[Federal Register: July 25, 2007 (Volume 72, Number 142)]
[Notices]
[Page 40925-40953]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy07-112]
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Part II
Millennium Challenge Corporation
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Notice of Entering Into a Compact With the Government of the Republic
of Mozambique; Notice
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 07-06]
Notice of Entering Into a Compact With the Government of the
Republic of Mozambique
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with Section 610(b)(2) of the Millennium
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium
Challenge Corporation (MCC) is publishing a summary and the complete
text of the Millennium Challenge Compact between the United States of
America, acting through the Millennium Challenge Corporation, and the
Government of the Republic of Mozambique. Representatives of the United
States Government and the Government of the Republic of Mozambique
executed the Compact documents on July 13, 2007.
Dated: July 17, 2007.
William G. Anderson Jr.,
Vice President & General Counsel, Millennium Challenge Corporation.
Summary of Millennium Challenge Compact With the Government of the
Republic of Mozambique
A. Introduction
Since emerging in 1992 from three decades of nearly continuous
conflict, Mozambique has experienced one of the fastest growth rates in
Africa, averaging eight percent per year over the last decade. To
sustain this growth, it is necessary to unlock the potential of the
economically lagging Northern provinces, which are home to
approximately 10 million people. Moreover, given Mozambique's rapid
urbanization, its next stage of economic recovery cannot succeed
without well-functioning public services in its cities, where coverage
levels for water and sanitation, for example, are declining.
B. Program
1. Goal and Objectives
The $506.9 million Compact focuses on water, sanitation, roads,
land tenure, and agriculture (the ``Program''), as summarized in the
table below. The Program involves crucially needed investments in
physical assets, policy reforms, capacity building, and institutional
strengthening.
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Program CIF/Year 1 Year 2 Year 3 Year 4 Year 5 Total
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1. Water Supply & Sanitation Project.................... $16,250,586 $33,486,540 $60,354,509 $51,577,477 $41,916,281 $203,585,393
2. Roads Project........................................ 5,430,562 4,420,542 39,733,884 79,578,499 47,143,993 176,307,480
3. Land Tenure Services Project......................... 5,261,274 12,369,941 9,541,389 6,823,931 5,071,772 39,068,307
4. Farmer Income Support Project........................ 3,754,417 3,491,632 3,851,878 3,375,446 2,958,838 17,432,211
5. Monitoring and Evaluation............................ 2,195,000 955,000 1,880,000 920,000 2,255,000 8,205,000
6. Program Administration & Oversight................... 23,577,473 11,014,974 10,086,885 9,009,757 8,636,572 62,325,661
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Total MCC Contribution.............................. 56,469,312 65,738,629 125,448,545 151,285,110 107,982,456 506,924,053
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The Program's goal is to reduce poverty in Northern Mozambique
through economic growth. The Program's objective is to increase the
productive capacity of the population in selected districts, with the
intended impact of reducing the poverty rate, increasing household
income and employment, and reducing chronic malnutrition in the
targeted districts. The various interventions are designed to foster
investment and increase economic opportunities for Mozambicans living
in the North.
2. Program Rationale
The Program addresses key constraints to growth in Mozambique,
which include:
An inadequate stock of infrastructure--particularly for
roads, water, and sanitation--that has degraded because of years of war
and lack of maintenance;
A poor investment climate, including land tenure
administration;
Limited human capacity and poor health; and
Low levels of productivity affecting agriculture.
The Program is consistent with two key themes of the Government of
Mozambique's (``GOM'') development strategy: (a) Decentralization and
urban-based growth; and (b) meeting the Millennium Development Goals
for water and sanitation. It also is consistent with and a key part of
the United States Government's (``USG'') foreign policy and public
diplomacy objectives.
C. Program Description
1. Water and Sanitation Project ($203.6 million)
Lack of access to water and sanitation is a major barrier to growth
and health. Mozambique has one of the lowest levels of per-capita water
consumption in the world. With an average of less than 10 liters per
day, the country is far below global benchmarks. Moreover, due to
existing gender norms, girls and women are responsible for collecting
most of the water at the household level. They spend hours fetching
water, leaving little time for child care, attending school, or income-
generating activities.
The Water Supply and Sanitation Project will improve access to
safe, reliable water supply and sanitation services, thereby increasing
productivity and reducing water-borne diseases--one of the causes of
death in children under five. It involves: (a) Water supply and
sanitation services in three large cities (Quelimane, Nampula, and
Pemba) and three mid-sized towns (Guru[eacute], Mocuba, and Nacala) in
the provinces of Zamb[eacute]zia, Nampula and Cabo Delgado; (b) water
supply services in two small towns (Monapo and Montepuez) and 600 rural
villages in the provinces of Nampula and Cabo Delgado; (c) capacity
building of local institutions; and policy development.
MCC's capital investments in water and sanitation will build on the
pioneering work begun in the mid-1990s and funded by the World Bank to
put in place the key sectoral institutions and regulatory frameworks.
MCC funding will also address some key heretofore neglected market
segments--small-town water supply and sanitation--and, in so doing,
will help consolidate and advance the GOM's water sector strategy. In
urban water supply, the strategy is based on a separation of asset
ownership and operations and maintenance (``O&M''). Under the so-called
system of delegated management, the state owns the water assets; O&M is
carried out by the private sector; and an independent regulatory
authority (``CRA'') sets service standards and regulates tariffs.
Accordingly, the MCC program is predicated on private sector
participation to reduce operating costs and improve service--factors
that are key to sustainability.
