Addendum to Business Case for the Global Agriculture and Food
Security Programme (GAFSP)
Following submission of the Business Case for GAFSP to the Secretary of
State and his approval, he concluded that our contribution to GAFSP should
be $20m (year 1), $60m (year 2 -in 2 tranches of 30); and $40m (year 3). This
has been communicated to the trustees of the multi-donor trust fund (the
World Bank) and to the Chair of the GAFSP Steering Committee.
The costs and profiling set out in the Financial Case section of the Business
Case should therefore be updated as follows:
DFID will provide £76,000,000 funding to GAFSP over three financial years
from October 2012 to 31 December 2014. The spending will be profiled as
follows:
(i) £12,500,000 to the Public Sector Window in October 2012
(ii) £37,500,000 to the Private Sector Window in two equal tranches of
£18,750,000 paid between 1 April 2013 and 31st March 2014
(iii) £26,000,000 to the Private Sector Window between 1 st April 2014 and 31st
December 2014, subject to satisfactory progress with operational reforms and
results.
Business Case and Intervention Summary
Title: Global Agriculture and Food Security Programme
What support will the UK provide?
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DFID will provide up to £50mn (~US $80mn) to the Global Agriculture and Food
Security Programme (GAFSP). The contribution will be split into two parts;
£13mn (~US $20mn), to be released in 2012/13 to fund public sector-led work
on improving agriculture and food security. In 2013/14, contingent on progress
with proposed reforms and planned contributions from other donors, £37mn
(~US $60mn) will be invested through the private sector window to boost
agricultural production, help farmers deal with risks and encourage more
commercial investment in agriculture.
DFID’s contribution to the Public Sector Window will provide sufficient funding to
support implementation of one country investment plan drawn from the
countries which have submitted requests to the GAFSP Steering Committee but
have yet to have their plans approved.
Together our £50mn will provide additional funding for public and private
investment in agriculture and food security in at least 2-3 countries. Our burden
share of total GAFSP funding will not exceed 10%, in line with our share of other
multi-donor initiatives.
DFID will also provide sufficient staff time, including through active membership
of the Steering Committee, to influence and aspects of programme governance
and crucially, to ensure operational reforms are carried through successfully,
including strengthening the Private Sector Window.
Why is UK support required?
To achieve the Millennium Development Goal of halving the number of people who
do not have enough to eat, FAO estimates that the number of undernourished
people must fall by 73 million a year. Better nourishment, especially for children, is
an urgent development priority. Without enough to eat in the first two years of life,
a child’s development is permanently impaired.
Climate change is predicted to cut production of food. In some of the most food
insecure areas of the world, yield losses could reach 20% by 2030. Less food
means higher prices. It is estimated that the food price rises of 2007/8 pushed an
extra 100 million people into poverty. Prices of many food commodities have
returned recently to their 2008 levels.
After years of declining direct investment, the importance of improving agriculture
productivity in developing countries sustainably, has again been recognised. Some
estimates put the level of under-investment in agriculture in SSA as US$ 15 bn per
year. Most African countries have now pledged to invest 10% of their budgets in
agriculture, but many poor countries struggle to afford the levels of investment in
infrastructure and public goods and services required to boost agricultural
productivity and economic growth in the sector. DFID’s funding will help to support
the implementation of country-led investment plans and to leverage additional
funding from others, including from the private sector.
GAFSP is a multi-donor trust fund set up in 2010 by signatories of the L’Aquila
Food Security Initiative (AFSI) to provide an effective means of supporting countryled and strategic agriculture investment plans in low income countries. Seven
donors have pledged funds (US, Australia, Canada, the Gates Foundation, Ireland,
Korea and Spain) totalling US$ 972mn, of which US$ 581mn has already been
transferred to the Fund Trustees and US$ 481 m allocated to 12 country proposals
(out of the 60 countries which are eligible to apply). A UK contribution to GAFSP
now will help:
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Provide a critical mass of available funds to support both public and private
sector investment plans with which to help meet the widely anticipated
demand when the Coordinating Unit next calls for proposals.
Demonstrate UK commitment to the use of effective instruments for delivery
of development assistance (GAFSP procedures are designed to comply with
the key tenants of the Aid Effectiveness agenda).
Trigger other AFSI signatories to agree to channel funds through GAFSP (a
combination of their greater confidence in the mechanism and greater
pressure to match fellow donors). Over US$ 100mn has already been
mobilised in additional funding in three countries whose GAFSP investment
proposals were approved in 2010. It is probable that other GAFSP
investments will leverage further funds in other countries as programme
implementation begins on the ground.
What are the expected results?
Developing countries submit proposals to the Public Sector Window of GAFSP that
are in line with their overall plans for growth and for development of their food and
agriculture sector. Money for the private sector window goes directly to support
agribusiness. Supervising organisations provide managerial and technical support.
Each country investment plan must have specific targets and a results framework in
order to receive support from GAFSP.
The GAFSP Coordinating Unit have calculated that the 12 country investment plans
which have received Public Sector Window finance to date, at a cost of $481mn, will
reach 1.5mn rural households (or roughly 7.5mn people) when fully implemented.
This will raise total incomes of beneficiaries by an estimated US $ 100mn per year
(see methodology at Annex 3). It is reasonable to assume that the next 12 country
investment plans which receive funding will deliver broadly similar results. If a DFID
contribution of £50mn (US$ 80mn) was applied to these expected results of the
GAFSP Public Window, it would help raise the income of roughly 7.5mn people
by US $16.6mn. Using the existing 12 funded plans as a benchmark, the GAFSP
Coordination Unit has estimated aggregate figures for four key indicators, covering
three outputs that would be produced if 12 of the country investment plans which
have now been submitted but not yet funded, were funded in full, at cost of US$
487mn. If a DFID contribution of £50mn (US$ 80mn) was applied to these results of
the GAFSP Public Window it would, at a minimum, buy the following outputs:
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Smallholders supported in use of higher yielding technologies and
management practices e.g. over 80,000 smallholder farmers with access to
agricultural advisory services
Infrastructure in place to support agriculture e.g. rehabilitation of over 4,000
hectares of irrigation and upgrading of over 750 kilometers of road
People better protected against risk and less vulnerable to shocks affecting
the agriculture sector e.g. over 110,000 people living in rural areas receiving
direct (conditional) cash transfers.
Funds provided through the Public Sector Window will also help to build capacity in
important public sector institutions responsible for creating key aspects of the
enabling environment for increased investment in agriculture.
If the bulk of DFID’s £50m is applied to the Private Sector Window, there is not yet a
succinct results offer to which it can be easily applied. However, IFC estimates that
every US$ 1mn of concessional funding provided by the PSW will mobilise US$ 67mn of commercial funding. This would produce £300-350mn of added value for a
£50mn contribution. IFC also intends to contribute its own resources and blend
these with GAFSP funding for each project to increase the leverage potential. An
early $15mm PSW project in Bangladesh gives some indication of possible future
results:
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1,200 jobs created
Improve the availability of food
Increase the competitive pricing for food products
The latter two results could benefit thousands of food consumers in impoverished
communities.
DFID’s participation in GAFSP will secure key reforms to the current operation of
GAFSP so that it is more strongly supportive of UK objectives of: ensuring a strong
results focus of work on food security, particularly on gender; improved cost
effectiveness of interventions; greater attention to resilience to climate change and
to improvement of nutritional status in the appraisal of investment plans; and a
strengthened private sector ‘window’ to complement the operation of the current
public sector window. Our approach to securing reforms and for monitoring and
evaluation of our contribution to GAFSP is summarised in the Strategic Case (p. 19,
paras. 64-65), where the more detailed treatment of these issues in the Appraisal
and Management Cases is also sign-posted.
Acronyms Used in Business Case
AfDB
African Development Bank
AFSI
L'Aquila Food Security Initiative
AsDB
Asian Development Bank
AU
African Union
BMGF
Bill & Melinda Gates Foundation
CAADP
Comprehensive Africa Agriculture Development Programme
CGIAR
Consultative Group on International Agricultural Research
CSOs
Civil Society Organisations
CU
Coordination Unit
DAC
Development Assistance Committee
DIME
Development Impact Evaluation Initiative
DOTS
Development Outcome Tracking System
ECOWAS
Economic Community of West African States
FAO
Food & Agriculture Organisation
FNST
Food & Nutrition Security Team
FTI
Fast Track Initiative
GAFSP
Global Agriculture and Food Security Programme
GDP
Gross Domestic Product
GFATM
Global Fund to Fight Aids, TB & Malaria
GHG
Green House Gases
GPE
Global Partnerships for Education
GRD
Growth & Resilience Department
HMT
Her Majesty's Treasury
IBRD
International Bank for Reconstruction and Development
IDA
International Development Association
IDB
International Development Banks
IE
Impact Evaluation
IEG
Investment Evaluation Group
IFAD
International Fund for Agricultural Development
IFC
International Finance Corporation
IFI
International Financial Institutions
IFPRI
International Food Policy Research Institute
MAR
Multilateral Aid Review
MDBs
Multilateral Development Banks
MDG
Millennium Development Goal
NEPAD
New Partnership for Africa's Development
NPK
Nitrogen, Phosphorous and Potassium
ODI
Overseas Development Institute
OECD
Organisation for Economic Cooperation & Development
PIC
Project Investment Committee
PIDG
Private Infrastructure Development Group
PSW
Private Sector Window
RMs
Results Management Systems
SAFANSI
South Asia Food & Nutrition Security Initiative
SBS
Sector Budget Support
SE
Supervising Entity
SMEs
Small & Medium Enterprises
SSA
Sub Saharan Africa
TAC
Technical Advisory Committee
TFP
Total Factor Productivity
TOR
Terms of Reference
WB
World Bank
WDR
World Development Report
WFP
World Food Programme
Strategic Case
A. Context and need for a DFID intervention
1. The Millennium Development Goal target to halve the number of people who do
not have enough to eat (MDG1) is severely off track. Globally estimates suggest
that around 850 million people remain undernourishedi; an estimated 642 million
people in Asia, 265 million in Sub-Saharan Africa. To meet MDG1, the FAO
estimates that the number of undernourished people must fall by 73 million a year.
2. The poorest people, dependent on agriculture for their livelihoods, are most
vulnerable to stresses and sudden shocks. For example, more than 100 million
extra people are estimated to have been pushed into poverty as a result of the
2007/08 food crisis. Climate change is expected to decrease food security. By
2050, global yields are expected to be reduced by about 7%. But for some of the
most food insecure regions, yield losses are likely to be 20% or more as soon as
2030ii.
Food and Nutritional Security
3. Food and nutritional security depends on the physical availability of food, the
affordability of an adequate and appropriate diet, and the ability of people to make
effective use of the food they consume. Some of the factors that enable poor
people to access the financial and other resources needed to consume, purchase
and grow enough nutritious food lie outside the ‘food system’ and the ‘agricultural
sector’. But agricultural sector development can have a positive impact on food
and nutritional security of poor people in a number of ways:
 the technologies, institutions, infrastructure and information that support
sustainable and equitable increases in agricultural productivity can
increase the supply of a diverse and locally desirable diet at affordable
prices;
 these same increases in productivity can improve economic access for all
by raising farm income, generating employment on and off farm, and
reducing prices;
 increasing productivity can change social access to food by deliberately
empowering women or socially excluded groups; and
 by improving the nutritional content of food and the nutritional status of
consumersiii;
4. The linkages between agriculture and food and nutritional security are complex
and there are gaps in the evidence on how one affects the other. Food security is
an overriding priority for poor people, who often have limited access to sufficient
productive assets such as land or water for irrigation. To maintain their livelihood
they use a diversity of resources – crops, livestock, trees and fish- for the
purposes of sale or exchange. Poor farmers often grow a selection of crops and
different varieties of each crop to spread their risk and make them less vulnerable
to biological, climatic or price shocks. Livestock are a key asset that can be sold
to contribute to household food security during seasonal or periodic stresses.
5. Central to people’s livelihood strategies is access to and control over
resources, particularly land and water. Land is a particularly important resource
and inequitable or insecure land tenure often has a significant impact on levels of
food security.
6. To improve their food security status and increase their incomes, rural
households often diversify into a wide range of off-farm activities. Non-farm
incomes constitute a significant and growing part of rural incomes. In turn, the
rural non-farm economy can contribute to the agriculture sector, through agroprocessing and the distribution and provision of farm inputs. Clearly farm and
non-farm sources of income are closely linked and the distinction between rural
and urban activities is increasingly blurred.
More productive agriculture sectors: an engine of growth in developing
countries
7. Most countries with large numbers of poor and hungry people depend on
agriculture for growth and economic development. In Sub-Saharan Africa (SSA)
the agricultural sector employs nearly two thirds of the population and accounts for
20-30% of GDPiv.
8. Studies of growth in the agriculture sector repeatedly show that, compared to
economic growth in other sectors, it is more effective in reducing povertyv,vi.vii,viii,ix.
The most recent empirical evidence is in a 2011 cross country study of the OECD
which concludes: ”More than half of the reduction in poverty achieved in the
selected countries … can be attributed to growth in agricultural incomes, over onethird to growth in remittances, and the rest is due to growth in non-farm incomes.”x
It also states that this pro-poor effect is unambiguous and not dependent on
country characteristics. The 2008 World Development Report supports this
conclusion finding that GDP growth originating in agriculture is more effective in
raising incomes of extremely poor people than GDP growth originating outside the
sector”xi. Rural households depend on agricultural production for their income –
especially poorer rural households, which get a bigger part of their income from
farming and agricultural labour than do better-off households. xii This evidence
indicates that strengthening agricultural sectors is likely to have a bigger poverty
reducing effect than support to other sectors by raising rural incomes. But it makes
no claims about the costs of doing so and therefore the relative value for money of
agricultural interventions compared to other uses of UK funding.
9. Support to agriculture reaches the poor directly, even in a rapidly urbanising
worldxiii. Most of the poor still reside in rural areas. This is particularly true for
women and girls who provide much of the labour for agriculture but who, in most
cultural contexts, are less mobile than men and boysxiv. Many urban poor – those
in precarious informal jobs or are unemployed - also depend on extended family
networks in the local rural hinterland and rely on agriculture as a safety netxv.
10. Two thirds of the world’s agricultural value added is created in developing
countriesxvi. All top-performing countries that have successfully reduced poverty in
recent years initially emphasised support to agriculture through increased total
factor productivity (TFP). For example, China’s successful support for smallholder
production TFP growth has had a major impact on its agricultural production.
China’s strong initial emphasis on agricultural growth has also been essential to its
success in reducing povertyxvii.
11. In order to boost agriculture sector productivity, national governments and the
private sector need to:
 make higher yielding technologies;
 improve the infrastructural base;
 provide better access to markets for farmers;
 create an enabling environment for private sector investment in agriculture.
Higher yielding technologies
12. Every 10% increase in yields of staple food crops in Africa is estimated to
reduce poverty by 7%xviii. In Africa, maize yields on farmers’ fields are often only
one third of what can be achieved in experimental trials. Closing the yield gap will
require the generation of new technologies adapted to and appropriate for the
needs of developing country farmers, better management practices and increased
use of improved seed varieties and fertilisers. Labour productivity can be further
improved with increased use of mechanisation.
13. Agricultural research and development can produce substantial returns on
investment, ranging from 35% (SSA) to 50% (Asia) in 700 studiesxix. But farmers
must be able to participate in priority setting, design and implementation of
research. Adoption of improved technologies is enhanced if farmers can see it
working in their fields and if they are supported by effective extension, information
and advisory services. Enabling farmers, particularly small holders, to benefit from
these higher yielding technologies and practices requires that linkages between
farmers and advisory services are strengthened with well-functioning support
markets to provide them sustainably. Translating higher adaptation rates for
improved technologies into reductions in poverty also requires more equitable
access to assets by poor farmers.
Improved infrastructure
14. Agricultural growth and poverty reduction also depend critically on
investments in rural infrastructure, which generally provide high returns. Transport
costs are often 50-60 percent of total costs, creating situations where staple food
crops are not competitive to produce for export out of local production areas even
in good years and are expensive to import in bad years. Without investment in the
construction, rehabilitation and upgrading of rural feeder roads, local food
producers are left highly vulnerable to weather shocks that translate into high and
volatile staple food prices, particularly in rural areas.
15. Investment in irrigation has also provided high payoffs. Sub-Saharan Africa
has large untapped water resources available for agriculture. Here, after many
failures in the 1980s, returns on irrigation projects now often reach 15 to 20%, xx
and irrigation is expected to become more important as a source of productivity
growth. In Asia the scope for further expanding irrigated land is now limited and
more efforts are needed to increase water use efficiency.
Better functioning markets
16. For large numbers of rural producers to benefit substantially from improved
technologies and infrastructure, they need efficient markets. This includes
affordable access to accurate and timely market information, support for meeting
the quality standards of potential customers, increased access to finance and to
risk management tools such as weather based crop-insurance. Better functioning
markets can increase the share of the retail price farmers receive for their
products. Well integrated regional agricultural markets can also reduce the cost of
food and uncertainty of supply, with positive impacts on food security.
17. More efficient markets alone do not promote equitable outcomes. Building the
bargaining power of smallholders by providing support for strengthening producer
organisations can improve prices farmers receive for their products and lower the
cost of inputs.
Improved management of risks and increased resilience to shocks
18. Growth in low income countries is more volatile and both asset and income
risks are higher than in more developed countries. So, while raising agricultural
sector productivity and improving access to markets are important for increasing
the economic opportunities for poor people, sustainable reductions in poverty also
require that poor producers are better able to manage risks and their livelihoods
are made more resilient to economic shocks.
19. The nature of risks facing farmers varies from one country to another but in
many developing countries there are certain common factors. Often financial and
insurance markets, which can help farmers to manage their risks are underdeveloped or completely absent. The most vulnerable populations are often
dispersed and asset-poor small holders have limited access to technology and
markets. They face high operational costs for access to risk management
programmes and products. Women headed households typically fare worst as
their access to assets, finance, extension service support and risk management
tools is even more limited than for other small producers.
20. Reducing risks and vulnerability to shocks means helping to build human
capital, assets and access to employment, thereby freeing families to make more
productive investments as they become more confident in their economic security.
It can also mean providing social protection measures which help individuals and
families smooth their consumption and handle shocks and stresses through better
coping strategies. A number of themes have emerged as important in building
poor people’s adaptive capacity in the face of food-related stresses and shocks:
 the importance of access to assets;
 the value of innovation;
 the role of knowledge and information;
 flexibility and foresight – forms of governance which can deal with complex
challenges and build resilience to address them.
A Better Business Environment for Agribusiness
21. Policies, rules and institutions that promote predictable business operations
reduce unnecessary costs and facilitate the monetization of assets to build wealth
all help strengthen and build agricultural markets. By reducing costs of complying
with government administration, a better business environment enhances
agricultural productivity. Making it easier to enforce contracts and establish
property rights facilitates access to finance, encourages longer term investment
and increases predictability of future income. All of these effects help to strengthen
agricultural markets and contribute significantly to the sector’s overall growth.
22. A better agribusiness environment also involves streamlining the rules and
procedures for trading across borders which is an essential ingredient for global
food security and for connecting developing country farmers to bigger markets.
Costly import and export regimes can act as a barrier to trade and keep
agricultural products uncompetitive in regional and global markets.
23. Wider societal and governance reforms are also important if economic growth
in the agriculture sector is going to contribute significantly to food security and
poverty reduction. These reforms often include equalising rights of access to
resources such as land and water; employment; finance; education and support
services, as well as the ability to mobilise social capital.
Investment levels in agriculture
Public sector
24. Many developing country governments have neglected investment in
agriculture, generally, and in small holder agriculture specifically. In Africa,
aggregate public spending on agriculture accounted for 5–7% of the total national
budget from 1980 to 2005 – compared with agriculture’s 20-30% contribution to
GDP. Asia fares better on agricultural investment, putting in 6–15%xxi.
25. The agricultural sector has faced a marked decline in direct public investment
over the past 20 years. The low level of government investment has been
reflected in direct aid to agriculture. Although total aid to developing countries
grew by about 5% a year from US$7 bn in 1980 to US$27 bn in 2006, in relative
terms the direct investment in agriculture fell from 20% in 1980 to 4% by 2006 largely as the result of donors moving into complementary areas such as rural
infrastructure (WDR, 2008).
26. While the level of direct investment in agriculture has begun to rise, IFPRI
suggests that, in SSA alone, the total public investment in agriculture required to
achieve the hunger target of MDG 1 by 2015 is at least $33 bn per annum (IFPRI,
2008). In 2004, total public expenditure on agriculture in SSA was $9 bn, a $24
bn annual shortfall. Even assuming an ambitious 10% annual increase in funding
over 7 years from 2004 to 2011 would increase funding to only $17.5 bn, leaving
a conservative annual gap (ignoring the cumulative gap) of over $15 bn in SSA
alone. According to rough FAO estimates, the overall annual public and private
financing gap in developing countries is $67 bn in order to ensure food security
for all by 2050xxii.
27. In 2003, many SSA country governments pledged to increase support to
agriculture in order to achieve the goal of 6% annual agricultural growth (The
Maputo Declaration). Under the Comprehensive African Agricultural Development
Programme (CAADP), African heads of state agreed to allocate 10% of their
national budgets to agriculture. But many African governments are operating in an
environment of scarce public resources, and so far only a few states have met
these growth and spending targets.
Private sector
28. Development assistance cannot, by itself, grow agriculture sectors to realise
their potential for growth and poverty reduction. It must be complemented by
public investment which, when used strategically, can strengthen the business
environment by developing conducive policies and regulations or funding public
infrastructure that helps to deepen markets and lower transaction costs, so that
investing in the food and agriculture sectors becomes more attractive. Ultimately,
agriculture is a for profit activity undertaken by private individuals who must
compete in dynamic local, national and international markets. For this reason
above all, private sector investment will be critical to filling the remaining financing
gap in the sector and is critical to the sustainability of interventions aimed at
agriculture sector growth and poverty reduction.
29. The private investment gap in agriculture in developing countries, though not
authoritatively estimated, is a substantial part of FAO’s rough $67 bn estimate.
Commercial bank lending to the primary agricultural sector has historically been
small. Agriculture accounts for 30% of Africa’s economy but less than 5% of bank
lending goes into the sector in SSA.xxiii. For example, agriculture accounts for 40%
of Nigerian GDP, yet the sector receives only 1% of commercial bank loans. In
Mozambique in 2007, 80% of the financing for agriculture was in the form of public
finance including loans and grants from development institutions. Less than 5 %
was from domestic private sector investors.
30. The recent increase in the prices of agricultural commodities has trigged an
upswing in domestic bank lending and foreign private investment in some
developing countries. It has also helped to spawn a range of innovative publicprivate partnerships, for example to support the development of regional
agricultural growth corridors in Southern Tanzania and around Beira in
Mozambique. There is renewed interest in farmers’ organisations, ‘hub-out
grower’ and contract farming models, which increase opportunities for farmers to
access finance, technical expertise and markets. These experiences demonstrate
that private investment is responsive to positive changes in agricultural markets.
31. To ensure permanent long term growth in commercial investment at the scale
that would bridge the significant financing gap in the sector requires competitive,
fairly contested and well-functioning markets backed by good infrastructure, a
conducive enabling environment, vibrant cross border trade and stronger
partnerships between public and private sectors to provide all the necessary inputs
that support well-functioning markets.
Aid Effectiveness in the Food and Agriculture Sector
32. Applying aid effectiveness principles to the food and agriculture sectors is
especially challenging, because of the sectors’ breadth and the spread of
responsibilities across different parts of government. Unlike service delivery in
social sectors such as health and education, which is predominantly in the hands
of the public sector, agriculture is overwhelmingly a private sector activity and
agricultural outcomes are a result of complex interactions between the public and
private sectors and civil society. The range of actors, the diversity and complexity
of the economic activity involved, and the drive for rapid action with credible
results all point to the need for improved effectiveness of assistance to the sector.
33. As aid to agriculture increases again, country leadership is under threat even
where, as with African countries in which the CAADP process is most advanced,
national strategies with strong technical frameworks are in place. In 2009,
signatories to the L’Aquila Food Security Initiative (AFSI) made commitments to
provide more and better public and private investment in agriculture and related
sectors, in order to improve the income and food security of poor people in low
income countries. They also committed to adhering to aid effectiveness principles
because they recognised that their own pledges to increase resources for food
security and agriculture risked - i) increasing fragmentation in the sector,
potentially weakening country ownership and alignment; and ii) undermining
efforts to define and measure development impact on the ground attributable to
their funding.
34. GAFSP was established in April 2010 as a means by which countries which
had committed increased funding under AFSI could do so in a way that improved
the effectiveness of aid delivery rather than undermined it. Its governance and
operating methods have been specifically designed to promote country ownership,
improve donor alignment with national plans, provide additional resources and not
replace other funding, make transparent funding decisions, focus on results and
allow lesson learning between countries and institutions.
Fit with UK strategic priorities
35. Increasing DFID support to agriculture responds to recent evidencebased, scientifically-validated, UK Government policy thinking. In January
2011, the DFID and DEFRA Secretaries of State jointly launched a report of the
Government Office of Science on “The Future of Food and Farming” saying there
is “a strong case for governments, the private sector and civil society to continue
to prioritise global food security [and] sustainable agricultural production.” The
report highlights that a sustainable increase in agricultural productivity is
necessary to feed a growing global populationxxiv.
36. The UK government is committed to the achievement of the Millennium
Development Goals and has made specific public commitments to tackle
MDG1: halving poverty and hunger. Forty countries including most of SSA
and South Asia are off-track against the hunger target of MDG1. The publication
“Changing lives, delivering results” states that over the next four years the UK will:
 stop 10 million more children going hungry (since increased to 20 million);
 ensure another four million people have enough food throughout the year;
and
 Help more than six million of the world’s poorest people to escape extreme
povertyxxv.
 Help poor families to grow enough food by increasing their access to seeds,
tools and training in farming”.
37. Support for agriculture sector growth will contribute to other UK
government/ DFID priorities:
 To work more with the private sector and stimulate private investment (as
outlined in the ‘Engine of Growth Strategy’) in order to create wealth in
developing countries;
 To foster growth, trade and economic integration in Africa, for example
through its support for the Regional Economic Communities in Southern,
Eastern and West Africa. And the African Free Trade initiative (AFTI). A

