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Investment Study Inception Report

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Understanding the issue of initial capital investment requirements is a key step in removing obstacles to agricultural water development and achieving food

    INVESTMENT IN AGRICULTURAL WATER MANAGEMENT IN SUB-

    SAHARAN AFRICA: DIAGNOSIS OF TRENDS AND OPPORTUNITIES

    A Collaborative Program

    between

    The New Partnership for Africa’s Development (NEPAD),

    The African Development Bank (ADB),

    The Food and Agriculture Organization of the United Nations (FAO),

    The International Fund for Agricultural Development (IFAD),

    The International Water Management Institute (IWMI),

    and

    The World Bank (WB)

    INCEPTION REPORT

    Volume 1 Main Report

    Submitted to

    The African Development Bank

    January 2004

     INTERNATIONAL WATER MANAGEMENT NSTITUTE

    Table of Contents

    TABLE OF CONTENTS ................................................................................................................................................................. 1 List of Acronyms ............................................................................................................................................................................ 2 Foreword ........................................................................................................................................................... 3 Executive Summary ............................................................................................................................................. 4 Introduction ....................................................................................................................................................... 7 HOW THIS INCEPTION REPORT IS ORGANIZED ............................................................................................. 10 COMPONENTS SUPPORTED BY THE AFRICAN DEVELOPMENT BANK ........................................................... 10 Planning and Implementation ..........................................................................................................................................10 Private Sector Participation .............................................................................................................................................11 Health and Environment .................................................................................................................................................11 Agricultural Water and Livestock .....................................................................................................................................12 Poverty Reduction .........................................................................................................................................................12 THE OTHER COMPONENTS OF THE COLLABORATIVE PROGRAM ................................................................ 13 Demand for Products of Irrigated Agriculture .....................................................................................................................13 Assessment of Potential ..................................................................................................................................................14 Irrigation Costs..............................................................................................................................................................15 IWRM in a Basin ..........................................................................................................................................................15 OVERALL APPROACH AND METHODOLOGY ................................................................................................. 16 Synergies .....................................................................................................................................................................21 Workshops ...................................................................................................................................................................21 WORKING GROUP AND STEERING COMMITTEE ........................................................................................... 21 OVERVIEW OF MAIN OUTPUTS ...................................................................................................................... 22 REFLECTIONS ON THE FINAL OUTPUTS ........................................................................................................ 22 Draft Outline of Final Synthesis Report .............................................................................................................................23 Strategy for Dissemination ..............................................................................................................................................24 REFERENCES ................................................................................................................................................. 27 ANNEXES ....................................................................................................................................................... 29 Annex 1 Logframe of Planning and Implementation Component ..........................................................................................31 Annex 2 Gantt Chart of Planning and Implementation Component ........................................................................................33 Annex 3 Logframe of Private Sector.................................................................................................................................34 Annex 4 Gantt Chart of Private Sector Component .............................................................................................................35 Annex 5 Logframe of the Health and Environment Component ............................................................................................37 Annex 6 Gantt Chart of the Health and Environment Component ..........................................................................................38 Annex 7 Logframe of the Agricultural Water and Livestock Component .................................................................................39 Annex 8 Gantt Chart of the Agricultural Water and Livestock Component ..............................................................................41 Annex 9 Logframe of the ADB-funded Poverty Reduction Component ..................................................................................42 Annex 10 Gantt Chart of the ADB-funded Poverty Reduction Component .............................................................................44 Annex 11 Logframe of the IFAD-funded Poverty Reduction Component ...............................................................................45 Annex 12 Gantt Chart of the IFAD-funded Poverty Reduction Component .............................................................................47 Annex 13 Gantt Chart of the Regional Demand Component ................................................................................................48 Annex 14 Logframe of the Assessment of Potential Component ...........................................................................................49 Annex 15 Gantt Chart of the Assessment of Potential Component .........................................................................................51 Annex 16. Logframe of the Irrigation Cost Component .......................................................................................................52 Annex 17 Gantt Chart of the Irrigation Cost Component ......................................................................................................54 Annex 18 Summary of Outcomes of Water for Food Security Session at Pan Africa Conference ................................................55

