ASIAN DEVELOPMENT BANK JFPR: CAM–36156

PROPOSED GRANT ASSISTANCE

(Financed by the Japan Fund for Poverty Reduction)

TO THE

KINGDOM OF CAMBODIA

FOR

IMPROVING THE LIVELIHOOD OF POOR FARMERS

IN SOUTHERN CAMBODIA

To be implemented in conjunction with the

PROPOSED AGRICULTURE SECTOR DEVELOPMENT PROGRAM (loan for Board consideration in 2003)

October 2002

CURRENCY EQUIVALENTS (as of 9 August 2002)

Currency Unit – riel (KR) KR1.00 = $0.00026 $1.00 = KR3,835

ABBREVIATIONS ADB − Asian Development Bank ASDP − Agriculture Sector Development Program CBO − community-based organization CEDAC − Centre d' Etude et de Développement Agricole Cambodgien DAALI − Department of Agronomy and Agricultural Land Improvement JFPR − Japan Fund for Poverty Reduction MAFF − Ministry of Agriculture, Forestry, and Fisheries NGO − nongovernment organization PRASAC − Support Programme for the Agricultural Sector in Cambodia

NOTES

(i) The fiscal year (FY) of the Government ends on 31 December. (ii) In this report, “$” refers to US dollars.

CONTENTS

Page I. INTRODUCTION 1 II. BACKGROUND AND RATIONALE 1 III. THE PROPOSED JFPR PROJECT 3

A. Objectives 3 B. Scope 3 C. Costs and Financing 5 D. Implementation Arrangements 6 E. Linkages, Partnership, and Poverty Reduction Impact 7 F. Risks, Assumptions, Assurances 9

IV. THE PRESIDENT'S RECOMMENDATION 9

APPENDIXES 1 Project Framework 102 Map of the Project Area 123 Summary of Cost Estimate 134 Outline Terms of Reference for Executing and Implementing Agencies 145 Implementation Arrangements 156 Fund Flow Mechanism 167 Participation of Poor Women 178 Summary Poverty Impact Assessment 20

SUPPLEMENTARY APPENDIX Detailed Cost Estimates (available on request)

I. INTRODUCTION

1. In response to the request of the Government of Cambodia, the Asian Development Bank (ADB) provided technical assistance (TA) to assist the Government in preparing a detailed proposal for an agriculture sector development program (ASDP).1 The ASDP will aim at promoting sustainable agricultural growth through increased productivity, thereby contributing to the reduction of rural poverty. ADB’s TA Fact-Finding Mission in May 2001 had a series of discussions with CEDAC (Centre d' Etude et de Développement Agricole Cambodgien), which is a leading national nongovernment organization (NGO) in the agriculture sector, to identify an effective approach for expanding outreach to poor people in the rural areas. Subsequently, CEDAC, in consultation with ADB, prepared a project proposal for grant financing under the Japan Fund for Poverty Reduction (JFPR), which would enhance the impact of the ASDP on poverty reduction. In January 2002, ADB fielded a project design and appraisal mission to formulate a detailed proposal for the JFPR Project through discussions with the relevant stakeholders in the field. The Government endorsed the JFPR Project on 25 February 2002, and the Government of Japan approved JFPR financing on 12 August 2002.

II. BACKGROUND AND RATIONALE

2. Rural Poverty in Cambodia. Cambodia is one of the lowest-income countries in the world, with its Gross Domestic Product per capita estimated at $259 (a provisional estimate for 2001). In terms of social capacity for human development, Cambodia is now in the lowest tier of the medium human development category and ranked 121st, with its human development index estimated at 0.541 and the gender development index at 0.534.2 At present, about 36% of the country's population is below the poverty line,3 and about 90% of the poor population, or about 3.6 million poor people, live in rural areas. Poverty incidence is higher in rural areas at about 40% than in municipalities and Phnom Penh. Widowhood, disability, and social isolation are widely seen in all parts of rural Cambodia, and cause serious conditions of poverty among rural people. Poor households are also characterized by a high dependency ratio with children, the elderly, and the disabled; and by the low level of social capacity relating to educational achievements, health, and sanitation. Poverty is most prevalent among the vulnerable groups of people affected by the long civil conflict: internally displaced people, returned refugees, and war widows. Poor people in rural Cambodia have limited access to adequate means for their sustainable livelihood, and require immediate funds for critical investment and intensive support. Women constitute a significant proportion of the rural poor. About 20% of poor households in Cambodia are headed by women. Particularly vulnerable are households headed by widows with high dependency ratios, and divorced and deserted women with young children. These women have limited access to employment opportunities, mobility, and resources such as land and finance.

3. Declining agricultural productivity. Agriculture accounts for about 40 percent of the national GDP of Cambodia, and provides employment for about 80 percent of the total work force. Given the high incidence of rural poverty, the agriculture sector has an important role and

1 ADB. 2001. Technical Assistance to Cambodia for Agriculture Sector Development Program (TA 3695–CAM).

Manila. The ensuing loan for an agriculture sector development program is proposed for approval in 2003. 2 United Nations Development Programme. 2001. Human Development Report, New York. 3 Based on a consumption-based poverty line defined as adequate income to purchase a daily 2,100-calorie food

basket plus an allowance for non-food expenditure. At present, it is equivalent to KR (Cambodian riel) 54,050 or about $14 per capita per month. The Ministry of Planning. 1999. Report on Cambodia Socioeconomic Survey, the Royal Government of Cambodia.

2

potential for reducing poverty and improving their capacity for human development. However, many areas of traditional rainfed rice cultivation have a serious problem of decreasing agricultural productivity due to neglect of agricultural production during the past civil conflict, inadequate delivery of effective research and extension services, unfavorable weather conditions, and out-migration of agricultural laborers to municipalities and Phnom Penh.

4. Agricultural Growth for Poverty Reduction. Against this sector background, the ASDP, which will be the counterpart project of the proposed JFPR Project, is being formulated under the ADB's TA (footnote 1). The ASDP is expected to be a combination of policy and investment-based assistance, and will (i) further facilitate the policy and institutional reform measures introduced under the first Agriculture Sector Program;4 (ii) develop domestic and external markets for agro-based products by establishing comparative and competitive advantages, and by removing internal regulatory constraints; (iii) build the capacity of public service delivery systems; (iv) promote private service providers in agricultural research and extension; and (v) improve agricultural marketing infrastructure and post-harvest technology.

