rearing cages, fabrication tools, etc.)
to enterprises established by the youth and women. These are among the 62,731
businesses to be established in REP III.
Involvement of public (e.g., 4 farm institutes) and private services providers
(NGOs, formal business leaders) in the BDS component and for provision of
services such as training, guidance and counseling, among others.
2 Component 2: Development
of Agricultural Commodity
Processing Infrastructure
(ACPI)
(Amount: UA 43.81 million)
The 51 RTFs (21 old and 30 new) will be backstopped by GRATIS Foundation to
implement the ACPI component through:
The training of 39,690 master craftsmen and 32,840 agro-processing clients in the
construction, repair and maintenance of farm and agro-processing equipment;
The involvement of public (e.g., CSIR, IITA, TCC) and private sector (MM,
LBAs leaders) in the training;
The provision of 6,000 start-up kits (e.g., fabrication tools) for new master
craftsmen (youth) and other rural entrepreneurs;
Assistance of the DAs in running the RTFs, using PPP model found most efficient.
3 Component 3:Creation of
Enabling Business
Environment (EBE)
(Amount: UA 12.85 million)
including UA64,940
earmarked for ESMP)
Activities in this component include:
Access by 27,000 MSEs to Rural Enterprises Development Fund (REDF) loans
and by 7,000 youth and women-owned MSEs to MGF. A triangular relationship
will be developed between the PFIs, stockists and the clients to ensure effective
use of the loan;
On behalf of the BoG and ARB Apex Bank, RAFiP will monitor the 100 PFIs to
ensure efficiency in loan disbursement and utilization;
Contribution to Ghana decentralization process by supporting the functioning of
the 161 districts and 10 regional sub-committees on MSE promotion targeted in
REP III;
Involvement of LBAs in the planning and implementation of programme activities
4 Component 4: Programme
Coordination & Management
(PCM)
(Amount: UA5.37 million)
The same PCMU of REP II will be strengthened to efficiently implement REP III.
Staff to strengthen the PCMU will include: a Financial Management Officer, an
M&E Officer, an Environmental and Social Safeguards Specialist, and a
Procurement Officer.
2.2. Technical solution retained and other alternatives explored
Table 2.2 presents design options considered and reasons for their rejection.
Table 2.2: Programme alternatives considered and reasons for rejection
Alternative name Brief description Reasons for rejection
MoFA as Executing
Agency instead of
MoTI. Human
Resources &
Engineering
Directories of MoFA
substituting NBSSI
and GRATIS of
MoTI.
Instead of establishing
BACs and RTFs by MoTI
at the district level, MoFA
will implement REP III
through its existing
regional and district
structures and TVET
institutions. These will be
strengthened to variously
backstop agro-based
enterprises
MoFA and its agencies did not have the capacity and
proven experience to effectively backstop workshops,
agro-processing and agro-industry businesses.
MoTI has stronger link with industries and has
acquired strong experience from REP I and II. However,
design of REP III has been improved to ensure higher
MoFA involvement.
4
Alternative name Brief description Reasons for rejection
BDS and TPSAT
training backstopped
by NBSSI and
GRATIS within
existing TVET
institutions.
This involves delivering
BDS and ACPID training
to 293,000 and 76,000
persons, respectively, by
strengthening existing 301
TVET institutes (141
public and 160 private)
without construction of
new facilities (BACs &
RTFs)
The 301 TVET institutes are not evenly spread in the
171 districts of REP III. Many are located in regional
capitals or not agro-business oriented. It is logistically
difficult for them to train such large number of persons
located in communities all over the country in agri-based
enterprises. However, TVET institutes related to agri-
based enterprises will be involved in REP III
implementation.
Dispatching the four
(4) Programme
components
distinctively between
IFAD and the Bank
This involves for example,
IFAD funding activities in
components 1 & 3 and the
Bank funding activities in
components 2 and 4 to
ovoid redundancy.
All 4 components include interventions where both
IFAD and the Bank have comparative advantage.
Budget by each institution could not separately fit
distinctive components and M&E cannot be carried out
by component.
Observance of donor coordination is equally important.
DAs involve trade
associations, private
sector, NGOs and
GRATIS and NBSSI
in bidding for works
and services similar to
those relevant to
BACs and RTFs.
DAs, the owners of BACs
and RTFs get less involved
in their functioning; Most
reliable institutions
recruited by DAs to run
these structures.
Decentralization not yet fully implemented; Ministries
yet to hand over regional and local institutions to DAs.
Private institutions (NGOs, business men, private
TVET) may not be willing to take over the social aspects
(subsidized and low cost training & counseling) currently
undertaken by government agencies such as GRATIS and
NBSSI; Besides, no economic study to show profitability
of REP III BACs & RTFs; No strong basis for bidding.
Also, MSEs & LBAs still weak.
2.3. Programme type
This is an investment programme financed with ADF loan/grant.
2.4. Programme cost and financing arrangements
2.4.1 The total programme cost is UA125.25 million (USD192.9 million) or GHS 382.66 million,
net of taxes and customs duties. This is made of UA102.19 million (81.6%) in base costs and
UA23.07 million in physical (6.1%) and price contingencies (12.3%). The foreign exchange element
is UA31.08 million estimated at 25% of total cost. A summary of the costs by component is shown in
Table 2.3 and by category of expenditure in Table 2.4.
Table 2.3: Summary of Programme Cost Summary by Component
COMPONENT
(GHS Million)
(UA Million) Foreign
% Local Foreign Total Local Foreign Total
1. Creation of Business Development Services (BDS) 101.60 21.18 122.79 33.31 6.85 40.16 17
2. Development of Agric. Comm. Proc. Infra. (ACPI) 79.10 54.77 133.87 25.88 17.92 43.80 41
3. Creation of Enabling Business MSE Environment
(EBE)
3.1. Access to Rural Finance 33.05 3.39 36.44 10.84 1.11 11.95 9
3.2. Institutional Capacity Building and Policy
Dialogue 1.61 1.12 2.73 0.53 0.37 0.90 41
Subtotal 34.66 4.51 39.17 11.37 1.48 12.85 12
4. Programme Coordination & Management (PCM) 12.82 3.56 16.38 4.20 1.17 5.37 22
Total BASELINE COSTS 228.18 84.02 312.20 74.76 27.42 102.18 27
Physical Contingencies 16.75 6.48 23.24 5.49 2.12 7.61 28
Price Contingencies 42.50 4.72 47.22 13.92 1.54 15.46 10
Total Programme Costs 287.43 95.23 382.66 94.17 31.08 125.25 25
5
Table 2.4: Summary of Programme Cost by Category of Expenditure (UA million)
CATEGORY Base Cost Phys. Cont Price Cont.