[[Page 40927]]
2. Roads Project ($176.3 million)
The objective of the Roads Project is to: (a) Improve access to
markets, resources, and services; (b) reduce transport costs for the
private sector to facilitate investment and commercial traffic; (c)
expand connectivity across the Northern region and down toward the
southern half of the country; and (d) increase public transport access
for individuals to take advantage of job and other economic
opportunities. Specifically, MCC funding will rehabilitate 491 km of
key segments of the National Route 1, which forms the backbone of
country's transportation network, in three provinces. The road segments
will include Rio Lurio--Metoro in Cabo Delgado (74 km); Namialo--Rio
Lurio (148 km) and Nampula--Rio Ligonha (102 km) in Nampula; and
Nicoadala--Chimuara (167 km) in Zamb[eacute]zia.
These roads are part of the GOM's five-year master plan for roads,
known as the Integrated Road Sector Program (PRISE), a sector-wide
initiative for developing the national road network. The PRISE's first
three-year rolling investment program (covering 2007-2009) is budgeted
at more than US$1 billion, and includes: (i) The building,
rehabilitation, and maintenance of roads and bridges; (ii) the
development of pilot projects to test low-cost materials; and (iii) the
implementation of a road-safety initiative.
MCC funding will support the following types of interventions:
Design, environmental assessment, and construction
activities;
Implementation of environmental and social mitigation
measures, including compensation for physical and economic displacement
of individuals and businesses affected by the rehabilitation and
construction;
Design, construction and rehabilitation of drainage and
bridge structures;
Posting of signage and incorporation of other safety
improvements;
Project management, supervision, and auditing; and
Technical assistance and capacity building.
3. Land Tenure Services Project ($39.1 million)
The objective of the Land Tenure Services Project (``Land
Project'') is to establish more efficient and secure access to land by
improving the policy and regulatory framework and helping beneficiaries
meet their immediate needs for registered land rights and better access
to land for investment. The Land Project--which would operate in all
four provinces, but could have a national impact--is comprised of three
mutually reinforcing activity areas: (a) A Policy Support Pillar to
help improve the policy environment by addressing implementation
problems in the existing land law and regulatory reviews to improve
upon it; (b) a Capacity Building Pillar to build the institutional
capacity to implement policies and provide quality public land-related
services; and (c) a Site-specific Pillar to facilitate access to land
use by helping people and business with: (i) Clear information on land
rights and access; (ii) more predictable and speedy resolution of land
and commercial disputes, thereby creating better conditions for
investment and business development; and (iii) registering their grants
of land use.
4. Farmer Income Support Project ($17.4 million)
Coconuts and coconut products form an important part of the economy
in Northern Mozambique. However, outbreaks of Coconut Lethal Yellowing
Disease (``CLYD'') now threaten the industry and the livelihood of over
1.7 million people in the provinces of Zamb[eacute]zia and Nampula. At
the present rate of spread, more than 50 percent of the coconut area is
likely to be lost over the next nine years. Affected trees cease
producing and threaten the productivity of healthy trees; therefore
they must be removed and replaced.
The objective of the Farmer Income Support Project is to improve
productivity of coconut products, and encourage diversification into
other cash-crop production. The Project will eliminate biological and
technical barriers hindering economic growth among farms and targeted
enterprises, while supporting diversification into other cash crops and
improved farming practices to assist smallholders and producers to
recover lost income. In conjunction with tree removal and replacement,
the Project will assist farmers in adopting new cropping systems and
developing alternative sources of cash income during the time required
for new coconut trees to reach productive age, i.e., seven years and
beyond. The Project will also provide technical support to introduce
better practices aimed at increasing crop yields.
D. Impacts
Four strategic elements coalesce to form a platform to achieve the
overall Program objectives:
Increase the accessibility, reliability, and quality of
water and sanitation facilities;
Increase access to productive resources and markets;
Make land access more efficient and secure for households,
smallholders, and investors; and
Improve productivity of coconut products and diversify
into other cash crops.
The four strategic objectives, if achieved, will result in
increased investment and employment. Overall, the Program will increase
regional gross domestic product across the targeted provinces in
Northern Mozambique--Cabo Delgado, Nampula, Zamb[eacute]zia, and
Niassa--by nearly $75 million in 2015 and $180 million in 2025. A
projected 33 percent of the population of these provinces would have
been poor in 2015 without the Program. The Program can be expected to
reduce the projected poverty rate by over 7 percent by 2015 and by over
16 percent by 2025. As a result of Program implementation, nearly
270,000 persons will be lifted out of poverty by 2015 and 440,000
persons by 2025. The net present value of the net economic benefits of
the Program comes to more than $420 million discounted at the MCC
hurdle rate for Mozambique.
At the project level, the Water Supply and Sanitation Project is
expected to assist some 1.9 million beneficiaries by 2015 through
improved water systems, wastewater disposal, and storm water drainage.
Around one-third of these beneficiaries are among the poor. The net
present value of the net economic benefits for all of the water and
sanitation activities (for large cities and towns, small towns, and
rural stand posts) amounts to close to $360 million discounted at the
MCC hurdle rate for Mozambique.
By 2015, nearly 2.3 million people--of whom more than one-third is
likely to be poor--will benefit from the Roads Project, by having
improved access to markets and services. The net present value of the
net economic benefits for all of the roads activities amounts to more
than $20 million discounted at the MCC hurdle rate for Mozambique.
The Land Project will assist anyone who has or acquires land-use
rights. Improved land tenure services are projected to benefit 1.9
million people by 2015, the first year after the end of the Compact,
and to benefit 2.6 million people, 15 years after the end of the
Compact. The net present value of the net economic benefits for the
Land Project amounts to more than $4 million discounted at the MCC
hurdle rate for Mozambique.