5. Agricultural Extension Services by NGOs. In Cambodia, public agricultural extension services are inadequate to address the needs of farm households, particularly poor farmers, because of limited financial resources and technical staff of the Government. In this context, NGOs have been important catalysts in providing intensive support targeted at the rural poor. Support for the NGOs' extension services under the proposed JFPR Project will benefit the rural poor and provide substantial impact on poverty reduction. The JFPR Project has been formulated with a view to ensuring synergies and complementarity of CEDAC's approach with the investment component of the proposed ASDP in the seriously poverty-stricken areas in southern Cambodia where intensive socioeconomic support is urgently required (para. 14). The JFPR Project will be implemented prior to the ASDP to demonstrate the validity of a community-based self-help group approach as developed by CEDAC in reaching the rural poor, and to prepare poor farmers to be able to absorb the new opportunities and information of the counterpart ASDP and overall agricultural growth under the Second Socioeconomic Development Plan (2001–2005).5

6. Self-Help Approach. A self-help group approach will be adopted under the JFPR Project based on the NGOs' experience gained in the proposed project area. This approach is still unique in Cambodia where group formation is difficult due to the farmers' experience of forced labor during the Khmer Rouge period, and requires support under the JFPR Project. Under this approach, trained farmers will become farmer promoters or extension agents to help train other members of the group and other self-help groups based on area-specific training needs. This approach will accelerate a farmer-to-farmer transfer of knowledge and technology, and expand self-help networks of farmers. Other innovative aspects of the JFPR Project include (i) close collaboration with local community-based organizations (CBOs) and NGOs under the managerial leadership of a national NGO; (ii) introduction of appropriate techniques and skills for improved soil and crop management, nutrient replenishment, and integrated pest management; and (iii) use of small-scale village-based drainage and irrigation systems for farm and homestead areas to promote crop intensification and diversification. CEDAC will associate

4 ADB. 1996. Loan to Cambodia for Agriculture Sector Program (Loan 1445-CAM[SF]). The loan was closed on 5

September 2000. 5 Under the plan, the Government aims to transform agriculture into a driving force to achieve higher economic

growth and reduce rural poverty by further deregulating the agricultural trade and exports, and promoting sound development of agricultural markets. The Government is expected to allocate to agriculture $210.2 million or about 13% of the total public investment program during the first three years of the plan. The Ministry of Planning, the Royal Government of Cambodia. 2001. The Second Five-Year Socioeconomic Development Plan 2001–2005. Phnom Penh.

3

with appropriate local CBOs and NGOs that have relevant experience in the project area and will work for the activities to achieve the project objectives. 7. Lead Women Farmers. Under the JFPR Project, capable women farmers will be selected on a priority basis as farmer promoters to lead women farmer groups with the assistance of local CBOs and NGOs. The lead women farmers will increase active participation of other women’s farmer groups, and contribute to the equitable access by rural women to productive resources and opportunities. The JFPR Project will also ensure a sustainable poverty reduction impact in their villages by establishing networks of new self-help groups of the rural poor and strengthening the existing self-help groups and their networks. The innovative nature of the activities requires JFPR grant financing since the provision of direct financial and material support for the rural poor through CBOs and NGOs is new and unique in Cambodia, and thus not suitable for financing from ADB loans or TA for the Government.

III. THE PROPOSED JFPR PROJECT

A. Objectives 8. The JFPR Project aims at reducing rural poverty by improving the opportunities of poor and vulnerable groups of farmers for sustainable livelihood. This will be achieved by providing access to agricultural services and resources through NGOs' direct and intensive support, thereby enhancing the impact of the proposed ASDP on poverty reduction. Under the JFPR Project, the participation of rural women in income-generating activities will particularly be promoted. The project framework is in Appendix 1.

B. Scope

1. Project Components

9. The Project will have four components: (i) improving access to income-generating opportunities through the provision of small-scale village infrastructure (e.g., community ponds and tree plantations), the establishment of village revolving funds, and the promotion of village-based agro-enterprises; (ii) strengthening the absorptive capacity of poor farmers through social mobilization programs and agricultural, horticultural, and livestock training, including special intensive support for disadvantaged and landless farm workers in the rural area; (iii) supporting capacity building of local CBOs and NGOs; and (iv) supporting overall project management and poverty impact assessment. The field experience of NGOs indicates that these activities will have an immediate impact on the beneficiaries' attitude by raising their sense of self-reliance for their livelihood improvement.

10. Improving Access to Income-Generating Opportunities. The main purpose of this component is to enable villagers to have improved access to income-generating on-farm and off-farm activities. The main activities include,

(i) identifying, selecting, and supporting village communities through the provision of entrepreneurship and business management training;

(ii) establishing village-level revolving funds to provide capable farmer groups with loans for their small-scale enterprises, including livestock and fisheries activities (a revolving fund will be eventually managed by a farmer association comprising farmer groups in the same village with assistance from the implementing NGO);6

6 The average size of the village-level funds is estimated at about $800 according to the past schemes of the

implementing NGO. These funds will be established in areas where no microfinance institutions operate.

4

(iii) organizing exchange visits among microentrepreneurs in the project area (the JFPR Project will also support the establishment of networks and associations of local microentrepreneurs and include linkage with the new commune councils for collaborative efforts in developing local economies);

(iv) organizing internships for entrepreneurs to learn new skills and diverse income-generating activities; and

(v) in collaboration with local institutions such as religious associations and local governments, supporting the rehabilitation and establishment of community ponds for small-scale fisheries, community-based woodlot plantations, and other critical village infrastructure.