FE Local Total FE Local FE Local Total
A. Works 1.55 2.33 3.88 0.16 0.23 0.05 0.28 4.60
B. Goods 15.70 8.06 23.77 0.79 0.40 0.60 1.79 27.35
C. Services 2.71 16.77 19.48 0.26 1.67 0.16 5.22 26.79
D. Miscellaneous - 10.22 10.22 - 0.51 - 2.83 13.56
E. Personnel - 26.09 26.09 - 1.31 - - 27.40
F. Other operational costs 6.67 12.47 19.14 0.65 1.10 0.66 4.00 25.55
TOTAL 26.63 75.94 102.58 1.86 5.22 1.47 14.12 125.25
2.4.2 The programme will be financed by ADF, IFAD, the Government of Ghana (with resources
directly from the central budget as well as from District Assemblies administrative budgets),
participating financial institutions and project beneficiaries. Table 2.5 presents the contribution and
the proportion for each financier. The source of finance by category of expenditure is summarised in
Table 2.6. Table 2.7 gives the expenditure schedule by components. Table 2.5: Sources of Finance (UA million)
Sources Foreign
Exchange
Local
Currency Total Per cent
African Development Bank (ADF) 22.02 27.67 49.69 39.7
Government of Ghana (GoG) 1.06 14.79 15.85 12.7
International Fund for Agricultural Development
(IFAD) 3.72 16.92 20.64 16.5
Beneficiaries (BEN) 0.39 7.18 7.57 6.0
Participating Financial Institution (PFIs) 0.03 5.65 5.68 4.5
District Assemblies (DAs) 3.86 21.96 25.82 20.6
Total Programme Costs 31.08 94.17 125.25 100.0
Table 2.6: Source of Finance by Category of Expenditure (UA million)
CATEGORY ADF GoG IFAD BEN PFI DA TOTAL
A. Works 4.48 - 0.12 - - - 4.60
B. Goods 27.01 - 2.06 - - - 29.07
C. Services 11.46 - 9.38 4.16 0.08 - 25.08
D. Miscellaneous - 0.60 4.58 2.79 5.59 - 13.56
E. Personnel 0.45 12.46 2.40 - - 12.09 27.40
F. Other operational costs 6.29 2.79 2.10 0.61 0.01 13.74 25.54
TOTAL PROGRAMME
COSTS 49.69 15.85 20.64 7.56 5.68 25.83 125.25
Table 2.7: Expenditure schedule by component (amounts in UA million)
Component 2013 2014 2015 2016 2017 2018 2019 2020 Total
1. Creation of Business Development Services (BDS) 5.31 6.25 5.73 5.62 5.75 3.85 3.84 3.81 40.16
2. Dev’t of Agric. Comm. Proc. Infra. (ACPI) 6.55 10.16 8.09 5.72 5.74 2.46 2.46 2.46 43.65
3. Creation of Enabling Busin. Environment (EBE)
3.1. Access to Rural Finance 2.80 2.94 1.10 1.09 1.04 1.01 0.99 0.99 11.95
3.2. Inst. Capacity Building & Policy Dialogue (ICPD) 0.36 0.41 0.06 0.03 0.03 - - - 0.90
Subtotal 3.16 3.35 1.16 1.12 1.07 1.01 0.99 0.99 12.85
4. Programme Coord. & Management (PCM) 0.89 0.81 0.68 0.74 0.66 0.58 0.61 0.59 5.56
Base costs (BC) 15.91 20.57 15.65 13.20 13.22 7.91 7.90 7.86 102.22
Physical Contingencies 1.15 1.50 1.19 1.05 1.06 0.55 0.55 0.55 7.60
Price Contingencies 0.40 1.46 1.80 2.31 3.05 1.76 2.14 2.53 15.44
Total Programme Costs 17.46 23.52 18.64 16.55 17.33 10.22 10.59 10.94 125.25
6
2.4.3 ADF resources, a blend of loan and grant, will finance 70.8% of the foreign exchange costs
of the programme estimated at UA22.02 million. About 68.3% of ADF resources will be spent in
Component B. These include costs associated with civil works, RTF machinery/equipment, training,
small office equipment and furniture, and operation and maintenance. The ADF funds will also cater
for 26.7% of BACs activities (UA13.21 million). While UA 0.79 million (1.6%) of the ADF resources
will be allocated to institutional capacity building, UA1. 70 million (3.4%) will be allocated to the
Programme Coordination and Management (procurement, environmental/social safeguards, and
financial management activities). The loan will be completely allocated to works, goods and services
mainly in the establishment of well performing RTFs associated with Hostel and Resource centres.
2.4.4 The IFAD loan will be used to finance costs related to scaling up a network of BACs
(component A), access to rural finance (component 3.1), institutional capacity building and policy
dialogue (component 3.2), and the related coordination and M&E costs. From the Table on
Component by financier, 20.4% of IFAD resources will be used to establish new BACs; 38.3% to
promote rural finance, 25.1% for institutional capacity building and policy dialogue and 16.2% for the
Programme Coordination and Management.
2.4.5 Government will finance part of the recurrent costs, including salaries, utilities, office space,
and some of the general operating costs. Existing credit lines (REDF) will be made available by Bank
of Ghana (BoG) (GHS1.2 million, equivalent to USD 606,060), with an incremental USD 4 million
(GHS7.92 million) provided under REP III. The complementary MGF will be topped up by USD 1.9
million (GHS3.762 million). The PFIs will provide credit (UA5.68 million) to REP III clients and
contribute to staff training cost.
2.4.6 As part of Government support, through the contribution of UA25.82 million, the District
Assemblies will: (i) finance salaries of at least one Business Development Officer and other support
staff at the BAC; (ii) provide office space for the BAC and gradually take over the BAC operating
costs; (iii) finance salaries of part of the RTF staff and contribute to the RTF operating costs. Clients
are expected to contribute 20% - 40% of the cost of training and 10-30% of the matching grants. Their
total contribution is estimated at UA7.57 million.
2.5. Programme’s target area and population
2.5.1 This programme will cover 161 out of 170 rural districts (94.7%) in the 10 regions of the
country, representing 16.3 million people. The direct beneficiaries include the families of the 35,000
SMEs established in the 95 new districts established in REP III; as well as the 27,000 SMEs of REP I
and II. These include women and the youth, 65% of the rural population, whose capacity in micro and
small-scale enterprises (MSEs) will be built and or strengthened for sustainable businesses that will
lead to growth in income, employment generation, improvement in food and nutrition security,
educational enrolment, and improved health and overall welfare. REP will also target the owners and
employees of small informal and formal businesses. Priority will be given to unemployed youths and
other clients who have followed secondary or tertiary education but need additional skills and support
to effectively manage MSEs. A total of 9,200 unemployed youth will be provided with start-up kits to
help them establish their own businesses. Primary job creation, through the activities of REP III, has
been estimated at 100,000.
2.5.2 The indirect beneficiaries include the rural population as a whole who stand to benefit from the
agricultural modernization infrastructure and technological innovation. They include the rural
populations of the 161 districts estimated at 16.5 million from which 65% are women and youth (10.7
million). The direct beneficiaries will lead this process through community-based training, exposure to
the resource centres of the programme and linkages to the local business associations (LBAs).
7
2.6. Participatory process for programme identification, design and implementation
The current phase of the programme has been characterized by extensive participation of and
consultations with key stakeholders. To ensure a participatory formulation of the programme, every
stakeholder expected to be involved in the implementation was consulted, an exercise that helped to
shape the design, especially in terms of determining the activities, partners, and resources (human and
material) for each component. There were consultations (through workshops, retreats, meetings,
interviews, courtesy visits, sharing of report with the borrower, etc.) with: (i) GoG through the
relevant Ministries (e.g., MoTI, MoFA, MLGRD, MoFEP, GES) and their Institutes, Centres,
Councils, Boards and Foundations (e.g., IIR, ARI, STEPRI of CSIR, Farm Institutes, TCC/KNUST,
Export Promotion, Food and Drugs, NBSSI, GRATIS); (ii) the District Assemblies; (iii) various
private sector and CSO stakeholders such as local business associations (e.g., AGI, ASSI); (iv) rural
community banks (e.g., ARB Apex Bank); (v) NGOs (TechnoServe, Malnutrition, faith based, etc.);
(vi) service providers (e.g., PEF, private TVET, Formal Business Leaders, etc.); and (vii) development
partners (e.g., IFAD, CIDA, etc.). Above all, the target beneficiaries, including women, and the youth,
at the District levels were also consulted.
2.7. Bank Group experience, lessons reflected in the programme design
2.7.1 The implementation of the earlier phases resulted in valuable lessons summarized in Table 2.8
and encapsulated in the PCR and taken into account in formulating REP III.
2.7.2 Many more stakeholders will be involved in REP III than was the case in REP I and II. This
will mainly be in the implementation of the activities of the BDS and the ACPI components to ensure
that REP III activities and related up scaling are effectively delivered. The lessons learned as regards
the establishment, support, and growth of farm-based businesses and agro-processing during REP II
are reflected in REP III through the establishment of strong linkages between these institutions and
others public and private institutions involved in training (e.g., Farm Institutes of MoFA, TVET), in
research (e.g., TCC/KNUST; IIR/CSIR), and in development (e.g., NGOs, Malnutrition Matters
(MM) of Canada, International Institute of Tropical Agriculture (IITA)). The lessons learned have
also informed the inclusion of Public-Private Partnerships (PPP) and private models in managing them
in REP III. REP III will continue the Matching Grant Fund (MGF) approach used in REP II with a
better targeting and will involve the Venture Capital Trust Fund (VCTF) to provide cheaper financial
resources to SMEs. Youth start-up kits and asset transfer to access their first commercial loan will be
targeted to “graduates” from training. The design of the programme has also taken into account the
lessons learned from Bank and other Development Partners in the country in relation to rural credit
management.
2.7.3 The design of the programme also took into consideration the findings and recommendations
of two studies, Promotion of Youth Employment in Agriculture in Ghana and Review of the
Operations and Management of Rural Technology Facilities (RTFs) in Ghana. With respect to the
Youth study, these are in the areas of increased targeting of the youth noted to be keen to accept
agriculture and agribusinesses, if supported with appropriate skills, information, and services. For the
RTF study, it is in the areas of more focus on agribusinesses and related technology promotion,
increased linkages with vocational and technical training institutions, streamlining of the RTFs’
reporting structure (with more prominence to the DAs), increasing the sense of ownership of the
RTFs, inclusion of PPP in the management of RTFs, and more involvement of the private sector to
ensure sustainability.
8
Table 2.8: Lessons learnt from earlier phases of REP
Area Lesson Action taken in REP III
Training
facilitated by
BACs (BDS)
Not taking advantage of the human resources and
infrastructures of formal training institutions (e.g., training
centres, Polytechnics) in the training activities of the BDS
and TPSAT limits the project benefits.