[[Page 40928]]
The Farmer Income Support Project will benefit 1.7 million
smallholders as well as workers on coconut estates, which employ some
5,000 workers. Half of these smallholders would be in poverty even
without income losses from CLYD. The net present value of the net
economic benefits for the Farmer Income Support Project amounts to $38
million discounted at the MCC hurdle rate for Mozambique.
E. Program Management
1. Governance Structure
The implementation and management arrangements are designed to
ensure strong governance, oversight, management, monitoring and
evaluation (``M&E''), and fiscal accountability in the use of MCC
funds. The GOM will create MCA-Mozambique as a public institution to
oversee and manage the program as an autonomous accountable entity.
MCA-Mozambique will have: (1) A Board of Directors to oversee
implementation, make strategic decisions, and ensure the execution of
agreed policy reforms; (2) an Executive Committee, composed of a
smaller working group of Board members or their representatives, to
facilitate implementation by assisting in decisions regarding technical
matters; and (3) a Management Unit to handle the day-to-day operations.
The Board will be composed of representatives from government, private
sector, and civil society. It will also include as non-voting members,
a representative from MCC, a representative of an environmental NGO,
and the Executive Director of MCA-Mozambique. The Management Unit will
be composed of professional staff hired through an open and competitive
recruitment. MCA-Mozambique will have an office in Maputo and a field
office in Nampula.
Stakeholder participation will occur at both the Program and
Project levels. At the Program level, stakeholders will be able to
provide feedback through participatory M&E fora. Mechanisms will also
be structured at the Project-level to allow the private sector, civil
society, and local/regional governments to provide advice and input for
implementation.
2. Implementation Arrangements
Line ministries and public institutions will serve as Implementing
Entities (``IEs'') and service providers for the various projects. IEs
will be responsible for developing the operational requirements for the
Projects and performance monitoring of contractors. Teams will be
located within the IEs to ensure institutional strengthening and close
collaboration and communication. To help ensure Program success, the
Compact has budgeted nearly $40 million for technical assistance,
capacity building, and institutional strengthening. In addition,
competitively selected external service providers will perform the
Procurement and Fiscal Agent functions.
F. Other Highlights
1. Transformational Change
The Program has the potential for significant transformational
change to help unlock the economic potential of the northern part of
the country by addressing key binding constraints to growth. Overall,
the Program is expected to reach a total of five million people, many
of whom will benefit from multiple Projects. In addition, the Program
will have an important qualitative developmental impact, by helping to
develop and consolidate key sectoral institutions and improve water and
sanitation services, road maintenance, and land tenure.
2. Consultative Process
The Compact is derived from Mozambique's Poverty Reduction Strategy
Paper, known as PARPA in Portuguese, which was submitted to a domestic
consultation involving a wide variety of sectors and an extensive range
of stakeholder groups, including the poor. For the MCC program, the GOM
conducted a consultative process through two organizations: The Poverty
Observatory, an umbrella group of non-governmental organizations
(``NGOs''), and the Federation of Economic Associations (the ``CTA''),
a private sector trade association. The Poverty Observatory and CTA
together represent the preponderance of NGOs, not-for-profit, and
domestic for-profit businesses in Mozambique.
Government Commitment and Effectiveness
The GOM has demonstrated commitment by showing a willingness and
flexibility to develop solutions for inefficient government procedures
that affect implementation of donor-funded programs. It also has
already initiated institutional reform and organizational restructuring
processes in the water and sanitation and roads sectors and in land.
The GOM is working with MCC and the World Bank to carry out the
necessary policy reforms for program success, building on the crucial
institutional developments identified by the GOM as part of the Compact
development work funded by an MCC 609(g) grant. Over the past two
years, the GOM has developed a new road strategy and investment program
that includes an organizational restructuring of the road agency and
performance-based disbursements linked to measurable indicators for
routine maintenance, among others. To supplement this, MCC also
successfully negotiated a commitment by the GOM to implement a rigorous
periodic maintenance program covering the country's entire paved road
network, upon which disbursement of MCC funding is contingent. In
December 2006, the GOM passed a decree approving urban land
regulations, which establish the rules governing the use and enjoyment
of land in towns and cities.
G. Sustainability
1. Water and Sanitation
For urban water, the Water and Sanitation Project will help promote
the sector's evolution and solidify its institutions, while addressing
the institutional capacity gap for smaller cities and towns and for
sanitation. The sustainability of the water supply projects in the
three large cities (Nampula, Quelimane, and Pemba) is assured through
the existing state-owned asset-holding company for water (``FIPAG''),
which operates on a self-sustaining basis. The proposed investments
will help consolidate the financial sustainability of FIPAG by
providing additional assets and water sales volume without adding
additional debt. The GOM is establishing a FIPAG-like entity, the Asset
Management Unit (``AMU''), as part of the National Water Directorate,
with the assistance of World Bank funding to improve service delivery
in the smaller cities and towns (Nacala, Guru[eacute], Mocuba, Monapo,
and Montepuez). The AMU--along with the expansion of the scope of the
independent regulatory authority--will provide the basis for cost-based
tariffs to ensure commercially sustainable operations and maintenance
services. For the largest cities, CRA will continue to set tariffs to
ensure full cost recovery. In smaller towns and in rural areas, as well
as for sanitation, tariffs will be set to recover, at a minimum, 100
percent of O&M costs. This is projected to occur by 2015, after a
period of tariff adjustments.