11. Strengthening of Poor Farmers' Absorptive Capacity. This component will enable farmers to have access to and apply improved agricultural technologies, mainly through joint learning, field research trials and lessons learned. The component will help enrich practical experiences in farming and strengthen the capacity in jointly working for the common interest and for the development of their communities. The main activities of the component include,

(i) organizing twice-weekly small group meetings of farmers at an early stage of the JFPR Project in poor villages, to introduce new ideas and information, skills training, and exchange of ideas;

(ii) forming new self-help groups of poor farmers, and women and youth groups, and strengthening existing groups through regular provision of advice, guidance, and training programs addressing the specific needs of farmer groups;

(iii) providing women farmers with functional literacy training, and improving training programs, materials, and facilities to accommodate women farmers' needs;

(iv) documenting and disseminating locally proven ideas through local newsletters, handouts, pamphlets, and videos, and at monthly group meetings and training programs among farmers from different villages;

(v) supporting key farmers and farmer promoters in their efforts to develop, disseminate, and implement new and innovative ideas;

(vi) organizing in-country exchange visits among farmer groups between villages, including exposure trips to areas outside the project area;

(vii) selecting key farmers, including prospective women leaders, to train as farmer promoters or group leaders in their communities;

(viii) providing the disadvantaged and landless poor, including vulnerable groups such as households headed by disadvantaged women and ethnic minorities, with opportunities for improving their livelihood through special training programs and intensive support;

(ix) promoting individual and group consultations with the disadvantaged and landless poor to increase their self confidence and self awareness for taking up income-generating initiatives;

(x) supporting the establishment and management of farmer associations, which are led and guided by key farmers and farmer promoters; and

(xi) facilitating the linkage among commune councils, farmer associations, local grass-roots organizations, and other local stakeholders.

12. Institutional Capacity Building of Local CBOs and NGOs. The main purpose of this component is to strengthen local CBOs, and provincial- and district-level NGOs to provide effective agriculture and community development services to poor farmers. These CBOs and NGOs will be associated with CEDAC in implementing project activities. The main activities include,

(i) training local CBO and NGO staff, and key farmers and potential leaders identified by the CBOs and NGOs;

5

(ii) supervising and mentoring with local CBOs and NGOs in organizational development and implementation of farmer-led extension services;

(iii) hosting visits and internship programs for staff of local CBOs and NGOs; and (iv) producing reference materials to be used by civil society organizations based on

lessons learned in the field.

13. Project Management Support. For effective project implementation and monitoring, the JFPR Project will assist the executing and implementing agencies in establishing a JFPR project unit and managing project activities. An in-depth poverty impact assessment will be carried out in the project area by an independent institution, which will also refine the base-line data and improve the periodic performance monitoring and survey systems. The in-depth assessment will be conducted in the third year of the JFPR Project and at project completion. Funds will also be provided to meet incremental operating costs, including those for operational staff and local office facilities.

2. Project Area and Beneficiaries

14. Geographical Focus. The JFPR Project will cover the poverty-stricken areas in five provinces: Kompong Cham, Kompong Chhnang, Prey Veng, Svay Rieng, and Takeo. It will initially be implemented in selected districts of Kompong Cham, Prey Veng, and Svay Rieng, and then expanded to the two other provinces.7 These provinces belong to the typical rainfed lowland ecosystem, and have pockets of serious poverty where poverty incidence is as high as about 70%. Rural people in southern Cambodia have market potentials but, at present, depend heavily on rice mono-cropping and have no alternative income-generating opportunities. They have little access to entrepreneurial skills, agricultural technology, and market information, and are vulnerable to crop failures and flood damage. A map of the project area is in Appendix 2.

15. Poor Beneficiaries. Project activities will be targeted at groups of poor and vulnerable farmers, who will be selected by the implementing NGO based on the selection criteria, including (i) more than five dependents per household, including children and disabled and elderly people; (ii) vulnerable, female-headed households; (iii) landholding of less than 0.75 hectares and high dependence on rainfed agriculture, causing inadequate food-grain production for family consumption; (iv) dependence on seasonal borrowing from moneylenders; or (v) illiteracy, or less than three years of primary education. In addition, specific eligibility criteria will be adopted for credit, intensive skills and managerial training, and social preparation support.

C. Costs and Financing 16. The total cost of the JFPR Project is estimated at $2.0 million equivalent. ADB will provide $1.8 million equivalent to be financed on a grant basis from the JFPR. The Government, NGOs, and project beneficiaries will provide the remaining cost in kind, amounting to $200,000 equivalent for office accommodation, counterpart staff remuneration, training facilities, and sites for field trials. ADB financing will include (i) revolving credit facilities; (ii) small-scale civil works; (iii) equipment, machinery, and service vehicles for project activities; (iv) training materials and other supplies; (v) beneficiary training, participatory workshops, demonstration and field trials, and farmer exchange programs; (vi) consultants and association contracts with local CBOs and NGOs; (vii) project management for executing and implementing agencies; and (viii) other project inputs (monitoring, field surveys, miscellaneous administrative expenses, and documentation). The JFPR budget matrix in Appendix 3 shows the allocation of funds by

7 The Japan International Cooperation Agency (JICA) will start a small-scale project with CEDAC in one district of

Takeo Province in 2002. The proposed JFPR Project will coordinate closely with the JICA project.

6

component and by activity. A more detailed cost breakdown for each component is available on request.

D. Implementation Arrangements 17. Executing Agency. The Executing Agency for the JFPR Project will be the Department of Agronomy and Agricultural Land Improvement (DAALI) of the Ministry of Agriculture, Forestry and Fisheries (MAFF). MAFF will be the Executing Agency for the counterpart loan. DAALI is headed by a director, and has 471 staff in 6 offices, 5 research stations, 2 seed farms, and 5 agricultural development centers. The World Bank's Agricultural Productivity Improvement Project supports DAALI's activities in seed multiplication, integrated pest management, soil fertility improvement, and capacity building. DAALI will have overall responsibilities for project implementation and monitoring of the JFPR activities, and for coordination with the counterpart ASDP. DAALI will establish a JFPR project unit, which will (i) administer day-to-day activities and coordination of project activities on behalf of the Government, (ii) act as a secretariat for the JFPR steering committee, (iii) prepare project-related documents including withdrawal applications for JFPR funds, and (iv) ensure regular monitoring of project performance and impact. The deputy director of DAALI will act as the JFPR project manager, and will be assisted by a full-time project officer and necessary support staff. Central and provincial staff of DAALI, the Department of Agricultural Extension, and other relevant departments of MAFF will be fully involved in the project activities in the field, and will provide full support and cooperation for the JFPR Project in the use of seed farms and agricultural development centers.