    1

    LIST OF ACRONYMS

ADB - African Development Bank

    AQUASTAT - FAO‘s Information System on Water and Agriculture

    AU - African Union

    CAADP - NEPAD Comprehensive Africa Agriculture Development Program

    CCG - Collaborative Program Core Consultative Group

    EAP - East Asian and the Pacific countries

    E&CA - European and Central Asian countries

    FAO - Food and Agriculture Organization of the United Nations

    FARA - Forum for Agricultural Research in Africa

    GDP - Gross Domestic Product

    HIV/AIDS - Human Immunodeficiency Virus / Acquired Immunodeficiency Syndrome

    IFAD - International Fund for Agricultural Development

    IFPRI - International Food Policy Research Institute

    ILRI - International Livestock Research Institute

    InWEnt - Capacity Building International, Germany

    IWMI - International Water Management Institute

    IWRM - Integrated Water Resource Management

    LAC - Latin American and Caribbean countries

    MENA - Middle East and North African countries

    NEPAD - New Partnership for Africa‘s Development

    NGO - Non-Government Organization

    SA - South Asian countries

    SC - Collaborative Program Steering Committee

    SSA - sub-Saharan Africa

    UNCED - United Nations Conference on Environment and Development

    USAID-IEHA - United States Agency for International Development Initiative to End

    Hunger in Africa WB - World Bank

    WG - Collaborative Program Working Group

    2

FOREWORD

    The Collaborative Program on Agricultural Water Investment Strategies in Sub-Saharan Africa: Trends and Opportunities is a unique partnership among quite different institutions, all of whom share the same goal: promotion of sustainable economic growth and poverty reduction in Africa, through enhancing the productivity and profitability of agriculture. We all agree that improving smallholders‘ access to water, and creating the conditions under which they can use it productively, is one of the key strategies for achieving the common goal. The partners, in addition to IWMI, are the African Development Bank, the Food and Agriculture Organization of the United Nations, the International Fund for Agricultural Development, the Secretariat of the New Partnership for Africa‘s Development, and the World Bank. We are determined to work together and make a positive contribution to promoting good agricultural water investments in Sub-Saharan Africa.

    This Inception Report has been prepared specifically as part of the Executing Agency Agreement between the African Development Bank and IWMI, which is supporting the implementation of four of the sub-projects or components of the Collaborative Program. But we have written this Inception Report to reflect the larger set of activities being implemented under the Program.

    We would like to thank the African Development Bank for its strong commitment and its support for this work. We also wish to thank our other partners for the contributions they are making.

    We look forward to producing a product that will lead to greatly enhanced but effective investments in agricultural water development in Africa.

Douglas J. Merrey

    Director for Africa

    International Water Management Institute

    3

EXECUTIVE SUMMARY

    The Collaborative Program on Agricultural Water Investment Strategies in Sub-Saharan Africa: Trends and Opportunities is a joint undertaking of the African Development Bank (ADB), the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the International Water Management Institute (IWMI), the Secretariat of the New Partnership for Africa‘s

    Development (NEPAD), and the World Bank (WB).

    The objective of the collaborative program is to review experiences, identify opportunities, and make practical recommendations for innovative investments in agricultural water management in sub-Saharan Africa. The underlying premise is that sustainable economic growth and poverty reduction in Africa can be achieved by enhancing the productivity and profitability of agriculture, both irrigated and rainfed, and by encouraging more investment in the sector.

    The idea of launching this program emerged from the deliberations of an international workshop on Agricultural Water Use that was held in June 2001 in Harare, Zimbabwe to discuss and draft a strategy paper on Agricultural Water Use in sub-Saharan Africa. A series of subsequent consultations and interactions among the partner organizations mentioned in the opening paragraph led to the formulation of the present collaborative program that is articulated around the following inter-related components:

? Irrigation project planning and implementation process;

    ? Constraints and opportunities for private sector participation in agricultural water development and management;

    ? Health, environment and livestock with the growing importance of the latter, this

    component has been broken down into two: Health and environment aspects and Agricultural water and livestock production;

    ? Agricultural water development for poverty reduction;

    ? Regional demand for products of irrigated agriculture;

    ? Assessment of potential for improving agricultural water management; ? Irrigation cost study; and

    ? Agricultural water use from a river basin perspective.