2. Roads
The Roads Project's sustainability depends upon the functioning of
the two major institutions in the sector--the National Road Agency
(``ANE'') and the Road Fund. ANE is undergoing reorganization in order
to provide more
[[Page 40929]]
efficient maintenance and system management. On the financial side,
responsibility for revenue collection, identifying sources of funding,
and financial management is the purview of the Road Fund, which is
under the Ministry of Finance. The Road Fund is capitalized by a fuel
levy, which enables the roads sector to meets its routine maintenance
requirements. Nevertheless, to help ensure asset preservation, MCC
obtained a government commitment from the GOM during Compact
negotiations to fully fund and execute periodic maintenance, which
should occur on a seven-year cycle for paved roads. As a condition
precedent to disbursements for civil works, the GOM will present--to
MCC's satisfaction--a rigorous plan for periodic maintenance covering
the entire paved road network. Under this plan, the near-term periodic
maintenance funding will come from user fees, GOM funds, and donor
funds. Over a 10-year period, however, the plan would phase out donor-
funded periodic maintenance and replace it with user fees.
3. Land
The Land Project addresses sustainability by supporting the
development of an overall strategy for modernization of land services
that emphasizes client service, adoption of technology solutions
adapted to the local context, and strengthening of financial and human
resource capacity. Re-establishing trust and creating efficiency in
public land services will increase citizen and business use of
services, thereby contributing to high-quality, up-to-date records. The
GOM's increased ability to collect land rents from leases of public
land and expanded collection of rationalized service fees will provide
a major improvement in capacity to fund public land services at the
national, provincial, and municipal levels. Finally, the Project will
enable significant progress to improving access to and security of land
tenure, which will help facilitate sustainable economic development
through increased investment.
4. Farmer Income Support Project
Sustainability for the Farmer Income Support Project is linked to
the overall market performance of coconuts and alternate crops. The
market for coconuts and its processed products is growing domestically
and internationally, as are markets for targeted alternate crops. Yield
improvements should help foster sustainability, as should the adoption
by smallholders of improved farming practices and crop diversification,
which can help reduce their risks and vulnerability. The Project would
also promote environmental sustainability, as coconut trees are
particularly productive at carbon sequestration.
5. Environment and Social Impacts
MCC requires that all Projects comply with national laws and
regulations, MCC's Environmental Guidelines and Gender Policy, and
World Bank Operational Procedure 4.12 on Involuntary Resettlement (WB
OP 4.12). None of the Projects is likely to generate significant
adverse environmental, health, or safety impacts. However, several of
the Water and Sanitation Project (``Category A,'' according to MCC's
Environmental Guidelines) activities have the potential for limited
resettlement, alteration of river flows and aquatic habitat, and over-
extraction of surface and/or groundwater resources that may require
mitigation. Since the Roads Project (``Category B'') involves the
rehabilitation and paving of existing roads and not the construction of
new roads, any negative environmental or social impacts are expected to
be mitigatable. Similarly, any potential negative environmental and
social impacts of the Land Project (``Category C'') and the Farmer
Income Support Project (``Category B'') are expected to be mitigatable.
The full scope of the impacts of each Project will be further examined
through various environmental and social assessments that the GOM will
conduct during the first year of implementation. Any negative impacts
or risks identified through these assessments would be mitigated or
managed through adequate approaches to implementation, including
preparing and implementing environmental management plans, resettlement
action plans, and gender analyses, as necessary.
It is important to note that a number of positive environmental and
social benefits should emerge from many of the Compact activities, most
notably from the Water and Sanitation and the Farmer Income Support
Projects. Furthermore, to maximize the positive social impacts of the
Compact and ensure compliance with MCC's Gender Policy, the GOM will
develop: (a) A Gender Integration Plan that includes approaches for
meaningful and inclusive consultations with women and vulnerable and
under-represented groups; and (b) Project-specific gender analyses, the
results of which will be incorporated into final Project designs.
To promote environmental and social sustainability, MCA-Mozambique
will ensure that comprehensive public consultations are developed so
that Project stakeholders, including women and vulnerable groups, are
afforded consultation and an opportunity to provide their inputs to
Project design and implementation. MCA-Mozambique will ensure that
environmental and social mitigation measures are followed for all
Project activities in accordance with the provisions set forth in the
Compact and supplemental agreements.
H. Donor Coordination
MCC has worked closely with various multilateral, bilateral, and
private donors to facilitate Program design. MCC has not only built off
existing successful programs, but has also catalyzed financial support
from several donors. In water and sanitation, MCC coordinated closely
with the water sector working group of donors throughout all stages of
Compact development. For land tenure, MCC coordinated closely with many
donors, including most extensively with USAID, DFID, and the World
Bank. The Land Project is designed to build on prior schemes and to
complement existing initiatives. Specifically, it will support a ``buy-
in'' to a multi-donor program called the Land Fund to allow its
expansion into three more provinces. MCC funds will add greater
emphasis on women's land rights. Finally, the Compact will support
municipal cadastre work, and will draw lessons from the experience
gained under USAID's local governance project, which is piloting
cadastre work in five municipalities currently. In roads, MCC
resources, like all major donor and GOM investments going into the
sector, will fund road improvements in the context of the GOM's five-
year master plan, called the Integrated Road Sector Program
(``PRISE''). MCC's participation in the PRISE would be in the form of
project finance, while other donors will use a mixture of both project
finance and pooled funding.
MCC has also taken a proactive approach to coordinating with
various USG agencies throughout the Compact development and due
diligence process, including: USAID, State Department, USTR, USTDA,
Africa Development Foundation, Treasury Department, Department of
Commerce, Department of Justice, USDA Forest Service, OPIC, U.S.
Export-Import Bank, and the HELP Commission.
I. The ``MCC Effect'' in Mozambique
The ``MCC Effect'' has been pronounced in Mozambique in several
different ways, including: (1) Creating space to increase the voice of
civil society in developing the original proposal; (2) mobilizing other
donor
[[Page 40930]]
activity; and (3) catalyzing the implementation of an urban water and
sanitation strategy for small towns.