18. Project Implementing Agency. A national NGO, CEDAC, will be directly selected as the project implementing agency in view of the strong need for continuity in the proposed approach to the expansion of outreach to poor farmers and its proven skills and experience in the field. CEDAC will (i) strengthen the existing self-help groups and form new groups; (ii) provide intensive counseling, training, and guidance for the self-help groups; (iii) provide advisory and training services for the capacity building of farmer promoters, self-help group members, and local CBOs and NGOs; (iv) conduct monitoring and evaluation activities; and (v) report to the DAALI's project unit on the progress of field activities. Prior to project inception, CEDAC will sign with MAFF a memorandum of agreement that is satisfactory to ADB. This agreement will clarify the responsibilities of the parties involved in project activities, and ensure that all assistance provided by CEDAC will not be used for political, religious, or other non-project purposes. The outline terms of reference for key agencies involved in the JFPR Project are in Appendix 4.

19. Steering Committee. A JFPR steering committee will be established at MAFF to provide overall policy and guidance for the JFPR Project; decide on project milestones, including approval on annual work plans; and avoid overlapping of project activities with similar activities of other projects, including the special programs for food security supported by the Food and Agriculture Organization (FAO) of the United Nations and the support program for the agriculture sector in Cambodia (PRASAC) by the European Union. The steering committee will be chaired by the secretary of state of MAFF and will include representatives from DAALI; the Department of Agricultural Extension of MAFF; Ministry of Economy and Finance; Ministry of Rural Development; Ministry of Land Management, Urban Planning and Construction; Ministry of Water Resources and Meteorology; Ministry of Commerce; Ministry of Interior; Ministry of Women's and Veterans' Affairs;8 other relevant agencies of the Government; the project

8 The provincial staff of the Ministry of Women's and Veterans' Affairs will carry out a close monitoring of the field

activities of the Project with a view to promoting the mainstreaming of women beneficiaries in agriculture development.

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implementing agency (CEDAC); and an NGOs' apex organization. The implementation arrangements are summarized in Appendix 5.

20. Procurement and Consulting Services. The service vehicles (mainly motorcycles and bicycles), office equipment, and materials will be procured in accordance with ADB's Guidelines for Procurement. International and domestic consultants will be recruited on an individual basis for postharvest technology, marketing, veterinary services, managerial support, and other technical expertise in accordance with ADB's Guidelines on the Use of Consultants and other arrangements satisfactory to ADB on the engagement of domestic consultants.

21. Disbursement. The fund flow mechanism for project funds will be specified and agreed in the letter of agreement for the JFPR Project between the Government and ADB. MAFF will establish and maintain a separate JFPR project account for the project management support component (para. 13). The amount to be advanced for project activities will be determined based on the projection for expenditures during the next 6 months. In line with the annual plan approved by the JFPR steering committee, DAALI will prepare its withdrawal applications for all disbursements, which will be signed and submitted to ADB by the Ministry of Economy and Finance. CEDAC will also establish a separate account for the JFPR Project in accordance with its memorandum of agreement with MAFF regarding the use of funds, financial reporting, and auditing arrangements. CEDAC will receive funds from ADB according to the direct payment procedures. The advance to CEDAC will not exceed $200,000. The statement of expenditures for expenses less than $10,000 will be prepared by CEDAC to liquidate and replenish the advance. Expenses equal to and more than $10,000 will need to be liquidated with full supporting documents after prior approval from ADB. The project accounts of the executing and implementing agencies will be subject to ADB reviews as required, and should be annually audited by external auditors satisfactory to ADB. Appendix 6 presents the fund flow mechanism for the Project.

22. Performance and Impact Monitoring Indicators. Monitoring of project performance and impact will be carried out on an annual basis. Initially, baseline information will be collected in two villages in each of the three provinces where project activities will be commenced in the first year. The baseline survey will consist of (i) a village survey mainly based on secondary data and key respondents, covering information on village population, farming, infrastructure, social organizations, and women; and (ii) household surveys on access to social and economic services, resources, and opportunities. Such baseline information on other villages to be covered under the JFPR Project will be collected during the first year. Participatory appraisals and surveys will be conducted regularly during the project period, covering the variables in the baseline survey, and tracing the project impact on incomes and food security of the poor and vulnerable people; changes in land and other resource utilization; improvement of knowledge and awareness; and trends in migration, women's organization, and empowerment.

23. Reporting. CEDAC will submit quarterly progress reports on their activities to the JFPR project unit of DAALI and ADB. In conjunction with the proposed ASDP, the JFPR Project will be implemented for 5 years from 2002. A midterm review will be conducted in the third year to identify any implementation issues and undertake necessary remedial actions. The JFPR Project will also support the preparation of yearly independent audits.

E. Linkages, Partnership, and Poverty Reduction Impact

24. Linkage to the Proposed Project and Other Activities: The proposed ASDP will be a combination of policy and investment-based assistance. The JFPR Project will increase the ASDP's impact on poverty reduction by (i) ensuring that poor farmers and vulnerable people in

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the rural area are prepared to fully utilize the benefits and opportunities provided by the ASDP and overall agricultural growth, and (ii) influencing the modalities of the Government’s agricultural support services by demonstrating a workable alternative model of livelihood support system for the poor and disadvantaged. The JFPR Project will link the self-help groups of the rural poor to the ASDP activities once they start. The JFPR Project will have a direct geographical linkage with the ASDP, whose investment project component will be implemented in the southern and southwestern regions. The JFPR Project will also closely coordinate with other externally financed projects in the agriculture sector through its steering committee meetings, which include representatives of the concerned operational departments of MAFF and the NGOs’ apex organization.

25. Participatory Gender Sensitive Development. The JFPR Project was proposed by CEDAC, a national NGO, which is in a leadership position among the international and national NGOs active in agriculture development, and will be implemented by this NGO, and its associated local CBOs and NGOs based in the project provinces. Its self-help group approach is highly participatory (para. 6). Gender mainstreaming will be an important issue addressed in both the JFPR Project and the ASDP. Participation of capable women as farmer promoters will be strongly encouraged under the JFPR Project, particularly in homestead vegetable, livestock, and fishery production. The impact on women's participation in agriculture development is presented in Appendix 7.