REP III will involve four farm institutes of MoFA, and also public and private TVET
and NGOs (MM, TechnoServe) in training activities of BDS and ACPID
Targeted
trainees
The need to adapt flexible modules and scheduling of the
training and counseling activities in rural areas in order to
match specific seasonal farming activities and literacy
conditions of the attendance.
Many of the unemployed in rural areas are graduates from TVET or those who dropped
out from secondary or primary schools. REP III will mostly be targeting these people
who are also easier to train to become champions and trainers of others.
Support to
business
establishment
Lack of emphasis on support to farm-based businesses
(e.g., small animal rearing) and agro-processing unlike
industrial-related ones (e.g., soap making) and workshops
(e.g., welding) in the training modules and startup kits.
REP III will strengthen the four farm institutes of MoFA in order to deliver intensive
training modules in farm-based businesses. It also provided for startup kits to both
workshops and farm-based and agro-processing businesses.
Technology
transfer
Involvement in enterprise development, cloning of existing
machines/equipment, technology transfer, and the design
of new machines.
REP III will not allow distraction into research-type of activities but will partner with
research institutions (TCC/KNUST; IIR, IITA) and NGOs (MM) in the design and
initial construction of necessary new machines. GRATIS Foundation will continue to
supervise the RTFs in training and fabrication of already existing machines.
Environment
and safety
Inadequate training on safety and hygiene related to RTFs,
workshops of trained craftsmen, and many REP clients.
REP III is classified as category II whereas REP II was classified as category III. More
training and activities on safety and hygiene will be undertaken in REP III than REPII.
RTFs’
management
Lack of involvement of professional associations and the
private sector in the management of the RTFs caused
sustainability and competitive concerns.
REP III included PPP and private models in the running of the RTFs.
Involvement of
Local Business
Associations
Limited involvement of the professional associations
(trade/enterprise/workshop) in implementation related to
establishment/growth of rural MSEs.
In REP III, Local Business Associations will be represented in MSE sub-committees in
the DAs and RECOMEP in the Regional Coordinating Council (RCC). The Private
Enterprise Foundation (PEF) will be involved in the design and management of the
RTFs.
Access to
finance
Efficiency lapses in the use of the MGF to simultaneously
attain social and economic benefits.
In REP III, the existing MGF will be better targeted to make it more efficient in
achieving social as well as economic benefits. Groups, especially women and the
youth, “graduates from training” will be targeted and assisted through start-up kits and
asset transfer to access their first commercial loan.
Interest rate The interest rate on micro-credit in the project area is high,
18 to 32%. Besides, in order to access credit, a guarantor
and substantial collaterals are needed.
Rural banking innovations aimed at increasing efficiency, reducing transaction costs,
and introducing innovative bank products to reduce interest rate are pursued under REP
III. REP III involves the Venture Capital Trust Fund (VCTF), established by ACT 680,
2004 by the GoG to provide cheaper financial resources to SMEs.
9
2.8. Key performance indicators
The key indicators of the programme performance are aligned to those of the GSGDA and the
CSP for Ghana. The key performance indicators for monitoring progress in achieving the programme
objectives are described in the programme logical framework. These include output indicators such
as number of people trained by the BACs (disagregated by gender), number of BACs that are
operational, number of BAC staff trained per year (disagregated by gender), number of rural MSEs
(with ownership disagregated by gender), number of new RTFs established, number of RTF trainees
with NVTI certification (disagregated by gender), number of PFI staff trained (disagregated by
gender), number of MSEs accessing MGF and/or REDF, amount of MGF and/or REDF disbursed,
number of branches of ASSI functional at the district level, number of employment opportunities
created (by type, gender and age), number of enterprises in operation after 3 years (sustainability
measure), number of enterprises graduating from survival to growth to rapid growth categories
(growth measure), and number of policy initiatives emanating from the Directorate for SME and
Technology of MoTI and stakeholders to promote SME, among others; outcome indicators such as
percentage increase in household income (disaggregated by gender of head of household), and
percentage increase in the number of people employed (disagregated by gender); and impact
indicators such as reduction in poverty rate (incidence) as percentage of population and percentage
GDP growth rate.
III – PROGRAMME FEASIBILITY
3.1. Economic and financial performance
3.1.1 A financial assessment of the programme was undertaken using cost-benefit analysis of ex-
ante activities (productive) models and on the basis of prevailing market prices. Economic analysis
was carried-out using shadow pricing method, by adjusting market or financial prices to their values
under optimal market conditions and in line with the Pareto optimum criterion. Such price values are
their values to the society. Both financial and economic analyses were carried-out using the Farmod
tool and based on financial and economic costs generated by the COSTAB tool.
3.1.2 The key assumptions underlying the analyses include: (i) successful programme
implementation will generate benefits from at least 15 types of enterprises in the areas of farm-based
businesses, agro-processing, agro-industries and related activities; (ii) period of the assessment was 20
years, in line with the optimal duration of the investment; (iii) hired labour value was adjusted by a
conversion factor of 0.65, due to employment, in line with the standards, and family labour was
estimated to be 70,724 jobs per annum based on data from the field mission (situation without
project). The opportunity cost of capital (OCC) was estimated to be 12%. The details on the
assumptions are presented in Annex B7.
3.1.3 Financial analysis: Based on the above models, the financial analysis yielded a combined net
financial impact of GHS4.62 billion per annum at optimum operational phase starting from year 10
out of the 20-year operational period. The Financial Internal Rate of Returns (FIRR) is estimated at
23.5%. This implies that if the revenues generated from the programme were collected by private
entities, they can afford to pay back a loan equivalent to the overall cost of the programme by
supporting an interest rate as high as 23.50 %, which is still above the opportunity cost of capital
(12%). The overall Net Present Value (NPV) was estimated at GHS64.37 billion. On these bases, it
can be concluded that the project is financially feasible under the above-stated assumptions.
3.1.4 Economic analysis: An economic analysis of the programme was carried out using the above-
mentioned models, and the economic values (shadow values or values to society) of products
(outputs) and inputs, instead of market prices of tradable goods (outputs and inputs). Based on the
above-mentioned assumptions, the economic analysis yielded a combined net economic impact (NPV)
10
of GHS84.66 billion for the 20-year operational period. The Economic Rate of Return (ERR) was
estimated at 26.6%. This outcome implies that the economic feasibility of the program is even higher
than the financial feasibility. In other words, the value to society of the support to the programme that
will develop farm-based businesses, agro-processing, and agro-industries is even higher than its cash
value.
3.1.5 The results of financial and economic analyses are quite robust in the event of adverse changes
from successive declines in output prices by 5%, 10%, 15%, 20%, 25%, 30%, and 35%, as reflected
by the result of the sensitivity analysis. A decrease in output prices by 40% (switching values) would
have to occur before the programme’s economic benefits break even at 12%, the opportunity cost of
capital.
3.1.6. REP III is an economically robust and viable venture for national capital investments in
SMEs. The programme has positive benefits and the indicators were computed on the basis of a
continuation of the policy that encourages key implementing partners to continue to play their
assigned programme roles. Detailed financial and economic analyses of the programme are presented
in Annex B7 of Technical Annexes.
3.2. Environmental and social impacts
3.2.1 Environment: REP III is classified as environmental category 2 according to the Bank’s
Environmental and Social Assessment Procedures (ESAP). The Rural Technology Facilities (RTFs) to
be developed across Ghana will mainly focus on small to medium scale agro-processing facilities
which will likely generate localized, site-specific impacts which will be managed through the
implementation of mitigating measures described in the Strategic Environmental and Social
Assessment (SESA) prepared for the Programme. The category was validated by the Bank’s Quality
Assurance and Results Division (ORQR.3) on 26 March, 2012. The SESA was prepared by the
Borrower, the Ministry of Trade and Industry to guide the implementation unit on screening sub-
projects and on the mitigation measures that would adequately address the potential environmental
and social impacts generated by the programme. The SESA establishes the objectives, procedures,
institutional framework and implementation arrangements for identifying, managing and monitoring
potential environmental and social impacts generated by REP III activities during the implementation
stage of the programme. The report has been sent to ORQR.3 for review and advice. The cost for
implementing and monitoring the mitigation measures (ESMP), estimated at UA64,940.00 has been
included as part of the project costs.