large part of the trade these initiatives are design to promote is likely to be
in food and agricultural commodities.
Given that agriculture is also a source of greenhouse gas emissions and
contributes to climate change, investing in sustainable intensification in
agriculture in developing countries will help adapt to and mitigate the
impacts of agriculture on climate change.
38. DFID has committed to reach 20 million children under five between now
and 2015 with our nutrition programmes.
 Undernutrition is a major challenge to human and economic development. It
has complex causes which must be addressed through a combination of
direct interventions and nutrition-sensitive development in health,
education, and agriculture.
 Agriculture has the potential to drive improved nutritional outcomes,
although the evidence for how this can be done most effectively is weak. It
provides a source of food and nutrients, a source of income, has effects on
food prices, affects the environment in which people live and influences
women‘s time for taking care of very young children. Several studies show
that a 10% increase in income per capita usually results in a 3-4% decline
in stuntingxxvi. But if growth is in the agriculture sector, and concentrated
amongst the rural poor, we see a faster reduction in stuntingxxvii .This
relationship is even stronger in food insecure contextsxxviii.
 While we know agricultural growth is important for reducing stunting at the
aggregate level, the evidence for the impact of agricultural programmes on
nutrition is weaker. In 2010, a DFID funded review of the nutritional impact
of agriculture interventions concluded that agricultural interventions improve
the production and consumption of nutritious food among poor households
but could not identify a direct impact on the nutritional status of children
because most studies were too smallxxix. This is an important current field
of investigation for DFID and its development partners.
39. DFID is committed to empowerment of women and girls through
increasing access to jobs and financial services.
 Women account for 70% of the global workforce in agriculture. But they
own just 1% of the land receive only 5% of extension services and only
10% of farm credit. But investment in women as farmers and food
producers has significant benefits in terms of poverty reduction, agricultural
productivity, food security and natural resource managementxxx.
 The strong economic relationship between gender inequality and hunger
(which is overwhelmingly female) suggests that reducing gender disparities
in areas such as small-holder agriculture is essential to reducing hunger
levelsxxxi. Reducing the gender gap in the control of agricultural resources
(i.e. land, inputs and finance) can increase agricultural productivity by 1520%xxxii. In SSA it has been calculated that agricultural productivity could
increase by up to 20% if women’s access to such resources as land, seed
and fertiliser were equal to men’sxxxiii.
 Women-focused support for agri-business development can also add
social valuexxxiv. Greater direct incomes for women from agriculture lead to
improved gender equity and provide benefits for the entire familyxxxv.
Evidence also suggests that effective support to agriculture also speeds up
the achievement of the MDGs related to education, maternal health,
HIV/AIDS, malaria and other diseasesxxxvi.
Argument for DFID intervention
40. There is a pressing need for more and better financial support to help
accelerate agricultural sector growth and improve food security for
approximately 1 billion people worldwide. Developing countries have
expressed high level demand for increased investment, requiring collective global
action to meet the conservative estimate of $15 bn per year in additional public
investment and the rough $67 bn per year investment overall required to meet the
financial gap. With food prices now higher than in 2008, a rising global population,
the uncertainty of global climate change and increasing food demands from
emerging economies, addressing the causes of high and volatile prices and their
impacts on the poor have become prominent and pressing global concerns.
41. DFID is an important global player on agricultural sector development
with a good track record of support. An informal analysis of OECD data shows
DFID as the fifth biggest donor to ‘agriculture’ in SSA (when we include our
multilateral contributions). DFID’s annual ‘core’ funding combined to three main
UN-affiliated bodies responsible for food and agriculture - WFP, FAO and IFAD, is
increasing from £52mn in 20011/12 to £82mn in 2014/15. DFID support to
agricultural research has increased by 60% since FY 2008/9 and DFID plans to
scale up investment in the uptake of research including developing new cofunding arrangements with the private sector, and integrating climate change and
agriculture, through development of new research programmes.
42. Increased engagement will complement and improve the effectiveness
of existing DFID investments. In Africa, DFID is providing £10mn to a World
Bank Multi Donor Trust Fund to support the development of the Comprehensive
Africa Agricultural Development Programme (CAADP) country investment
plans/programmes. DFID has been a strong advocate of CAADP, which aims to
increase investment in agriculture and align donors behind national government’s
own plans to improve the productivity and sustainability of the agriculture sector.
In South Asia, DFID works with the World Bank and other partners on the South
Asia Food and Nutrition Security Initiative (SAFANSI) to develop evidence on the
most effective ways of achieving food security, raise awareness on the challenges,
and promote advocacy for action amongst the various stakeholders. This
demonstrates UK support for its non-financial AFSI commitments on aideffectiveness, including support for the implementation of country-led agricultural
investment plans through country-led coordination processes, consistent with the
Accra Agenda for Action.
43. DFID also has the potential to provide leadership on private sector
development in agriculture, building on the expanding challenge funds such as
the African Enterprise Challenge Fund and the Food Retail Industry Challenge
Fundxxxvii that encourages private sector companies to compete for funding for new
and innovative business and projects in agriculture.
44. The need for investment in developing country agriculture is enormous
and immediate. The GAFSP vehicle is already responding to increasing country
demand and the roughly £67 bn annual financing gap in developing countries. Six
AFSI donors plus the Bill and Melinda Gates Foundation (BMGF) pledged US$
972mn to GAFSP, of which to date US$ 570mn has been received by the Trustee
(see Annex 1). Of the 60 countries eligible to apply for GAFSP (see Table 5 in
the Management Case), 25 have submitted funding requests totalling US$1.2 bn,
14 of which were from Africa. The GAFSP Steering Committee has, to date,
allocated US$ 481mn in grants to 12 countries (see Table 6 in the Management
Case). A further 18 countries have submitted requests to the latest call for
proposals (including Ghana, Tanzania, Malawi, Kenya, Senegal, Burkina Faso,
Niger, Burundi and Yemen). Some of the countries applying to GAFSP, such as
Yemen and Kenya, are experiencing rapid increases in level of food insecurity.
Others, such as Ghana, are attracting interest from investors who see the
potential for significant growth in the agriculture sector, driven by rapid increases
in agricultural commodity prices.
45. Increasing DFID support to agriculture would meet UK political
commitments to tackle food security internationally made at every G8 and G20
Summit since the food price spike in 2008. The UK has met in full its commitment
to contribute £1.1 bn towards the AFSI pledge of $20 bn investment in food
security and agriculture in the 3-year period from 2009 - 2012xxxviii. The US-led G8
Summit in May 2012 will see the launch of a New Alliance for Food and Nutritional
Security in Africa which will involve G8 countries, including the UK, recommitting to
support global efforts to improve food security, with a focus on private sector
investment in African agriculture. Re-energising GAFSP and increasing its funding
base, particularly for the private sector window, will be part of this package. At the
G20 in 2011 Agriculture Ministers agreed an Action Plan on Food Price Volatility
and Agriculture. This committed all G20 governments to: ”improve agricultural
production and productivity both in the short and long term in order to respond to a
growing demand for agricultural commodities’xxxix; and ‘promote sustainable crop
diversification and agricultural systems which contribute to … a sustainable use of
natural resources in particular land, water and biodiversity”.
46. GAFSP is a vehicle with significant potential for positively transforming
global agriculture and meeting the world’s food security challenges. As set
out in para 44 above, its public sector window is already helping to address the
public financing shortfall in developing countries and its private sector window,
which is currently being reformed and strengthened, has the potential to leverage
billions in private financing to
i)
meet the overall global investment shortfall that purely public investment
would struggle to meet and
ii)
sustain a transformation in agricultural productivity and promote more
resilient agricultural markets to meet the future challenges of increased
demand and climate uncertainty.
In addition, by supporting both public and private investment, GAFSP will be
uniquely placed to strengthen synergies, complementarities and scale economies
to deepen the impact of increased investments in both public and private sectors.
47. In summary the key strategic and practical reasons for DFID intervening by
increasing financial support to agriculture are:
 Meeting large scale demand from developing countries for more resources
and addressing the pressing need to expand global food availability.
 The need for faster progress on MDG 1
 DFID’s strong role on aspects of this agenda and on related development
issues to which agricultural growth makes a crucial contribution.
 Closing the substantial public and private funding gaps in the sector in
developing countries, estimated at a combined $67 bn per year.
 Meeting high level political commitments on food security.


Meeting on-going commitments on aid effectiveness.
Meeting DFID’s corporate priority of increasing private sector investment,
growing open markets and free trade by supporting the development of
agricultural markets.
Consequences of DFID not intervening :
48. Economic results foregone: Recipient countries will not realise the potential
for increased agricultural productivity, higher incomes for the poor in the sector
and improved agricultural infrastructure all of which would contribute to poverty
reduction. Failure to increase investment in agriculture - a primary economic
sector –threatens the implementation of nationally-driven, and internationally
endorsed development plans.
49. Political/reputational: A decision by the UK not to contribute will generate
significant criticism from some development partners (other donor governments,
international and domestic thought leaders, members of think tanks and NGOs,
parliamentarians), who will accuse the UK of failing to live up to its rhetoric on
supporting a step change in agricultural sector development and in food security.
50. Failure by DFID to invest in development of the food and agriculture sector will
have a negative impact on international commitments to increase investment, and
the contribution that the sector can make to enhancing food security.
51. Not investing could also jeopardise developing country government
commitments to invest. African Union countries signed the Maputo Declaration in
2003, pledging to increase spending on agriculture to at least 10% of national
budgets; seeking a 6% increase in productivity. The AU Commission is
encouraging African countries to deliver on this commitment but they may fail to do
so if donors do not adequately support them in meeting their commitments.
52. Social: The poorest who are most dependent on agriculture are women.
Investing in agriculture invests in women, through helping them to increase income
from a more sustainable and secure livelihood. Not investing in agriculture misses
an opportunity to advance the economic empowerment of women and girls living
in poor rural communities.
53. Institutional: If DFID does not intervene it will lose the opportunity to play a
role in shaping the aid architecture for effective delivery in this important sector.
What will we do?
54. We will provide financial support to help meet both the public and private
investment shortfalls in agriculture faced by developing countries. Our public
investment will support stronger institutions, better policies and improved physical
infrastructure to support expansion and strengthening of agricultural markets and
better connecting small and medium sized agribusiness and farmers to them
Our private investment will increase commercial investment for small and medium
sized agri-businesses and farmers, by facilitating access to finance and expanding
investment opportunities to strengthen productivity and improve their capacity to
participate in global agricultural value chains.
55. To maximize GAFSP’s comparative advantage and the impact of DFID
funding, we are proposing support of £50mn over two years. The first
disbursement will be made in July 2012 for £13mn to the public sector window to
support the investments in public institutions and infrastructure that strengthen
agricultural markets. The second will be made to the private sector window in
2013/14 in two equal tranches of £18.5mn each. The rationale for our larger
support to the private window is to maximize our ability to help meet the global
funding gap and stimulate the growth of open agricultural markets. It will be
subject to a number of conditions (see appraisal and management cases) and
more detailed appraisal before final transfer of funds. DFID’s £50mn will provide
additional funding for public and private investment in agriculture and food
security in 2-3 countriesxl. These countries will come from among the 18
(including Ghana, Tanzania, Malawi, Kenya and Yemen) which have submitted
requests but not yet received approval of their plans from GAFSP.
Sustainability of GAFSP interventions
56. For World Bank administrative purposes the end date of the Programme has
been set at 2019, but there is nothing in its statutes or operating procedures
which would prevent GAFSP from continuing as long as there is demand from low
income countries and private sector entities and available resources. The impact
of each country level investment plan will depend on the degree to which capacity
constraints of key sectoral institutions are addressed, the extent of local
ownership of interventions and the relevance of policy reforms implemented in
support of GAFSP funded investments. The sustainability of individual public
sector investments will also depend on the extent to which the Supervising Entity
responsible and recipient government have sustainability as one of its design
criteria. For the Private Sector projects, sustainability will be one of the criteria
which IFC will use in decision making about individual proposals.
57. Any decision about future DFID contributions to GAFSP, beyond the
recommended £50mn contribution spread over two financial years will only be
made after the independent evaluation of GAFSP which we will commission in
2013 and will be subject to a new business case.
B. Impact and Outcome that we expect to achieve
58. The expected impacts of the intervention will be reduced rural poverty. This
will be measured by increased household incomes and additional rural economic
opportunities for the poor.
59. The outcome (and key indicators) of the programme intervention will result in
more productive agricultural sectors in developing countries. This will be
measured by yield increases and increased returns to investment in the agriculture
sector. The outcome will be achieved through delivery of five broadly defined
outputs as set out in the appraisal case:
1.
2.
3.
4.
higher yielding agricultural technologies developed and in use;
improved infrastructure to support agriculture in place and operational;
better functioning markets which farmers are able to access;
improved risk management and increased resilience of rural people to
shocks; and
5. improved policies and capacity of relevant institutions to administer a
conducive agribusiness enabling environment.
60. Each GAFSP financed project identifies which of these five outputs it will
achieve results against and selects at least one indicator for each of the relevant
outputs from an agreed set of core indicators (see list at Annex 2). The selected
indicators form the basis of each project’s Results Framework. Because they are
drawn from a common core set they can be aggregated across projects.
61. In generating a Log Frame for DFID’s contribution to GAFSP we have focused
on Outputs 1-4. GAFSP has not yet developed specific results it will deliver from
Output 5 – which relates to the enabling environment –and its inclusion runs the
risk of setting objectives for GAFSP that have not been agreed by its constituent
donors. For this reason we have left it out of our initial logframe but it can be
added once it is formulated and agreed by GAFSP. In the DFID Log Frame we
have selected the highest level and most easily measured indicator from the core
set for each of Outputs 1-4 and added a fifth, specific to DFID – GAFSP Internal
Reforms – against which to measure achievement of the reforms set out on page
43 in the Appraisal Case.
62. The GAFSP Coordinating Unit have calculated that the 12 country investment
plans which have received Public Sector Window finance to date, at a cost of
$481mn, will reach 1.5mn rural households (or roughly 7.5mn people) when fully
implemented. This will raise total incomes of beneficiaries by an estimated US $
100mn per year (see methodology at Annex 3).
It is reasonable to assume that the next 12 country investment plans which receive
funding will deliver broadly similar results. If A DFID contribution of £50mn (US$
80mn) was applied to these expected results of the GAFSP Public Window it
would help raise the income of roughly 7.5mn people by US $16.6mn. Using
the existing 12 funded plans as a benchmark, the GAFSP Coordination Unit has
estimated aggregate figures for four key indicators, covering three outputs that
would be produced if 12 of the country investment plans which have now been
submitted but not yet funded, were funded in full, at cost of US$ 487mn. If a DFID
contribution of £50mn (US$ 80mn) was applied to these results of the GAFSP
Public Window it would, at a minimum, buy the following outputs:



smallholders supported in use of higher yielding technologies and
management practices e.g. over 80,000 smallholder farmers with access to
agricultural advisory services
infrastructure in place to support agriculture e.g. rehabilitation of over 4,000
hectares of irrigation and upgrading of over 750 kilometres of road
people better protected against risk and less vulnerable to shocks
affecting the agriculture sector e.g. over 110,000 people living in rural areas
receiving direct (conditional) cash transfers.
Funds provided through the Public Sector Window will also help to build capacity
in important public sector institutions responsible for creating key aspects of the
enabling environment for increased investment in agriculture.
63. If the bulk of DFID’s £50m is applied to the Private Sector Window, there is not
yet a succinct results offer to which it can be easily applied. However, IFC
estimates that every US$ 1mn of concessional funding provided by the PSW will
mobilise US$ 6-7mn of commercial funding. This would produce £300-350mn of
added value for a £50mn contribution. IFC also intends to contribute its own
resources and blend these with GAFSP funding for each project and increase
leveraging potential. An early $15mm PSW project in Bangladesh gives some
indication of possible future results:



1,200 jobs created
Improve the availability of food
Increase the competitive pricing for food products
The latter two results could benefit thousands of food consumers in impoverished
communities.
64. DFID’s participation will also secure key reforms to GAFSP so that the use of
its total financial resources is more strongly supportive of UK objectives of:
ensuring a strong results focus of work on food security, particularly on gender;
improved cost effectiveness of interventions; greater attention to resilience to
climate change; improvement of nutritional status in the appraisal of investment
plans; and an improved private sector ‘window’ to complement and exploit
synergies with the current public sector window.
65. Our agenda for change and for monitoring and evaluation of our contribution to
GAFSP are set out as follows:
 on identification and prioritisation of operational reforms – in the
Appraisal Case on ‘Reform Options’ (p.42/43) and in the Management
Case (p 60);
 on our approach to releasing funding for the Private Sector Window – in
the Management Case (p. 60);
 on overall monitoring and evaluation - in the Management Case, Section
D p.69-73.
66. In summary, we will review progress against our priority reforms and make a
detail assessment of progress with the Private Sectors Window’s operations
before deciding whether to recommend making the proposed contribution to this
Window. We will secure agreement through the Steering Committee to an overall
independent evaluation of GAFSP to be carried out two years after we join the
Steering Committee and before consideration is given to any future UK
contribution to GAFSP, beyond that recommended here.
Appraisal Case
A. What are the feasible options that address the need set out in the Strategic case?
1. This appraisal consists of four parts.
 Part 1 sets out the theory of change of support to agriculture: both the benefits of
increasing the sector’s productivity and of strengthening the welfare of the poor whose
livelihoods depend on agriculture.
 Part 2 constructs feasibility criteria using the Strategic Case’s justification for DFID
intervention and uses these to select, from different modalities, the preferred options
to provide support and achieve maximum value for money.
 Part 3 conducts economic, reform and financial engagement appraisals of the feasible
options and recommends a preferred overall option.
 Part 4 assesses the value for money of the preferred option.
Part 1: Theory of Change
2. The results chain schematic at Annex 4 represents the links between growth in
agriculture sector and rural poverty reduction – reflecting the role of agriculture both as a
source of income and a direct source of food for poor rural people. In summary the theory
of change is as follows:
 activities and outputs which increase agricultural yields, improve infrastructure and
give farmers access to better functioning markets help to improve the productivity of
the agricultural sector.
 Activities which increase the resilience of poor people to shocks help to protect their
assets and their livelihoods.
 These outputs increase the productivity of the agriculture sector and create economic
opportunities which, if targeted at poor and vulnerable groups deliver poverty
reduction as an impact. In the Log Frame we have added a fifth output – not
represented in the Theory of Change diagram – internal reforms of GAFSP. These
are described in the Appraisal Case and in the Management Case.
The link between impact (reduced rural poverty) and the outcome (more productive
agriculture sectors)
3. The evidence underlying the link between Outcome 1 (more productive agriculture
sectors) and impact (reduced rural poverty) is set out in the Strategic Case. To summarise,
studies of growth in the agriculture sector repeatedly show that, compared to economic
growth in other sectors, it is more effective in reducing povertyxli,xlii,xliii,xliv,xlv. This does not
imply that poverty reduction in the agricultural sector is more cost effective than in other
sectors, simply that strengthening agricultural sectors is likely to have a bigger poverty
reducing effect than support to other sectors by raising rural incomes. Rural households
depend on agricultural production for their income – especially poorer rural households,
which get a bigger part of their income from farming and agricultural labour than do better-off
households.
4. Agriculture is fundamentally a private sector activity. It is unique in that structural
transformation in the sector leads to productivity gains, surplus capital and labour being
released into other sectors, keeps food prices lower for the urban poor and provides export
earningsxlvi. Historically, the wealth generated by agriculture sector growth has been the
platform for more diversified economic development and rising of living standards of the rural
population. Increasing farm incomes brings rural economies to life, generates jobs for other
poor people and increases demand for domestically produced goods and services.
Increased incomes generally lead to improved nutrition, better health, and increased
investment in educationxlvii. We judge the evidence on the link between increasing
agricultural productivity and poverty reduction to be strong. It comes from a range of
reputable sources including institutions with no obvious vested interest in reaching such a
conclusion, such as the OECD.
Link between outputs and outcome
5. Given that agriculture is a heterogeneous sector with multiple markets, commodities and
business types, there is a large range of interventions through which the outcome can be
achieved. The evidence for some of the linkages between the key interventions, as outlined
in the theory of change, is given below.
Output 1 – Higher yielding agricultural technologies developed and in use lead to
increases in agricultural productivity
6. Agricultural productivity critically depends on investment in agricultural technology that is
developed and adopted by farmers. Dramatic rises in productivity have been based on the
development and application of new technologiesxlviii. Over the past 50 years global food
production has more than tripled. Global yields per hectare of the major staple crops grew at
an annual rate of 2-3% between 1961 and 1990, exceeding population growth rates and
contributing to a long-term decline in food prices. Major food security successes – such as
the Asian Green Revolution, and the expansion of improved maize varieties in East and
Southern Africa, have been driven by agricultural innovation. Agricultural research and
development also produces substantial returns on investment, ranging from 35% (SSA) to
50% (Asia) in 700 studiesxlix. Most recently, an assessment of the impact of the International
Rice Research Institute’s research on improving rice varietal yield between 1985 and 2009
found a boost in rice yields by up to 13%.
7. However, there is also evidence that market inefficiencies constrain agricultural
technology adoption in developing countries. In SSA, adoption of new technologies has
lagged behind that of Asia. For example, by 2000, adoption of modern varieties of maize was
estimated to be 17 percent of total area harvested in SSA compared to 90% in East and
South East Asia and the Pacific and 57 % in Latin America and the Caribbean (Gollin et al.
2005). What is lacking is a systematic analysis of why such innovations haven’t been
successful scaled up in SSA. We judge the evidence to be strong given the key role that
technology plays in productivity improvements in any economic sector as well as in
economic theory. Different sources and historical experience demonstrate a strong linkage.
Output 2 – Improved infrastructure in place to support agriculture
8. There is evidence of how investment in agricultural and rural infrastructure (output 2) can
provide high returns. The development of irrigation has provided high payoffs in Asia. In
SSA, after many failures in the 1980s, returns on irrigation projects now often reach 15 to
20%.l. Irrigation development has been recommended as a powerful tool to enhance
agricultural productivity ultimately reducing povertyli,lii,liii. Arif and Ahmad (2001) estimated
that rural poverty had been reduced to 13.8% in the rain fed areas of Punjab as a result of
enhanced irrigation schemesliv. The World Bank argues that investment in irrigation in SSA
is negligible. Only 4 % of the area in production is under irrigation, compared with 39 % in
South Asia and 29 % in East Asialv.
9. Some studies show that deficient transport infrastructure can be one determinant of low
technological adoption, restricted cropping choices and low agricultural productivity in
developing countries (Omamo 1998; Zeller et al. 1998; Von Oppen et al. 1997; Antle 1983).
Trader surveys in Benin, Madagascar, and Malawi find that transport costs account for 50–
60 percent of total marketing costslvi. Rural road development has the potential to reduce
transport costs and generate market activity. In Vietnam, road rehabilitation increased the
variety of goods that households sold in the market—primary fruits, vegetables, and meat—
and encouraged greater participation in trade and services. In Georgia, the construction and
rehabilitation of roads increased the opportunities for off-farm and female employment. In
Madagascar, simulations suggest that a 50% reduction in travel time per kilometre on roads
would increase rice production by 1%lvii.
10. We judge the evidence of returns to investment in rural infrastructure and irrigation to be
adequately robust.
Output 3 – Better functioning markets which farmers can access
11. Linking farmers to markets can also help to increase agricultural productivity and
profitability. Some studies have found that aggregate physical productivity increases with
improvement in market accesslviii. Inefficient rural markets fail to provide the great majority of
rural families with enough income to cross the poverty linelix. Market access creates
incentives in the agricultural sectorlx. Price incentives, provide positive signals for production
decisions, resource allocation and market orientation in ways that may contribute to
eradicating rural povertylxi,lxii,lxiii. Effective interventions include improving pricing policies or
improving the transmission of information, physical changes to markets, e.g. improvements
to wholesale markets. A survey of wholesale markets handling fresh produce in four states in
India found that 40% of the shops had no electricity, and only 6% of the markets had a cold
storage facility which affected their ability to do businesslxiv. But another study in India found
that wealthier farmers tend to capture a disproportionate share of the benefits of facilities in
congested wholesale marketslxv. Access to well functioning commodity markets can help to
influence farm incomeslxvi.
12. Alongside better functioning output markets, input markets for capital, land, and labour
need to be made more efficient so that farmers can better access those factors. There are
particular barriers in each case for women. Access to agricultural credit has been positively
linked to agricultural productivity in several studies. The development of local financial
markets improves efficiency of inputs use in agriculturelxvii. Effective land rental markets can
contribute to rural diversification and income growth in a rapidly growing economy.
13. Evidence assessment is strong given the wide range of evidence from multiple context
and reputable sources and of accepted economic theory on the importance of efficiently
functioning markets for increased productivity and growth more generally.
Output 4 – Improved management of risks and increased resilience to shocks
14. Shocks to the food system, such as the sudden increase in food prices, can expose the
lack of resilience of the poor. Without access to risk management tools such as credit,
insurance, and safe and effective storage facilities, or support for coping strategies such as
direct transfers, their assets can be eroded with subsequent long-term effects on livelihoods
and overall agriculture sector productivity.
15. One of the ways that economic and physical shocks manifest themselves on rural
households is through the sale or loss of productive assets. Land is a key asset for the poor.
It provides a foundation for economic activity and the functioning of market-based institutions
(e.g. credit) and nonmarket institutions (e.g. local governments and social networks) in many
developing countrieslxviii. Improving land tenure systems can benefit the poor. Lessening the
risk of expropriation reduces the need to spend private resources and time on protecting
assets, increases productivity and provides incentives to invest.
16. Analysis of a recent land certification initiative in Ethiopia, which registered over 20
million parcels of land to some six million households, found that although certification failed
to eliminate tenure insecurity, it significantly reduced fear of land loss by 10%. The
propensity to invest in soil and water conservation increases by between 20 and 30 %.
Certification consistently increased the amount of land rented out by about one tenth of a
hectarelxix. However, as property rights systems are complex institutions and tend to be
entrenched in the local social, economic and political power dynamics, causal chains
become quite complex and evidence tends to be context specific.
17. Forced sale of livestock assets has multiple impacts on the poor – reducing availability
of food for the households, reducing income from the sale of meat, milk, eggs and reducing
collateral. Given that about three quarters of the extreme poor are estimated to keep
livestock as part of their livelihood portfolios 2009), safeguarding and increasing the returns
from their livestock assets is expected to help them to escape poverty lxx.
18. There is a growing understanding of the link between social protection and development
of productive and market-oriented smallholder agriculture in developing countries. Farmers
faced with increasingly volatile local food markets will be reluctant to commit their scarce
resources to market-led developing of agriculture, often involving activities other than
producing staple crops, if they have no effective way of managing risks or no reliable safety
net. In such situations, global price spikes or catastrophic rain failures will reduce food
security and increase poverty. There is a need to manage risk and the long-term negative
impacts of failure to protect households from irreversible shocks. Farmers who are
supported to diversify their livelihoods, sustainably, will be more resilient to shocks.
19. We know that a growing agricultural sector can improve nutritional outcomes by
increasing aggregate availability, lowering prices and reducing price volatility but it cannot
guarantee food acquisition by the poor and vulnerable. More work is needed to identify
effective transmission mechanisms but these are likely to include effective cash transfers
programmes and other targeting mechanisms (such as school nutrition programmes).
20. In addition to investments in agriculture, scaled-up investments in social protection that
focus on nutrition are also crucial for improving the lives of poor rural people. Evidence from
developing countries confirms that increases in food prices cause maternal and child undernutrition levels to riselxxi. Nutritional deficiencies in very early in pregnancy increase the
likelihood of reduced foetal and infant growthlxxii. A child who was undernourished during its
first two years of life is less likely to complete school (due to impact on cognitive
development), diminishing their human capital which is a key asset, and will earn, on
average, a 10-17% lower income than one who was well-nourishedlxxiii. Mothers who are
undernourished during pregnancy are more likely to give birth to undernourished children.
Children who are undernourished in the first two years after birth are likely to suffer from
poorer health and to attain less in terms of education and income generating outcomes
through their life. So improving the resilience of the rural poor to shocks has intergenerational benefits for poverty reduction.
Food and Nutritional Security
21. As highlighted in the Strategic Case, the linkages between agriculture and food and
nutritional security are complex and there are gaps in the evidence on how one affects the
other. This Business Case focuses on the factors that affect people’s food security that fall
primarily within the agricultural sector, including through the use of direct transfers which
help them protect their assets in times of stress. Its Outcome will be increased agriculture
sector productivity, specifically among disadvantaged farming households. Focusing on a
wider range of possible factors that can impact on food security would risk spreading the
Programme’s resources too thin, diminishing its impact on the ground, and making
monitoring and evaluation more problematic.
22. Although not explicitly stated in the Output or Outcome statements, this intervention will
improve the food security of the beneficiaries through more than one of the transmission
mechanism previously described i.e. i) increasing direct availability of more food and more
nutritious food to food producers, by improving their productivity; ii) increasing aggregate
availability, lowering prices locally, reducing price volatility and, therefore, increasing
affordability of food for poor consumers (NB. most poor farming households produce some
crops but purchase others, even staple foods in periods between harvests.) ; iii) increasing
the income from the sale of their own produce and therefore increasing the purchasing
power of producers; iii) providing employment for landless rural workers; and iv) reducing
the risks and increasing the resilience of rural households to shocks.
The enabling environment
23. The theory of change model used here (Annex 4) and the Log Frame has been kept
deliberately simple to aid measurement of results and attribution of impact. It does not
include enabling environment because GAFSP has not set out a high level result on this
agenda. But evidence shows the importance of policies and procedures that encourage
private sector investment and more open markets. Recent OECD analysis on links between
agricultural development and poverty reduction shows that among the countries which have
made the fastest progress in reducing poverty between 1980 and 2005, improvements in
agricultural productivity have been accompanied by reductions in dis-protectionist policies for
agriculture such as over-valued exchange rates and high taxes on agricultural exports. And
more generally the evidence on improving the enabling environment from empirical studies
and literature reviews by the World Bank on business registration show how reducing red
tape and streamlining regulation can have meaningful positive impacts on investment and
the number of firms.lxxiv
The Private Sector Window - Theory of Change
24. The Private Sector Window theory of change is an integral part of the overall GAFSP
Theory of Change. The Private Sector Window will provide financing and advisory services
to support new technologies in existing firms and unlock constrained private investment in
infrastructure, input markets and services which all contribute to the development of
agricultural markets. These activities are all amply reflected in the overall GAFSP Theory of
Change:
Output 1: new technology developed that enhances productivity. PSW
investments and advice have as a direct objective the development and acquisition of
new technology to enhance agricultural productivity.
Output 2: Development of Infrastructure to support agriculture. PSW financing
and advice will stimulate private sector investment in infrastructure assets and
services to support agricultural markets.
Output 3: Better functioning markets that farmers can access: PSW will provide
funds, instruments and advice to reduce market constraints and facilitate more
productive operations by small and medium enterprises that will strengthen the
functioning of markets. Its focus on SME agribusiness and on catalytic investments
should lead to better access for individual farmers.
25. Evidence of impact of investments and advisory services in private markets is available
from market development initiatives in DFID agricultural market development projects:

In Bangladesh, the Katalyst (DFID, multi-donor) programme has supported market
development initiatives to generate an extra £150m of income for over 1.6m small
farmers and businesses, in sectors ranging from maize to fish to furniture, including
the most vulnerable communities in flood-prone areas.

In Nigeria over 10,000 small farmers are using tractor services for the first time,
resulting in cost savings of £37 for the average farmer (5-10% of household income).
And a commercial fertiliser supply chain has been established, delivering more
appropriate inputs to small farmers (e.g. 1kg bags) at prices they can afford –
increasing yields and creating jobs.lxxv1

More generally, investment is a critical input into the functioning of markets, whether
locally or through foreign investment that also imports new technology and
knowledge. This is not a contentious point.
26. We judge the evidence in favour of facilitating private sector investment to be strong
given the importance of the private sector to all economic activity. This linkage is a core part
of DFID policy (see DFID’s recent Private Sector Development Strategy).
Institutional, Social and Political Appraisal
27. Agricultural markets operate within political, institutional and social structures which
underpin the assumptions which ensure that the links in each part of the theory of change
hold. Without political will or institutional capacity in country, the success of GAFSP
interventions would be significantly compromised. Without social appraisal it is impossible to
fully understand whether interventions benefit or hurt end beneficiaries and achieve the
stated impact.
28. GAFSP directly tackles the political will concern by requiring investment plans to be
signed off and submitted by country Ministries of Finance as well as ensuring country
governments play a central role in drafting them. This affords political buy-in for the use of
GAFSP funds at a high political level. Social and institutional issues are intervention specific
and are thus best addressed at that level. Supervising Entities (which have all been ranked
good value for money by the DFID multilateral aid review) have rules and procedures to
safeguard social and institutional issues as part of their operational policies. Any further
strengthening would need to be led through DFID’s corporate relationship with, and core
funding for each entity which can be subsequently supported through the GAFSP
mechanism. This same analysis also applies to environmental safeguards.
Part 2: Identifying Feasible Options
I. Constructing Criteria
29. We construct criteria based on i) the rationale for DFID intervention and ii) basic
operational requirements for demonstrating and improving results. In summary the rationale
for DFID intervention is:







Meeting large scale demand for more resources from developing countries and
addressing the pressing need to expand global food availability.
The need for faster progress on MDG 1
DFID’s strong role on aspects of this agenda and on related development issues to
which agricultural growth makes a crucial contribution.
Closing the substantial public and private funding gaps in the sector in developing
countries, estimated at a combined $67 bn per year.
Meeting high level political commitments on food security.
Meeting on-going commitments on aid effectiveness.
Meeting DFID’s corporate priority of increasing private sector investment, growing
open markets and free trade by supporting the development of agricultural markets..
30. All options except doing nothing additional imply additional DFID support to agriculture.
We assume these all address DFID political commitments, its role on agriculture and a
significant contribution to meeting MDG 1. To differentiate between the options we construct
criteria based on meeting large scale demand and pressing need, closing the funding gap
and meeting aid effectiveness commitments as well as operational focus on results:
Table 1: Feasibility Criteria to Assess Possible Options
Criteria Description
1
Addresses need to meet immediate, large scale demand from developing
countries for more public and private investment in agriculture and the
pressing need to increase agricultural productivity to address global
geopolitical risks and trends.
2
Meets aid effectiveness commitments by supporting interventions led by
developing countries.
3
Helps close the output gap by leveraging contributions from others and
focusing on results, VfM and improved accountability and transparency.
4
Has a high level framework of results which can be aggregated across
different countries and by different type of intervention
5
Provides an independent evaluation of results
6
Drives increased private sector investment to develop agricultural markets.
II. Possible Options
31. The possible options for increasing support to agriculture to achieve the outcomes and
impact are:




Option 1: Maintain current levels of funding and mechanisms for delivery (country
programmes, agricultural research, multilateral funding)
Option 2: Support the Global Agriculture and Food Security Programme (GAFSP)
Option 3: Support the Private Infrastructure Development Group (PIDG)
Option 4: Support to Sector-Budget Support (SBS) in DFID target countries
Of these, Options 2, 3 and 4 will be assessed for feasibility (with rankings of high, medium
and low) to include in an appraisal to compare against the ‘maintain current levels’ (i.e. the
‘do nothing additional’) option. This is always feasible and so it is not assessed for feasibility.
32. Our criteria for exclusion are: If an option scores ‘low’ on more than one of any of
these criteria (i.e. one third of criteria) then, in our judgement, the option is not
feasible. This section briefly describes each option and how it contributes to impacts in the
agricultural sector. Each option is then evaluated against the feasibility criteria.
III. Feasibility Analysis Overall Results
Table 2: Summary of Feasibility Assessment for all Funding Options
Criteria
GAFSP PIDG
Meets Urgent Need
High
Low
Addresses Aid Effectiveness Commitments
High
Low
Helps Address Financing Gap by leveraging others. Medium High
Has a Results Framework
Low
High
Evaluates Results
Medium High
Drives private sector investment
Medium High
OVERALL
Keep
Discard
Sector Budget
Low
Medium/High
Low
Medium
High
Low
Discard
Feasibility Analysis Result: options that should be assessed in an economic appraisal are:


Option 1: Maintain current levels of funding and mechanisms for delivery
Option 2: Financial Support to GAFSP
IV. Detailed Feasibility Analysis
Option 2: GAFSP
i) Brief Description:
33. GAFSP is a multi-donor trust fund which provides a pool of grant funds for evidencebased, technically robust, country-led agriculture and food security projects for low income
countries, including fragile states, which exhibit both significant need and clear readiness to
use funds effectively. To date, seven donors have contributed and US$ 481mn has been
awarded in grants to twelve countries to help finance agricultural investment plans that
increase long-term food security. The World Bank provides the Coordination Unit (financial
management and oversight) for the Programme.
34. GAFSP consists of a public sector window which funds developing country agricultural
investment plans and a private sector window - currently undergoing reform - that is
expected to increase private investment in agriculture by piloting innovative schemes to
provide finance to smallholder farmers and small and medium-sized agribusinesses. Given
GAFSP’s current status, immediate DFID support will focus on the Public Sector Window
and the appraisal, through financing and reform options, and the management case, will set
out an approach to a strengthened private sector window.
35. Most of the GAFSP allocations to date have focused on promoting growth in the
agriculture sector. More than 60% of the allocations have focused on agricultural
productivity growth, about 20% to linking farmers to markets and to improve market
efficiency. GAFSP also supports the maintenance and increase in the assets of the poor by
supporting country plans which can include interventions to improve resilience.
ii) Contribution to Agricultural Impact:
36. The main impact of GAFSP on poverty reduction is through improved agricultural
productivity and increased farmers’ access to markets, with a secondary focus on increasing
the economic resilience of poor people. Proposals cover a range of agricultural and food
security interventions such as those which improve irrigation, crop and livestock production,
smallholder access to credit and inputs such as seeds and fertilisers. GAFSP targets poorer
countries. Though the fund is new (2010) and there has not been evidence to date of its
impact, examples of the desired results from countries which have received funding include:




Sierra Leone – Reducing the gap between national rice production and demand
(representing 70,000 metric tons) through: (a) increase in rice upland yields by 15%;
(b) intensification of rice production on 4,000 ha of Inland Valley Swamps; (c)
reduction of rice post-harvest losses by 20%; and (d) improvement in access to inputs
for farmers targeted groups by 10%.
Rwanda - Increased Productivity in irrigated command area ($/ha) from 1000 to 1700,
increased Productivity in non-irrigated hillsides ($/ha) from 1000 to 1400 and increase
the share in commercialized products in project areas (%) from 35% – 60%
Nepal – 2000 women’s groups will be strengthened, enabling women to better engage
in commercial agriculture. Social transfers for women and community education
programme will benefit 50,000 girls and young mothers e.g. reduced levels of
anaemia by 15% and increase in maternal weight during pregnancy by 50%
Togo - 650,000 households raising poultry and/or small ruminants will benefit from
dedicated animal vaccination campaigns.
37. The Private Sector Window leverages private capital to support traditionally ‘unbanked’
or ‘underbanked’ groups such as small holder farmers or SMEs in the agribusiness sector.
This represents an important complement to the public sector financing which helps create
the infrastructure and enabling environment for agriculture. Greater private sector
investment brings inflows of capital, knowledge and technology which are vital for the longer
term sustainability of growth in the agriculture sector and to the potential for moving farmers
and their families out of poverty permanently.
iii) GAFSP Feasibility Analysis:
Addresses Large Scale Investment Demand and Pressing Need– HIGH
38. GAFSP is able to deliver agricultural investment promptly to meet developing country
demand at the scale of need and to respond to geopolitical pressures. When the private
sector window is designed effectively, it will be in the unique position to both tackle the public
and private financing gaps for agriculture and exploit synergies. It currently has a funding
shortfall of at least US$ 402mn and 18 country plans ready to be considered for funding.
The Steering Committee will make decisions on the allocation of funds to countries in May
2012. It can begin disbursing DFID funds within 3 months of business case approval.
GAFSP enables the UK to put into action its international commitments for rapidly increasing
and delivering support to global agriculture.
Meets Aid Effectiveness Commitments – HIGH
39. The GAFSP Public Sector Window encapsulates the aid effectiveness principles
underpinning the L’Aquila commitment in its support of country-led plans for agriculture and
food security and through aligning donor support with countries’ own priorities. The
Comprehensive Agriculture Development Programme (CAADP), which is overseen by the
African Union New Partnership for African Development, governs the process the
development of agriculture and food security strategies, and also the process for submitting
proposals for funding from GAFSP. It ensures empowered developing country ownership of
GAFSP-funded activities.
40. Support to GAFSP provides a mechanism through which DFID, together with other
donors and International Financial Institutions, can align resources behind country-led plans
that are internationally endorsed, and will enable the UK to put into action its international
commitments to aid effectiveness.
Helps Leverage Others – MEDIUM
41. GAFSP leverages other donor assistance. Of the eight country investment plans which
were allocated funds in 2010, three countries (Haiti, Niger and Togo) have received
equivalent matching finance, totalling US$ 106mn, in additional contributions from
international institutions and bilateral donors. It is reasonable to assume that future
allocations will also attract complementary funding from other donors.
42. The Private Sector Window, managed by the IFC, could help to unlock private capital
and innovative investments in agriculture, specifically targeting smallholder farmers and
SMEs in the agribusiness sector. When fully operational, IFC estimates that every US$ 1mn
of concessional funding provided by GAFSP, it will mobilise US$ 6-7mn of commercial
funding. With both windows operational, GAFSP would score high under this criterion.
Has Results Framework – LOW
43. Currently, a high-level, comprehensive and streamlined results framework does not exist.
Donors have asked GAFSP to develop a common menu of results indicators for all
participating Supervising Entities to use in project monitoring and evaluation frameworks.
The common results indicators will assist donors in comparing the results of GAFSP
investments across countries and Supervising Entities.
44. For the Private Sector Window, results tracking will be integrated in the IFC’s monitoring
and evaluation system. IFC will define time bound targets upfront using standard indicators
and will track progress against these continuously throughout the project’s life span. In
addition, IFC will also assess each project’s overall development outcome within each of four
performance components – financial, economic, environmental and social.
Evaluates Results Independently - MEDIUM
45. GAFSP has put in place a strong, country-level monitoring and evaluation framework,
including rigorous, in-depth impact evaluations, which will help track and quantify the results
of the fund’s investments. In the initial design of GAFSP, donors agreed to set aside 2.5% of
fund resources for monitoring and evaluation activities, including rigorous impact
evaluations. This investment in results measurement helps donors fulfil their fiduciary
obligations vis-à-vis their own citizens and will also help others learn from GAFSP
investments. But while programme level evaluation is robustly included in design, there are
currently no plans for an independent evaluation of GAFSP as a whole. If DFID were to fund
GAFSP, we would seek a commitment to independent evaluation of its operations after two
years/by end of 2013 as a condition of DFID funding.
Drives private sector investment - MEDIUM
46. The Private Sector Window supports new and innovative aimed at increasing the
commercial potential of small and medium size agribusinesses and farmers by connecting
them to local, national and global value chains. It is managed by the IFC who predict that
every $1.00 invested from public funds will be able to leverage approximately $6.00- $7.00 of
private sector investment. The Private Sector Window is behind in its operationalization –it
held its first call for proposals in mid-2011 and only agreed its first investment (to Pran
Group, a local food producer and processor in Bangladesh) in April 2012.
47. Overall Assessment: GAFSP is a feasible option. Its low performance on the results
framework is being actively addressed and DFID would make an independent evaluation a
condition of any funding. It performs well on the other criteria. It is particularly attractive for
helping DFID meet its international commitments and its support to the private sector in the
agriculture sector.
Option 3: The Private Infrastructure Development Group (PIDG)
i) Brief Description:
48. PIDG aims to address market and institutional failures that constrain the private sector’s
involvement in infrastructure development which fosters economic growth and reduces
poverty. On agriculture, it is able to invest "social venture capital" to create commercially
viable agribusiness investment opportunities, until they attract private investment from
domestic and overseas investors. It focuses on sustainable agricultural and agri-processing
business opportunities, strengthening of agricultural market systems and the development of
agriculture-supporting infrastructure such as irrigation, feeder roads and bulk storage. PIDG
scored highly in DFID’s Multilateral Aid Review (both organisational strengths and
commitment to UK development objectives were rated ‘strong’).
ii) Contribution to Agricultural Impact:
49. The PIDG has a good track record in targeting investments at poor and fragile states with
51 % of all projects to date in fragile states. Its funding has supported the improvement of the
agriculture sector in developing countries, for example through funding a large scale
irrigation project. During 2010, PIDG supported 15 projects that reached financial close,
attracting $4.1 bn of private investment commitments. But the vast majority of its financing
(at least 97%) is not in the agricultural sector and there are only a small number of examples
of the impact it delivers on agriculture. In Zambia, InfraCo, a facility of PIDG, provided
funding for a project that will support 650 smallholder families (up to 6,500 individuals) with
year-round irrigation services for at least 25 years, enabling them to enhance their incomes
through profitable commercial-scale farming. It will end dependence on food aid for 900
families directly benefitting from the Project (up to 9,000 individuals); and stimulate growth in
the wider economy which supports 15,000 people.
50. Its generic impact statement says that it will provide smallholder farmers and local
communities with:





Affordable irrigation services
Improved access to agricultural inputs, expertise and markets
A share of profits from large-scale commercial farming activity
Ability to add-value through processing and storage facilities
Job creation throughout the value chain
51. PIDG does not specifically address food security or building the economic resilience of
poor people. DFID’s Multilateral Aid Review recommended that PIDG should continue to
target low income countries and work for maximum value for money in countrylxxvi.
iii) PIDG Feasibility Analysis:
Addresses Large Scale Investment Demand and Pressing Need– LOW
52. PIDG’s current support to agriculture through AgDevCo is a small part of its investment
portfolio. It can help meet the private investment gap but not the public investment gap since
it works exclusively through the private sector. To increase its support it will need to develop
expertise, recruit more staff and put in place expanded operational procedures. This will take
at least 1 year and it could be 18 months before DFID funds can begin to be effectively
disbursed. But even then, it will need to significantly expand its operations to meet the need
for scaling up in agricultural investment. This could take even longer. And such a shift in
PIDG’s focus, and the increased dominance of DFID shareholding that would result, would,
in any case, be subject to agreement and negotiation with its other funding contributors. The
long and uncertain process this involves means PIDG scores low on this criterion.
Meets Aid Effectiveness Commitments – LOW
53. PIDG invests in private sector led or partnered initiatives. Though this means that it can
be country-led, it is not well placed to bring together multiple donors to support
comprehensive agricultural development plans from a wide range of developing country
governments across the world and to reduce the transaction costs of multiple donor
initiatives in the agricultural sector. It therefore is not well placed to contribute to DFID’s aid
effectiveness commitments for agriculture.
Helps Leverage Others – HIGH
54. PIDG has catalysed $30 of private investment for each $1 of donor funding and it is
anticipated that the PIDG will continue to achieve excellent value for donor money if it were
to expand its work into agriculture. It is unclear whether a large additional contribution from
DFID would leverage other donors but the leverage of the private sector would be significant.
Has Results Framework – HIGH
55. PIDG produces post project completion reports to monitor development impacts. It also
measures the number of consumers increased and additional services provided, by country.
However, it does not disaggregate by level of customer or who is using new services, so it is
not known if it is reaching the poorest.
Evaluates Results Independently – HIGH
56. Every two years there are independent evaluations of each of the facilities of the PIDG.
There is currently a strategic review of PIDG underway. An independent review of results
was undertaken as part of the MAR.
Drives private sector investment – HIGH
57. The PIDG is designed to leverage private finance and catalyse private investment in
infrastructure and reports significant leverage rates on private sector finance of 30 to 1.
Though it still has to develop its expertise in agricultural markets, it is rated high under this
criterion as it is well set up to drive private investment.
58. Overall Assessment: Since two criteria are ranked low, this option is not feasible.
Although a well performing vehicle that DFID already funds, its low expertise on agriculture,
the length of time needed to build up its agricultural portfolio and its focus on private sector
financing means that it does not contribute strongly to aid effectiveness commitments; it is
poorly placed to meet demand from developing countries at scale and to quickly implement
to meet pressing global needs.
Option 4: Sector Budget Support (SBS)
i) Brief Description:
59. The transfer of financial resources specifically targeted at a particular sector to the
national treasury of a partner country. For the agriculture sector, Agriculture Ministries in
recipient countries are then likely to be responsible for programming and monitoring spend.
As a result, Agricultural SBS can be targeted at a country’s own agricultural goals, which
obviously vary for individual countries.
ii) Contribution to Agricultural Impact:
60. An ODI study of ten cases of SBS in agriculture found that they were generally “all about
processes and procedures and very little about development results on the ground”lxxvii.
Another review of SBS found that it provides a number of benefits to project approaches
including supporting the expansion of service delivery, but primarily has procedural benefits,
such as improving the efficiency of the budgeting, planning and monitoring cycle,
strengthening public financial management and policy implementationlxxviii,lxxix .
iii) SBS Feasibility Analysis:
Addresses Large Scale Investment Demand and Pressing Need– LOW
61. This option would need to be based on DFID country-office demand for increased
support for agriculture. However, the process of identifying those countries and establishing
an SBS mechanism (DFID currently only provides SBS to agriculture in one country Rwanda) would be complex as DFID would need to establish what the current donor
arrangements exist in country and what kind of support the national government favours.
SBS also requires significant adviser input in terms of regular liaison with government
ministries and programme reviews. This may require participating country offices to recruit
additional expertise. Scaling up sector budget support in multiple country offices assumes
that partner governments would request DFID to prioritise agriculture consistently across
programmes and would require either a shift in country budget prioritisation or the provision
of additional funds that would distort existing country allocations. The full implications across
the DFID country office portfolio given competing needs would need to be negotiated by
DFID corporately in addition to in-country. With high coordination costs and no guarantee
that scale up would occur to meet large scale demand and pressing global need, this
approach is not well suited to meeting this criterion.
Meets Aid Effectiveness Commitments –MEDIUM/ HIGH but potentially LOW at Country
Level
62. SBS support tends to be country-led and works through government systems and is
therefore well placed to meet aid effectiveness commitments. The major drawback is that by
restricting funding to a sector, donors distort government priorities. Agriculture may not be
placed as high on the list of priorities, relative to other sectors, as increased donor financing
might dictate. If this is so, either DFID funding would not be used to scale up agriculture or
DFID would distort country priorities to meet its commitments to agriculture which would
undermine aid effectiveness.
Helps Leverage Others – LOW
63. The dialogue with government which accompanies SBS could encourage individual
developing country governments to increase their budgetary allocations to the sector.
Providing SBS could also encourage other donors to increase their contributions to
agriculture, but it is as likely to have the opposite effect if donors perceive DFID to be the
primary donor to the sector. Given the major scale up envisaged, it is unlikely that DFID will
leverage significant levels of donor funding in multiple countries.
Has Results Framework – MEDIUM
64. A high level framework of results would comprise the results framework which countries
themselves develop as part of their agricultural strategies. Strategies may not be
comparable across countries; therefore DFID would need to require that specific results were
included so that results could be aggregated. This could also be time consuming and
difficult.
Evaluates Results Independently – HIGH
65. An independent evaluation of SBS in country would be specified as part of the funding
commitment for DFID corporate reporting requirements.
Drives private sector investment – LOW
66. SBS is generally focused on government action and public sector delivery and while
some of that may be helpful to the private sector, there is no particular emphasis on direct
facilitation of private investment and so it is assessed as low under this criterion.
67. Overall Assessment: This option is not feasible. Operationalising a major increase in
sector budget support to agriculture requires that too many assumptions be satisfied with
respect to country office programming and corporate processes. It is unclear whether other
donors would contribute more across multiple countries. The risks and complexity under two
(if not three) criteria : meeting large scale demand and leveraging others are significant
giving it a low score on both and thus the option should be discarded.
B. Assessing the strength of the evidence base for each feasible option
Option 2
(GAFSP)
Evidence rating
Medium
68. The positive evidence that GAFSP will be a good vehicle for achieving development
impact includes:


Good value for money scores in the Multilateral Aid Review (MAR) of other Global
Funds in health and education sectors - such as the education Fast Track Initiative,
Global Alliance on Vaccinations and Immunization, and the Global Fund for Aids, TB
and Malaria. The MAR included criteria on delivery and results.
A recent evaluation of World Bank Trust Fundslxxx found that they add value as a
distinct aid vehicle by providing coordinated financing and grant resources for
individual countries, targeted development issues, and global public goods.
[Assessment: GAFSP reinforces coordinated financing for individual countries and
targets a specific sector.]
69. The negative or missing evidence includes:
 The use of a Global Fund to support to an economic sector where the private sector
dominates but public goods investments are required to support it is unique and it is
unclear how effective it can be.
 The recent evaluation of World Bank Trust Funds: value added of trust funds is more
evident when they support global public goods than when they are used merely to
supplement national development efforts. [Assessment: GAFSP supports national
development efforts so does not fare well on this point.]
 They do not necessarily integrate well with countries’ own programs, nor do they
foster coordination on the ground with other sources of aid. [Assessment: It is unclear
how well GAFSP tackles in country coordination as Supervising Entities are primarily
in charge of implementation rather than country governments yet are supposed to be
working in concert with country plans. ]
 Many trust funds of global scope involve insufficient recipient participation in the
design of their objectives and modalities, and lack clear outcome objectives.
[Assessment: Countries are an integral part of agricultural plan development in
GAFSP and participate in GAFSP’s corporate governance, although it is unclear how
much true leadership and ownership they exercise vis-à-vis donors and Supervising
Entities that design and implement programmes.]
 Improved accountability for the results of trust-funded activities is needed and needs
to be integrated with World Bank management processes. [Assessment: As noted
earlier, GAFSP aggregate results management and accountability need strengthening
although at the individual intervention level, significant resources have been made
available to support monitoring and robust evaluation.]
70. Overall: The evidence base is assessed as ‘medium’. The modality has generally
proved effective but is untried in an economic sector led by the private sector. To maintain a
medium rating DFID should ensure GAFSP implements a reform programme to strengthen
results and accountability and ensures client governments have ownership of GAFSP
governance and supervising entity programme design and implementation.
What is the likely impact (positive and negative) on climate change and environment
for each feasible option?
71. One of the four outputs of the programme is to improve the management of risks and
resilience to shocks including those due to environmental and climate change. This will be a
significant opportunity and help to develop more sustainable and climate resilient agriculture
or climate smart agriculture. The Climate and Environment Assurance Note (attached as
Annex 5) sets out the opportunities and risks for each of the options, and the actions
required to realise opportunities and mitigate or avoid risks, and where these are covered in
the programme’s logframe. The main opportunities and risks are summarised below.
72. Rising populations are producing greater pressure on agricultural land. Over the last 50
years, arable land per capita has gradually declined from 0.44 ha to less than 0.25 ha.lxxxi
Increasing pressure on land is leading to greater levels of land degradation. Experts
estimates that 18% of the land in Asia (1034m ha) and 16% in Africa (494m ha) was
degraded by human action. The overall global proportion of degraded land was estimated at
15%. lxxxiiLater studies, using satellite based measures of vegetation cover have lxxxiiiarrived
at a figure of 24% of land being degraded, with a statistically significant increasing trend of
land degradation concentrated in SSA, East Asia and parts of India. This figure will take into
account deforestation and bringing land into cultivation as well as land other degradation.
73. Land degradation reduces the ability of soils to hold water and nutrients, and so reduces
yield. FAOlxxxiv estimated that land degradation costs South Asia $10 billion a year, or 7% of
gross agricultural product.
74. Low levels of fertilizer use and soil loss, especially in Africa, are leading to the depletion
of soil nutrients. On average, 39Kg of nutrients (NPK) are lost annually per hectare of
cultivated landlxxxv. In some areas it can be dramatically more, for example in Rwanda the
net loss per year is estimated to be 136Kg.lxxxvi
75. The development of projects that address land degradation present opportunities to
improve people’s livelihoods, and reduce the impact of agriculture on the environment. This
could be by the adoption of more sustainable practices that deliver increased agriculture
productivity, thereby reducing pressure to convert more forests to agriculture use, and
reduce siltation and pollution of rivers from soil erosion.
76. Knowledge of how to reverse land degradation and nutrient loss exists. Simple
techniques such as terracing, contour ploughing and grass or hedgerow strips can have a
dramatic effect. For example, hedgerow strips can reduce soil loss resulting from a single
storm from 24 metric tonnes per hectare to between 5 and 0.2 metric tonnes per hectare lxxxvii.
77. But it is important to match improvements to the situation and support people through
the change. Conservation Agriculture can increase yields between 20 and 75%, but in the
first few years yields may go down and labour demand goes up. In some sites, conservation
agriculture may not work. lxxxviii
78. Assessing the potential impact of climate change on agriculture is not precise due in part
to the uncertainty in predictions from climate change and agriculture models. A systematic
review for DFID found that climate change is likely to lead to a yield depression of about 8%
in Africa and South Asia. But this figure masks large regional differences, with maize yield
losses for Southern Africa estimated at being 27% for the 2030’s and 44% by the
2050s.lxxxixIt is therefore important that agriculture programmes consider the impact of
climate change, and include measures to help farmers adapt to current and future climate
risks. This is a significant opportunity that will help build the resilience of farmers and help
maintain and increase their incomes. Early action is likely to be needed to reduce their risks
from the increased frequency of climatic extreme events (storms, floods and droughts). xc
This will include better management of water resources and more efficient and effective
irrigation and implementation of soil and water conservation measures including water
harvesting and small scale on-farm storage.
79. Improved agricultural practices can also help to sequester carbon. Long term trials found
that conservation agriculture increased soil carbon by about 6% compared to a 7% decrease
for conventional tillage.xci
80. Options 2 to 4 all have opportunities to respond to the environmental and climate
challenges outlined above. Projects and programmes developed under all aim to increase
productivity and to do this sustainably. Of these options GAFSP potentially provides the most
opportunity for agriculture programmes, and PIDG the least given that it has a boarder focus
than agriculture. Sector budget support presents the best opportunity for main streaming
climate and environment issues into agriculture policies, and realising a more
transformational benefit. However, by sharing lessons from GAFSP projects with national
partners also presents this opportunity for improving national policies and plans. Option 1
does not present any additional climate and environment opportunities.
81. Proposals for GAFSP projects already made put an emphasis on environmental
conservation and addressing the climate change challenge. The details of how they will do
this will be situation specific but are expected to include soil and water conservation, and
more efficient irrigation. There are also expected to be mitigation co-benefits. For example
the World Bank appraisal of the Rwanda proposal makes some general estimates of the
value of added carbon sequestration of US$ 1.7 million over a 50 year period.
82. The opportunities offered by this programme for enhanced soil and water conservation
are large. The country project documents do not go into detailed design however, and while
the importance of taking climate change into account is recognised, it will be important to
ensure the design of projects support people in the early years of change, when productivity
can decline, and are able to cope with future climate variability including the likely impact of
more frequent severe weather.
Risks
83. There are risks that projects that focus on maximising food and crop production result in
practices that negatively impact on the environment. This includes the conversion of forests
to agricultural use resulting in increasing GHG emissions, and loss of biodiversity. Other
technologies and practices may result in environmental pollution – for example poor or
incorrect use of agrochemicals. Projects involving the construction of infrastructure also have
potential significant negative environmental impacts. It is therefore essential that all projects
developed under any of the options are subject to environment assessments.
84. There are risks that some of the proposed investments may lead to maladaptation to
future climate change. For example projects that include rural infrastructure investments and
provide better access to markets for the poorest may actually encourage people to stay or
move into areas that in some cases will no longer be viable for agriculture in 20-30 years
time. This issue was identified by the Foresight Report on Migration and Environmental
Changexcii.
82. The environmental and social safeguards of the implementing agencies will need to
address these risks upfront, through project design, policy dialogue, procurement, and M&E.
83. Table 3 summarises the climate change and environmental categories for the four
different options being appraised. In undertaking this appraisal options were also assessed
against how well they contributed to build the resilience of people and communities,
especially small holder farmers, to present and future climate risks. The categories used in
this appraisal are defined as: Category A, high potential risk or high opportunity; B, medium
or manageable or medium opportunity; C, low or no risk, or no opportunity; or D, core
contribution to a multilateral organisation. Based on this climate and environment appraisal
the preferred option would be support to GAFSP and then increased sector budget support.
Table 3
Climate change and environmental categories of options
Option
1. Maintain current levels of support and
delivery
2. Support Global Agriculture and Food
Security Programme (GAFSP)
Climate change and environment
Risks and impacts
Opportunities
Category
Category
B
C
B
A
C. What are the costs and benefits of each feasible option?
84. Based on the feasibility analysis, the economic appraisal for rapidly increasing support
to agriculture becomes a comparison of GAFSP against the counterfactual of doing nothing
additional. If GAFSP’s benefits exceed its costs - both quantitative and qualitative - then
there is a strong case to proceed with funding. This appraisal focuses on funding the GAFSP
public sector window and assumes identical returns from the private sector window once it
has been strengthened.
Option 1. Maintain current levels of funding and mechanisms for delivery
Pros:
 Reduces transaction costs for DFID by not administering another funding mechanism
 Reduces opportunity cost for strategic priorities other than food security and frees up
funds for those to be targeted.
Cons:
 Underfunded interventions at country level which support agricultural performance
and the protection of individuals’ assets thereby reduced possible impact on poverty
reduction.
 Misses possible opportunity to leverage more support for food security from others.
 Lost opportunity to potentially leverage private sector investment.
 Risks continued underinvestment in country-led agricultural sector development plans
where funding gaps already exist.
 Fails to meet the clear demand and urgent need for increased investment in
agriculture.
 Signals a lack of UK commitment to support agriculture and food security.
85. Assessment: Given the urgency of the need to increase investment in sustainable
agricultural development, the scale of need and the implications for poverty, the cons
outweigh the pros from a poverty reduction perspective and the ‘do nothing’ option should be
discarded. If we assume total net benefits of 0 (zero) for doing nothing additional, provided
GAFSP produces positive net benefits then the case for funding from an economic
perspective is strengthened.
Option 2: (a) GAFSP Quantitative Benefits and Costs
86. Taking a traditional Cost and Benefit analysis approach to complex multilateral funding
requires exhaustive quantification of benefits and costs for each individual intervention in
each country, with differentiated discount rates and development of a robust method for
overall aggregation. This is neither feasible, cost effective nor a recommended procedure for
business cases involving multi-lateral funding. Instead, we use GAFSP analysis of outputs
and the economic rates of return it calculates for its own existing project plans to build an
estimated quantitative appraisal with sensitivity analysis to check its internal robustness. The
appraisal is meant to provide a measure of confidence in the value of funding GAFSP but it
is by no means definitive or exhaustive and should not be construed as a fully accurate
derivation of the expected net benefit.
87. So far, 12 countries (6 African) have received allocations from GAFSP totalling US$
481mn. Another 18 countries (12 African) have submitted proposals with a total cost of US$
736 million. Although the next set of country investment plans to receive an allocation of
funds are likely to be broadly comparable to those approved most recently by the Steering
Committee, the detailed outputs from the country investment plans which would receive UK
funding cannot be known at this stage (a call for proposals is likely in early 2012). Unit costs
produced by the GAFSP Coordinating Unit have therefore been used to calculate indicative
outputs for the next 12 countries to receive funding and the proportion of these results that
could be attributed to DFID funding. (See Intervention Summary).
88. Since the specific outputs DFID would be funding are unknown, the economic rates of
return associated with these outputs are also unknown. For this reason we have used
conservative rates of return based on GAFSP analysis to guide the appraisal.
a) Quantitative Benefits
89. GAFSP results are produced in four distinct types of intervention. Table 4 shows each
intervention type, its share of total current GAFSP programme funding and its corresponding
economic rate of return. In the first two cases, the figures come from GAFSP’s own technical
analysis using World Bank data to calculate economic rates of return for some current
country investment programmes in the particular intervention types for which we have taken
simple averages. The income streams these benefits relate to are, on agricultural
productivity, higher production yields and from agricultural market development, increased
profitability. Economic rates of return are therefore based on private returns due to increases
in income for individual farms. Form illustrative purposes only, estimates for rates of return of
Nutrition/ Social Protection investments are taken from academic papers. Since GAFSP has
not calculated them in existing interventions, they are not used in the subsequent analysis.xciii
Table 4.
Increased Agricultural productivity
Agricultural Market Development
Share of Total
GAFSP Prog.
69%
22%
Annual Rate of
Return Estimate
25.2%
24.5%
Social Protection
Nutrition Enhancement
1.0%
1.0%
60%
1060%
Assumptions:
90. To construct a conservative appraisal we assume that GAFSP public and private
windows together have an economic rate of return equal to the lowest rate of return of a
GAFSP intervention which is 24.5%. We also assume DFID is providing a £50mn
contribution in two instalments: £13mn to the public sector window in mid-2012 and £37mn
in mid-2013, that DFID funding starts to accrue full benefits in 2014 (2 years after the first
transfer) and that benefits accrue equally on a yearly basis over 9 years. Although we
believe that the transformational impact of private sector window funding could increase
returns above those obtained from the public sector window, in the absence of evidence, we
take a conservative assumption that the economic rates of return between public and private
windows are the same. Assuming a conservative, high discount rate of 10% to reflect the
pressing need to quickly meet large scale need and geopolitical pressures, the annual net
benefit of a £50mn contribution with these benefit characteristics is £31.9mn.
b) Quantitative Costs
91. The rate of return calculations above already include the direct and indirect costs of
funded projects. To obtain the effective rate of return we also need to subtract the cost of
GAFSP administration, both of administering the Fund itself and of the supervising entities
managing GAFSP funds. We also need to integrate DFID administrative costs for managing
our GAFSP contribution.
i) DFID costs: We assume this cost to be equal to 1.0 Full Time Equivalent cost at
advisory (A1) level per year for 2 years at a daily rate of £386 for 220 days per year.
We estimate the administrative cost to be: £85,000 per year of managing DFID’s
contribution.
Ii) Internal Admin Costs: GAFSP reports its administrative costs to be 0.85% for
internal administration and 5% for supervising entity administration both as a
percentage of total funding. Together GAFSP’s total administrative costs are 5.85% of
total funding.
92. Putting DFID and GAFSP costs together for DFID’s £50mn contribution, total costs come
to £3.01mn per year.
c) Net Benefits
93. To construct net benefits we assume a net benefits stream with the characteristics set
out in the assumptions and subtract from this stream annual administrative costs, starting
from the moment that the first DFID instalment is transferred in Year 0 (2012).
94. This produces Estimated Total Net Benefits of DFID’s £50mn contribution to
GAFSP funding of £11.23mn, an effective rate of return of 15.4%. This is a lower total
rate of return than the WB’s own estimate of 20% aggregate rate of return for GAFSP.
d) Sensitivity Analysis.
95. All the figures in the analysis above are rough standard estimates, not a rigorous
derivation based on future GAFSP programmes with independent verification of robustness.
There are two other important limitations to the methodology to highlightxciv:
(i) Some costs have not been counted in the World Bank’s economic rate of return
methodology. In particular, we noted that an increased use of carbon and its negative
externalities did not feature in their cost calculations.
(ii) The assumption that the profile of net benefits accrual is constant is a major
simplification. It is more likely that benefits increase rapidly in the first few years,
maximize midway through the 9 year cycle and then reduce and persist beyond the 9
year period.
96. The second limitation is less of a worry as it suggests that we may have understated the
benefits which would not change our decision to proceed with funding. To deal with the first
concern, which could lead us to fund when the true costs outweigh the benefits, we construct
two simple sensitivity analysis tests and combine them in a third test:
(i) Increase administrative costs by 50% to 9% of total funding to capture costs that
are not captured in the Bank’s economic rate of return methodology.
(ii) Increase the discount rate to 12% which is the World Bank’s discount rate for the
poorest countries. This makes the analysis even more conservative as it assumes
only the poorest countries receive GAFSP funding.
Test 1 Net Benefits:
£3.18mn
Test 2 Net Benefits:
£7.25mn
Combined Test Net Benefits: - £ 0.80mn
97. When combining both factors to make the appraisal more conservative, the net benefits
become slightly negative. Break even analysis indicates that at a 10% discount rate,
increasing total costs by up to 68% still produces a positive net benefit. At a 12% discount
rate this increased cost figure is 44%. This analysis and its conservative parameters gives a
measure of confidence that, from a purely quantitative perspective, the economic case in
favour of funding GAFSP is sound. It also puts focus on three issues DFID should monitor
and engage on to ensure net benefits remain positive:
i.
Costs need to be kept under control and, where feasible, efficiency of
operations improved.
ii.
Disbursements by GAFSP and implementation by the supervising entity need
to be timely. If benefits fail to accrue 2 years after DFID’s initial contribution,
net benefits quickly become negative.
iii.
To strengthen value for money, given the process of strengthening the private
sector window, DFID should tranche its contributions, both to enhance the net
benefits stream and to ensure the instrument is performing well before the
funds are disbursed.
All of these issues have been included in the priority reforms and/or management case in the
analysis below.
Usefulness and Limitations
98. The analysis above provides a reasonable estimate of the net benefits of funding GAFSP
because it:
I. Is built on a lower rate of return than GAFSP’s own estimate of the programme’s
aggregated rate of return (20% versus 15.4%).
II. Significantly increases costs and the discount rate well above those expected yet
still reports positive net benefits.
III. Assumes a conservative 2 year lag between DFID funding disbursement and the
start of accrual of benefits. The actual lag may be half of this thus strengthening
the results.
IV. Assumes a conservative 10% social discount rate.
99. But this appraisal should not be considered a definitive statement of Net Benefits
because it does not thoroughly or accurately aggregate the rates of return of all existing
GAFSP programmes nor differentiates between public and private window rates of return
(the latter are not yet available). 6 public window projects from 3 countries (Togo,
Bangladesh and Ethiopia) have been used to give an indication of the expected rate of
return. The programmes chosen are of the same type as 91% of the GAFSP portfolio but
they cannot be said to be fully representative of the GAFSP programme.
100. The rates of return calculated by the Bank have their own methodological limitations as
set out in para 91. In fact, an aggregate cost benefit analysis of any complex multilateral
funding cannot be accurate without a significant resource investment to properly measure
benefits and costs accrual and aggregate and benchmark effective rates of return. The
present analysis serves to increase confidence on the basis of reasonable assumptions and
evidence without providing a definitive and accurate calculation.
Option 2: (b) Qualitative Benefits and Costs
101. While the estimated analysis suggests strongly that GAFSP will achieve net benefits in
quantitative terms, it is important to consider qualitative costs and benefits to provide an
overall picture of total net positive value:
Qualitative Benefits:






Promotes ownership: supports country-led plans and investment gaps identified by
individual countries.
Addresses high level political commitments for support to agriculture, builds political
capital for DFID.
Generates UK influence over larger resource flows and recipient government plans.
High poverty impact: intervention areas of agriculture and nutrition are highly effective
in reducing poverty in comparison with growth in other sectors and other kinds of
interventionxcv.
Also supports enabling environment improvements that cannot be easily quantified
and that can have further knock-on benefits on the overall quality of governance.
Channelling multiple sources of donor financing through a common mechanism can
reduce fragmentation at the country level and recipient country transaction costs.
Qualitative Costs:





lacks a track record: risk that fund fails to perform as expected.
Creates further "verticalisation" of Multilateral Aid and compartmentalisation of overall
global aid resources.
Current aggregation of results is partial and not used for accountability. DFID has
estimated the impact it is buying – but there is currently no commitment from GAFSP
to be held accountable for a comprehensive set of results that UK funds will buy.
DFID cannot determine where funds are allocated except through influencing GAFSP
processes, which could mean lower DFID priority countries get funded.
Difficulty in divesting once invested: once invested in GAFSP, which has high political
backing, it will be difficult to remove DFID support without a political cost.
Qualitative Costs and benefits generally balance each other out because:

Increased compartmentalisation of aid at the global level is balanced by the reduced
fragmentation at the country level.