26. NGO and Community Involvement. CEDAC has been involved in the JFPR Project from the beginning of project formulation. During the project period, the intensive involvement of NGOs and CBOs is required for effective project implementation and close monitoring in the field. The JFPR Project will also promote closer public-private partnership in the field for improving farm-based livelihood.

27. Beneficiaries. On average, one field staff of the JFPR Project will work directly in 10 villages over the project period, supporting and supervising 20 self-help groups. Each group will start with a few members. From the initial members, one prospective farmer promoter will be selected and trained. Each field staff of the JFPR Project will be supported by 20 farmer promoters and the total is expected to reach about 700 group members at the end of the project period. Considering the association with local CBOs and NGOs, the Project will be able to reach about 13,200 poor families in 192 villages by the end of the project period.

28. Poverty Reduction Impact. The JFPR Project will expand the outreach of agricultural support services to the rural poor for increased agricultural production, thereby contributing to reduction in rural poverty. By project completion, the structural impact on poverty reduction in villages will be enhanced through the increased availability of (i) human capital in acquired knowledge, techniques, and management skills; (ii) financial capital accumulated from the initial funds and savings of communities; (iii) physical assets such as community ponds, tree plantations, and improved soil and fish habitat; (iv) social capital in social cohesion, cooperation, and farmer organization; and (v) village-based farm enterprises for livestock, seed, seedling, and fingerling production. In addition, the strengthened capacity of locally-based CBOs and NGOs will increase the positive impact on poverty reduction in the project area. The poverty impact assessment is summarized in Appendix 8.

29. Sustainability. The trained farmer promoters and extension agents will become important human assets for their communities to ensure sustainable activities for improved livelihood. Poor farmers will become more self-reliant in generating their on-farm and off-farm income with technical knowledge, market information, and managerial ability and attitude gained from support of civil society organizations. Under the recently approved Bill on the

9

Administration and Management of Communes, the resources of local communes are expected to increase through decentralization of authority and resources, and can be used for the continued support for farmers' self-help socioeconomic activities at the local level.

F. Risks, Assumptions, and Assurances

30. Risks and Assumptions. The basic assumptions for successful project implementation include (i) the Government's continued commitment to the reduction of rural poverty and support for women's participation in development in line with its Second Socioeconomic Development Plan (2001–2005), (ii) smooth collaboration among the agencies involved in project implementation and with projects of other external funding agencies and NGOs, (iii) effective coordination with the ASDP, (iv) proper selection of participating farmer beneficiaries and associated local CBOs and NGOs, (v) adequate and timely provision of counterpart resources, and (vi) close and regular monitoring and evaluation of project performance and impact.

31. Assurances. ADB emphasized the importance of these assumptions during project formulation, and obtained Government assurances for maintaining effective partnerships with civil society organizations in the field throughout the project period to enhance project benefits. The Government also assured ADB that adequate counterpart support would be provided for the JFPR Project. The participation of local civil society organizations and the relevant Government agencies in project planning and implementation will ensure careful identification of diverse village needs in the project area. The JFPR steering committee will ensure coordination and avoid overlapping with projects of other funding agencies and NGOs. ADB's review missions will assist the JFPR project unit in facilitating this process of coordination.

IV. THE PRESIDENT'S RECOMMENDATION

32. The President recommends that the Board approve ADB administering grant assistance not exceeding the equivalent of $1,800,000 to the Government of Cambodia, to be financed from the Japan Fund for Poverty Reduction on a grant basis, for Improving the Livelihood of Poor Farmers in Southern Cambodia.

10 Appendix 2

PROJECT FRAMEWORK

Design Summary Performance Indicators Monitoring Mechanisms Assumptions and Risks Goal

Enhanced poverty reduction impact in rural areas of the Agriculture Sector Development Program (ASDP) proposed for funding by the Asian Development Bank (ADB)

Enhanced role of rural women in income-generating activities and decision making

• Poverty incidence in the Japan Fund for Poverty Reduction (JFPR) Project area to decrease from the current estimate of more than 40%

• Quality of life among project beneficiaries in rural areas

• Increased sense of

self-reliance and security among rural women

• Socioeconomic surveys by the Ministry of Planning

• Monitoring through the proposed JFPR project unit based on the agreed indicators

• ADB review missions • Progress reports of the

implementing nongovernment organization (NGO)

• Regular interactions of JFPR project staff with project beneficiaries, other farmers, and local administrations

• Continued Government commitment to poverty reduction in rural areas and support for women's participation in line with the Second Socioeconomic Development Plan (2001–2005)

Purpose

Improved livelihood of the rural poor through the provision of income-generating opportunities in the poverty-stricken areas Increased participation of poor women in direct activities for agriculture development

• Household income among project beneficiaries

• Access to basic social services

• Proportion of women

groups in the total number of farmer groups in the JFPR Project

• Proportion of women among participating farmers

• Socioeconomic surveys

• Project monitoring activities

• ADB missions • Progress reports of the

implementing NGO • Regular interactions

with key stakeholders

• Improvement in transport and communications in the project area

• Smooth collaboration among the agencies involved in project implementation

• Effective coordination with the proposed ASDP

Components/Outputs

• Improved access to income-generating opportunities

• Increased absorptive capacity among project beneficiaries, including the disadvantaged and landless poor

• Expanded outreach and increased skills of local community-based organizations and NGOs

• Availability of farm inputs, information, and village funds

• Use of productive resources

• Responsiveness to new information and opportunities

• Number of farmer groups and villages satisfactorily managed by a field staff

• Quality of services provided to beneficiaries

• Socioeconomic surveys

• Project monitoring activities

• ADB missions • Progress reports of the

implementing NGO • Regular interactions

with key stakeholders

• Effective guidance and supervision by ADB, the JFPR project unit and the implementing NGO

• Proper selection of participating farmer beneficiaries and associated local NGOs