In the water/sanitation sector, the prospect of a large MCC
investment led the World Bank to assemble a package of up to $40
million in funding to complement MCC's interventions and invest in
areas beyond MCC's scope. This package will help leverage the impact of
MCC's investments, and is estimated to reach approximately two million
beneficiaries at the national level. Combined with MCC investments in
water/sanitation, which will reach more than 1.9 million people, nearly
four million people in total will benefit from improved water and
sanitation services.
In addition, through the 609(g)-funded Compact development process,
MCC has already succeeded in pushing to develop further Mozambique's
land policy and to make it more effective in practice. This was not
easy given the post-war legacy of extreme sensitivity around land
issues. As a result, other donors are contemplating ramping up their
own initiatives to support interventions on land policy and to engage
the government on needed policy and institutional reform.
Millennium Challenge Compact Between The United States of America
Acting Through the Millennium Challenge Corporation and the Government
of the Republic of Mozambique
Table of Contents
Article 1. Goal and Objectives
Section 1.1 Compact Goal
Section 1.2 Program Objectives
Section 1.3 Project Objectives
Article 2. Funding and Resources
Section 2.1 MCC Funding
Section 2.2 Compact Implementation Funding
Section 2.3 Disbursement
Section 2.4 Interest
Section 2.5 Government Resources; Budget
Section 2.6 Limitations of the Use of MCC Funding
Section 2.7 Taxes
Article 3. Implementation
Section 3.1 Program Implementation Agreement
Section 3.2 Government Responsibilities
Section 3.3 Policy Performance
Section 3.4 Government Assurances
Section 3.5 Implementation Letters
Section 3.6 Procurement
Section 3.7 Records; Accounting; Covered Providers; Access
Section 3.8 Audits; Reviews
Article 4. Communications
Section 4.1 Communications
Section 4.2 Representatives
Section 4.3 Signatures
Article 5. Termination; Suspension; Refunds
Section 5.1 Termination; Suspension
Section 5.2 Refunds; Violation
Section 5.3 Survival
Article 6. Compact Annexes; Amendments; Governing Law
Section 6.1 Annexes
Section 6.2 Inconsistencies
Section 6.3 Amendments
Section 6.4 Governing Law
Section 6.5 Additional Instruments
Section 6.6 References to MCC Web site
Article 7. Entry Into Force
Section 7.1 Domestic Requirements
Section 7.2 Conditions Precedent
Section 7.3 Date of Entry into Force
Section 7.4 Compact Term
Article 8. Additional Government Covenants
Section 8.1 Designated Entity
Section 8.2 Administrative Court
Section 8.3 Certain Financial Practices
Section 8.4 Procurement
Annex I: Program Description
Annex II: Summary of Multi-Year Financial Plan
Annex III: Description of the Monitoring and Evaluation Plan
Millennium Challenge Compact
Preamble
This Millennium Challenge Compact (this ``Compact'') is between the
Government of the United States of America, acting through the
Millennium Challenge Corporation, a United States government
corporation (``MCC''), and the Government of the Republic of Mozambique
(the ``Government'') (individually a ``Party'' and collectively, the
``Parties'').
Recalling that the Government consulted with the private sector and
civil society of the Republic of Mozambique (``Mozambique'') to
determine the priorities for the use of Millennium Challenge Account
assistance and developed and submitted to MCC a proposal based on the
integrated Government development strategy to reduce poverty and
increase household incomes by increasing the productive capacity of the
population in selected provinces in northern Mozambique (Cabo Delgado,
Nampula, Niassa and Zamb[eacute]zia); and
Recognizing that MCC wishes to help Mozambique implement a program
to achieve the goal and objectives described herein (the ``Program'');
The Parties hereby agree as follows:
Article 1. Goal and Objectives
Section 1.1 Compact Goal
The goal of this Compact is to reduce poverty in Mozambique through
economic growth.
Section 1.2 Program Objectives
The objective of the Program (as further described in Annex I) (the
``Program Objective'') is to increase the productive capacity of the
population in selected provinces in northern Mozambique.
Section 1.3 Project Objectives
The objectives of the Projects (as further described in Annex I)
(collectively, the ``Project Objectives'' and each a ``Project
Objective'') are to:
(a) Increase the accessibility, reliability and quality of water
and sanitation services;
(b) Improve access to productive resources and markets;
(c) Establish more efficient and secure access to land,
particularly in the four provinces included in the Program; and
(d) Improve productivity of coconut products and encourage
diversification into other cash crop production.
The Government will take all the steps necessary or appropriate to
achieve the Program Objective and Project Objectives during the Compact
Term (as defined in Section 7.4).
Article 2. Funding and Resources
Section 2.1 MCC Funding
(a) MCC grants to the Government, under the terms of this Compact,
an amount not to exceed Five Hundred Six Million, Nine Hundred Twenty-
Four Thousand, Fifty-Three United States Dollars (US$506,924,053)
(``MCC Funding'') to help the Government implement the Program.
(b) Annex II of this Compact describes the use of MCC Funding.
Section 2.2 Compact Implementation Funding
(a) Of the total amount of MCC Funding, MCC will make up to Twenty-
Five Million, Three Hundred Forty-Six Thousand, Two Hundred United
States Dollars (US$25,346,200) (``Compact Implementation Funding'')
available to the Government under Section 609(g) of the Millennium
Challenge Act of 2003 for activities which may include:
(i) Fiscal and procurement administration activities;
(ii) Administrative activities including start-up costs such as
staff salaries and administrative support expenses such as rent,
computers and other information technology or capital equipment;
(iii) Baseline surveys for monitoring and evaluation;
(iv) Additional work for feasibility studies and development of
technical scopes; and
(v) Other Compact implementation activities approved by MCC.