The difficulty in divesting is balanced by the political capital gained in an important,
poverty-focused sector and in a major funding instrument.
The lack of flexibility in use of funds is set against the gain in influence for a large and
politically important funding vehicle.
102. And there is scope for benefits to exceed costs. Enabling environment benefits can be
substantial if they lead to systemic improvements for agricultural sectors as a whole that all
beneficiaries benefit from while the risks to fund performance and the weak results
framework can be addressed by the reform and funding options set out below.
103. There is a strong likelihood that qualitative benefits will exceed qualitative costs,
provided that risks to fund performance are addressed. Therefore in sum, combining the
qualitative and quantitative appraisals, DFID can have a sufficient level of confidence that a
contribution to GAFSP will produce positive net benefits.
Overall Recommendation:
104. Based on this appraisal, the ‘do nothing additional’ option should be discarded and
DFID should proceed to make a funding contribution to GAFSP. But it should consider
reform, financing and engagement options to reduce the risks to DFID’s investment,
maximize its impact and safeguard positive net benefits.
4. Feasible Reform, Financing and Engagement Options for GAFSP Funding
105. Reform Options:
1. Implement proposed reforms of Private Sector Window (PSW): Reforms currently
proposed to improve coherence with public sector window, deliver tangible results and
ensure additionality of its financing.
2. Strengthen Results Framework: currently GAFSP only partially aggregates results. In
common with other multilaterals, it could strengthen its results framework to improve
its delivery and accountability.
3. Strengthen Cost Consciousness: Make cost effectiveness criteria a core part of its
internal operations and approval mechanisms and use these to incentivise improved
cost consciousness from its supervising entities. This is important to safeguard value
for money (see assessment below) and safeguard the net benefits in the economic
appraisal.
4. Speed of Disbursement: Project design and appraisal take time but sequencing of due
process could be improved to increase the pace of delivery and implementation and
ensure positive net benefits from a DFID perspective.
5. Improve Gender Disaggregation: Many GAFSP indicators are gender-blind. Improving
disaggregation would be an important step to better address the different roles that
men and women play in agricultural sectors.
6. Implement a streamlined evaluation into operations: Include as part of its operational
procedures a built in evaluation process every two years from the start of new GAFSP
programmes and for GAFSP as a whole.
7. Ensure appraisal investment plans place greater weight on resilience to climate
change and to delivering improvements in nutrition as part of the results framework.
106. Prioritising Criteria: We have considered these reforms and their importance and
urgency in terms of: i) the contribution to DFID corporate priorities (value for money, impact,
results, evidence, fragility, gender, private sector); ii) the extent of buy-in from other GAFSP
donors and therefore the likelihood of achievement; iii) the extent to which they improve
delivery in country.
107. Recommendation: Using the prioritising criteria above, DFID should focus its initial
reform ‘ask’ on three ‘one off’ reforms:
 Improving efficacy of the Private Sector Window’s operation. Baseline: the
issues which we believe need to be addressed in order for this to be achieved are
described in detail in the Management Case, p.60/61, paras. 42 and 43. An
assessment of progress on these issues will be made as the basis for a decision on
whether or not to provide £37mn for the Private Sector Window. Our working
assumption is that this assessment will be carried out 12 months after DFID takes up
a seat on the Steering Committee and linked to our funding disbursement (see
recommended approach below).
 Creation of a high-level, aggregated Results Framework Baseline: no aggregated
RF exists to date. This should include either DFID or World Bank core indicators and
should be reflected in individual funding proposals. Our working assumption is that
such an aggregated RF will be completed within 12 months of DFID taking up a seat
on the Steering Committee.

Improving speed of disbursement and strengthening management. Baseline:
the Coordination Unit has indicated that this has been taking up to 12 months from the
point at which funds are allocated through the Public Sector Window to the point at
which funds are transferred to the Supervising Entity. Our target is to have this
reduced to 6 months within 12 months of DFID taking up a seat on the Steering
Committee. Our corporate relationship with the Bank is stipulating that we push the
Bank to be more pro-active in solving problems faced by staff managing Trust Fund
programmes. We will monitor this and strive for full compliance with DFID corporate
positions as they relate to GAFSP.
108. In addition, in keeping with DFID’s strong corporate reform agenda with World Bank
Trust Funds, DFID officials should work on an ongoing basis to ensure a continual
improvement in:
 Cost consciousness of GAFSP operations across the board, especially in negotiating
competitive trust fund management fees charged by the Bank;
 Gender disaggregation of data.
 Attention to climate change and nutrition as aspects of food security.
 Strengthening the processes for filling staffing gaps.
 Ensuring the Bank fulfils appropriate roles that avoid conflict of interest (eg
Supervising Entity, Trustee and Coordination Unit) in management and delivery and
makes use of private sector expertise to take over responsibility for key functions if
and where appropriate
109. Since reforms score highly for DFID corporate objectives, additional funding should be
considered to motivate these reforms (see financing options below).
b. Financial Options:
110. What is a fair contribution from DFID?
A fair DFID contribution to GAFSP needs to consider:
1. The scale of need for agriculture: to meet the scale of need for funding, which is in
the billions of pounds, even with significant leveraging of funding from others, and a
fair burden share to the scale of need, a DFID contribution would need to be
substantial (at least in the tens of millions).
The burden share for the UK of a multilateral fund: UK provides roughly 10% of global
ODA. Currently, $570mn has been received by or firmly committed to GAFSP. This
figure will shortly increase by Eu10mn from the Dutch and $25mn from the US. This
will raise total receipts to $733mn (assuming 1 EUR = US$1.38). 10% of this total
would mean a DFID contribution of $73.3mn or £47mn (assuming £1 = US$1.55). A
figure of £50mn is therefore just over 10% - lower than historical comparators
including the education Fast Track Initiative (21%) and the Global Alliance for
Vaccinations and Immunizations (33%); much closer to the UK burden share of IDA
(12%) and broadly equivalent to GFATM (10%).
2. The leverage capacity of our funding: Leverage potential of our GAFSP contribution
is uncertain for the Public Sector Window. Our contribution may spur additional
investment from other donors but at a scale likely commensurate with our funding
levels.
In contrast, the Private Sector Window has the potential to leverage a significant
amount of additional funding from private investment –estimated at a ratio of £6-7 for
each £1 of DFID contribution. It also provides an important complement to public
funding to ensure sustainability and broader ownership of agricultural investments.
Recommended Funding Option and Approach:
111. Bringing all of these considerations together along with the reform options in the
previous section, the proposed approach is to approve funding to GAFSP for up to £50mn
(~US $80mn) representing approximately a 10% burden share over two financial years,
2012/13 – 2013/14 as follows:
i) Provide £13mn (~US$20mn) to the GAFSP Public Sector Window in 2012/13 to help
meet the scale of need for public investment and possibly incentivise additional donor
funding.
ii) Approve an additional £37mn (~US$60mn) which will be disbursed to the Private
Sector Window in two equal tranches of £18.5mn in early 2013/14 and the second before
the end of the 2013/14 financial year. This will complement our Public Sector Window
funding, critically leverage significant additional resources from the private sector to meet
the global financing gap and make our total contribution more commensurate with the
scale of need.
112. Our reform options will be integrated into our funding approach. We will make final
disbursement of the second year of funding (£37mn) contingent on progress on our priority
reform objectives (see para. 103 above) being achieved. As stated in the previous section
other priority reforms will be pursued as part of our role in GAFSP’s governance. This means
that our engagement approach with GAFSP will involve pursuing reform, lobbying others and
influencing effectively to see them through. The management implications of this
recommendation are set out in the Management Case below.
Overall Summary of Selected Option:
113. The appraisal and options analysis leads to the recommendation to fund GAFSP with a
total contribution of £50mn to signal that DFID ambition matches the scale of need. £13mn
will be provided to the Public Sector Window to meet core commitments and our fair burden
share of total GAFSP pledges. £37mn will be designated to the Private Sector Window
subject to completion of reforms and a satisfactory supplementary DFID assessment.
D. What measures can be used to assess Value for Money (VfM) for the intervention?
114. The Technical Committee does take VfM considerations into account in approving
country led proposals. The metrics that the TAC will use and that will be used to track
programme success will be the main criteria for tracking VfM. If we secure funding and a
seat on the Steering Committee we would expect to insist on continued revisions to this
framework and to an overarching VfM framework that monitors results, costs etc (see
Management Case below).
115. Key summary points:









Strategic fit - GAFSP supports the delivery of MDG1 and UK’s commitment to
poverty reduction. GAFSP prioritises countries which have a greater level and depth
of poverty. The average poverty headcount and poverty gap of the 12 financed
countries is 47.3% and 17.9% respectively, compared to 40.6% and 15.6% for all
GAFSP eligible countries. Within countries it favours public investment in poorer
areas or in high potential areas most likely to contribute to growth.
UK priorities - GAFSP ‘private sector window’ fits with UK strategic priorities of
generating private sector led solutions to agricultural challenge although the
functioning of the window needs to be properly established going forward.
Geographic fit – GAFSP can support any eligible country but over 60% of approved
funding is for African countries
Partnership - GAFSP is having a catalytic effect in encouraging countries to develop
comprehensive plans, with agreed results defined by country need.
Management - Decision making for funding is made by consensus of all GAFSP
board members supporting by technical advice.
Financial management – GAFSP is committed to project implementation less than a
year after approval of grants
Transparency – GAFSP routinely publishes project documentation. However, it is
less clear how it promotes transparency amongst partners and recipient countries
Cross cutting issues – Some of the GAFSP proposals are from fragile states (e.g.
Sierra Leone); whilst others focus (e.g. Bangladesh) aim to increase resilience of
farmers against increased risk of flooding resulting from climate change.
Scope for reform – Though it is too early to tell whether the governing body will strive
for continual reforms to GAFSP, membership would allow the UK to influence the
direction of any reform agenda.
Cost Control – see below
116. There are two aspects that are at the core of the VfM assessment of GAFSP: i) the cost
consciousness of its internal administration and ii) the VfM and cost consciousness of the
Supervising Entities that implement GAFSP projects. We use the robust, evidence-based
Multilateral Aid Review (MAR) process as the evidence and methodology for the latter. For
the former there are pros and cons in terms of VfM.
Pros:
 Aid is allocated in a transparent and predictable way using GAFSP internal


assessment procedures.
GAFSP administration costs are low and the Steering Committee (of which DFID
would be a part) has the power to keep costs under control.
The appraisal process for evaluating investment plans typically considers the
proposed design against alternatives (potentially of lower cost). For some types of
investments the economic assessment will include a cost-effectiveness analysis or a
calculation of economic rates of return.
Cons:
 GAFSP does not challenge or support partners to think about VfM.
 The Technical Assistance Committee does not prioritise cost effectiveness in
decision-making.
A Meta-MAR Assessment of GAFSP Supervising Entities
117. Most Supervising Entities – which countries select themselves – have had full MAR
assessments. 98.6% of GAFSP funding to-date is managed by entities that have been rated
good or very good value for money overall: World Bank (54.2% of GAFSP funds), AfDB
(16.5%), IFAD (14.6%), AsDB (8.1%), IDB (5.2%) and IFC. This list does not include FAO
and WFP which are Supervising Entities that provide technical support only and do not
manage GAFSP funds.
118. These institutions have the following scores on cost consciousness in the MAR
assessment: The World Bank (satisfactory), AfDB (satisfactory), IFAD (weak), AsDB
(satisfactory), IDB (satisfactory). 84% of GAFSP funds are implemented by Supervising
Entities with satisfactory cost consciousness.
119. VfM performance by Supervising Entities is good. Increased funding to IFAD relative
to other MDBs could worsen this score in the absence of IFAD reforms. Since this
assessment is based solely on the formal MAR process, the evidence underpinning it is
judged to be strong.
120. Overall we anticipate that the GAFSP has the potential to offer good VfM. But there
are also concerns about how well the GAFSP will focus on cost effectiveness in the choice
and stewardship of interventions. More broadly some of the features of the GAFSP are very
similar to features of the Fast Track Initiative (FTI) / Global Partnership for Education (GPE)
which historically have led to weak performance management. In particular that it has been
difficult to hold supervising entities to account and in particular that it has been hard for the
World Bank as implementing agency to be held to account by the Secretariat. In this regard it
will be very important for the GAFSP Steering Committee to require all implementers to sign
up to high performance standards, including delivery and speed of grant signing and first
disbursement. These issues have taken some time to sort in the FTI/GPE.
121. There has also been work in the context of FTI/GPE to make sure that the secretariat
is fully accountable to the governing structures and not to the parent institution (in this case
the World Bank). In general, in Global Funds it has also been very difficult to balance a
challenge fund model with sufficient visibility for sound planning and budgeting by partner
countries. In both the FTI/GPE and GFATM the full challenge fund model is in the process of
being diluted and countries are being given ex-ante planning scenarios based on a resource
allocation model. We are confident that GAFSP is seeking to learn lessons from the
GPE/FTI process but we will need to push hard on these and keep them under review (see
reform agenda).
122. This assessment of GAFSP has not gone through rigorous peer review like most
multilateral agencies and is based primarily on documentary evidence provided by the World
Bank. But it has followed the MAR methodology and core questions. The evidence
underpinning this assessment is moderate.
E. Summary Value for Money Statement for the preferred option
123. GAFSP’s own internal cost control can be considered satisfactory: administrative costs
are low and can be controlled by the Steering Committee while cost issues are assessed in
programme appraisals.
124. The procedures of Supervising Entities make up the bulk of GAFSP administrative
costs so their good or very good value for money on the MAR applies to the bulk of GAFSP’s
own value for money.
125. Performance would strengthen if GAFSP actively encouraged increased cost
consciousness on the part of its Supervising Entities and government partners, made cost
issues a stronger part of its assessment procedures, and ensured increased relative funding
to IFAD vis-à-vis other multilaterals is contingent on improved cost consciousness.
126. Overall: Satisfactory GAFSP internal value for money performance and good value for
money ratings for Supervising Entities on the MAR means that we can expect GAFSP to
provide good value for money. The evidence underlying this assessment is rated as
moderately strong. Lesson learning from the MAR is important to help shape our
engagement with the GAFSP Steering Committee and gives us confidence that going
forward we will be able to keep pushing for overall VfM in the way funds are allocated,
programmed and stewarded by GAFSP.
Commercial Case:
Direct procurement
A. Clearly state the procurement/commercial requirements for intervention
1. DFID will not undertake any direct procurement in relation to this intervention. Once
investment or Technical Assistance proposals are approved by the Steering Committee and
funds are transferred, the procurement procedures of the specific supervising entity in
receipt of the GAFSP funds will apply.
B. How does the intervention design use competition to drive commercial advantage
for DFID?
Not applicable
C. How do we expect the market place will respond to this opportunity?
Not applicable
D. What are the key cost elements that affect overall price? How is value added and
how will we measure and improve this?
Not applicable
E. What is the intended Procurement Process to support contract award?
Not applicable
F. How will contract & supplier performance be managed through the life of the
intervention?
Not applicable
Indirect procurement
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
2. The funding mechanism chosen is Administrative Arrangements with accompanying
governance documents – one with the International Bank for Reconstruction and
Development (IBRD) for the Public Sector Window and one with the International Finance
Corporation (IFC) for the Private Sector window. Such administration arrangements are the
usual mechanism when providing funding to World Bank trust funds. Whilst the governance
document contains standard provisions common to all donors, the administration
arrangements can be varied to suit DFID’s own particular requirements such as ensuring
that the language is appropriate and that paragraphs on e.g. corruption and fraud are
included.
B. Value for money through procurement
3. The alternative to providing funds to GAFSP would be to contract the technical assistance
and pay for the costs of programme directly. This would present a complex and challenging
administrative burden on DFID - one that could not easily be managed with the existing work
loads of staff. This would also impede the realisation of reduced rural poverty as measured
by increased rural incomes.
DFID has considerable experience of funding through the World Bank and has confidence in
their systems and controls as exemplified by their overall ‘very strong’ rating and their
satisfactory assessment for ‘Organisational Strengths’ in the Multilateral Aid Review.
Financial Case
A. What are the costs, how are they profiled and how will you ensure accurate
forecasting?
1. DFID will provide £50mn funding to GAFSP over two financial years, from May 2012 to 31
December 2013. This allocation has been approved by the Policy Division Director.
Expenditure will not extend beyond the current spending round unless a further allocation of
funding is justified based on delivery of results and proven value for money.
2. As this intervention is above £40mn, it has been formally reviewed by the Quality
Assurance Unit and shared with HMT. This Business Case has been copied to the Policy
Division Accountant who worked with Management Accounts to secure HMT approval.
3. Total Costs of the Public Sector Window investment are as follows:



£13mn investment of which 2.5% will be set aside for monitoring and evaluation
activities.
£170,000 staff costs of managing DFID engagement over two years.
5% supervising entity programme management costs and 0.85% Trust Fund
management costs which give £0.761mn of administration fees for a £13mn
investment. These fee rates are set by broader World Bank policy on full cost
recovery for the operation of Trust Funds but can be further reduced and negotiated
for large Trust Funds like GAFSP provided DFID can obtain support of other donors.
Total costs: £13.931mn
Total (estimated) Costs of the Private Sector Window investment are as follows:



£37mn investment of which some amount will be set aside for monitoring and
evaluation activities.
Staff costs of managing DFID engagement over two years included in the public
sector window calculation above and not double counted here.
Assuming the same fee rates of 5% supervising entity programme management costs
and 0.85% Trust Fund management costs gives £2.165mn of administration fees for a
£37mn investment.
Total costs: £39.165mn
4. These figures will be updated for the Private Sector Window when more information on
cost recovery is available to trigger a subsequent release of the additional £37mn in funds.
B. How will it be funded: capital/programme/admin?
5. As the beneficiaries of the intervention are DFID partner countries this is programme
expenditure.
C. How will funds be paid out?
6. The total budget allocated for GAFSP is £50,000,000 and is provisionally projected to be
disbursed as follows:
2012/13 – £
13,000,000 to the Public Sector Window – by end of July 2012.
2013/14 – £
appraisal:
37,000,000 to the Private Sector Window subject to reforms and further DFID
£18.5mn by end of July 2013
£18.5mn by end of December 2013
The funding contribution to the GAFSP Public Sector Window will be made through an
Administration Arrangement and accompanying governance document between DFID and
the International Bank for Reconstruction and Development, who act as the Trustee.
7. The funding to the GAFSP Private Sector Window, if approved following an assessment
of progress with reforms, will be made by means of an Administration Arrangement and
accompanying governance document with the International Finance Corporation (IFC). The
wording of these Arrangements will be cleared with Accounts Department and Finance and
Corporate Performance Department. The first payment of £60m will be made on signature of
the first Administration Arrangement with the stipulation that the funds will be allocated
through the early 2012 Public Sector Funding window within six months of receipt of the
contribution. The payment in 2012/13 will be made to the Private Sector window.
D. What is the assessment of financial risk and fraud?
8. The Administration Agreements with the World Bank and with IFC (the latter required if
and when funds are provided to the Private Sector Window) will contain a paragraph to
ensure that DFID is made aware immediately of any suspicion of the misappropriation or
diversion of funds or possible fraud or corruption relating to the activities being funded.
9. GAFSP funds disbursed to the country level are managed and accounted for by the
Supervising Entities (see Management Case). DFID’s Multilateral Aid Review (MAR) looked
at how these multilateral organisations allocate, disburse and account for their resources.
Scores were high for those who, among other things, showed clear and transparent resource
allocation decisions, strong policies and processes for financial accountability and oversight,
and a pro-active approach to managing poorly performing projects. All but one (FAO) of the
GAFSP Supervising Entities were assessed as ‘satisfactory’ or ‘strong’ on financial resource
management in the MAR.
10. It is worth noting that World Food Programme (WFP), an important GAFSP partner
providing technical assistance to recipient governments, is the first UN organisation to
implement International Public Sector Accounting Standards, against which it has now
achieved two unqualified annual audits. WFP has zero tolerance of fraud, corruption or
collusive practices. Whistleblower policies give staff protection from retaliation against
reporting financial irregularities and where irregularities are identified WFP always takes
disciplinary or legal action.
11. The following assessments of the financial and administrative capacities of the proposed
Supervising Entities below are drawn from DFID’s own assessments. The main source is the
Multilateral Aid Review, which can be found here.
Asia Development Bank (AsDB) (drawn from DFID’s engagement strategy paper)
The bank has a strong results culture and robust evaluation mechanisms, but there has been
concern over the quality of some projects. Although financial management is good, the Bank
is highly centralised and can be slow to respond, and country offices do not feel empowered
to make decisions without a mission from HQ. This has been changing over the last 10
years. The bank now has 23 resident missions covering 80% of developing member
countries, with 21 leading on country partnership strategies. AsDB has also piloted new
approaches to decentralisation, such as the “Joint Venture” working operating in Pakistan.
This allows direct links between professional advisers in RMs and headquarters, with
responsibility for sector programmes assigned to sector teams. The UK has a 2% stake in
the Banks and so has limited ability to influence decisions.
African Development Bank
The procedures in the bank are rated as satisfactory, with strong cost control, and robust
evaluation policies. For the fund that DFID assessed under the MAR (the African
Development Fund) disbursement was slow with only 60% of funds disbursed on time.
Inter American Development Bank
Results from the MAR in the area of financial and administrative efficiency and results
management noted that the Bank, as on the whole, satisfactory (3 out of 4). There are strong
evaluation procedures. Financial procedures are robust, although highly centralised. Money
is disbursed on time. New procedures to combat fraud were put in place at the end of 2010.
International Fund for Agricultural Development (IFAD)
IFAD was rated to have satisfactory results and evaluation procedures, although it could do
more to focus on sustainability. It’s financial management and cost control were rated as
weak, with relatively high overhead costs. Its financial system is slow in disbursing money.
The MAR also assessed that the ability of IFAD to sustain reform was uncertain, given that it
had a new management team and immediate reform goals had been achieved.
Food and Agriculture Organisation
The MAR noted that while much needed reform was underway, there was much to do.
Overall the agency was rated as weak. Country offices’ capacity was very variable, power
was centralised and processes not transparent. Financial procedures were slow and there
was insufficient attention to value for money. The scale of reform needed and that reform
will depend very much on the new Director, due to take office in 2012. FAO is restricted to
providing technical co-operation only under the GAFSP.
World Food Programme
WFP is a satisfactory performer, with improving evaluation standards. It has measured
performance against its strategic results framework since 2009 and has clear financial
procedures. It is a cost conscious organisation. The area marked for improvement was in
transparency, where it was felt its standard project report could do more to illustrate project
performance. WFP is restricted to providing technical co-operation only under the GAFSP.
World Bank
The World Bank is rated as a strong organisation, with particularly strong technical
knowledge and ability. It’s financial and management systems are robust.
International Finance Corporation
The IFC has a strong record of effectiveness, with 74% of its investments scoring
satisfactory or better. For SSA the figure is lower at 58%, but is improving from the average
score of 40% achieved in the last decade. The capacity of its advisory services is also rated
highly in 70% of its interventions. It is progressively moving more staff to the field with 54%
now based in recipient countries. It rates as satisfactory or better for financial management,
cost consciousness and performance. A strong evaluation system is in place. It is weakest
in working with others. While it is a leader in developing ways to measure impact, its country
collaboration and work with other parts of the World Bank is patchy.
E. How will expenditure be monitored, reported, and accounted for?
12. The design of GAFSP stipulates that once investment or Technical Assistance proposals
are approved by the Steering Committee, the preparation and implementation – including
Monitoring and Evaluation of GAFSP projects will follow the guidelines of the respective
Supervising Entity. Upon the transfer of funds, fiduciary responsibilities and legal liability will
be transferred from the Trustee to the Supervising Entity. Agreements between the Trustee
and the Supervising Entities set out the streamlined financial reporting requirements to the
Trustee and outline accountability requirements to the Trustee regarding financial
transactions (such as cancellations of approved amounts, financial closures and unutilised
funds if any).
13. The rules, guidelines, policies, procedures for procurement, financial management,
safeguards and supervision of the specific Supervising Entity in receipt of the GAFSP funds
will apply. Accountability for the proper handling and the use of funds will thus be between
the Supervising Entity receiving the funds and the Steering Committee. To allow
consolidated reporting to the donors and the Steering Committee, for the Public Sector and
Private Sector Windows Supervising Entities will submit annual implementation results
reports on the use of the GAFSP funding to the Steering Committee through the
Coordination Unit, and periodic financial reports (including an annual audited financial
statement) to the Steering Committee through the Trustee.
14. Contributions to GAFSP and allocations to countries are easily tracked through GAFSP,
helping to reinforce donor accountability and transparency e.g. using the World Bank Trust
Funds Directory and the World Bank Client Connection Website which allows easy access to
programme and financial information.
Management Case
A. What are the Management Arrangements for implementing the intervention?
1. GAFSP was established in April 2010 at the request of the G20 to provide a mechanism for
channelling more and better public and private investment, including funds pledged at the G8
Summit at L’Aquila in 2009, into agriculture and related sectors to improve incomes and food
security of poor people in low income countries.
2. Since the launch of GAFSP in April 2010, the Steering Committee has made funding
decisions worth US$ 481mn and approved key governance mechanism such as the
Governance Document, the Monitoring and Evaluation Plan, selection criteria for financing,
and administrative budgets.
3. The current focus of management activity is on: (i) implementation of the 12 country plans
already approved for GAFSP financing, (ii) incorporating lessons learned into revised
protocols; (iii) resource mobilisation to meet the high demand for GAFSP financing and the
launch of the next Call for Proposals before the end of 2011; (iv) establishing baseline data for
the project Monitoring & Evaluation; and (v) operationalising the Private Sector Window.
4. GAFSP has an end date, for World Bank Trustee administrative purposes only of 2019.
GAFSP Management Structures
5. The overall governance architecture for GAFSP was set out in a Framework Document,
prepared by a Task Team comprising members of a number of different World Bank
Departments, representatives from IFAD, FAO and WFP, and the governments of the US,
Canada and Spain. The Framework document sets out:






the Objectives and value added of the programme;
the scope of the programme;
eligibility for the public and private sector windows;
the main elements of governance and accountability – through the Steering Committee,
Technical Advisory Committee (TAC), Supervising Entities (SEs), Coordination Unit,
and Trustee.
trust fund operations; and
procedures for preparing and submitting proposals, implementation of those which are
approved and reporting of results.
Governance
6. GAFSP operates as a Financial Intermediary Fund for which the World Bank serves as
Trustee. Its governance is intended to be simple and flexible and to allow for evolution as
lessons are learned and needs evolve. The decision making body of GAFSP is an external
Steering Committee. The Committee is advised by an independent external Technical Advisory
Committee and supported by a small Coordination Unit in the World Bank’s Agriculture and
Rural Development Department and a team in the IFC for the Private Sector Window.
7. The World Bank plays three roles in the governance of GAFSP i) Trustee, ii) Coordination
Unit and iii) potential Supervising Entity for GAFSP financed projects.
I. In its capacity as Trustee, the International Bank for Reconstruction and Development,
holds funds in trust, as the legal owner, and administers the funds received from each
donor, in accordance with the terms of the Administrative Agreement entered into with
each donor. It is accountable to the Steering Committee for the performance of its
fiduciary responsibilities as set out in the Trust Fund Administrative Agreements. The
Trustee remits project funds to the Supervising Entities, receives financial reports from
them, provides financial reports to the Steering Committee and arranges for annual audit
of the Trust Fund.
II. The Coordination Unit in the World Bank provides support to the GAFSP Steering
Committee and the TAC. It receives investment and technical assistance proposals from
Ministries of Finance in developing countries or from Regional Organisations and submits
these to the Steering Committee. It organises ‘Calls for Proposals’, liaises with the
Trustee on the allocation of funds and provides an aggregate annual implementation
results report based on the results reports submitted by each supervising entity. It has no
role in evaluating or making recommendations to i) the TAC with respect to any of the
proposals it receives from countries and regional organisations; ii) the Steering
Committee with respect to the annual investment plans it receives from the IFC.
III. Supervising Entities provide technical expertise and management/financial supervision of
for the preparation and implementation of GAFSP proposals. The World Bank only acts
as Supervising Entity if requested to do so by the developing country government
concerned and if their selection is approved by the Steering Committee.
8. The multiple roles of the Bank represent a potential conflict of interest that could affect Fund
performance. This is dealt with as Risk 9 in the risk management section below.
9. The Steering Committee awards investment funds to countries whose investment plan has
been approved. The Steering committee consists of an equal number of donor and recipient
countries as voting members, and representatives from organisations that will supervise
projects in country and NGOs as non voting members. The voting members are: one
representative each from the five original contributing membersxcvi, and five regional
representatives from recipient countries, as nominated by the Executive Directors of the Bank
from IDA countries. The voting members may decide to grant voting rights to future
contributors, but the voting members will remain balanced between recipient countries and
contributors. It is expected that the UK will be invited to become a voting member. The Chair
of the Steering Committee, currently the US, is elected by the voting members and serves for
one year, subject to renewal.
10. The Steering Committee makes decisions on proposals by consensus. A voting member
can block assent to a proposal, register an objection to a proposal but let it go ahead, or block
a proposal outright. By agreement, individual recipient country members do not take decisions
on their own countries’ proposals and refrain from voting on those of other countries when their
own country proposal are under consideration in that particular call for proposals.
11. The non-voting members are: funding contributors who are not voting members; a
representative from each of the additional Recipient Countries as agreed by the Steering
Committee; two representatives of ‘Southern’ CSOs (currently Farmer and Nature Net from
Cambodia and an interim representative from Africa selected by the Pan African Farmers
Union), one representative ‘Northern’ CSO (currently Director of Policy and Campaigns for
Action Aid); and representatives from the World Bank; the United Nations Secretary General’s
Special Representative on Food Security and Nutrition; the IFC, and Supervising Entities xcvii,
who hold the money, administer projects and are responsible for fiduciary risk at country level
(see comment in Financial Case, Section D and ‘Risk 4’ below).
12. While the Steering Committee has not yet had to deal with a case of fraud or corrupt
practices identified by one of the Supervising Entities, it has the powers to:

decide to direct the Trustee to suspend any further commitment and/or withhold
disbursements of the Trust Fund funds to Supervising Entities in accordance with the
Transfer Agreements for reasons, including but not limited to: (i) a substantial deviation
from Project work plans and budgets approved by the Steering Committee; (ii) failure of
the Supervising Entity to comply with any of the terms of the Transfer Agreement and to
remedy or cause to be remedied such non-compliance in accordance with the terms of
the Transfer Agreement; or (iii) evidence of financial mismanagement in Projects;

decide to direct the Trustee to claim repayment of the Trust Fund funds in full or in part
directly from the Supervising Entity to the extent the Supervising Entity has been able to
obtain repayment of the same from the negligent party if the Trust Fund funds are found
to be misused or not satisfactorily accounted for;

decide whether to cancel all or part of a Project or Projects for reasons, including but not
limited to, the reasons set forth in the first bullet above and informing the Coordination
Unit and the Trustee thereof; and

decide the procedures for the Contributors seeking direct recourse against the relevant
Supervising Entity or Supervising Entities as third party beneficiaries under the Transfer
Agreement or Transfer Agreements.
13. The Steering Committee is recipient of reports of overall annual implementation results
concerning both Public and Private Sector Windows, compiled by the Coordination Unit; and
periodic financial reports (including annual audited financial statements) on the finances of the
GAFSP Trust Fund compiled by the Trustee. It is responsible for approving a common format
to be used by each Supervising Entity for reporting implementation results of each project.
These follow World Bank rules and procedures and are therefore considered robust.
14. A Technical Advisory Committee (TAC) has been appointed from nominations made by
voting and non-voting members of the Steering Committee with no involvement of the World
Bank or other SEs. From a total of 28 nominees, 13 were selected by the Steering Committee
based on availability and level of expert knowledge. TAC members have globally recognised
expertise on agriculture, food and nutritional security and wider development policy, half of
whom come from developing countries and some of whom are familiar with the CAADP
process in Africa.
15. Administratively, TAC members have been hired by the World Bank as Short Term
Consultants to carry out the functions defined in the TAC TOR. The period for which any
member serves on the TAC is still to be determined. Information on composition of the TAC
and its TOR will be posted on the GAFSP website when the next call for proposals is launched.
16. TAC members are mandated to screen country and regional proposals with regard to: the
quality assurance process used to formulate country plans; the proposed level and
composition of national government and donor expenditures proposed; the conduciveness of
national and regional policies to broad based agriculture sector growth and social protection;
any alternative sources of support for proposed investments; and relative magnitude of needs.
17. The Coordination Unit prepares guidelines, collates proposals and receives and readies
progress reports for the Steering Committee and the Trustee. As GAFSP grows, in terms of
funding and country-level operations, the Steering Committee has discussed whether to
recommend strengthening the capacity of the Coordination Unit to match. This would allow it
to play a more proactive role on strategic functions such as communications and outreach.
GAFSP is potentially vulnerable to the loss of institutional memory which would accompany the
departure of a small number of key individuals in the Coordinating Unit from their current roles.
Process
18. Proposals can only be submitted to GAFSP by countries eeligible to receive financing from
IDA and not IBRD (“IDA-only countries”) and whose oldest loan repayment arrears are less
than six months old (non-accrual status). IDA ‘blend’ (i.e. creditworthy for IBRD) countries can
receive funding only if approved by the Steering Committee.
Table 5: countries currently eligible to apply for GAFSP support
Africa
East Asia ECA (4)
Latin
(35 countries)
(9)
America (4)
Angola
Benin
Burkina Faso
Burundi
Cameroon
CAR
Chad
Comoros
DRC
Congo, Rep.
Cote d’Ivoire
Ethiopia
Eritrea
Gambia
Ghana
Guinea
Guinea-Bissau
Kenya
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Niger
Nigeria
Rwanda
Sao Tome &
Principe
Senegal
Sierra Leone
Tanzania
Togo
Uganda
Zambia
Cambodia
Kiribati
Laos PDR
Mongolia
Samoa
Solomon Is.
Timor-Leste
Tonga
Vanuatu
Kosovo
Kyrgyz Rep.
Moldova
Tajikistan
Guyana
Haiti
Honduras
Nicaragua
MENA
(2)
South
Asia (6 )
Djibouti
Yemen
Afghanistan
Bangladesh
Bhutan
Maldives
Nepal
Sri Lanka
19. Individual countries, through their Ministry of Finance, submit investment proposals to the
GAFSP Coordination Unit with the endorsement of the proposal by the Chair of the in-country
donor group for food and agriculture (or equivalent) to certify that no locally-available sources
can finance the proposed investments. This is intended to ensure requests are country-led,
and offer additionality, complementarity and reinforcement of what national governments and
their partners have agreed as priorities. Governments execute programmes and are
accountable for the use of funds to the Supervising Entities selected to support execution.
Regional Organisations with legal personality e.g. ECOWAS can similarly submit proposals to
GAFSP.
20. In order to ensure that proposals are explicitly aligned with country investment plans and
exploit regional technical networks, the TAC is required to ensure that proposals submitted by
African countries and regional organisations have been through a CAADP or CAADP like duediligence process and are aligned to the four CAADP pillars (land and water management,
market access, food availability and access, and agricultural research). Similarly, evidence is
required that non-African countries have followed an equivalent process of consultation with a
range of national and regional stakeholders who have endorsed the final investment plan.
21. Proposals are prepared by country governments with the assistance of one or more
Supervising Entity, selected by the country applying for funds. Supervising Entities are
international organisations with expertise in the development and delivering of support for food
and agriculture sector programmes in developing countries. Their role is to assist in the design
of projects, set up and sign grant agreements to disburse funds, arrange for technical
assistance, submit annual implementation results reports to the Steering Committee and
provide financial reports to the Steering Committee through the World Bank as Trustee. (FAO
and WFP only provide technical assistance to projects.) Supervising Entities are responsible
for the use of funds transferred by the Trustee and directly accountable to the Steering
Committee in accordance with their own fiduciary framework, policies, guidelines and
procedures. The terms of the Transfer Agreements between the Trustee and the Supervising
Entities specifically requires them to inform the Steering Committee immediately in instances of
illegal or corrupt practices.
22. The proposals are weighted due to country need (levels of undernourishment and poverty,
levels of donor investment in agriculture – overall weighting 30%), policy readiness (degree to
which country policies will help generate higher investment returns – overall weighting 30%),
and country readiness (for all countries, the specific objectives and targeted results, activities,
and extent of local consultation; for African countries the completion of a Comprehensive
Africa Agriculture Development Programme (CAADP) post-compact investment plan, for non
African countries and equivalent externally reviewed project proposal – overall weighting 40%).
23. The TAC take into account how well proposals fits with existing policy, the institutional
capacity to carry out the proposals, the degree to which they were produced with the
participation of those to be affected, gender dimensions, how it takes account of climate
change, the technical quality of the programmes, their value for money and management
feasibility. Once projects have started they follow the normal procedures of the Supervising
Entity. Up to 5% of the grant cost can be applied to the administrative costs of the Supervising
Entity, as defined in the Administrative Agreement between the Trustee and the SE.
24. The list of Supervising Entities for GAFSP Public Sector Window Investment Plans which
have already been allocated funds is at Table 6 below.
Table 6:
Country
Cambodia
Bangladesh
Ethiopia
Haiti
Liberia
Mongolia
Nepal
Niger
Rwanda
Sierra Leone
Tajikistan
Togo
Supervising Entity
Asian Development Bank
World Bank & Food and Agriculture Organisation (FAO)
World Bank and FAO
Inter-American Development Bank and World Bank
African Development Bank
World Bank and FAO
World Bank and FAO
African Development Bank
World Bank
International Fund for Agricultural Development (IFAD)
World Bank
IFAD and World Bank
25. 18 countries have submitted proposals for which funding has not yet been approved:
Benin, Burkina Faso, Burundi, The Gambia, Ghana, Kenya, Malawi, , Mali, Mauritania, Niger,
Senegal, Tanzania, Lao PDR, Kyrgyz Republic, Yemen, Bhutan, Honduras, Nicaragua
Private sector
26. The Private Sector Window of GAFSP will be run according to the procedures of the IFC.
Private sector organizations and firms of financial intermediaries) operating in eligible countries
and working in agribusiness, including agriculture, associated infrastructure, commodity
trading, co-operatives, processers and agricultural suppliers can apply.
27. The Private Sector Window’s governance structures are analogous to those of the Public
Sector Window. Its Project Investment Committee (PIC) has the same approval function as
the TAC for the Public Sector Window and it has its own Secretariat, in IFC, to manage its
operations. The GAFSP Steering Committee oversees both windows. The first call for proposal
was made in July 2011. A background paper on the Private Sector Window was issued by the
IFC on the 23 September. The paper, subject to approval by the IFC board, calls for
concessional funding to be made available from GAFSP funds as well as fully commercial
finance. Commercial finance will be made on an equal footing with other IFC investments.
28. Concessional finance may be applied to enterprises that require a temporary subsidy to
become fully commercially viable as approved by the IFC Board in 2012. Funding from the
Private Sector Window will also be used to fund advisory services for organisations receiving
concessional funding, either from IFC staff or from consultants contracted by IFC. The
concessional finance will provide the minimum amount of concessions in order to avoid market
distortion, and be time bound with a clear pathway to sustainability. IFC’s current experience
indicates that concessional finance can mobilize $6-7 for every $1 invested.
29. Investments will be direct - for example funding innovative companies trying out new
technologies and indirect; offering hedge funding for agricultural price changes; first loss
facilities; and concessional debt and equity products.
30. Advisory services are expected to build on IFC's existing work in the agricultural sector,
and be concentrated on increasing access to finance for farmers, improving supply chain links,
reducing risks through insurance, strengthening farmers’ organizations and adapting to and
mitigating climate change.
31. The IFC paper welcomes possible future partnership with other finance institutions on a
project by project basis. It has developed a master co-operation agreement to streamline this
process. In 2010, a total of US$ 734mn was mobilized from 13 parallel lenders in 10 countries.
Financing
32. Since the launch of GAFSP in April 2010, the Steering Committee has made funding
allocations worth US$ 480mn to 12 countries including Rwanda, Sierra Leone, Bangladesh,
Ethiopia and Nepal. Awards made to date provide an indication of the types of investments
GAFSP supports:
 Bangladesh will expand the adoption of improved rice varieties and better water
management practices to enhance farmers’ climate resilience;

Rwanda will transform hillside agriculture by reducing erosion and boosting production of
high value horticulture crops;

Sierra Leone will link small farmers to markets more effectively through new Agricultural
Business Centres;

Ethiopia will support agriculture in high potential but under developed areas of the country
and

Nepal will enhance the food security and nutritional status of poor and vulnerable
households in selected locations, with a focus on women farmers.
33. A further US$ 490mn has been pledged by donors but not yet transferred (see Annex 1),
and 18 countries - including Ghana, Tanzania, Malawi, Kenya and Yemen - have submitted
initial proposals for which funding has not yet been approved. The US plans to make another
contribution of US$ 100mn to the Public Sector Window as soon as their fiscal year 2012
budgets are confirmed. The Netherlands and the US also plan to contribute Euro 100mn and
US$ 25mn to the Private Sector Window in the coming months.
34. A total UK contribution of £50mn would put us in the middle of the donor contributing pack
based on current pledges – less than the US, Canada, Australia and Spain, but ahead of
Korea, Ireland and Gates. DFID’s burden share of total pledges to GAFSP would be broadly in
line with our contribution to IDA (12%) and GFATM (10%) at around 10%.
DFID agenda for the reform of GAFSP
35. Our initial assessment of GAFSP’s performance suggests the need for the reforms
outlined in Section 4a of the Appraisal Case to address: stronger operation of the Private
Sector Window; a higher level results framework; cost consciousness; speed of disbursement
and stronger management; gender disaggregation; prompt filling of staffing gaps and filling
appropriate roles, overall evaluation; climate change; and nutrition. Our ability to pursue these
reforms effectively is dependent on the UK’s presence on the GAFSP Steering Committee.
In particular, this is key to our ability to work with other members of the Committee to secure
desired improvements in the operation of the Private Sector Window before we make a final
decision on the provision of funding to that window. The time frames set for the achievement
of these reforms therefore relate to the point at which we take up a seat on the Steering
Committee.
36. We have discussed this with the current Chair of the Committee who has indicated that,
provided the DFID contribution is at least comparable in size with the other donors on the
Committee, the UK would take up one of the remaining two donor seats on the Committee. As
outlined above, a UK contribution of £50mn would put us in the middle of the donor
contributing pack, above some who are already on the Committee. We are therefore confident
of being offered a seat on the Committee and of being able to use this position to drive our
reform agenda.
37. While the performance of Supervising Entities in their role within GAFSP may highlight
some areas of weakness overall in these institutions, we do not propose to focus on
influencing their corporate performance through our role on the GAFSP Steering Committee.
Instead, we would expect the UK to use its position on the boards of these institutions and the
follow up to the MAR process to address any systemic failures on their part.
DFID management processes and oversight
38. The Head of the Food and Nutritional Security Team (FNST) in GRD will sit on the GAFSP
Steering Committee and act as the primary liaison point for DFID with other Steering
Committee and with members of the World Bank Coordination Unit. Financial reports,
compliance and administrative functions will be dealt with by administrative staff responsible
for FNST in the GRD Programme and Corporate Team. Modest support on engaging with IFC
on the Private Sector Window will be needed from Private Sector Department. Support from
International Financial Institutions Department and UKDel Washington will be needed on
aspects of governance and the reform agenda we will pursue with GAFSP. Some feedback on
the progress of the projects in countries where DFID is active may be sought from DFID
country based staff as appropriate, for example using the 10% allocation of advisory time to
DFID-wide cadre responsibilities.
Approach to Funding of the Private Sector Window (PSW):
39. IFC, the manager and implementer of the PSW, was rated a good multi-lateral in the DFID
multilateral aid review with good financial and developmental performance and a strong results
framework. Its performance in low income countries and fragile states was considered weaker
(especially in Africa) than its overall performance. A recent IEG evaluation of its work on
agribusiness corroborates this finding, stating that its performance in SSA was weak, as was
the case for the rest of the World Bank Group, due to challenging business environments for
agriculture. It performed better in other regions. It has recently agreed a new Agribusiness
Strategy.
40. DFID’s own corporate priorities for IFC are for it to do more work in IDA countries, fragile
states, provide greater support to SMEs and improve integration of climate and gender issues.
Given the PSW’s focus in IDA-countries, the PSW addresses the focus on core IDA countries
but how other DFID priorities will be integrated into its operations must still be finalised and
fully operationalised.
41. The appraisal case sets out the need for the PSW’s efficacy to be improved as a key
reform priority. The more focused engagement of three donors (the Netherlands (Euro 100mn),
Canada ($50mn) and the US ($25mn) has begun to bear fruit. The IFC has agreed on the
need to launch more innovative financial products (e.g. first less cover, partial credit
guarantees, micro-insurance) that will allow riskier financing of small to medium sized
companies along the agribusiness supply chain in low-income countries. It has also begun to
package technical assistance along with blended finance (a mix of commercial and
concessional lending) to decrease the financial risk and increase the bankability of small and
medium enterprises. This should ensure that PSW funds are deployed efficiently and can be
accessed by less experienced end users.
42. Other changes that we will pursue and that reflect the priorities of other key donors
include:








Ensuring the IFC engages more strategically with the investment needs of the
agricultural sector in its management of PSW funds, and in line with is agribusiness
strategy;
changing from a simple open call for proposals to a portfolio management approach,
shaped by a new advisory strategy;
taking more account of what others, such as the Africa Union/Grow Africa Task Force,
are doing to improve the enabling environment for investment in agriculture in specific
countries;
organising ‘market place’ events so that partners with experience in lending to or
investing in African agriculture can come together to develop bankable proposals for
GAFSP;
maximising the complementarity of the Private and Public Sector Windows;
deepening the engagement with IFC of IFAD, Regional Development Banks and other
Development Finance Institutions with a track record of investing in agriculture;
increasing the familiarity of IFC’s lending officers with the risk profile of farmers and
agribusinesses in low income countries; and
increasing the gender sensitivity of IFC managed investments.
The approach taken by these donors is similar to that DFID is taking to encourage IFC lending
to SMEs and is in line with IFC’s proposed new policy on blending commercial and
concessional finance in selected sectors including agriculture and climate change.
43. We will conduct an additional assessment and communications process, to be annexed to
this business case in months 11 and 12 after the point at which we take up a seat on the
Steering Committee, to ensure funding is only provided when we are confident that the PSW
design and performance is adequate. The proposed plan for this process is :
1. Assess status of the key outstanding questions (current views of PSW stakeholders in
brackets):

What returns does IFC expect to make from PSW investments? What are the net
returns from its existing agribusiness portfolio and strategy as an objective
indication? A projection of expected success should be added to the PSW results
framework.
(Other donors agree and are willing to prioritise this).

What are the specific plans for PSW to work with other IFIs and what proactive
steps will it take?
(Other donors agree to a limited extent and are willing to explore this with us).