Appendix 1 11

Design Summary Performance Indicators Monitoring Mechanisms Assumptions and Risks • Provision of self-help

village funds • Construction of village

infrastructure • Social mobilization

and training • Farm demonstrations

and farmers' exchange visits

• Provision of special

intensive support for the disadvantaged and landless poor

• Capacity building

support for local NGOs • Procurement of

vehicles and equipment

• Recruitment of

consultants • Monitoring of project

activities

• Use of disbursed

funds and repayment rates

• Use of constructed

facilities • Number of participants

and participants' evaluation

• Number of participants

and participants' evaluation

• Number of participants

and participants' evaluation

• Number of participants

and participants' evaluation

• Timing and

specification of procured items

• Timing of fielding

consultants • Timing, frequency and

appropriateness of information collected

Total Project Cost: $2.0 million equivalent JFPR financing: $1.8 million, Government, NGOs’ and beneficiaries' contributions: $200,000 equivalent

• Adequate and timely

provision of counterpart financial and human resources

• Close liaison and collaboration among the concerned agencies

• Close monitoring of implementation progress and project impact

Summary of Cost Estimates ($) Project Components Inputs

Component 1 Provision of

Improved Access to Income-Generating

Opportunities

Component 2 Strengthening the

Absorptive Capacity of Poor Farmers,

with Special Provision for

Intensive Support for Landless

Farmers

Component 3 Capacity Building of

Local CBOs and NGOs

Component 4 Project

Management, Studies, Surveys,

Monitoring and Poverty Impact

Assessment

Total (Inputs)

1. Revolving Credit Facilities: (e.g., microfinance, energy trust, low-cost housing fund, fund for women, community health insurance fund, and other specific funds)

157,000 157,000

2. Civil Works: (e.g., preparation, construction, and O&M of civil and public works and infrastructure, and related costs)

360,000 360,000

3. Equipment, Machinery, Materials, and other Capital costs: (e.g. power tools, irrigation pumps, compactors, vehicles, furniture, audiovisual equipment, construction material)

50,000 51,000 20,000 121,000

4. Supplies: (Consumable items for specific project activities, e.g., seeds, livestock, medicines, disposable medical equipment, textbooks, other reading materials)

64,000 90,000 154,000

5. Training, workshops, seminars: (e.g., rental for venue, farmers' exchange visits, other travel, food and lodging for participants, training facilities, and other related costs)

84,000 250,000 40,000 374,000

6. Consulting Services: (e.g., for impact assessment, research and special studies, specialists, contractors, engineers, and related costs such as travel and accommodation)

30,000 40,000 25,000 80,000 175,000

7. Project Management: including management of specific components by PMU, the EA and IAs. (e.g., wages for staff, office equipment, rental and O&M, recurrent costs)

308,000 308,000

8. Other Project Inputs: (For other specific project inputs that cannot be included in any of the above categories)

0

9. Contingencies (0-10% of total estimated costs, that can be utilized for any of the above categories that, due to unforeseen circumstances, may require additional funds during implementation. use of contingencies requires prior approval from ADB)

151,000 151,000

Subtotal JFPR-Financed Amount 745,000 431,000 85,000 539,000 1,800,000Government and beneficiary contributions in kind 200,000 200,000 Total Project Costs 745,000 431,000 85,000 739,000 2,000,000CBOs = community based organizations; JFPR = Japan Fund for Poverty Reduction; NGOs = nongovernment organizations. Source: Staff estimates.

14 Appendix 4

OUTLINE TERMS OF REFERENCE FOR EXECUTING AND IMPLEMENTING AGENCIES

1. Executing Agency. The Executing Agency, the Department of Agronomy and Agricultural Land Improvement of the Ministry of Agriculture, Forestry and Fisheries (MAFF), will

(i) administer day-to-day activities of the Japan Fund for Poverty Reduction (JFPR) Project on behalf of the Government to ensure that the project objectives are successfully achieved;

(ii) act as a secretariat for the JFPR steering committee and organize the steering committee meetings on a quarterly basis and as required;

(iii) prepare quarterly progress reports for the JFPR steering committee and the Asian Development Bank (ADB) and other project-related documents, including withdrawal applications for JFPR funds;

(iv) ensure that the project activities are properly coordinated with the activities of other relevant projects;

(v) provide, as required, technical resource persons from MAFF and provincial agricultural departments for training programs and seminars conducted under the JFPR Project;

(vi) ensure that adequate coordination is maintained in the field among the project implementing agency, provincial departments, external funding agencies, and the private sector;

(vii) carry out, in collaboration with the project implementing agency, training for project beneficiaries at the agricultural development centers, seed farms, and other relevant facilities; and

(viii) monitor the performance and impact of the project activities on a regular basis.

2. Implementing Agency. The Implementing Agency, the Centre d’Etude et de Développement Agricole Cambodgien (CEDAC), will

(i) implement project activities under the general supervision of MAFF according to the memorandum of agreement signed with MAFF, and the approved project administration manual and work plan;

(ii) carry out social benchmark surveys in the project area to assess and record the current situation of local communities;

(iii) identify project beneficiaries based on the detailed criteria developed for the selection of project beneficiaries in consultation with MAFF, ADB, and local community-based organizations and nongovernment organizations;

(iv) provide the project beneficiaries with intensive counseling, training, and guidance required for forming new self-help groups and strengthening the existing groups;

(v) provide local community-based organizations and nongovernment organizations to be associated under the JFPR Project with necessary advisory and technical support for their capacity building;

(vi) supervise in the field the operation of the revolving credit facilities and the rehabilitation and construction of village infrastructure works;

(vii) monitor and evaluate project activities, and update the baseline data and information on a regular basis; and

(viii) submit to MAFF project progress reports on a quarterly basis and as required.