    Individual studies will be carried out on each of the above components broadly though a combination of critical review and analysis of the literature, case studies and scientific scrutiny of real-life experiences, and field work to bridge gaps in knowledge. The findings of these studies will enhance the knowledge base and improve the understanding of experiences and lessons learned from past agricultural water investments, elucidate past trends and future development strategies, analyze constraints, and identify opportunities for overcoming them. They will also provide valuable inputs to NEPAD‘s Comprehensive Africa Agriculture

    Development Program (CAADP), which calls for US$38 billion of new investment in the

    sector by 2015, to rapidly expand the area under sustainable agricultural water management.

    The collaborative program will be implemented over a period of 12 months beginning in January 2004, although preliminary work on some components began in late 2003. The first five components listed above are supported by ADB with IWMI as executing agency. This Inception Report has been prepared in fulfillment of the requirements of the agreement 4

    between the ADB and IWMI. The remaining four study components, although not directly supported by ADB but by the other partner organizations, are also covered in this report.

    Detailed individual descriptions of each of these component studies including proposed methodology and approach, activities, outputs, work plan and budget, are given in this report. Efforts to exploit synergies, coordinate field work, and harmonize data collection among the various components, thereby rationalizing the use of available resources and facilitating integration, are also highlighted.

    The main output of each component study will be a report typically describing the analyses carried out, the lessons learnt from a critical review of the literature and carefully targeted case studies, and the constraints, opportunities and policy-oriented recommendations to promote wiser investments in agricultural water related to that particular component. These component reports will constitute the building blocks for an overall synthesis report that will integrate the lessons and conclusions and make key recommendations for encouraging innovative investments in agricultural water development and management in sub-Saharan Africa. A draft outline and chapter structure for the final synthesis report is included in this inception report.

    The main clients of this program are the investment partners, notably the World Bank, ADB, and IFAD, in addition to other donors and investors. Given the expected policy-level outcomes of the collaborative program, special efforts will be deployed to communicate results and discuss findings with decision-makers, donor agencies, researchers, non-government agencies, and other role players. Both print and electronic media will be used. It is expected that all partner organizations will assist in the dissemination of study findings and recommendations to potential users through their extensive communication and knowledge sharing networks: e.g., by the hosting of results and recommendations on their respective web-sites and by providing links to the proposed investment study collaborative program web-site. The scientific credibility of the program will be enhanced by presentations at national and international conferences and the production of peer-reviewed scientific publications.

    A high-level Steering Committee (SC) and a Working Group (WG) have been constituted to guide the implementation of the various studies. The Steering Committee will provide overall strategic direction and review the various outputs that will be produced under the collaborative program, including the overall synthesis report. The committee is composed of representatives of each of the collaborating institutions and chaired by a senior representative of NEPAD. The Working Group will ensure the technical quality of the program and consists of nominated representatives of the collaborating institutions. Key decisions (such as selection of specific cases and identification of indicators) and the detailed terms of reference for the various component studies are submitted to the Working Group for review and concurrence.

    5

6

INTRODUCTION

    Agriculture is the most important sector of the economy for many countries in sub-Saharan Africa, contributing an average of 30% of total gross domestic product and accounting for 67% of employment in the region. Roughly 80% of the region‘s poor live in rural areas and are dependent on agriculture for their livelihoods. The population of the region is expected to increase by close to 3% annually to over one billion in 2025. Meanwhile, the Forum for Agricultural Research in Africa (FARA) estimates that to keep up with this increase and achieve food security, poverty alleviation and economic growth in a sustainable way, agricultural contribution e must grow at an annual rate of 6% by 2020 (FARA 2003).