(b) Notwithstanding anything to the contrary in this Compact, this
Section 2.2 will provisionally apply, after MCC and the Government sign
this Compact, without regard to whether this Compact has entered into
force under Section 7.3.
(c) Compact Implementation Funding is subject to (i) the
limitations on the
[[Page 40931]]
use or treatment of MCC Funding set forth in Sections 2.6 and 2.7 as if
such provisions were in full force and effect, and (ii) any other
requirements and limitations as may be required by MCC in writing in
accordance with this Compact, the Program and relevant legislation.
Section 2.3 Disbursement
In accordance with this Compact and the Program Implementation
Agreement (as defined in Section 3.1), MCC will disburse MCC Funding
for expenditures incurred in furtherance of the Program (each instance,
a ``Disbursement''). The proceeds of such Disbursements will be made
available to the Government, at MCC's sole election, (a) by deposit to
a bank account established by the Government and acceptable to MCC (a
``Permitted Account'') or (b) through direct payment to a provider of
goods, works or services under this Compact. MCC Funding may be
expended only to cover Program expenditures as provided in this Compact
and the Program Implementation Agreement.
Section 2.4 Interest
The Government will pay to MCC any interest or other earnings that
accrue on MCC Funding in accordance with the Program Implementation
Agreement (including by directing such payments to the bank account
outside Mozambique that MCC may from time to time indicate).
Section 2.5 Government Resources; Budget
(a) The Government will provide all funds and other resources, and
will take all actions, that are necessary to carry out the Government's
responsibilities and obligations under this Compact.
(b) The Government will use its best efforts during each year it
receives MCC Funding to ensure that all MCC Funding it receives or is
projected to receive in such year is fully accounted for in the annual
budget of Mozambique on a multi-year basis.
(c) The Government will not reduce the normal and expected
resources that it would otherwise receive or budget from sources other
than MCC for the activities contemplated under this Compact and the
Program.
(d) Unless the Government discloses otherwise to MCC in writing,
MCC Funding will be in addition to the resources that the Government
would otherwise receive or budget for the activities contemplated under
this Compact and the Program.
Section 2.6 Limitations on the Use of MCC Funding
The Government will ensure that MCC Funding will not be used for
any purpose that would violate United States law or policy, as
specified in this Compact or as further notified to the Government in
writing or by posting on the MCC Web site at http://www.mcc.gov/implementation
, including but not limited to the following purposes:
(a) For assistance to, or training of, the military, police,
militia, national guard or other quasi-military organization or unit;
(b) For any activity that is likely to cause a substantial loss of
United States jobs or a substantial displacement of United States
production;
(c) To undertake, fund or otherwise support any activity that is
likely to cause a significant environmental, health, or safety hazard,
where the phrase ``likely to cause a significant environmental, health,
or safety hazard'' has the meaning set forth in environmental
guidelines delivered by MCC to the Government or posted by MCC on its
Web site at http://www.mcc.gov/implementation or otherwise publicly
made available, as the guidelines may be amended from time to time (the
``MCC Environmental Guidelines''); or
(d) To pay for the performance of abortions as a method of family
planning or to motivate or coerce any person to practice abortions, to
pay for the performance of involuntary sterilizations as a method of
family planning or to coerce or provide any financial incentive to any
person to undergo sterilizations or to pay for any biomedical research
which relates, in whole or in part, to methods of, or the performance
of, abortions or involuntary sterilization as a means of family
planning.
Section 2.7 Taxes
(a) Unless the Parties otherwise specifically agree in writing, the
Government will ensure that each of the following is free from the
payment of any taxes, duties, levies, contributions or other comparable
charges (``Taxes'') of or in Mozambique: (i) The Program; (ii) MCC
Funding; (iii) interest or earnings on MCC Funding; (iv) any Project or
activity implemented under the Program; (v) goods, works, services and
other assets and activities under the Program or any Project; (vi)
persons and entities that provide such goods, works, services and
assets or perform such activities; and (vii) income, profits and
payments with respect thereto. The Parties acknowledge and agree that
the foregoing includes, inter alia, value added and other transfers,
property and ad valorem items and import and export of goods (including
for goods imported and re-exported for personal use).
(b) Before any Disbursement, the Government and MCC must have
entered into one or more agreements setting forth the mechanisms for
implementing this Section 2.7, including (i) Waivers of certain filing
and compliance requirements relating to Taxes and (ii) an agreement on
exceptions to paragraph (a) above for (1) Taxes on and contributions
for certain individuals who are nationals or residents of Mozambique;
(2) Taxes other than transfer Taxes and import and export Taxes on
certain entities that are constituted under the laws of Mozambique; and
(3) fees or charges for services that are generally applicable in
Mozambique, reasonable in amount and imposed on a non-discriminatory
basis.
Article 3. Implementation
Section 3.1 Program Implementation Agreement
The Government will implement the Program in accordance with this
Compact and as further specified in an agreement to be entered into by
MCC and the Government dealing with, among other matters,
implementation arrangements, fiscal accountability, disbursement and
use of MCC Funding and procurement (the ``Program Implementation
Agreement'' or ``PIA'').
Section 3.2 Government Responsibilities
(a) The Government has principal responsibility to oversee and
manage the implementation of the Program.
(b) With the prior written consent of MCC, the Government may
designate an entity to implement some or all of the Government's
obligations or to exercise any rights of the Government under this
Compact or the PIA. Such a designation will not relieve the Government
of any designated obligations and rights, for which the Government will
retain full responsibility.