Appendix 5 15

IMPLEMENTATION ARRANGEMENTS

Department of Agronomy and

Agricultural Land Improvement of the

Ministryof Agriculture, Forestry and Fisheries

JFPR Project Unit

Asian Development Bank (ADB)

Self-Help Groups of Poor and Disadvantaged Farmers

The Government

JFPR Agreement

Support for Self-Help Farmer Groups in Social Mobilization and Capacity

Building

Capacity-Building Support

Local CBOs and NGOs

Project Beneficiaries

Executing Agency

Centre d’Etude et de Développement Agricole Cambodgien (CEDAC)

Implementing Agency (IA)Provincial Agricultural

Departments

JFPR Steering Committee

Memorandum of Agreement

Local CBOs and NGOs

(EA, IA, and other relevant agencies, and an NGOs’ apex organization as indicated in para. 19 of the text)

Legal Arrangements

Line of Operations Delivery of Services

Support for Income- Generating Activities

CBOs = community based organizations; NGOs = nongovernment organizations

16 Appendix 6

JFPR ProjectUnit

Asian Development Bank(ADB)

FUND FLOW MECHANISM a

Executing Agency

Centre d’Etude et deDéveloppement AgricoleCambodgien (CEDAC)

Implementing Agency

JFPR Fund to be disbursed to the Executing and Implementing Agencies according to the JFPR Agreement between ADB and the Government.

a The JFPR fund disbursements shown here exclude contingencies ($151,000).

Request for funds with withdrawal applicationsFlow of funds

Request for Funds basedon Projected Expenditures

Withdrawal Applications

Ministry of Economy and FinanceWithdrawal Applications

Fund Disbursements

Consultants for managerial supportand external review

$65,000

$98,400

$1,485,600

Field Surveys, Monitoring,Consultants and

Contracts with Local NGOs/CBOs

Management andAdministration

Village-BasedRevolving Funds

Small-scaleInfrastructure

Equipment, Vehicles,and Materials

Training, Workshops,and Seminars

$157,000 $360,000 $121,000

OtherSupplies

$154,000 $374,000

$110,000

$209,600

CBOs = community-based organizations; JFPR = Japan Fund for Poverty Reduction; NGOs = nongovernment organizations

Appendix 7 17

PARTICIPATION OF POOR WOMEN A. Women in Cambodia

1. In the social order for women in Cambodia, age, marriage, children, and wealth are included in the determinants of status. The Constitution of 1993 guarantees that "every Khmer citizen shall be equal before the law, enjoying the same rights, freedoms, and fulfilling the same obligations regardless of sex .." (Article 31). The Constitution provides a framework for gender equality including equal participation in economic and social life, employment, and remuneration. However, the effective capacity to claim these rights is subject to prevailing social attitudes about power and gender relations. Data from the 1997 Socioeconomic Survey of Cambodia shows the proportion of male and female population over 10 years old in the labor force to be almost equal, 65% of women to 65.8% of men. However, women outnumber men in the labor force as they constitute 53% of the population.1

2. The proportion of girls aged 10–19 in the labor force is higher than that of boys. Women's participation in the agricultural workforce is high, with 55.5% of the agricultural workforce being women. In agriculture, there is no strict sexual division of labor. Researchers have noted the increasing flexibility of gender in rice cultivation activities, particularly when they are carried out by household labor. Women heads of households with young children tend to carry out more “male” tasks, given their lack of access to male labor.2 Whereas productive tasks are flexible, women's domestic work remains unchanged. Women work longer hours than men, yet their work remains less valued, reflected in the lower female wage rate.3 Women household heads in Svay Rieng Province reported to a mission of the Asian Development Bank (ADB)4 that one morning of ploughing by men is exchanged at least for a full day of transplanting or weeding by women. It is also reported that significant numbers of women and children have to spend inordinate amounts of time foraging for food.5

3. As regards access to land, after the reforms of 1989, as land allocation was based on the number of adults in the household, the land allocated to female-headed households depended upon the age of children. Ability to farm depended upon the age and health of the female head, number of working age children, and access to exchange and hired labor. Households headed by women with young children are increasingly resorting to land sales and sharecropping of their lands to other farmers. Indebtedness also leads to the pledging of land to better-off farmers. The proportion of households headed by women, who possess farm land, is lower than that of households headed by men due to the lack of labor to acquire more agricultural land and/or farm profitably thus resulting in pressure to sell land. The incidence of landlessness among households headed by women is generally higher than that among households headed by men. Distress sales of land appear to have a causal relationship with the incidence of landlessness.

4. Livestock production is integral to the Cambodian agricultural economy. Possession of draft animals varies with landholding. Possession of smaller livestock is more widespread across land size classes. Access to natural resources has declined severely particularly in

1 Ministry of Planning. 1997. Report on the Socioeconomic Survey of Cambodia. Royal Government of Cambodia.

Phnom Penh. 2 Cambodia Development Research Institute (CDRI). 1999. Land, Labor and Livelihoods in Cambodia. Phnom Penh. 3 CDRI. 1999. Gender and Development in Cambodia: An Overview. Phnom Penh. 4 ADB's Project Design and Appraisal Mission fielded in January 2002. 5 ADB. December 2001. Participatory Poverty Assessment: Cambodia. Manila, Philippines.

18 Appendix 7

southern Cambodia, and women face considerable problems with obtaining fuel wood for household consumption.

5. Access to credit to meet consumption, investment, and emergency needs is important for poor households. Food insecurity is fairly widespread on account of predominantly rain fed agriculture, and natural calamities such as droughts and floods. Households headed by women reported borrowing from their better-off neighbors to meet consumption requirements. A study of landlessness in Takeo Province6 reported that causes of landlessness in rural areas included gender, lack of skills and ideas, and lack of unity and leadership.

6. Women's participation in decision-making is limited in Cambodia. Traditional committees such as pagoda committees consist of male members only. Even among self-help groups organized by the Partnership for Development in Kampuchea (PADEK), a women-oriented nongovernment organization (NGO) in Cambodia, the male minority took the decision-making positions.7 Although the efforts of NGOs have gradually enhanced women's participation in decision-making processes in society, additional support for women's leadership development and strategies to support and build women's capacity are still required.

B. Women's Participation in the Project

7. The Japan Fund for Poverty Reduction (JFPR) Project is expected to fully involve rural poor women in the poverty-stricken areas of five project provinces. The Implementing Agency of the JFPR Project, Centre d’Etude et de Développement Agricole Cambodgien (CEDAC), is already working with poor women to improve their productivity and incomes, and empower them through training and participation as key farmers. Under the JFPR Project, income-generating opportunities will increase for poor rural women through their selection for organization, training for improved farming activities, and access to loans from revolving funds. Poor households headed by women will be particularly targeted through participatory approaches by the implementing NGO, involving the community. Exchange visits will be promoted within the project area. The establishment of associations and networks of farmers and local entrepreneurs will involve capable women and address poor women in particular. Capable women farmers will be identified by the implementing NGO as farmer promoters to develop women's self-help groups. The rehabilitation and creation of community assets, including canals, ponds, and woodlot plantations, will improve poor women's access to fish, fuel, timber, and nontimber forest products, etc.