3.2.2 The programme is expected to generate positive social impacts that could lead to reduced
poverty, create jobs for the local population and youth through increase household income. Potential
significant negative impacts inherent to the development of agribusiness facilities are largely related
to effluent discharges and solid waste generated from the agro-processes which will likely have
negative impacts on water, soil and air. Mitigation measures identified and included in the SESA are:
(i) solid waste management through provision of receptors for waste collection and approved waste
facilities for disposing off (e.g., droppings from poultry, piggery, and rabbit keeping as manure); (ii)
separation and recycling of solid waste; (iii) reuse of waste generated from agro-processes (promote
sound use of biomass (e.g. palm kernel shell, sawdust for fuel); (iv) provision of containers for
temporary storage of oil from vehicles and equipment and disposal through approved agents; (v)
construction of drainage system for collecting and transporting effluents to shallow ponds for
treatment and sludge disposal; and (vi) education programmes. During programme implementation the
PCMU will work closely with the Environmental Protection Agency (EPA) to ensure that
implementation, supervision and monitoring of the mitigation measures complies with Ghana
Environmental Protection regulations, and the Bank’s safeguard policies. An Environmental and
Social Safeguards Officer will be hired to strengthen the PCMU in this regard.
11
3.2.3 Climate change: Ghana’s economy is highly dependent on climate sensitive sectors,
including agriculture. Climate change models indicated rising temperature and changing rainfall
patterns in all the ecological zones of Ghana. The Government of Ghana has prepared a National
Climate Change Policy Framework (NCCPF), with the assistance of UNEP, which guides on the
appropriate mitigation and adaptation measures that will lead the country to a low-carbon and
resilient economy and society. The activities under the REP III are designed in response to the policy
framework as it would promote alternative and diversified livelihoods to adapt to the impacts of
climate change as well as through research and awareness creation.
3.2.4 Measures are envisaged under the programme to alleviate the likely impact on climate change
and address related capacity challenges. These include: (i) promoting the use of sustainable building
technologies; (ii) incorporating sustainable measures appropriate for the different ecological regions in
the designs of the RTFs; (iii) using design consultants knowledgeable in sustainable building
technology and institutions; (iv) building capacity in sustainable development waste management,
recycling, and sanitation; and (v) incorporating energy conservation in the design of RTFs, using
materials with less climate change impact.
3.2.5 In order to mitigate the impact of the programme on climate change, it will promote only
sustainable Micro and Small-scale Enterprises. The climate in Ghana varies with the regions.
Standard programme designs incorporated sustainable meassures that are appropriate to various
target regions. The programme will enlist the services of design consultants who are knowledgeable
in sustainable farm business and agro-processing technologies commonly used by MSEs, including
waste management and recycling and sanitation. Besides, elements of climate changes such as water
and energy conservation, design of energy-efficient buildings, and renewable energy will be included
in the various trainings offered under the programme.
3.2.6 Gender: Gender is an important dimension of poverty in Ghana. The GoG is fully committed
to gender equality and women empowerment and has made progress in promoting these through
constitutional enshrinement and policy as well as legal frameworks (see Ghana CSP 2012–2016).
However, significant gender disparities remain, especially in the areas of women’s access to
education, land title deeds and other productive resources, basic skills, credit, and other assets, as
well as their involvement in the formal economy.
3.2.7 Given rural women’s demographic weight and entrepreneurship potential, women represent
the core group of rural MSEs of REP III. It is for this reason that the earlier phases of REP have been
successful in mainstreaming gender issues in programme activities. This will further be improved
upon in REP III to continue reducing the number of women trapped in poverty. In REP III,
operational measures that ensure strong participation of women in programme activities will be
implemented.
3.2.8 The socio-economic advantages of REP III to women can be summarized as follows: (i)
improvement of the level of organization, training and productivity in order to increase their income;
(ii) facilitating women to improve productivity, profitability, and credit management; (iii) linking
women to appropriate innovations, including food conservation; and (iv) increase in income through
enhanced access to relevant inputs such as credit.
3.2.9 To ensure increased access to Business Development Services (BDS) and enhance the
capacity of beneficiaries to attain increased incomes particular attention will be directed to women
through the Business Advisory Centres (BACs). These BACs will provide intensive support to
35,000 newly established businesses (50% women owned) and 20,000 existing ones to move them
from survival to sustained growth. An estimated 20,000 enterprises are expected to graduate from
survival to normal/rapid growth categories. About 68% of these will be women-owned by 2017. In
REP III, concerted efforts will be made to specifically target women in the planned upgrade of
12
technologies in the rural MSE sector. They will constitute 50% of those to have been trained as
master crafts persons, apprentices and agro-processing service by 2017.
3.2.10 REP III will procure technical assistance to develop a gender action plan (GAP) for PCMU to
implement and monitor. The GAP will include: (i) focus on supporting rural women’s participation
in professional organizations; (ii) adequate capacity building in gender and youth targeting for the
PCMU, service providers, and core stakeholders from the onset; (iii) supporting and monitoring
women’s active participation in BAC/RTF activities, district sub-committees on MSE promotion,
and regional committee on MSE promotion; (iv) improving technology for women producers and
processors; (v) conducting gender-sensitive business training programmes (e.g., holding training in
the communities for women to easily access this); and (vi) attention to suitability of the management
practices for women entrepreneurs. The encouraged REP III’s outreach (in participation in training
sessions, access to financial services and start-up kits) to women will be monitored using gender-
disaggregated output/outcome indicators in the Result-Based Logical Framework (RBLF).
3.2.11 REP III also encourages a comprehensive and multi-sectoral approach to institutional
capacity building in: (i) gender sensitive development management and service delivery, (ii)
development of tools, guidelines, and gender checklists, and (iii) increased access to quality
vocational skills training in various areas (e.g., micro-credit) for girls and women entrepreneurs,
aimed at improving the status of women.
3.2.12 Adequate budget and resources have been allocated for implementing gender equality and
women’s empowerment (capacity building, awareness creation to demand for accountability in
project activities, outputs, and outcomes) activities.
3.2.13 Social: The social impact of the REP III will be significant to improve the human capital
needed for a successful intervention. Among others, these are in the areas of employment generation,
educational enrolment, and improved nutrition as well as health and overall welfare of beneficiaries.
This is underscored by the all-inclusive nature of the beneficiaries: (a) MSEs, (b) women, (c) the
youth, (d) disabled who will receive special attention, and (d) people living with HIV and AIDS
(PLWHA). They will benefit from increased productivity, improved value-addition, and enhanced
competitiveness in rural and urban markets and help to address the problem of unemployment and
rural–urban migration. The targeted activity levels and indicators are set in the programme Log-
frame.
3.2.14 In order to have social impact on nutrition, REP III has planned a number of behavioural
change communication and sensitization activities for the targeted population. An optimal nutrition
status protects the individuals against diseases, minimising the impact of illness. REP III will help
small-scale enterprises to meet food safety standard through safe processing which will lead to better
health and nutrition. Through well-nourished and healthy communities, developments that reduce
poverty and lead to sustainable livelihoods will be attained.
3.2.15 Educating girls and integrating them into the labour force is a highly cost-effective way to
break the intergenerational cycle of poverty. At the sector level, the REP III objectives resonate with
the objectives of Ghana’s Industrial Policy and the Food and Agricultural Sector Development Policy
(FASDEP II) which, among others, emphasizes the provision of equitable access to industrial
development and the improvement of the quality of agricultural processing, agribusiness and trade,
and agricultural infrastructure. This intervention is needed to buttress the skills training for private
entrepreneurship development, particularly in the rural areas, and support efforts to increase the
number of rural MSMEs that generate profit and growth as well as provide youth employment
opportunities. HIV/AIDS sensitization as part of training activities will also minimise the incidence
of HIV/AIDS among the communities targeted.
13
3.2.16 The inter linkages with the on-going Gender Responsive Skills and Community Development
programme and the Development of Skills for Industry Project will be fully harnessed during
programme implementation particularly in training on gender mainstreaming and aligning training
certification with the Council of Technical, Vocational and Educational Training (COTVET).
3.2.17 Involuntary resettlement: This is not applicable as there will be no people who will be
displaced by the programme. The activities supported by the programme will take place either on
own lands of the clients or on rented or Government lands.
IV – IMPLEMENTATION
4.1. Implementation arrangements
Institutional arrangements
4.1.1 The institutional arrangement used for the implemenation of phase II will be used for this
phase. The Programme Steering Committee (PSC), responsible for providing policy and operational
oversight for the programme and the Programme Coordination & Management Unit (PCMU) are
already in place and functional with IFAD funding. The PCMU comprises a National Programme
Director, Financial Controller, Monitoring & Evaluation Manager, Business Development Manager,
Agricultural Commodity Processing Infrastructure Development Manager, and Rural Finance and
Institutional Development Manager. Given the nationwide nature of the programme, now involving
161 districts in 10 regions, and the need for effective internal control and programme management,
the existing PCMU team will be strengthened by a Financial Management Officer, a Monitoring &
Evaluation officer, an Internal Auditor, an Environmental and Social Safeguards Specialist, and a
Procurement Officer. These new personnel will be paid by the Bank. The qualifications of the
incumbents are described in Annex A3 of the technical annexes. Through its Directorate for SMEs
and Technology, MoTI, the Executing Agency (EA) will have overall responsibility for
implementation.