    Substantial new investments in agriculture are needed to meet targets for poverty alleviation and food security. Meanwhile, FAO estimates that about 75% of the growth in crop production in Sub-Saharan Africa required by 2030 will have to come from intensification in the form of yield increases (62%) and higher cropping intensities (13%), with the remaining 25% coming from arable land expansion (FAO 2000). Since irrigation and other forms of agricultural water management is the key to intensification, it is also clear that much of the required new investment must be in agricultural water development.

    Improved management of land and water can make significant contributions to overcoming some of the major challenges confronting sub-Saharan Africa: feeding a growing population, providing opportunities to escape poverty, and achieving sustained economic growth. The ability to identify and make judicious investments in agricultural water use, establish new infrastructure, and improve the performance of existing facilities, will be a key determinant of success. Improving land and water productivity, and increasing poor people‘s access to water for domestic and productive purposes are critical elements in this process. Ensuring that such developments occur in a balanced and harmonious way within the framework of an integrated and market driven approach to land and water resources management will require research to understand the reasons for past failures and identify the conditions for success.

    Historical figures on lending for infrastructure development for irrigation and drainage by region show general declines for all regions with quite drastic cuts in Asia (Figure 1.1). In sub-Saharan Africa (SSA) a decreasing trend is observed from already very low levels of investment. More than turning around the decline, in SSA the issue is how to substantially increase the historically very low levels of spending on irrigation and drainage. The common denominator in the declines and low investments is the disappointing performance of development to date in terms of sustainability and returns on investment. Moreover, the decline in irrigation lending has been matched by declining farm-gate prices for food crops

    further depressing returns to investment in agricultural water. That the decline and low level of investment has continued for more than 20 years indicates that the sector has been slow to respond and adapt to change. However, if the decline in investment is to be turned around and increased substantially, innovative approaches to agricultural water development are now required.

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    Figure 1.1 . Trends in Investments in Irrigation and Drainage, 1961-2002

    6.00

    5.00

    4.00

    3.00

    2.00

    (Bn US$)1.00Investments in 1995 prices

    0.00

    61-6566-7071-7576-8081-8586-9091-9596-0001-02

    Year

    SSAEAPE&CALACMENASA

     Sources of data: World Bank, Asian Development Bank, and the Intern-American Development Bank.

    SSA stands for sub-Saharan Africa, EAP for East Asia and the Pacific, E&CA for Europe and Central

    Asia, LAC for Latin America and the Caribbean, MENA for Middle East and North Africa, SA for

    South Asia.

With the above in mind, five international organizations (ADB, FAO, IFAD, IWMI and

    World Bank) have joined forces with the secretariat of the New Partnership for Africa‘s

    Development (NEPAD) in a program intended to diagnose the causes for current trends and

    identify new opportunities for investment in sustainable, cost-effective agricultural water

    development in sub-Saharan Africa. The program aims to (a) identify changes in the current

    global development context related to agricultural water development; (b) identify innovative

    approaches and technologies for agricultural water use, including water harvesting and water

    conservation, as well as issues related to institutional and capacity building; and (c) propose

    better approaches to future agricultural water use development in the region than those of the

    past, both in terms of implementation and lending. It is expected that the program will

    contribute to improving the ability of governments to develop appropriate investment

    strategies for agricultural water use and to catalyse increased investment.

As a first step, a workshop on Agricultural Water Use was organized in Harare, Zimbabwe,

    from 13-16 June 2001. The objective of the workshop was to discuss and draft a strategy

    paper on Agricultural Water Use in Sub-Saharan Africa. The workshop brought together over

    30 participants from a wide variety of countries and backgrounds, including ministry staff,

    NGOs, research institutes, universities, and the private sector. In addition, the workshop saw

    strong representation from international organizations, including ADB, FAO, IFAD, IWMI,

    and the World Bank. The Harare workshop identified a number of strategic issues

    concerning agricultural water use that needed consideration. These, somewhat modified after

    further consultations, included:

    ? the demand for products of irrigated agriculture;

    ? approaches to irrigation development planning and implementation;

    ? private sector investment in agricultural water development; 8 ? agricultural water use from a river basin perspective;

    ? agricultural water development for poverty reduction;

    ? costs of agricultural water use development;

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