8. Women's access to training and extension will be improved through village-level training. The best-performing women farmers among them will be selected for disseminating innovative ideas. Through these means, poor women, particularly women heads of poor households, will benefit from improved income earning opportunities, reduced migration, increased participation in community-level decision making, and leadership positions. Gender-related capacity among government agencies, local NGOs, and community-based organizations will be strengthened through gender training.

C. Monitoring of Project Impact on Women

9. Baseline and annual surveys will be carried out under the JFPR Project to monitor the impact on the socioeconomic status of poor rural women. The baseline survey will be carried

6 Kato, Elisabeth. 1999. Overview of the Cambodia Land Study Project: Case Studies. Oxfam: Phnom Penh. 7 Rao, Janardhan, and Swift, Peter. 1998. Savings, Solidarity and Self Help. Phnom Penh.

Appendix 7 19

out in two selected villages in the three provinces in the first phase of project activities. Indicators for the monitoring may include (i) demographics (population; sex ratio; numbers and ratio of households headed by women, including widows and divorced and deserted women with young children; and migration trends); (ii) economic indicators (housing condition; livestock; fisheries; access to agricultural and homestead land by gender; trends of land loss through indebtedness and distress sales; sharecropping by gender; women's participation in on-farm and off-farm income-earning activities; male and female income and wage levels; income distribution by gender; comparative levels of food security among households headed by men and women; women's access to forest products, training, extension, credit, agricultural inputs and markets; access to seed capital through self-help groups; and access to irrigation facilities and other water infrastructure); and (iii) social indicators (male and female educational levels; health status of women and men; women's participation in community groups; number of women-only groups; women's role as key farmers and farmer promoters; leadership positions in organizations by gender; women's participation in the dissemination of new and innovative practices; and the level of recognition of poor women's capacities and roles in improving their socioeconomic status). These indicators will be tested through repeat studies in order to understand the changes in project impact on poor women's positions.

20 Appendix 8

SUMMARY POVERTY IMPACT ASSESSMENT

Profile Project Provincesa

Physical Characteristics

Five project provinces comprise about 15% of the total land area of Cambodia, and are in the southern region. These provinces belong to the typical rainfed lowland zone where farmers depend on the wet season and recession rice and have no major alternative opportunities for income generation. Poor farmers are extremely vulnerable to crop failures and frequent flood damages. Decreasing soil fertility caused by intensive cropping over many years with poor farming techniques and inadequate nutrient replenishment is a major constraint to improved productivity. Improved access to agricultural support services is urgently required in the poverty-stricken areas.

Poverty About 90% of population is engaged in agriculture. 60–70% of farmers have marginal land holdings of less than 1 hectare. More than half of rural households have food deficit, often up to 6 months of the year. Off-farm employment opportunities are limited within the province, and available only in Phnom Penh. To augment their income for daily food requirements, some farmers grow cash crops in their homestead. About 10% of farmers are heavily indebted. There are a large number of poor areas where the poverty incidence is estimated to be higher than 40% of the population.b Poverty incidence in the pockets of serious poverty is estimated at as high as 70%. Specific means for poverty reduction depend on the characteristics of poverty in the villages concerned. Poverty in rural Cambodia often relates to the lack of (i) self-sufficiency in rice; (ii) additional sources of cash income to fulfill food requirements; (iii) access of school-age children to education;c and (iv) off-farm employment in urban areas.

Education Adult literacy rate is estimated at about 50% in most of the villages. There is a substantial difference in school enrollment by gender, with about 70% of boys in the villages enrolled in secondary schools while only about 20% of girls are enrolled. Parents cannot afford to send their daughters for higher education. This is also partly because girls cannot be accommodated in pagodas for boarding to commute to secondary schools, which are far from villages. About 30% of children stop going to school during planting and harvesting seasons.

Health Long distance to commune or district clinics is a major issue. In many cases, the distance is 2–3 kilometers. Thus, people tend to depend on traditional healers and midwives.

Environment The Japan Fund for Poverty Reduction (JFPR) Project is likely to generate a positive environmental impact through increased use of leguminous plants and appropriate training and awareness programs on the use of agrochemicals and pest management.

Social Issues The villages have high proportions of widows and disabled people. Intensive support and provision of better access to social services are urgently required for vulnerable people and landless poor in the project area. Women seldom participate in groups and are rarely leaders in villages.

Impact Monitoring Indicators

In support of the Government’s efforts to reduce poverty and in line with Asian Development Bank’s Poverty Reduction Strategy, some impact indicators have been developed for the proposed JFPR Project to assess the project impact on poverty in the project area. By project completion, about 9,300 farm households or 70% of the prospective project beneficiaries will move out of poverty.d Other major indicators for monitoring the project impact on poverty reduction may includee (i) acquisition of relevant technical knowledge and skills, and managerial capacity; (ii) level of total enrollment and enrollment of girls in primary and secondary schools;

Appendix 8 21

(iii) access to agricultural support services; (iv) access to financial services (savings and credit); (v) changes in cash income; (vi) activities and sustainability of farmer groups and associations; (vii) activities and sustainability of women and youth groups; (viii) level of food self-sufficiency; (ix) land tenure and ownership; (x) availability of individual and village ponds and tree plantations; and (xi) enterprise activities such as livestock and poultry, rice and vegetable seed production, nursery development, and fingerling production.

a The description of project provinces is based on the baseline survey report prepared by the proposed project implementing agency in June 2002.

b Asian Development Bank (ADB). December 2001. Participatory Poverty Assessment: Cambodia. Manila, Philippines. Figure 4. c In particular, girls suffer, since priority is given to boys if people can afford to send their children to school. d The total population in the project area is estimated at 4.24 million according to the population census in 1998. e These are preliminary indicators. The expected project impact on poverty reduction will be assessed based on actual baseline

surveys before project inception.