4.1.2 At the district level, the District Assemblies (DAs) will continue to be the seat of programme
implementation. They will play a central role in coordinating the services, resources and programmes
of various stakeholders (e.g., MSE operators, LBAs, CSOs) in the implementation. In addition to
GRATIS and NBSSI support to RTFs and BACs, collaborations will be sought with Malnutrition
Matters (MM) of Canada that specializes in equipment for household, community, and cottage-level
agricultural commodity processing, and with IITA in the areas of specialized farm, harvesting and
processing implements (e.g., grain threshers, cassava processing equipment). Given the specialized
nature of these collaborations, they will be procured using the Single Source Selection (SSS) method
and necessary MoUs. The BoG and ARB Apex Bank will be supported to monitor the performance of
the PFIs. It is expected that during REP III, the BACs and RTFs will form the nucleus of the new
Department of Trade and Industry (DoTI) within the DA structure under the MLGRD (LI 1961 in
2009) to facilitate implementation of policies and programmes on MSE promotion at the district level.
Meanwhile, REP III will continue the same implementation procedure as REP II in the new districts
where orientation seminars will be organized to sensitize the leadership of the DAs to establish their
own Sub-Committees on MSE promotion. MoFA, through its three Farm Institutes at Wenchi,
Adidome and Asuansi and an Animal Traction Centre at Nyampkala will be an implementing partner.
It will be involved in the delivery of BDS through an MOU which includes the improvement of its
training infrastructure and capacity buildings of its human resources at the farm institutes.
4.1.3 Local Business Associations (LBAs) will be members of the MSE sub-committees on MSE
promotion established within the DAs of the target 161 districts and the 10 Regional Coordinating
Councils (RCCs). The MOU with the TCC will involve it in the implementation of the ACPI
component activities on the RTFs, besides the GRATIS and in setting up with the LBAs arrangements
14
that promote private sector participation in the management of the 21 old RTFs. Copies of the MOUs
signed during REP II are in Annex 7 of the Technical Annexes.
4.1.4 The Bank’s component of REP III will be implemented over 5 years (2013–2017).
Geographic expansion will occur in PY1-PY2. During PY3-PY4, responsibility for active
implementation will be transferred to national institutions (NBSSI, GRATIS, ARB Apex Bank, DAs,
etc.) to engender sustainability and as agreed on with MoUs. During PY5, the role of the PCMU will
be limited to ensuring fiduciary aspects, backstopping of implementation, and monitoring of
outcomes and impact. At the end of each stage of implementation (PY1-PY2, PY3-PY4, and PY5),
the composition of the PCMU team will be reviewed according to the needs of programme. A
performance based evaluation system of REP III staff, linked to the Annual Work Plan and Budget,
will be used to appraise results achieved by staff. General programme performance will be regularly
reviewed with major stakeholders, including clients, PFIs, MSE operators, LBAs, CSOs, and DAs.
After programme completion, the PCMU will be integrated in the Technology and SME Division of
MoTI to continue with the provision of support services to the rural MSE sector.
Procurement arrangements
4.1.5 The Bank’s procurement Rules and Procedures will generally be used in executing the
programme. However, Ghana’s national procurement procedures shall be used for National
Competitive Bidding (NCB) provided the conditions specified as corrective measures of deviations
identified by the Fund’s assessment of the country’s legal regulatory framework are taken into
account (see Annex B5.9 for details of the issues and the mitigation measures). The PCMU will be
responsible for the procurement of goods, works and services. The resources, capacity, expertise and
experience of the PCMU are described in Annex B3. The procurement plan for works, goods, and
consultancy services is prepared as a separate attachment.
4.1.6 The procurement arrangements and schedule for the programme are summarized in Appendix
V.
Disbursement arrangements
4.1.7 Disbursement for large contracts including supply of goods (vehicles, office equipment, etc.)
and consulting services will be made by using direct payment method. A segregated USD
denominated Special Account (to be managed by the PCMU) will be opened specifically for the
project at the Bank of Ghana, to handle payment for recurrent expenses related to project. Funds will
be deposited in the special account, which will be replenished from time to time upon justification of
utilization of 50 per cent of the recent previous advance and a 100 per cent of the older
replenishments. The PCMU will also open a local currency (Ghana Cedi) Project Account at the
Bank of Ghana, Kumasi to support payments from the Special Account in local currency. All
disbursement will follow the procedures outlined in the Bank’s Disbursement Handbook.
Financial management arrangements
4.1.8 REP III will be managed using the existing financial management arrangements that were used
satisfactorily by the previous phase of the programme. The PCMU has an experienced and qualified
accountant (the Financial Controller) who will be supported by additional FM staff (to be hired).
Complementing the PCMU, for each participating District or Municipal Assembly, the District or
Municipal Finance Officers will be expected to supervise the reporting function of the Business
Advisory Services (BACs) and Rural Technology Facilities (RTFs) at their respective District and
Municipal Assemblies. The Financial Controller will coordinate the production of quarterly interim
financial reports to aid the in-year monitoring of project disbursement.
15
4.1.9 Accounting will be on the iScala accounting system (to be upgraded) which was used by the
PCMU for REP II. The same system will capture project related financial reporting of the District and
Municipal Assemblies.
4.1.10 Ghana is rolling out the Ghana Financial Management Information System (GFMIS) as the
official FM system for the government during the life of the project. With the ultimate aim of
eventually moving to using the country FM system, the iScala consultant will be required to configure
an interface with the government system till the change-over is possible.
4.1.11 The current PCMU structure does not include internal audit, but due to the dispersed nature of
the proposed activities, an internal auditor will be hired (see 4.1.1) to strengthen the internal control
function of the programme.
4.1.12 Audit: The Ghana Audit Service (GAS) is the statutory auditor of the programme; however the
GAS currently outsources the audit of donor funded projects to approved private audit firms in the
country. Thus an auditor for the programme will be selected based on TORs to be agreed between
IFAD and the Bank, and in accordance with procedures agreed between the Bank and GAS, so that
the PCMU has only one auditor for both IFAD and the Bank at any one time. The PCMU will ensure
that the audited programme financial statements, inclusive of the accompanying audit management
letter, will be submitted to the Bank annually within six months of the end of each year audited.
4.1.13 The FM assessment concluded that the residual FM risk is moderate and that the PCMU has
adequate capacity to meet the FM requirements of the proposed programme (see detailed FM Capacity
Assessment incorporating the project Fiduciary Risk Analysis and the agreed FM Action plan in
Technical Annex B4).
4.2 Monitoring
4.2.1 The programme design has an all-inclusive M&E system by various stakeholders. Provision is
made for periodic impact assessment by a specialized institution. Through these and the Bank’s
supervision the knowledge generated will be captured and used. The PCMU will be responsible for
programme activities monitoring. An M&E Manager is a member of the PCMU. Following the
established format, the PCMU will submit to ADF quarterly progress reports. This must be received
within 30 days following the end of each quarter and will cover progress measured against indicators
in the log frame (RBLF). The PCMU will also prepare and submit a completion report in accordance
with the ADF format. Additional reports and clarifications will be submitted as required. Based on
experience from REP I and II, the M&E capacity of the programme is good but as earlier indicated
needs strengthening given the planned increase in the number of districts to be covered in Phase III. REP III will develop an M&E System based on Geographic Information System (GIS) and Web-based
Technology for data collection, compilation and presentation. This system will be piloted and expanded to
future projects as deemed fit, with the BAC being the focal point for district-level data collection and
entry. The M&E Manager will coordinate all activities, ensure the quality control and provide the
necessary capacity building and backstopping to the BAC and RTF staff. The RBLF will form the basis for
measuring output, outcome and impact. A draft M&E template for the programme is included in Annexes
A4 and A5 of the Technical Annex. The PCMU monitoring will be complemented by Banks’s
supervision missions at least two times in a year. The GHFO will also assist in the M&E. A mid-term
review will also be conducted after two years. A participatory approach will be encouraged in the
review process.
4.2.2 The RBLF will be used in checking the extent to which programme impact, outcomes and
outputs is achieved against targets set in it. The annual and quarterly reports will provide information
on the progress made in outputs. The mid-term review and end-of- programme reports will indicate
progress made towards achieving the expected programme outcomes. An impact assessment study at
the end of the programme will focus on programme achievements and issues of sustainability. All
16
related reports will be shared with programme stakeholders, the programme steering committee
(PSC), and the Bank.