(c) The Government will ensure that no law or regulation in
Mozambique now or hereinafter in effect makes or will make unlawful or
otherwise prevent or hinder the performance of any obligation under
this Compact, the PIA or any other agreement related thereto or any
transaction contemplated thereunder.
(d) The Government will ensure that any assets or services funded
in whole or in part (directly or indirectly) by MCC Funding will be
used solely in furtherance of this Compact and the
[[Page 40932]]
Program unless otherwise agreed by MCC in writing.
Section 3.3 Policy Performance
In addition to the specific policy and legal reform commitments
identified in Annex I, the Government will seek to maintain and to
improve its level of performance under the policy criteria identified
in Section 607 of the Millennium Challenge Act of 2003 and the
selection criteria and methodology used by MCC.
Section 3.4 Government Assurances
The Government assures MCC that:
(a) As of the date this Compact is signed by the Government, the
information provided to MCC by or on behalf of the Government in the
course of reaching agreement with MCC on this Compact is true, correct
and complete in all material respects;
(b) This Compact does not, and will not, conflict with any other
international agreement or obligation of the Government or any of the
laws of Mozambique; and
(c) The Government will not invoke any of the provisions of its
internal law to justify or excuse a failure to perform its duties or
responsibilities under this Compact.
Section 3.5 Implementation Letters
From time to time, MCC may provide information to the Government
through implementation letters on the frequency, form or content of
requests for Disbursements or on any other matter relating to MCC
Funding, this Compact or implementation of the Program (each, an
``Implementation Letter''). The Government will apply such information
in implementing this Compact.
Section 3.6 Procurement
The Government will ensure that the procurement of all goods, works
and services by the Government or any Provider (as defined in Section
3.7(c)) in furtherance of this Compact will be consistent with the
procurement guidelines (the ``MCC Program Procurement Guidelines'') of
which MCC will inform the Government in writing or by posting on the
MCC Web site at http://www.mcc.gov/implementation, or otherwise make
publicly available, as the guidelines may be amended from time to time,
which MCC Program Procurement Guidelines will include, but will not be
limited to, the following requirements:
(a) Open, fair, and competitive procedures must be used in a
transparent manner to solicit, award and administer contracts and to
procure goods, works and services;
(b) Solicitations for goods, works, and services must be based upon
a clear and accurate description of the goods, works and services to be
acquired;
(c) Contracts must be awarded only to qualified contractors that
have the capability and willingness to perform the contracts in
accordance with their terms on a cost effective and timely basis; and
(d) No more than a commercially reasonable price, as determined,
for example, by a comparison of price quotations and market prices,
will be paid to procure goods, works and services.
Section 3.7 Records; Accounting; Covered Providers; Access
(a) Government Books and Records. The Government will maintain, and
will use its best efforts to ensure that all Covered Providers (as
defined in subsection (c) below) maintain accounting books, records,
documents and other evidence relating to this Compact adequate to show
to MCC's satisfaction the use of all MCC Funding (``Compact Records'').
In addition, the Government will furnish or cause to be furnished to
MCC upon its request all such Compact Records.
(b) Accounting. The Government will maintain, and will use its best
efforts to ensure that all Covered Providers maintain, Compact Records
in accordance with generally accepted accounting principles prevailing
in the United States, or at the Government's option and with MCC's
prior written approval, other accounting principles, such as those (i)
prescribed by the International Accounting Standards Committee (an
affiliate of the International Federation of Accountants) or (ii) then
prevailing in Mozambique. Compact Records must be maintained for at
least five (5) years after the end of the Compact Term or for such
longer period, if any, required to resolve any litigation, claims or
audit findings or any statutory requirements.
(c) Covered Provider. Unless the Parties agree otherwise in
writing, a ``Provider'' is (i) any entity of the Government that
receives or uses MCC Funding or any other Program asset in carrying out
activities in furtherance of this Compact or (ii) any third party that
receives at least US$50,000 in the aggregate of MCC Funding (other than
as salary or compensation as an employee of an entity of the
Government) during the Compact Term. A ``Covered Provider'' is (i) a
non-United States Provider that receives (other than pursuant to a
direct contract or agreement with MCC) US$300,000 or more of MCC
Funding in any Government fiscal year or any other non-United States
person or entity that receives, directly or indirectly, US$300,000 or
more of MCC Funding from any Provider in such fiscal year, or (ii) any
United States Provider that receives (other than pursuant to a direct
contract or agreement with MCC) US$500,000 or more of MCC Funding in
any Government fiscal year or any other United States person or entity
that receives, directly or indirectly, US$500,000 or more of MCC
Funding from any Provider in such fiscal year.
(d) Access. Upon MCC's request, the Government, at all reasonable
times, will permit, or cause to be permitted, authorized
representatives of MCC, an authorized United States government
inspector general, the United States Government Accountability Office,
any auditor responsible for an audit contemplated herein or otherwise
conducted in furtherance of this Compact, and any agents or
representatives engaged by MCC or the Government to conduct any
assessment, review or evaluation of the Program, the opportunity to
audit, review, evaluate or inspect facilities and activities funded in
whole or in part by MCC Funding.
Section 3.8 Audits; Reviews
(a) Government Audits. Except as the Parties may otherwise agree in
writing, the Government will, on at least a semi-annual basis, conduct,
or cause to be conducted, financial audits of all disbursements of MCC
Funding covering the period from signing of this Compact until the
earlier of the following December 31 or June 30 and covering each six-
month period thereafter ending December 31 and June 30, through the end
of the Compact Term, in accordance with the terms of the Program
Implementation Agreement. As requested by MCC in writing, the
Government will use, or cause to be used, to conduct such audits an
auditor approved by MCC and named on the list of local auditors
approved by the Inspector General of the Millennium Challenge
Corporation (the ``Inspector General'') or a United States-based
certified public accounting firm selected in accordance with the
``Guidelines for Financial Audits Contracted by MCA'' (the ``Audit
Guidelines'') issued and revised from time to time by the Inspector
General and posted on the MCC Web site at http://www.mcc.gov/implementation.
