The African food crisis response: resources from agricultural and non-agricultural projects in Ethiopia

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1. Introduction

1.1 On July 24, 2008 the Boards of Directors in Resolution B/BD/2008/14 Rev.1 - F/BD/2008/09/Rev. 1, approved the Africa Food Crisis Response (AFCR). The AFCR provides the framework for accelerated support to Regional Member Countries (RMC) affected by increased food prices. The Boards of Directors also approved on 8 August 2008, by Resolution ADF/BD/WP/2008/64/Add.2 - ADB/BD/WP/2008/113/Add.2, the indicative list of non agriculture projects to be considered for restructuring, including those for Ethiopia.

1.2 The Government of the Federal Democratic Republic of Ethiopia (GOE) has accepted the Bank's proposed short term measures to address the current food crisis affecting its Regional Member Countries. Subsequently, the GOE has submitted to the Bank a request for restructuring fourteen (14) Bank projects in Ethiopia and to make available a total amount of UA 39,680,001 to purchase fertilizers and boost crop production in the country. However, resources amounting to UA 11,350,000 from two Social sector Projects (Education III and Primary Health Care Projects) will only be disbursed when outstanding audit issues are resolved by the Borrower.

1.3 The lists of projects earmarked for revision of list of goods and services (LOGS) and those for restructuring and the amounts projected to be released towards the AFCR are shown in Annexes 1a and 1b respectively. The fourteen projects are divided up into 2 batches: Batch A (1 project) are agriculture projects which include crop production components and Batch B (13 projects) are nonagriculture projects whose released resources will be used to mitigate the impact of rising food prices. The purpose of this memorandum is to seek the Board's consideration of the proposed use of the resources as indicated herein, including the procurement and implementation arrangements outlined herewith.

2. Project Background

2.1 Brief Description

The projects selected for the restructuring exercise are: (i) Awash River Flood Control; (ii) Rural Financial Intermediation Support Project; (iii) Institutional Support Project to women's Affair Office; (iv) Agriculture Sector Support Project; (v) Genale Dawa river Basin Integrated Development Master Plan Study; (vi) National Livestock

2.2 Implementation Status of the Projects

The projects involved have been carefully evaluated ensuring that the reallocation of these resources will not affect the attainment of the initial objectives of these projects. To that end, only projects with either substantial savings upon completion, earmarked for cancellation or with un-disbursed balances which will not be required by the project's closing dates have been selected for this food crisis initiative. In a few cases, select project activities will be accomplished with lesser budget than estimated at appraisal. (See Annex 2)

2.3 Implementation Arrangements

The resources that will be freed from the project funds will be pooled together and will be managed by the Ministry of Agriculture and Rural Development, the Executing Agency. The Marketing Department of the Ministry of Agriculture and Rural Development (MOARD) is responsible for fertilizer procurement, as well as other agricultural inputs. Fertilizer distribution is done through the network of the Agricultural Input Supply Agency (AISA) and Farmers Unions. The Ministry through the Zonal extension agencies in the field will oversee food production on the ground. The actual food production will be handled at the individual farmer's level.