4.2.3 A baseline study is a high priority activity in this programme. The impact assessment of the
previous programme will provide as baseline for the old BACs and RTFs. The baseline for additional
BACs and RTFs will be conducted at the onset of programme implementation and will provide the
basis for a reality check on progress with each performance indicator (disaggregated by gender) as
programme implementation advances.
4.3. Governance
Based on the Bank’s experience in implementing projects in Ghana, the existing governance
practices and controls have been satisfactory. The PCMUs have observed the procurement and
financial procedures as well as the management of contracts as required by the Bank. The audit and
supervision reports of on-going agriculture sector projects have not reported major irregularities that
could compromise fiduciary assurance. However, the Bank’s supervision and audit systems will be
proactive throughout the implementation, providing the desired guidance on improvements in internal
controls. The EA will also have an internal auditor to provide sound advice on financial management.
4.4. Sustainability
4.4.1 Client ownership: Although decentralization is moving slowly at the district level, the DAs
which are the owners of the BACs and RTFs have complied with their fiduciary responsibilities
during REP II. The establishment of the MSE sub-committees within the DAs has also strengthened
them in dealing with the MSE sector. REP III will speed up the pace of decentralization through
intensive involvement of the public and private sectors as well as professional associations in the MSE
sub-committees at the district and regional levels. The entrepreneur demand-driven and participatory
approach whereby the clients and their representative institutions (DAs) request for programme
services and participate in their design and implementation will ensure client ownership during
implementation. The DAs will continue to coordinate all other stakeholders at the district level while
coordination of the various support services will be done by the BAC offices within the DAs. This
arrangement is expected to continue after programme intervention.
4.4.2 Profitable enterprises: REP III will enhance the starting and growing of the established
businesses through more: (i) reliable start-up kits support; (ii) efficient training, with increased
targeting of literate clients and graduates from TVETs and Polytechnics as well as the involvement of
experienced training institutions; and (iii) efficient follow-up and counselling of the MSEs, involving
many more relevant stakeholders (champion LBA members, local public institutions, and NGOs). The
increased additional income will provide the necessary incentive and motivation for the entrepreneurs
to continue to engage in the MSEs. Client entrepreneurs will therefore increasingly value and rely on
the services to improve the profitability of their businesses such that they will be willing to pay for the
full cost of their provision. Increasing profitability will help the client enterprises grow and diversify,
creating more youth employment opportunities.
4.4.3 Cost sharing arrangement: Continued funding of services that will be initiated by the
programme, would be through cost sharing arrangements between relevant implementing agencies and
clients on initial cost recovery arrangement to full cost-recovery for services, whereby clients would
pay market rates for services received.
4.4.4 Mainstreamed programme activities: The programme activities will be incorporated and
mainstreamed by the DAs into their respective development programmes. The DAs will make
budgetary provisions to finance training and overhead costs of the BACs and RTFs.
17
4.4.5 Public-Private Partnership (PPP): Many private workshop businesses are already tooled and
experienced in fabricating equipment and spare parts similar to those by the RTFs. Successful
businessmen are keen in growing their businesses. The DAs indicated their readiness to take over the
management of the RTFs on PPP basis as some of them already have activities implemented through
PPP. The existing RTFs are designed to prepare for early sustainability in the provision of MSE
support services, by involving the LBAs. REP III, in collaboration with regional and national MSE
associations will support the DAs in managing the old RTFs on PPP basis.
4.4.6 Institutional strengthening: The performance of farm-based businesses established under
REP II will be enhanced in REP III through the harnessing of the opportunities provided by the
existing training and extension institutions of MoFA and make them more efficient through capacity
building and improvement of training facilities.
4.4.7 Marketing of products: The result of an assessment indicates the existence of demand for
RTF/clients products (e.g. agro-processed and farm-based enterprises products). Under the PPP
management, RTFs products will target regional and international markets to avoid competition with
local workshops. The domestic demand for agro-processed and farm-based products is yet met. The
marketing of these products will be strengthened through the inclusion in REP III of resource centres
and strong involvement of LBAs for collective action on market information and research; product
development; linkages to lead firms; and guidance of MSEs registration.
4.5 Risk management
Risks Rating1 Mitigation Measures
GoG counterpart and DAs funds not
paid in time
M Continued close collaboration and partnership with GoG
Exposure of MSEs to tax M Deliberate policy improvement in favour of rural MSEs
Government decentralisation policy
derails.
M Advocacy and dialogue on decentralisation agenda
Failure of partners to play assigned
roles
L Steady interaction among partners; Joint supervisions;
Participatory approach used during formulation will continue
during implementation.
High interest rates by the PFIs. M BAC provides services that reduce the perceived risk of clients,
ensuring that MSE sub-committees, RECOMEP and ASSIs have
representation of women, the youth, disabled people &
PLWHA.
Weak procurement capacity at
RTF/BAC levels
M Provision made to build capacity of RTF managers, BAC Heads
and BDOs in line with Public Procurement Act 663 1M = Medium; L = Low
4.6 Knowledge building
REP III will assist in knowledge building in Ghana and the Bank. Knowledge will be built on
MSEs in the areas of farm and agro-processing businesses and related machinery and spare parts. The
activities that will lead to knowledge include studies (tracer, business opportunity identification study,
etc.), analysis of M&E data, supervision missions, Mid-Term Reports, and periodic impact assessment
by specialized institutions.
18
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1. Legal instrument
ADF resources will be used to finance the REP programme as loan and grant.
5.2. Conditions associated with Bank Group intervention
A. Conditions precedent to entry into force of the Protocol of Agreement
5.2.1 The entry into force shall be subject to fulfilment of the provisions of section 10.01 of the
General Conditions Applicable to the Protocols of Agreements for the Loan and Grant of the Fund.
B. Conditions precedent to first disbursement
5.2.2 The obligation of the Fund to make the First Disbursement of the loan and grant to the
Recipient, the Government of Ghana, shall be conditional upon the entry into force of the Protocol of
Agreement and the fulfilment of the following condition:
(i) Provide evidence satisfactory to the Fund that it has opened a foreign currency Special
Account (SA) and a local currency account (LCA) with bank acceptable to the Fund;
Other Conditions:
The borrower undertakes to provide, within six months of effectiveness of the loan, signed MoUs
between the Executing Agency (MoTI/REP) and the implementing agencies (DAs, NBSSI, GRATIS
Foundation, BoG, the ARB Apex Banks, and MoFA/HRDMD).
5.3. Compliance with Bank Policies
This programme complies with all applicable Bank policies. The proposed programme is consistent
with the Bank’s Agriculture Sector Strategy. It is also in line with the Bank Group’s Country Strategy
Paper for Ghana.
VI – RECOMMENDATION
In light of the potential contribution of the proposed programme to sound agricultural modernization,
sustainable MSE promotion and development and overall economic growth in Ghana, management
recommends that: the Board of Directors approves the proposed loan of UA26.69 million and the
proposed grant of UA23.00 million to the Government of Ghana for the purposes and subject to the
conditions stipulated in this report.
I
Appendix I.
Year Ghana Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2011 239 30 323 80 976 54 658Total Population (millions) 2011 25,0 1 044,3 5 733,7 1 240,4Urban Population (% of Total) 2011 52,2 40,4 45,5 75,4Population Density (per Km²) 2011 109,7 36,1 59,9 36,5GNI per Capita (US $) 2010 1 230 1 549 3 304 38 657Labor Force Participation - Total (%) 2011 76,4 74,7 65,0 60,4Labor Force Participation - Female (%) 2011 47,7 42,5 49,2 50,2Gender -Related Dev elopment Index Value 2007 0,524 0,502 0,694 0,911Human Dev elop. Index (Rank among 187 countries) 2011 135 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population) 2007-09 28,6 40,0 22,4 ...