Why isn’t more of IFC’s own ample finance being used to expand the size and
reach of the PSW, especially since early use of PSW is likely to be on a fully
commercial basis?
(Other donors strongly agree and expect IFC to make an announcement of its own
contribution in due course).

Commercially viable projects should be accompanied by a full explanation of their
developmental benefits to agribusiness markets to justify IFC investment
additionality. Funding requirements and evidence will need to demonstrate that it
is crowding in more private investment and that its engagement is catalytic and
subject to an adequate exit strategy.
(Other donors strongly agree and are willing to tighten up the mechanism to reflect
this).

IFC additionality must be a firm condition of commercial and concessional
investment in line with its strategy for blended financing. Will the PSW funding
criteria be strengthened to properly reflect this?
( Other donors strongly agree as above)

Will the criteria be strengthened to prioritise SMEs now that concessional finance
has been approved? Will a target on SME engagement be set and what
additional criteria will be added to ensure concessional financing has broad
market development impacts and does not undermine existing financial markets?
(Other donors, US and Netherlands especially, strongly agree and will pursue with
us)

If funding cannot be moved between windows, what recourse would donors have
if PSW isn’t performing as expected?
(Funding cannot be moved but there is plenty of support from other donors to
increase synergies between the windows that DFID can influence)

What innovations and new approaches will lead to IFC’s improved performance
and engagement in SSA through the PSW mechanism?

How will PSW integrate DFID IFC priorities of gender, environment and fragile
states engagement?
(This is an area where there is donor interest but plenty of shaping of the mechanism
still needed)

In addition, questions around the PSW’s risk profile, use of investment returns
and donors’ appetite for risk need to be answered to ensure a balanced approach
that maximizes development impact.
(this is an ongoing agenda which DFID can feed into but US and Netherlands have
voiced a significant appetite for higher risk exposure in return for greater
development impact potential)
2. Use this assessment as part of an economic appraisal of the PSW compared to at least
two other feasible alternatives for global funding at scale if they exist.
3. Conduct and update value for money and financial management assessments for IFC
using the latest MAR information.
4. Update the management case with relevant management actions, cost metrics and
evaluation questions related to the PSW.
5. Share assessment with PSD and jointly submit an information note to ministers on
whether or not to fund.
6. Disburse funding if analysis justifies it.
DFID Influencing Strategy
44. Priority reforms which DFID will pursue during the first 12 months as a contributor to
GAFSP, are:



Improving efficacy of the Private Sector Window operation with a separate DFID
assessment as an addendum to this business case. The assessment plan is set out in
para 43 above.
Creation of a high-level, aggregated Results Framework
Improving speed of disbursement and proactive Bank management.
45. In addition, DFID officials should work on an ongoing basis to ensure a continual
improvement in:
 Cost consciousness of GAFSP operations across the board; especially in negotiating
competitive trust fund management fees charged by the Bank;
 Gender disaggregation of data.
 Attention to climate change and nutrition as aspects of food security
 Strengthening the processes for filling staffing gaps.
 Ensuring the Bank fulfils appropriate roles that avoid conflict of interest (e.g. Supervising
Entity, Trustee and Coordination Unit) in management and delivery and makes use of
private sector expertise to take over responsibility for key functions if and where
appropriate.
46. To influence GAFSP we will:
1. Use our position as an active voting member on the Steering Committee (to be
confirmed) to push for reforms. The regular place on the Committee will be taken by
the Head of the Food and Nutritional Security Team in Policy Division.
2. Use DFID’s bilateral relationship with the other contributors – including through more
senior management and Minister engagement when necessary - to agree common
approaches to driving continuous improvement in GAFSP. In particular we will work
with the Dutch, the US and the Canadians to drive reforms of the Private Sector
Window. DFID has already attended one GAFSP donor review meeting as observer.
We will use the opportunity of our regular contacts with key like-minded contributors
such as US, Canada, Australia and BMGF, at events such as the Aquila Food
Security Initiative Review Group meetings and in processes such as the G20 work
on Food Security to build consensus around approaches to important reforms. The
Head of Growth and Resilience Department used this to highlight initial concerns
over issues such as the need for an aggregated results framework against which to
report overall achievements and intensified cost consciousness on the part of all
organizations in the results delivery chain. This elicited recognition from the existing
contributors that more could be done to focus on results, value for money, gender
and nutritional outcomes and an expectation that should DFID agree to contribute to
GAFSP that we would play a leading role in pursuing these objectives.
3. Work with International Financial Institutions Department and United Nations and
Commonwealth Department and with UKDel Washington to use the UK position on
the governing boards of the World Bank, IFC and other Supervising Entities to
reinforce messages about their role in GAFSP implementation, as and when
appropriate.
4. Use our position as a long-standing supporter of and contributor to the CAADP Trust
Fund, to ensure that the CAADP process provides the basis for high quality
investment proposals going to the GAFSP after CAADP due diligence.
5. Use early engagement in the Steering Group to propose operational improvements
such as increasing focus on empowerment of women and to identify champions for
change, like-minded supporters of reforms and any potential blockers. Thereafter
we will develop a plan for achieving our priority reforms. Indicatively, we will achieve
the three priority ‘one off’ reforms identified in the Appraisal Case (improved
performance of the private sector window, agreement on an aggregated results
framework and improved speed of delivery) by the end of the first year of our
membership of the Steering Committee. We will assess the success of our efforts to
make continuous improvement in two others areas (cost consciousness and gender)
when the
6. Negotiate specific triggers for the release of the second year tranches to the Private
Sector Window with GAFSP management and the Steering Committee in line with
both our assessment criteria for the private sector window and the overall GAFSP
reform actions (in paragraphs 43-45 above). Having discussed our key assessment
issues for the Private Sector Window with other donors, it is clear that our concerns
are widely shared and that we will have ample opportunity to influence the
strengthening of the mechanism. Our engagement in the Steering Committee and
our ability to withhold PSW funding until issues highlighted in the PSW approach
section above have been adequately resolved provide us the necessary tools to
ensure a positive outcome to strengthening both the PSW and the overall GAFSP
mechanism.
7. Seek a commitment to independent evaluation of GAFSP, at the overall fund level,
two years after our initial contribution is made, as a condition of further DFID funding.
47. If the assessment which we will carry out of progress on our priority reform indicates that
targets have not been met 12 months after taking up a seat on the Steering Committee, then
we will not go ahead with planned funding to the PSW.
B). What are the risks and how these will be managed?
48. Developments on the ground funded by GAFSP will result from country-led programme
designs and be executed through a Supervising Entity. The ability of the GAFSP Steering
Committee to impact the quality of work on the ground is therefore dependent on the
robustness of appraisal processes and the monitoring and evaluation systems which are being
put in place.
Private Sector Window
Risk 1. Weakness in the design of the Private Sector Window and of the separate public
and private sector funding channels more generally result in lost opportunities to
leverage additional resources into agriculture and reduce GAFSP’s overall impact on
food security.
49. To date, IFC has been reluctant to act as a coordinator and trustee for funds which might
pass through it to other Supervising Entities. This threatens to limit the degree of coordination
on work to support private sector investment in developing country agriculture. As does the
weak linkages between the two windows. For example, there is no link between countries
which receive Public Sector Window support for their overall investment plans and the location
of companies bidding to the Private Sector Window or any mechanism for prioritising private
sector investments which complement public investments through the other window.
Mitigation
50. We will be committed to driving through reforms to the Private Sector Window and, in
keeping with GAFSP overall philosophy of on-going learning and improvement, will work to
ensure its overall governance and operational approach are delivering maximum impact. We
will not make any contributions to the Private Sector Window until reforms to its operations
have made progress. There is significant support and willingness to engage on these issues
from other donors that we will leverage through our influencing strategy on pages 63-64. Any
funding would be subject to an assessment presented as an addendum to this business case.
51. Steps have been taken to clarify the rules for IFC’s investments. An IFC paper of the 23
September advocates strongly for concessional finance to be provided under the GAFSP,
which would allow finance to be provided to projects that need an initial subsidy to be viable.
Public Sector Window
Risk 2: Applicant countries take insufficient ownership of the process and are
insufficiently prepared to implement programmes supported by GAFSP funds.
52. The GAFSP programme guidelines require that proposals must be in line with externally
reviewed national plans for agricultural investment. But the TAC only has paper reports on
which to base its judgement on the link between the investment plans submitted to GAFSP and
overarching national development plans. To date, available reports have been under a page,
and while they are good at picking up where proposals are not in line with national agricultural
plans (e.g. Tajikistan), their ability to assess the capacity to implement are more limited.
53. For African countries, the national plans on which GAFSP submissions are based are
produced as part of the CAADP process. A review carried out in 2010 noted that the CAADP
process has yet to fulfil its potential. Country level agricultural investment plans vary in quality
and in some cases were simply a repackaging of existing country development plansxcviii.
DFID is committed to supporting CAADP process and has provided £10mn to help countries
which have not yet done so to produce high quality investment plans.
Mitigation
54. An informal review of GAFSP’s first year of operations by the contributing donors, done in
August, produced a ‘white paper’ and recommended adjustments to procedures to address the
twin issues of ownership and readiness.
55. To boost country ownership and commitment to quality of plans:
 By adding a requirement for co-financing from country government and Supervising
Entities.
56. DFID will support recommendations to provide a greater depth of scrutiny of proposals by
the TAC, without compromising the country-led nature of the process. The provision of
independent extra technical help for producing proposals, preferably through the early
involvement of the Supervising Entity will be considered. DFID will also advocate for increased
scrutiny of the links of GAFSP proposals to overarching national plans, and the viability of
those plans.
57. The current guidelines mention the need to assure sustainability of investments in the face
of climate change. DFID will advocate for this to include specific criteria, especially where the
construction of irrigation and soil and water conservation infrastructure is planned. The criteria
should ensure that the detailed designs are such that they can reasonably be expected to have
a positive return over their design lifetime, taking into account the projected changes due to
climate change. DFID will advocate for the reports explicitly to take into account not only the
current progress of the project, but also an assessment of the changing external environment
and a critical appraisal of changes that may be needed to make sure projects remain able to
deliver transformational outcomes.
Risk 3: The programmes funded lack technical expertise to deliver the promised
outcomes.
58. An important part of the role of Supervising Entities is to fill gaps in country based
expertise through technical and management assistance. The TAC scrutiny of the proposals
does not specifically require an appraisal of the suitability and capacity of the Supervising
Entity. This could change if the appraisals done by the Supervising Entities can be made
available to TAC in advance of funding.
Mitigation
59. DFID’s MAR process confirms that the Supervising Entities are all international
organisations with a strong track record in technical assistance. They are able to draw on world
wide expertise. The possible exception to this is FAO, whose performance was variable, but
with good ratings on some aspects of performance.
60. The Supervising Entities own appraisals will provide an assessment of the technical
assistance needed to carry out the projects. The recommendation that proposals are
endorsed by a Supervising Entity at an earlier stages, should allow an early assessment to be
made of the technical assistance needed. During project implementation the monitoring of the
project at 6 monthly intervals will enable GAFSP to track the efficiency of the projects.
Risk 4: The programmes cannot be implemented due to a lack of management capacity
on the part of recipient Governments.
Mitigation
61. The management capacity of the Governments to deliver the projects can be initially
assessed through the scrutiny of the national level plans and the project proposal. DFID will
advocate for increased scrutiny of the quality and viability of national plans that the place of
GAFSP projects in contributing to their achievement. The Supervising Entities will be in a
position to assist countries with implementation.
Risk 5: The programmes cannot be implemented due to a lack of management capacity
of the Supervising Entities, including acting against corruption and fraud.
62. A critical factor in the delivery of the programmes is the financial and administrative
capacity of the Supervising Entity, as all funds will ultimately be routed through them.
Mitigation
63. Mitigation rests with the management ability of the Supervising Entities. The MAR has
shown that the Supervising Entities are technically competent (see Financial Case). The plan
to get supervising entities to endorse plans before they go to the steering committee will help
to assure the viability of project plans. DFID will advocate for a clear management appraisal to
be available to the technical and steering committees.
64. The responsibility for action to combat corruption and fraud among country level
implementing partners rests with the Supervising Entities and their own internal procedures.
The agreement between the Supervising Entities and the GAFSP specifically requires that the
Supervising Entities inform the Steering Committee immediately in instances of illegal or
corrupt practices. Any repayment made by a Supervising Entity due to instances of corrupt
practices would be made in accordance with its policies and procedures and only to the extent
that it (the SE) has been able to obtain repayment from the negligent party.
Risk 6: GAFSP procedures and approach cause delays in delivery, which undermine
confidence among recipient, donor and potential donor countries.
65. Project design and appraisal take time but in several cases implementation has been
delayed for reasons that would appear to have been within the control of the Supervising Entity
and recipient government. The approval of proposals by GAFSP is followed by a more
detailed appraisal of projects by the Supervising Entity. In most cases this has only begun
once the overall country investment plan has been approved by GAFSP, lengthening the time
to implementation.
Mitigation
66. To accelerate implementation DFID will work with others on the Steering Committee to:
 Permit Supervising Entities to use a proportion of the funds for project start up activities.
For example, IFAD used its own funds for this in Togo; with the result that project
implementation began within a year.
 Require the Supervising Entity to endorse the proposal to encourage them to begin
appraisals before funding is awarded. This would help to provide greater assurance on
the quality of the proposals and the in-country capacity to implement, but would also
require greater investment by Supervising Entities in advance of funding.
 Increase the capacity of the Co-ordination Unit in the World Bank so that they can play a
more active role in sharing planning and operational information between Supervising
Entities - allowing them to compare notes and benefit from best practice.
Risk 7. The results from the projects funded by GAFSP do not provide clear evidence
that shows the aggregate impact of the GAFSP.
Mitigation
67. The monitoring and evaluation plan requires the collection of baseline data and the use of
standard indicators, with all data disaggregated by gender. The co-ordinating unit is charged
with producing synthesis reports of impact. A proportion of projects (10-30%) will have
experimental or quasi experimental impact assessments. All other projects wil be subject to a
rapid impact evaluation.
68. The steering committee and the Bank are committed to ensure the programme learns as it
goes along. Already an informal review by steering committee members has suggested
improvements to the programmes processes.
69. DFID will advocate for regular reviews of programme performance as a whole and an
evaluation after two years.
Risk 8. The programme does not provide the best possible value for money because of
a lack of attention to cost control.
70. The assessment process of country proposals do not have a strong emphasis on value for
money and cost consciousness and in the assessment of projects by the technical committee.
Currently, the Steering Committee does not engage strongly enough with the procedures on
the Supervising Entities on value for money.
Mitigation
71. DFID will use its position on the Steering Committee to include a stronger emphasis on
value for money in project appraisal. The Supervising Entities have acceptable scores on cost
consciousness in the MAR except for IFAD. DFID will ensure that where IFAD is the
supervising entity, specific requirements are put in place to ensure they raise their efforts on
value for money. DFID will also consider building donor support for reduced Trust Fund
management fees and negotiate accordingly to reduce administrative overheads in line with
emerging corporate guidance.
Risk 9: The World Bank’s multiple roles as Trustee; Secretariat to the Steering
Committee and Potential Supervising Entity could create a conflict of interest or
otherwise negatively affect GAFSP’s performance.
72. The World Bank manages the funding on behalf of donors, recommends funding
approvals to the steering committee and implements funds approved. This could create actual
conflict of interest between its different roles and compromise the quality of GAFSP’s internal
processes. Alternatively a lack of clarity and space between its roles could feed perceptions of
conflicts of interest. For example, there have been instances in other Trust Funds where the
Fund Secretariat has been primarily accountable to Bank Management rather than the Fund
Steering Committee.
Mitigation
73. There are procedural controls in place on each of the roles which the Bank plays in
GAFSP that are set out in the management case. A key mitigating factor is that the Bank is not
the sole supervising entity and often works in partnership with other institutions. Having a
choice of implementing partner creates a healthy level of competition and positive incentives
for the Bank to play an effective role.
74. Though certain incentives and procedures are in place, to ensure the risk is proactively
managed, DFID will use its role on the Steering Committee to strengthen existing procedures
and corrective measures to include: setting up and enforcing firewalls between different parts
of the Bank engaged in different roles to ensure objectivity, the ability to take away one or
more of the Bank’s roles if conflict of interest becomes persistent or entrenched and offer them
to other qualified parties, ensuring conflict of interest issues are assessed in all annual reviews
and evaluations.
C. What conditions apply (for financial aid only)?
D. How will progress and results be monitored, measured and evaluated?
75. The Steering Committee of GAFSP approved a Monitoring and Evaluation plan in
February 2011. The Plan builds on the existing monitoring systems of the Supervising Entities
to ensure that a comprehensive results framework is created against which donor countries
and their tax payers, recipient country governments and their publics, and the wider
development community can judge the impact of GAFSP interventions. The main elements of
the Plan are set out below covering Preparation, Implementation and Completion stages of the
project cycle. DFID will also make completion of an independent, external evaluation of the
GAFSP mechanism, to be carried out two years after we join the Steering Committee (ie in
early 2014), endorsed by the Steering Committee, a firm condition of any further engagement
with the mechanism.
Project Preparation
Baseline data – will be collected at the latest before the end of the first year of
implementation. The baseline indicators required for impact evaluation are the household
income of direct project beneficiaries and the proportion of the target population below the
minimum level of dietary energy.
Ex ante cost benefit analysis - will be done for all investment projects, and made publicly
available, before project implementation begins. To be acceptable on economic grounds a
project’s expected present value of the project’s net benefits must be significant and positive.
Project implementation
Core indicators – A core set of indicators have been compiled by the Coordination Unit from
the IDA core sector indicators and indicator sets recently agreed by the Global Donor Platform,
FAO and the World Bank. These indicators have been agreed with the Supervising Entities.
They cover each of the GAFSP Output areas (see the Theory of Change or Logframe). At least
one of the core indicators per results area must be included in project level results framework
so that these can be aggregated up and report at the programme level.
Progress reporting –Supervising Entities will report every 6 months against the GAFSP core
indicators.
Mapping of results - By the end of the first year a map of project activities, overlaid with
development indicators.
Project completion.
Project completion report – The template for the project completion report sets out the need
for both quantitative and qualitative assessments of the performance of the project, with
sections for lessons learned and cost efficiency of the project.
Independent Evaluation – Supervising Entities must ensure that all projects undergo
independent evaluation which will be submitted to the Steering Committee and made public.
Impact Evaluation (IE) - All projects will undergo an impact evaluation. For some projects (10
-30%) the impact evaluation will employ experimental or quasi-experimental methods.
76. The impact evaluation policy as set out in the GAFSP Monitoring and Evaluation Plan is
as below:
Table 7:
Target
I. In-depth IEs
(experimental or
quasiexperimental IE)
II. Rapid IEs
(nonexperimental IE)
Target
Approximately
10-30 % of all
GAFSP projects
selected
according to
lesson-learning
priorities
All GAFSP
projects (except
for those that
have been
chosen to carry
out the in-depth
Indicative
cost
$800,000
for each IE
Implementation Funding
CU to centrally
contract a
specialized
organization to
carry out all indepth IEs
To be
funded
separately
by the SC
$50,000
for each IE
Each project to
contract a
specialized
organization to
carry out its
rapid IE
To be
funded
from each
GAFSPawarded
Grant
IEs)
amount
77. While the programme will follow the protocols of the Supervising Entities for project
evaluation and monitoring, the Monitoring and Evaluation Plan sets the common elements of
an approach which all projects under the public sector window must follow in order to maximise
lesson learning and accountability. A survey of Supervising Entities has clarified that they all
collect baseline data, all do cost benefit analyses, and all carry out project completion reports.
Not all Supervising Entities evaluate or do impact assessments of all projects. Where this is
the case the Supervising Entities will ensure that the GAFSP projects are chosen for
evaluation and impact studies. Not all Supervising Entities make their reports available to the
public. Where reports are not routinely publicly available, the Coordination Unit (CU) will
extract data and publish it. The Coordination Unit (CU) will be responsible for reminding
partners of the due dates of reports and summarising and presenting information at a
programme level to the Steering Committee and to the public.
78. As indicated in the table above, for a sub-set of GAFSP programmes, an in-depth impact
evaluation will be carried out by a suitable research organisation with a proven track record in
impact evaluation of food security projects. The Steering Committee has agreed that the
World Bank’s Development Impact Evaluation Initiative (DIME) will be one of the impact
evaluation organisations available to Supervising Entities to conduct in-depth impact
evaluation. DIME is a World Bank programme that works with 300 agencies in 72 countries
across 15 development themes to generate knowledge, improve the quality of operations and
strengthen country capacity for evidence-based policy making. It is governed by a Steering
Group composed of chief economists and directors from the Banks networks and regional units
and reports to the Bank’s Managing Director responsible for knowledge management and to
the Chief Economist.
Dissemination of results and lesson learning
79. The Coordination Unit will develop a results page in the GAFSP website to report on
programme-wide progress at least every six months. It will also prepare project results sheets
and other dissemination material and upload this onto the GAFSP website, along with links to
the individual project websites and project activity maps. It will liaise with the Monitoring and
Evaluation counterparts in related organisations – such as the Regional Strategic Analysis and
Knowledge System for CAADP, and organise and participate in global and regional workshops
with such bodies.
80. The Steering Committee will commission an annual workshop from the Global Donor
Platform for Rural Development – involving representatives of different stakeholder groups
implementing GAFSP - to communicate progress on results and lessons learned from
implementation of country investment plans and the project level evaluations carried out by
DIME and others.
81. The detailed roles of the Steering Committee, the Coordination Unit and the Supervising
Entities are set out in Table B in the GAFSP Monitoring and Evaluation Plan.
Private Sector
82. IFC is the Supervising Entity for the Private Sector Window. The IFC will use its highly
rated Development Outcome Tracking System (DOTS) to measure progress and report
annually.
83. Projects are assessed according to financial, economic, environmental, social and private
sector development performance. Indicators proposed for GAFSP are as in the figure below.
84. Annual reports from all investments will be aggregated to measure the development
impact of the facility as a whole. The IFC will submit to the Co-ordinating Unit an annual
progress report by May 31 of each year.
Evaluation
85. The independent Investment Evaluation Group (IEG), which was rated highly in DFID’s
MAR process will be in charge of the in depth evaluation of a random sample of projects five
years after they were approved. The evaluations will be carried out by IFC staff and validated
by the IEG. IEG’s independence is safe guarded by its requirement to report direct to the
World Bank Board not to anyone in the management chain at IFC or the World Bank.
86. Role of the Steering Committee: The Steering Committee will review progress made at
the programme level and in the individual countries either virtually or at Steering Committee
meetings. Once the Steering Committee has reviewed the progress, the documentation will be
disclosed on the GAFSP website.
87. While individual programme level evaluation is robustly included in the design of GAFSP,
there are currently no plans for an independent evaluation of GAFSP as a whole. As a funding
contributor to GAFSP, DFID will seek a commitment to independent evaluation of its overall
operations two years after DFID takes up a seat on the Steering Committee, as a condition of
DFID funding beyond the initial payment of £60mn to the Public Sector Window.
88. Evaluation questions for the Public Sector Window, that address weaknesses in the
evidence base in the theory of change, as well as assumptions and challenges in the strategic
and management cases, and which we propose should be pursued through the independent
evaluation, are as follows:
1. How well suited is the GAFSP mechanism to support an economic sector? (Given that
this is an innovative use of a Financial Intermediary Fund, has complex relationships
with a range of multilateral supervising entities and in country stakeholders, and the
evidence presented in appraisal case is judged as weak).
2. How well has GAFSP tackled the links between increased agricultural productivity and
improved nutrition in its funded programmes? (Given low evidence as set out in the
Strategic Case.)
3. How well is business enabling environment interventions integrated into GAFSP in
terms of its results framework, investment plan criteria and funded interventions?
4. How well has GAFSP helped bridge the private and public financing gaps for
agriculture? (as set out in the Strategic Case as a core rationale for DFID intervention)
5. Have GAFSP outputs led to increased agricultural productivity and has this led to
measurable improvements in rural incomes and expanded economic opportunity? (as
set out in the Theory of Change)
6. Do all interventions have thorough results chains and indicators to ensure a clear line of
sight to support attribution to GAFSP for poverty impacts?
7. To what extent do GAFSP interventions ensure local ownership and maximize use of
local systems to create change at all stages of the intervention cycle? (To assess their
sustainability.)
8. Does GAFSP’s 20% aggregate rate of return remain relevant given actual project
results? (To ensure continued validity of the economic appraisal.)
9. Does GAFSP funding take a systematic approach to tackling deficiencies in agricultural
systems to ensure investments address assumptions and lead to the expected
outcomes? (As set out in the Theory of Change.)
10. Which GAFSP market development improvements have contributed most to enhancing
agricultural productivity and reducing poverty? (As set out in the Theory of Change.)
11. Is GAFSP’s approach to cost control appropriate and effective? (as set out in Reform
Priorities)
12. Is GAFSP’s speed of disbursement adequate and cost efficient? (As set out in Reform
Priorities.)
Logframe
Quest No of logframe for this intervention: 3254262
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and food security?
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Perez Ortola
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iii World Bank (WRD 2008) What are the links between agricultural production
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iv World Bank. (2008). World Development Report – Agriculture for Development
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vi Ligon, Ethan, and Elisabeth Sadoulet. 2007. “Estimating the Effects of Aggregate
Agricultural Growth on the Distribution of Expenditures.” Background paper for the WDR 2008
vii Julie Litchfield (January 2010), SRF, for DFID, Agriculture and Growth Theme Reviews, p. 2
viii Global Harvest Initiative (October 2010), The Global Harvest Initiative’s 2010 GAP Report –
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ix Fan, Shenggen, Nestorova, Bella and Olofinbiyi, Tolulope (2010), China’s Agricultural and
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x Dewbre, J., D. Cervantes-Godoy and S. Sorescu (2011), "Agricultural Progress and Poverty
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xi World Bank. (2008). World Development Report – Agriculture for Development
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xiii IFPRI, Welthungerhilfe (GAA), Concern (October 2009): Global Hunger Index 2009
xiv DFID (2007), Gender Equality at the Heart of Development, p. 13
xv Andrew Shepherd, ODI, Paper presented at the CPRC Poverty Conference, 8-10 Sept.
2010, Manchester, Agriculture and Escaping Rural Poverty: an Analysis of Movements and
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xvi
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Lessons from China, IPS News
xviii Government Office of Science. (2010). Global Food and Farming Futures
xix World Bank. (2008). World Development Report - Agriculture for Development.
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xxi Fan, S., T. Mogues, and S. Benin (2009). Setting Priorities for Public Spending for
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xxii How to Feed the World in 2050, Food and Agriculture Organisation available at:
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xxv
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xxvii Webb and Headey, D, 2011, Turning Economic growth into nutrition sensitive growth 2020
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xxviii Webb P and Block S, 2010. Support for agriculture during economic transformation:
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xxix Masset E et al, 2011, What is the impact of interventions to increase agricultural
production on children’s nutritional status? A systematic review of interventions aiming at
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xxx Oxfam International Research Report (September 2009), Harnessing Agriculture for
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xxvi
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xxxii World Bank (2009), Gender in Agriculture Sourcebook
xxxiii DFID (2007), Gender Equality at the Heart of Development, p. 13
xxxiv Chatham House & vivid economics (September 2010), Evidence for Action: Gender
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xxxv Chatham House & vivid economics (September 2010), Evidence for Action: Gender
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xl Based on an average spend of £25m per country
xli Gallup, J., S. Radelet and A. Warner. (1997). Economic growth and the income of the poor.
AER Discussion Paper No. 36. Harvard Institute for International Development: Cambridge.
xlii Ligon, Ethan, and Elisabeth Sadoulet. 2007. “Estimating the Effects of Aggregate
Agricultural Growth on the Distribution of Expenditures.” Background paper for the WDR 2008
xliii Julie Litchfield (January 2010), SRF, for DFID, Agriculture and Growth Theme Reviews, p.
2
xliv Global Harvest Initiative (October 2010), The Global Harvest Initiative’s 2010 GAP Report –
Measuring Agricultural Productivity”,
xlv Fan, Shenggen, Nestorova, Bella and Olofinbiyi, Tolulope (2010), China’s Agricultural and
Rural Development: Implications for Africa; IFPRI; Godoy, Julio (2010), Africa Should Take
Lessons from China, IPS News
xlvi Dorward, A., J. Kydd, J. Morrison, and I. Urey. 2004. A Policy Agenda for Pro-Poor
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xlvii Oxfam International, Duncan G. (2008), From Poverty to Power: How Active Citizens and
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xlviii Global yields per hectare of the major cereal crops (maize, wheat and rice) have more
than doubled due to improved seeds and husbandry. Between 1961 and 1990 wheat yields
grew at an annual average of 3%, but between 1990 and 2007 this had fallen to 0.5%.
Corresponding figures for rice are 2.2% which fell to 1.0%, and for maize 2.3% down to 1.9%
(FAOSTAT database).
xlix World Bank. (2008). World Development Report - Agriculture for Development.
l World Bank. (2008). World Development Report - Agriculture for Development.
li Carruthers, J.; M.W. Rosegrant; and D. Schuler,1997: Irrigation and Food Security in the 21st
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lii Fan, S; P. Hazaell; and S. Thorat, 1999:. Linkages between Government Spending, Growth
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liii Molden, D; Sakthivadival, R, Perry; C.J. Fraiture, C. and Kloezen, W.H.1998: Indicators for
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liv Arif GM. and Ahmad M. 2001:. Poverty Across the Agro Ecological Zones in the Rural
Pakistan, Proceedings of National Workshops on Pro Poor Intervention Strategies in Irrigated
Agriculture in Asia, International Water Management Institute Colombo, Sri Lanka
lv World Bank. (2008). World Development Report - Agriculture for Development.
lvi van der Walle, Dominique. 2007. “Impacts of Road Infrastructure on Markets and
Productivity.”
lvii Limao, Nuno, and Anthony J. Venables. 2001. “Infrastructure, Geographical Disadvantage,
Transport Costs, and Trade.” World Bank Economic Review 15(3):451–79.
lviii Kamara, AB. (2004). The Impact of Market Access on Input Use and Agricultural
Productivity: Evidence from the Machakos District, Kenya. Agrekon, Vol 43, No 2 (June 2004)
lix CGIAR (1998). Fair Growth
lx MAKANDA DW (1987). Managing Kenya’s agricultural sector to the year 2000 and beyond.
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21-25th September 1987, pp 17-29
lxi Boserup, E . Population and technological change. Chicago: the University of Chicago
Press, USA.
xxxviii
xxxix
lxii Coleman
D, and Young T. (1989). Principles of agricultural economics: Markets and prices
in less developed countries. WYE studies in agriculture and rural development. Cambridge
University Press, UK, pp 167–262
lxiii Hayami, Y. (1997). Development economics: From poverty to the wealth of nations.
Claredon Press, Oxford, pp 35-48
lxiv Marketing survey covering 78 wholesale markets handling mangoes, tomatoes, potatoes,
tumeric, and maize in the Tamil Nadu, Maharashtra, Orissa, and Uttar Pradesh, India (World
Bank 2007f).
lxv Shilpi, Forhad, and Dina Umali-Deininger. 2006. “Where to Sell? Market Facilities and
Agricultural Marketing?” World Bank. Washington, DC. Processed.
lxvi Manfred, Z et al. (1997). Market access by smallholder farmers in Malawi, IFPRI
lxvii Deininger K, and Okidi J. (1997?) Capital market access, factor demand, and agricultural
development in rural areas of developing countries: The case of Uganda. World Bank and
Economic Policy Research Center, Kampala
lxviii World Bank. (2003). Land Policies for Growth and Poverty Reduction.
lxix Ethiopia – 2008 Deiniger, Ali and Alemu Deininger, K., D.A. Ali, and T. Alemu. 2008.
“Impacts of Land Certification on Tenure Security, Investment, and Land Market Activity:
Evidence from Ethiopia.” World Bank Policy Research Working Paper. World Bank,
Washington, DC
lxx
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evidence from household surveys.
lxxi FAO/GIEWS. (2010). Global Cereal Supply and Demand Update.
lxxii United Nations Standing Committee on Nutrition. (2009). Global recession
increasesmalnutrition for the most vulnerable people indeveloping countries
lxxiii World Bank (2009) http://youthink.worldbank.org/blog/tackling-child-malnutrition-southasia
lxxiv Motta, M, Oviedo, A M and Santini M, “An Open Door For Firms: The impact of Business
Entry Reforms” Viewpoint Note No 323 June 2010, World Bank and IFC, Washington DC.
lxxv
Mitchell, Andrew. (2011) Africa is open for business. Speech at the London School of Business,
11/07/2011; PrOpCom. (2011) Fertiliser + training for Nigeria’s farmers.
lxxvi
DFID Multilateral Aid Review March 2011, http://www.dfid.gov.uk/About-DFID/Who-wework-with/Multilateral-agencies/Multilateral-Aid-Review/
lxxvii ODI. (2009:45). SBS in Practice: Mozambique Case Study
lxxviii Williamson, Tim and Catherine Dom, Sector Budget Support in Practice: Synthesis
Report, Overseas Development Institute, London, 2009.
lxxix Williamson, Tim and Catherine Dom, op.cit..
lxxx “An Evaluation of the World Bank’s Trust Fund Portfolio: Trust Fund Support for
Development”, Independent Evaluation Group, Washington DC available at:
ieg.worldbankgroup.org/content/dam/ieg/tf_eval.pdf
lxxxi
FAO The State of the World's Land and Water Resources for Food and Agriculture (SOLAW) June
2011
lxxxii Oldeman, L.R., Hakkeling, R.T.A. & Sombroek, W.G. 1991. World
map of the status of human-induced soil degradation, 2nd edn. ISRIC, Wageningen
lxxxiii Proxy global assessment of land degradation
Z. G. Bai1, D. L. Dent1, L. Olsson2 & M. E. Schaepman3 Soil Use and Management, September 2008,
24, 223–234
lxxxiv Land Degradation in South Asia: its severity, causes and effects upon the people, Rome, FAO,
1994
lxxxv Africa’s Growing Soil Fertility Crisis: What Role For Fertilizer?
Jonathan Agwe, Michael Morris, and Erick Fernandes . Agricultural and rural development notes World
Bank 2007
lxxxvi Food and Agricultural Organization (FAO). 2003. Assessment of Soil Nutrient Balance: Approaches
and Methodologies. FAO Fertilizer and Plant Nutrition Bulletin 14. FAO, Rome
lxxxvii The effectiveness of contour hedgerows for soil and water
conservation Anthony Young Agroforestry Forum December 1997 Volume 8 Number 4 2
lxxxviii Evidence Base for Climate Resilient and Productive Agriculture in Southern Africa. Martin
Whiteside. 2011 DFID Report
lxxxix What are the projected impacts of climate change on food crop productivity in
Africa and S Asia? DFID Systematic Review J.W. Knox, T.M. Hess,A. Daccache and M. Perez Ortola
12th April 2011
xc
IPCC SREX Extreme Events Report (2011) Summary for Policymakers
Ibid – footnote 8.
xcii Foresight: Migration and Environmental Change Report. 2011. Government Office for Science,
London.
xci
xciii
a. On nutrition:
Behrman, J., H. Alderman, and J. Hoddinott. 2004. “Hunger and Malnutrition.” In Global Crises, Global Solutions, ed.
B. Lomborg. Cambridge: Cambridge University Press.
b. On cash transfers:
de Mel, Suresh, David McKenzie, and Christopher Woodru_, “Returns to Capital in Microenterprises: Evidence from a
Field Experiment," The Quarterly Journal of Economics, November 2008, 123 (4), 1329-1372
and
Gertler, Paul, Sebastian Martinez, and Marta Rubio-Codina, “Investing cash transfers to raise long term living
standards," Policy Research Working Paper Series 3994, The World Bank August 2006
A more minor discrepancy in the World Bank’s figures is possible double counting of some
benefits in its economic rate of return calculations. But this is not significant enough to warrant
additional attention beyond the existing sensitivity analysis.
xciv
xcv
Conditional on an even distribution of land, GDP growth originating in agriculture is up to
four times more effective in raising incomes of extremely poor people than GDP growth
originating outside the sector according to Ravallion, M., and Chen, S.. (2007).China’s
(Uneven) Progress Against Poverty. Journal of Development Economics 82(1):1–42
xcvi Bill & Melinda Gates Foundation, Canada, the Republic of Korea, Spain and the United
States of America
xcvii IFAD, FAO, WFP, the World Bank, African Development Bank, Asian development Bank,
Inter American Development Bank, and the IFC for the Private Sector window.
xcviii CAADP Review, NEPAD, March 2010
Annex 1: Pledges and funds transferred to GAFSP
Contributor
Currency
Total USD
equivalent
(# million)
AUD
CAD
USD
EUR
EUR
Amount
pledged
[Public/Private]
(# million)
100.0
180/50
30.0
0.5
100
92.6
223.0
30.0
0.7
133.4
Amount
transferred
(as
of
(31/12/2011)
65.0
223
30.0
0.7
-
Australia
Canada
Gates Found’n
Ireland
The
Netherlands
(all to private
sector window)
Korea
Spain
US
USD
EUR
USD
50.0
70.0
450/25
50.0
93.4
475.0
29.0
93.4
166.4
* Australia has committed a further US$ 46.3mn, of which US$ 15.8mn has
already been transferred, taking their total contribution to US$ 92.6mn. This
second tranche of funding is still to be announced officially. (Information taken
from GAFSP website)
ANNEX 2: DEFINITION OF CORE INDICATORS IN GAFSP MONITORING AND
EVALUATION PLAN
Output 1: Higher yielding technologies developed
1. Number of collaborative research or extension sub-projects implemented
2. Number of client days of training provided to raise agricultural productivity
(disaggregated by gender)
3. Number of client days of extension services provided to farmers, community
members etc (disaggregated by gender)
4. Number of farmers who have adopted the technology being promoted
Output 2: Improved infrastructure to support agriculture in place and
operational
5. Number of additional hectares which have adopted the technology being promoted
6. Area with new irrigation and drainage services
7. Area with new improved/rehabilitated irrigation and drainage services
8. Number of water users provided with new/improved/rehabilitated irrigation and
drainage services (disaggregated by gender)
9. Number of operational water user associations
10. Number of target population with use or ownership rights recorded
(disaggregated by gender) in a manner recognized by national or customary law
11. Percent of target land area with use or ownership rights recorded in a manner
recognized by national or customary law
12. Km of roads constructed (disaggregated by all-weather or seasonal)
13. Km of roads rehabilitated (disaggregated by all-weather or seasonal)
14. Number of targeted clients who are members of an association including
producer association, cooperative, water user association, etc (disaggregated by
gender)
Output 3: Better functioning markets which farmers are able to access
15. Number of rural markets/market centers constructed
16. Volume of produce under improved post-harvest management
17. Number of private or public-private agro-processing facilities installed
19. Outstanding rural microfinance loan portfolio (amount US$)
20. Outstanding rural SME loan portfolio (amount US$)
21. Number of active microfinance loan accounts of holders domiciled in rural areas
(disaggregated by gender of holder)
22. Number of active loan accounts of rural SMEs
23. ‘At-risk’ proportion of microfinance loan portfolio
24. ‘At-risk’ proportion of rural SMEs
25. Volume of food for which price risk has been managed using market based tools
26. Value of food for which price risk has been managed using market based tools
27. Number of systems introduced or restored to improve food security monitoring
and early warning for weather-related risks
Output 4: Rural people more resilient to shocks and able to build assets
28. Number and frequency of food security and crop assessment surveys conducted
29. Volume of production covered by risk mitigation programs directed towards
vulnerable groups.
30. Number of households benefiting from cash transfer programs
31. Number of households receiving food-based transfers (disaggregated by gender,
vulnerable groups)
32. % increase in production of fortified foods including complementary foods and
special nutritional products
33. Number of people receiving improved nutrition services (e.g., Ready to Use
Therapeutic Food [RUTFs], Vitamin A, micronutrients, bio-fortified foods),
disaggregated by gender, age, vulnerable groups
34. Number of client days of non-farm related vocational training provided
(disaggregated by gender)
35. Percentage of targeted clients satisfied with non-farm related vocational training
provided (disaggregated by gender)
Output 5: Institution-building and capacity development
36. Number of policies, strategies, frameworks or investment plans adopted
37. Number of public expenditure reviews published
38. Number of trained additional civil servants dedicated to sectoral planning and
strategy
39. Number and percentage of community based organizations which reflect
community interests and needs that actively participate in national or provincial level
technical and policy bodies or project implementation related to food security or
agriculture programs
40. Number of additional community based organizations‟ staff trained in institutional
strengthening/sectoral planning and strategy
41. Number of participants in M&E workshops, training events, seminars,
conferences etc. (disaggregated by gender and affiliation)
42. Number and cost of analytical reports published
ANNEX 3: WORLD BANK METHODOLOGY FOR CALCULATING FOR TOTAL
INCREASING IN INCOME RESULTING FROM 12 COUNTRY INVESTMENT
PLANS APPROVED TO DATE
US $ 100mn is the estimated income increase implied by a 20% rate of return on the
US $ 481mn allocation to the 12 countries. The median economic rate of return from
recent World Bank agriculture projects is 24%. As the WB is the supervising entity of
8 out of the 12 investment plans approved so far, it was considered to be indicative of
likely returns across all 12 plans. In addition, the estimated economic returns to
investments in the 5 GAFSP projects furthest forward in terms of detailed appraisal
are: Bangladesh 21.4% (over 20 years); Togo 16.4 % (over 20 years); Ethiopia
19.9% (over 20 years); Rwanda 29% (over 50 years) and Sierra Leone 14.2% (over
20 years). The assumption used is that income increase begins only in Year 2 of
project implementation when it will reach 20% of the expected full income increase.
From Year 3, the assumption is an equal increase until Year 6 when the expected full
target is reached. After Year 6 the expected full income increase is expected to
remain for 14 years.
Annexe 5 : Climate & Environment Assurance Note
Intervention Details
Title
Home Department
Budget
Global Agriculture and Food Security
Programme (GAFSP)
Growth and Resilience
Department (GRD)
£76,000,000 over 3 years
Responsible Officers
Title
Name
Department
Project Owner
Climate Change and Environment Advisor
Kenny Dick
David Howlett
GRD
Climate and Environment
Appraisal
Success Criteria
Resilience of people and communities, especially small holder farmers,
to climate risks (present and future)
Climate & Environment Category
Risks & impacts
Option 1 – Maintain current levels of support and
delivery: B (medium risk)
Option 2 – Support Global Agriculture and Food
Security Programme (GAFSP) (medium risk)
Option 3: - Support Private Sector Infrastructure
Development Group (PIDG): B (medium risk)
Option 4: Sector budget support in DFID target
countries
Sensitivity Analysis
Carried out for all options
Opportunities
Option 1: C (No opportunities)
Option 2: A (significant opportunities)
Option 3: B (opportunity)
Option 4: A (significant opportunities)
Management
Risks and opportunities defined
Opportunities
Climate & Environment Measures
agreed
Climate & Environment
Measures in log-frame
Options (2) and (4) provide
significant opportunities. Option 1
does not present any extra
opportunities, and option 3 while
presenting similar opportunities
described below due to PIDG not
being focussed on agriculture and
food security these will not be as
great. Main opportunities are
summarised below.
A. Present and future climate risk is
putting peoples’ food security at risk.
Current climate risks of extreme
weather events (floods and
droughts), especially when
accompanied by poverty, weak
governance and lack of access to
markets results in serious food
security problems and potential long
term impacts especially for women
and children. Projects under GAFSP
and under budget support have the
potential to tackle these challenges,
and to reduce the impact of
agriculture on the environment (e.g.
loss of biodiversity, reduced
deforestation).
A1. The programme will fund
projects to help build resilience to
present and future risks of
smallholder farmers and their
communities. Under GAFSP this can
be strengthened by ensuring
technical assessment include criteria
on resilience and responding to
climate change. Similar under
framework for sector budget support
should include these.
A2. Indicators on resilience, climate
change adaptation and sustainability
should be part of GAFSP/sector
budget support monitoring and
evaluation.
A3. DFID programme adviser(s)
should work with the implementing
agencies on developing M&E and
indicators of country projects that
capture climate change and
environmental sustainability as part
of output 5 (indicator - Agreed
results frameworks for public and
private sector window which can
aggregate results across countries).
B. Options 2 and 4 both have the
opportunity to help improve policies
and plans to build resilience, tackle
climate risk and deliver more
sustainable agriculture practices,
and adaptation. These will have a
positive impact especially where
these policies are linked to national
development and economic policies.
B1. This can be strengthened at the
national level by the mainstreaming
of agriculture into the development
of new strategies and plans on
climate change, and development.
This would include national
adaptation and mitigation plans,
climate compatible development
plans. Option 4 under budget
support is likely to be the best
opportunity for this.
B2. For GAFSP evidence and
knowledge from the different
programmes needs to be
documented and shared as part of
the knowledge management parts of
the programme.
Under output 1 the provision of
improved agricultural
technologies that produce higher
yields indicators should be
developed for projects to
capture how these technologies
will help farmers become more
resilient to climate variability and
future climate change, and help
develop sustainable farming
systems. These should identify
how these impact on women
and men.
Under output 2 Infrastructure to
support agriculture in place and
operational project indicators on
irrigation and roads targets need
to capture that these are
sustainable and are climate
proof.
Under output 4 management of
risks and increased resilience to
shocks it is expected this will
include activities to respond to
climate and environment risks.
Log frames for projects should
include indicators on these.
No direct links in log frame but
this will be part of output 5 on
reform.
C. Many practices that will be
implemented under the programme
can also reduce emissions of GHG
and/or sequester carbon into soils
and biomass. This includes soil and
water conservation, biogas units,
agroforestry and conservation
agriculture. This provides an
opportunity for significant mitigation
co-benefits.
C1. Projects under GAFSP are
planning to capture data and
information on practices to
determine mitigation potential. This
should be reported under overall
GAFSP reporting, and this should be
shared under its knowledge
management and communication
activities to help in building the
evidence base for “climate
smart/resilient agriculture”.
Under output 1 the provision of
improved agricultural
technologies that produce higher
yields indicators for projects can
be developed to capture how
much carbon has been
sequestered and emissions
reduced.
C2. Option 4 could also develop
system to capture data on reduced
emissions and carbon sequestration
but this would take longer and
require significant resources in terms
of capacity building. Thus early
evidence on what projects can
deliver would not be quickly
available.
Risks
A. The main risk for options (2) to (4)
would be that projects developed
under these options focus on
maximising food and crop production
using practices that impact on the
environment. This could also lead to
the conversion of forests to
agricultural use leading to an
increase greenhouse gas emissions
from this change in land use, loss of
biodiversity, over use of water
resources for irrigation, and
environmental pollution from
agrochemicals.
B. Projects involving the construction
of infrastructure (e.g. roads, irrigation
and dams, and market and
processing facilities all have
potential negative environmental
impacts.
A1. Programme is designed to
promote more sustainable and
resilient agriculture, and therefore
these risks should be avoided. But
all major investments particularly in
irrigation and intensive agriculture
should be subject to separate
environment assessments that meet
international standards. DFID should
ensure implementing agencies have
effective climate change and
environment policies in place.
A2. Implementing agencies should
report how projects have been
assessed and where negative
impacts identified what measures
have been take to avoid or reduce
these impacts. This should be part of
the framework developed under
output 5.
B1. All projects developed under all
option should be subject to separate
environment assessments that meet
international standards. Option 4
would also benefit from strategic
environment assessment of policies
and plans under budget support.
B2. All infrastructure developed
under all the options should use low
carbon and energy efficient
technologies.
Not in logframe
Under output 2 Infrastructure to
support agriculture in place and
operational project indicators on
irrigation and roads targets need
to capture how these are using
low carbon technologies and
designing energy efficient
facilities that and are also
climate proof.
C. Options 2 to 4 require increased
resources for travel, and programme
activities. For financial (VFM) and
environmental reasons these need
to be reduced and increased energy
use avoided where possible.
C1. Implementing agencies to
minimise resource use by improved
working practices and reducing
travel. This should be set out in their
climate change and environment
policies.
C2. Implementing agencies should
work with national partners to ensure
that they either have, or are working
to have, climate change and
environmental management systems
that meet national and international
standards.
Evidence
Relevant documents
Business case : Quest doc. 3677961
Logframe: Quest doc. 3254262
SIGNED OFF BY:
David Howlett
DATE: 1 October 2012
Not in log frame