Demographic Indicators
Population Grow th Rate - Total (%) 2011 2,3 2,3 1,3 0,4Population Grow th Rate - Urban (%) 2011 3,7 3,4 2,3 0,7Population < 15 y ears (%) 2011 38,4 40,4 28,7 16,5Population >= 65 y ears (%) 2011 3,9 3,4 5,9 16,2Dependency Ratio (%) 2011 73,3 78,1 53,0 48,6Sex Ratio (per 100 female) 2011 103,6 99,5 103,4 94,6Female Population 15-49 y ears (% of total population) 2011 24,5 24,4 26,2 23,6Life Ex pectancy at Birth - Total (y ears) 2011 64,2 57,7 77,7 67,0Life Ex pectancy at Birth - Female (y ears) 2011 65,3 58,9 68,9 81,1Crude Birth Rate (per 1,000) 2011 31,1 34,5 21,1 11,4Crude Death Rate (per 1,000) 2011 7,7 11,1 7,8 10,1Infant Mortality Rate (per 1,000) 2011 45,0 76,0 44,7 5,4Child Mortality Rate (per 1,000) 2011 65,5 119,5 67,8 7,8Total Fertility Rate (per w oman) 2011 4,1 4,4 2,6 1,7Maternal Mortality Rate (per 100,000) 2010 350,0 530,7 230,0 13,7Women Using Contraception (%) 2008 23,5 28,6 61,2 72,4
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2009 8,5 57,8 112,0 276,2Nurses (per 100,000 people)* 2009 104,6 134,7 186,8 708,2Births attended by Trained Health Personnel (%) 2008 57,1 53,7 65,3 ...Access to Safe Water (% of Population) 2010 86,0 65,7 86,3 99,5Access to Health Serv ices (% of Population) 2007-09 ... 65,2 80,0 100,0Access to Sanitation (% of Population) 2010 14,0 39,8 56,1 99,9Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2009 1,8 4,3 0,9 0,3Incidence of Tuberculosis (per 100,000) 2010 86,0 241,9 150,0 14,0Child Immunization Against Tuberculosis (%) 2010 99,0 85,5 95,4 ...Child Immunization Against Measles (%) 2010 93,0 78,5 84,3 93,4Underw eight Children (% of children under 5 y ears) 2008 14,3 30,9 17,9 ...Daily Calorie Supply per Capita 2007 2 907 2 462 2 675 3 285Public Ex penditure on Health (as % of GDP) 2009 3,1 2,4 2,9 7,4
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2011 107,3 101,4 107,8 101,4 Primary School - Female 2011 107,2 97,6 105,6 101,3 Secondary School - Total 2011 58,1 47,5 64,0 100,2 Secondary School - Female 2011 55,2 44,3 62,6 99,8Primary School Female Teaching Staff (% of Total) 2011 36,7 44,3 60,7 81,7Adult literacy Rate - Total (%) 2010 67,3 67,0 80,3 98,4Adult literacy Rate - Male (%) 2010 73,2 75,8 86,0 98,7Adult literacy Rate - Female (%) 2010 61,2 58,3 74,9 98,1Percentage of GDP Spent on Education 2010 5,5 4,6 4,1 5,1
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2009 19,3 7,6 10,7 10,8Annual Rate of Deforestation (%) 2007-09 1,7 0,6 0,4 -0,2Forest (as % of Total Land Area) 2010 21,7 23,0 28,7 40,4Per Capita CO2 Emissions (metric tons) 2009 0,3 1,1 2,9 12,5
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update :
UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.
Note : n.a. : Not Applicable ; … : Data Not Available.
COMPARATIVE SOCIO-ECONOMIC INDICATORS
Ghana
June 2012
0102030405060708090
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Infant Mortality Rate( Per 1000 )
Ghana Afr ica
0
200
400
600
800
1000
1200
1400
1600
1800
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
GNI Per Capita US $
Ghana Afr ica
2,2
2,3
2,3
2,4
2,4
2,5
2,5
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Population Growth Rate (%)
Ghana Africa
111213141516171
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Life Expectancy at Birth (years)
Ghana Afr ica
II
Appendix II. Table of ADB’s On-going Portfolio in the Ghana
Project/Study Name Loan Number Loan/Grant
Amount
Disb.
Ratio
Closing
date
IP DO Current
Supervision
Rating
PFI Status
Agriculture
Export Market and Quality Awareness 2100150010245 17,000,000 61 30.12.2013 2.14 2.67 2.24 Non PP/Non PPP
Afram Plains Rural Development 2100150012345 19,970,000 74.7 31.12.2013 1.85 2.00 1.88 Non PP/Non PPP
Northern Rural Growth Program 2100150015795 40,000,000 6.3 31.12.2015 1.93 1.75 1.89 Non PP/ PPP
Subtotal 76,970,000 36.1
Social
Urban Poverty Reduction 2100150010893 25,000,000 76.4 30.12.2012 2.07 2.25 2.11 Non PP/Non PPP
Gender Responsive Skills & Community Dev't 2100150015898 5,950,000 22.4 31.12.2012 2.58 3.00 2.67 Non PP/Non PPP
Gender Responsive Skills & Community Dev't -G 2100155010919 2,360,000 51.3 31.12.2012
Subtotal 33,310,000 65
Transport
Tema-Aflao Road Rehabilitation - Supplm 2100150019194 25,400,000 39.8 31.12.2013 1.71 2.00 1.78 Non PP/Non PPP
Akatsi-Dzodze-Noepe (Akatsi-Akanu) - Supplm 2100150018994 13,400,000 75.3 30.12.2013 2.14 3.00 2.33 Non PP/Non PPP
Awoshie-Pokuase Road & Community Dev. 2100150020893 53,590,000 18.3 31.12.2015 2.43 2.00 2.33 Non PP/Non PPP
Fufulso-Sawla Road - G 2100155019117 109,720,000 11.5 31.12.2015 2.07 3.00 2.28 Non PP/Non PPP
Subtotal 202,110,000 21.1
Power
Power Systems Re-Inforcement 2100150015548 27,600,000 58.6 31.12.2014 2.00 2.00 2.00 Non PP/Non PPP
Subtotal 27,600,000 58.6
Budget Support
Poverty Reduction Support and B.E Support (L) 2100150017393 44,000,000 50 31.12.2013 2.67 2.00 2.44 Non PP/Non PPP
Poverty Reduction Support and B.E Support (G) 2100155020617 26,000,000 50 31.12.2013
Subtotal 70,000,000 50
III
Water/Sanitation
Accra Sewerage Improvement 2100150011894 46,000,000 23.6 30.11.2013 2.31 2.50 2.35 Non PP/PPP
Subtotal 46,000,000 23.6
Multinational
Uemoa Ghana Road 2100150007165 64,500,000 75.2 31.12.2012 2.21 3.00 2.31 Non PP/Non PPP
Uemoa Ghana Road (Supplementary) 2100150019043 4,300,000 55.8 31.12.2013
Ghana - Togo -Benin Power Interconnect 2100150014296 14,870,000 26.5 31.12.2012 2.08 2.00 2.06 Non PP/Non PPP
Subtotal 83,670,000 65.6
Total 539,660,000 38.7
Awf Grants
Improved Sanitation And Water Supply Service 5600155001651 1,825,191 68.5 15.01.2012 2.67 2.67 2.67 Non PP/Non PPP
Design For Re-Use 5600155002451 441,325 40.2 30.06.2013
Reoptimization Of Akosombo & Kpong Dams 5600155002501 1,608,994 25.3 31.05.2014
Subtotal 3,875,510 47.3
Multinational
Ghana - Prom of Sci. And Tech. For Agric. Devt. 2100155008294 15,581,000 53.3 31.12.2013 2.17 3.00 2.33 Non PP/Non PPP
Subtotal 15,581,000 53.3
Total 19,456,510 52.1
Grand Total 559,116,510 39.2
Private
Kempinski Accra Hotel 2000130006231 11,617,400 100 29.06.2012 1.75 1.80 1.76 Non PP/Non PPP
Cal Merchant Bank 2000120001919 9,326,000 100 - 1.91 2.00 1.94 Non PP/Non PPP
Subtotal 20,943,400 100
IV
Appendix III. Key related Projects Financed by the Bank and Other
Development partners in the country
DP Title Description Total
budget
Currency Runtime
GDC
GTZ/DED 1
Market Oriented Agriculture
Programme (MOAP)
Value Chain
Development
23.2 Euro 2004 -
2013
USAID Development Credit Authority Agricultural Finance 9.3 US$ 2009 -
2013
AfDB Rural Enterprises Project Phase
II
Capacity building for
Rural Micro- and small
(food and non-food)
enterprises development
7.5 UA 2003 -
2012
Export Marketing and Quality
Awareness Project
Agriculture Produce
Marketing
17.0 UA 2006 -
2013
Afram Plain Agricultural
Development Project
Agriculture and Agro-
Industry Development
19.9 UA 2007 -
2012
Northern Rural Growth Program Agriculture and Agro-
Industry
Development
40 UA 2008 -
2015
Gender Responsive Skills Technical and Vocational
Skills Development
29.5 UA
Development of Skills for
Industry
Skills Development 70 UA 2012 -
2018
IFAD Root and Tuber Improvement
and Marketing Programme
(RTIMP)
Food Crops Processing
and Marketing
28.7 Euro 2006 -
2014
Rural Enterprises Project Phase
II
Capacity building for
Rural Micro- and small
(food and non-food)
enterprises development
29.3 US$ 2003 -
2012
Rural and Agricultural Finance
Programme (RAFiP)
Agricultural finance
41.8 US$ 2010 -
2016
Rural Enterprises Programme Capacity building for
Rural Micro- and small
(food and non-food)
enterprises development
185 US$ 2012 -
2019
WB Commercial Agriculture
Program
Value Chain
Development
100 USD 2011 -
2016
DANIDA Master Craftsperson Training Technical Skills
Development
30 USD
V
Appendix IV. Map of the Programme Area
VI
Appendix V. Procurement Arrangements of the project
V-1: Procurement Arrangements (UA million)
CATEGORIES ICB NCB CON. SCES
Local Shop DC
Direct PNST F.INT N.B.F. Total
A. WORKS
Rehabilitation of Business Advisory Centres - 0,34 -
- - - - 0,34
(0,22)
(0,22)
Construction of new Rural Technology Facilities, Resource Centres & Hostels - 4,25 -
- - - - 4,25
(4,25)
(4,25)
Office Rehabilitation for PCMU - 0,01 - - - - - 0,01
B. GOODS
Vehicles & Motorbikes - 4,03 - - - - - 4,03
(2,23)
(2,23)
EQUIPMENT & MATERIALS - - - - - - -
Computers & Office Equipment - 0,77 - - - - - 0,77
(0,51)
(0,51)
Machine Shop Equipment 7,18 - - 3,00 - - - 10,18
(7,18)
(3,00)
(10,18)
Technology Innovation Start-up kits
17,08 -
- - - 17,08
(17,08)
(17,08)
C. SERVICES
TRAINING - - - - - - - Training of Staff - - 1,73
- - - 1,73
1,04
(1,04)
Training of Clients - - 11,54 7,39 - - 18,94
(5,09) (0,09)
(8,19)
Workshops & Events - 1,60 - - - 1,60
(0,47)
(0,47)
Other Training - - 0,14 - - - - 0,14
(0,08)
(0,08)
TECHNICAL ASSISTANCE - - 1,86 0,29 - - - 2,15
(1,36) (0,23)
(1,59)
STUDIES - - 0,24 - - - - 0,24
(0,01)
(0,01)
DESIGN & SUPERVISION (CONTRACTUAL SERVICES) - - 0,07
- - - - 0,07
(0,07)
(0,07)
AUDITS - - 0,20 - - - - 0,20
D. MISCELLANEOUS - - - - - 13,56 - 13,56
E. PERSONNELS - - - - - - 27,40 27,40
(0,45) (0,45)
F. OPERATING COST - - - 25,54 - - - - 25,54
(6,29)
(6,29)
TOTAL 7,18 26,49 17,39 25,54 3,29 7,39 13,56 27,40 125,25
(7,18) (24,31) (8,13) (6,29) (3,23) (0,09) - (0,45) (49,69)
Note: Figures in parenthesis are the respective amounts financed by ADF
VII
V-2: Procurement Schedule (UA million)
CATEGORIES 2013 2014 2015 2016 2017 2018 2019 2020 Total
A. WORKS Business Development Services 0,29 0,04 - - - - - - 0,34
Rural Technology Facilities 1,19 2,15 0,91 - - - - - 4,25
Other Works 0,01 - - - - - - - 0,01
Subtotal 1,49 2,20 0,91 - - - - - 4,60
B. GOODS VEHICLES 1,49 1,84 0,65 - - - - - 3,98
EQUIPMENT & MATERIALS - - - - - - - - -
Standard Equipment 0,32 0,22 0,11 0,07 0,05 - - - 0,77
Specific Equipment (Materials) 1,90 3,65 2,13 0,51 0,52 - - - 8,71
Subtotal 3,71 5,72 2,89 0,58 0,57 - - - 13,47
C. SERVICES Training - - - - - - - - -
Training of Staff 0,44 0,65 0,24 0,18 0,19 0,03 0,01 0,01 1,73
Training of Clients 1,45 2,50 2,83 3,48 3,90 1,41 1,50 1,61 18,67
Workshops & Events 0,23 0,35 0,23 0,21 0,22 0,12 0,13 0,10 1,60
Technology Innovation Mainstreaming 2,92 3,08 3,25 3,42 3,59 - - - 16,26
Other Training 0,02 0,03 0,04 0,04 0,02 - - - 0,14
TECHNICAL ASSISTANCE 0,22 0,37 0,39 0,41 0,38 0,04 0,04 0,10 1,96
STUDIES 0,08 0,02 - 0,06 - - 0,07 - 0,24
CONTRACTUAL SERVICES 0,03 0,04 0,01 - - - - - 0,07
AUDITS 0,02 0,02 0,02 0,02 0,03 0,03 0,03 0,03 0,20
Subtotal 5,41 7,06 7,00 7,82 8,32 1,63 1,78 1,85 40,88
D. MISCELLANEOUS 2,99 2,58 1,12 1,20 1,29 1,38 1,45 1,55 13,56
E. PERSONNELS 2,40 3,33 3,56 3,60 3,60 3,58 3,56 3,56 27,20
F. OPERATING COST 1,41 2,65 3,16 3,36 3,56 3,63 3,80 3,98 25,54
TOTAL COSTS 17,42 23,53 18,65 16,56 17,34 10,22 10,59 10,94 125,25
VIII
Appendix VI. Project Activities by Components
Activities: Inputs:
Component 1: Business Development Services (BDS)
1.1 Provide advanced training to BAC staff for enhanced value chain facilitation; • ADF Loan =UA 50 million (USD70 million)
1.2 Train BAC staff on performance counselling to improve efficiency and effectiveness; • IFAD USD 31.5 million
1.3 Harmonize the BAC training modules with those of other MSE service providers; GOG- USD 63.5 million
1.4 Strengthen NBSSI as knowledge, training and service centre for BACs; PFI –USD 6.2 million
1.5 Support all BACs to deliver BDS to its clients, mainly by mobilization of necessary private service providers. Clients: 13.8 million
Component 2: Agricultural Commodity Processing Infrastructure Development (ACPID)
2.1 Explore the potential for new types of RTFs (e.g. agricultural machinery servicing, electro-mechanics); GIZ-light industrial sites
2.2 Strengthen the management of RTFs; JICA rural electrification program
2.3 Strengthen the Management Boards of RTFs; Other donors: TBD
2.4 Align training programs with Council of Technical, Vocational and Educational Training (COTVET) certification; • Missions: Appraisal, supervision, policy dialogue, MTR & donor coordination
2.5 Expand outreach of skills training through partnerships with other specialized actors;
2.6 Actively promote new technologies and strengthen links with value chains projects (e.g., RTIMP, NRGP);
2.7 Provide tools/equipment as start-up kits for graduates of apprenticeship programs that meet growth criteria;
2.8 Support RTFs in various ways (e.g., short-term training of master craft persons) to ensure sustained growth;
2.9 Source, acquire, adapt and adopt new agribusiness prototype machines for RTFs according to need.
Component 3.1: Access to Rural Finance (ARF)
3.1.1 Facilitate access of BAC and RTF clients to Participating Financial Institutions (PFIs);
3.1.2 Sensitize PFIs to use their own credit funds to support the businesses of well-performing MSEs;
3.1.3 Support specialized training of PFI staff in critical areas of credit management for MSEs;
3.1.4 Re-sensitization/training of staff of PFIs, commercial banks and BACs on management of REDF) and MGF;
3.1.5 Use existing REDF as a refinancing facility for PFIs to expand their loan portfolios to targeted rural MSEs;
3.1.6 Strengthen the ARB Apex Bank to become a universal service provider;
3.1.7 Engage ARB Apex Bank to manage incremental credit funds through network of Rural Community Banks (RCBs) and non-bank financial institutions;
3.1.8 Continue MGF package as shared funding arrangement of PFI loan, grant by REP and equity contribution by the client;
Component 3.2: Institutional Capacity Building and Policy Dialogue (ICBPD)
3.2.1 Strengthen & mainstream Sub-Committee on MSE Promotion in all districts for effectiveness to deliver expected results;
3.2.2 Support effective implementation of the Department of Trade and Industry (DOTI) in the DAs;
3.2.3 Initiate the setting up of a Regional Working Group on Micro and Small Scale Enterprises Development (RWGME);
3.2.4 Provide institutional support to NBSSI to ensure they play their role efficiently in the BDS implementation;
3.2.5 Provide appropriate support to GRATIS Foundation for technical backstopping to the RTFs at the district level;
3.2.6 Continue to actively involve local business associations in the planning and implementation of programme activities;
3.2.7 Build capacity of local Service Providers to enable them provide good quality services to clients.
3.2.8 The gender action plan (GAP)
Component 4: Programme Coordination and Management Unit (PCMU)
4.1 Plan and coordinate programme implementation activities;
4.2 Carry out baseline studies;
4.3 Monitoring and Evaluation;
4.4 Management of relevant studies;
4.5 Day-to-day management of the project.
4.6 Knowledge management
4.7 Impact assessment and technical audit