Audits will be performed in accordance with the Audit Guidelines and be
subject to quality assurance oversight by the Inspector General. An
audit must be completed
[[Page 40933]]
and the audit report delivered to MCC no later than ninety (90) days
after the first period to be audited and no later than ninety (90) days
after each June 30 and December 31 thereafter, or such other period as
the Parties may otherwise agree in writing.
(b) Audits of United States Entities. The Government will ensure
that agreements between the Government or any Provider, on the one
hand, and a United States nonprofit organization, on the other hand,
that are financed with MCC Funding state that the United States
organization is subject to the applicable audit requirements contained
in the United States Office of Management and Budget Circular A-133.
The Government will ensure that agreements between the Government or
any Provider, on the one hand, and a United States for-profit Covered
Provider, on the other hand, that are financed with MCC Funding state
that the United States organization is subject to audit by the
cognizant United States Government agency, unless the Government and
MCC agree otherwise in writing.
(c) Corrective Actions. The Government will use its best efforts to
ensure that Covered Providers take, where necessary, appropriate and
timely corrective actions in response to audits, consider whether a
Covered Provider's audit necessitates adjustment of the Government's
records, and require each such Covered Provider to permit independent
auditors to have access to its records and financial statements as
necessary.
(d) Audit by MCC. MCC will have the right to arrange for audits of
the Government's use of MCC Funding.
(e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used
to fund the costs of any audits, reviews or evaluations required under
this Compact, including as reflected on Annex II.
Article 4. Communications
Section 4.1 Communications
Any document or communication required or submitted by either Party
to the other under this Compact must be in writing and, except as
otherwise agreed with MCC, in English. For this purpose, the address of
each Party is set forth below.
To MCC: Millennium Challenge Corporation, Attention: Vice President
for Operations (with a copy to the Vice President and General Counsel),
875 Fifteenth Street, NW., Washington, DC 20005, United States of
America, Facsimile: (202) 521-3700, Telephone: (202) 521-3600, E-mail:
VPOperations@mcc.gov (Vice President for Operations),
VPGeneralCounsel@mcc.gov (Vice President and General Counsel).
To the Government: The Government of the Republic of Mozambique,
Attention: The Honorable Minister, Ministry of Planning and
Development, Av. Ahmed Sekou Tour[eacute] N. 21, Maputo, Mozambique,
Facsimile: +258-21-495-463, Telephone: +258-21-492-268, E-mail:
aiuba@zebra.uem.mz.
Section 4.2 Representatives
For all purposes of this Compact, the Government will be
represented by the individual holding the position of, or acting as,
the Minister of the Ministry of Planning and Development of the
Republic of Mozambique, and MCC will be represented by the individual
holding the position of, or acting as, Vice President for Operations
(each, a ``Principal Representative''), each of whom, by written notice
to the other Party, may designate one or more additional
representatives for all purposes other than signing amendments to this
Compact. A Party may change its Principal Representative to a new
representative that holds a position of equal or higher rank upon
written notice to the other Party.
Section 4.3 Signatures
With respect to all documents other than this Compact or an
amendment to this Compact, a signature delivered by facsimile or
electronic mail will be binding on the Party delivering such signature
to the same extent as an original signature would be.
Article 5. Termination; Suspension; Refunds
Section 5.1 Termination; Suspension
(a) Either Party may terminate this Compact in its entirety by
giving the other Party thirty (30) days' written notice.
(b) MCC may, immediately upon written notice to the Government,
suspend or terminate this Compact or MCC Funding, in whole or in part,
and any obligation related thereto, if MCC determines that any
circumstance identified by MCC as a basis for suspension or termination
(whether in writing to the Government or by posting on the MCC Web site
at http://www.mcc.gov/implementation) has occurred, which circumstances
include but are not limited to the following:
(i) The Government fails to comply with its obligations under this
Compact, the PIA or any other agreement or arrangement entered into by
the Government in connection with this Compact or the Program;
(ii) An event has occurred that MCC determines makes it improbable
that the Program Objective or any of the Project Objectives will be
achieved during the Compact Term or that the Government will be able to
perform its obligations under this Compact;
(iii) A use of MCC Funding or continued implementation of this
Compact would violate applicable law or United States government
policy, whether now or hereafter in effect;
(iv) The Government or any other person or entity receiving MCC
Funding or using assets acquired in whole or in part with MCC Funding
is engaged in activities that are contrary to the national security
interests of the United States;
(v) An act has been committed or an omission or an event has
occurred that would render Mozambique ineligible to receive United
States economic assistance under Part I of the Foreign Assistance Act
of 1961, as amended (22 U.S.C. 2151 et seq.), by reason of the
application of any provision of the Foreign Assistance Act of 1961 or
any other provision of law;
(vi) The Government has engaged in a pattern of actions
inconsistent with the criteria used to determine the eligibility of
Mozambique for assistance under the Millennium Challenge Act of 2003;
and
(vii) The Government or another person or entity receiving MCC
Funding or using assets acquired in whole or in part with MCC Funding
is found to have been convicted of a narcotics offense or to have been
engaged in drug trafficking.
(c) All Disbursements will cease upon expiration, suspension, or
termination of this Compact; provided, however, MCC Funding may be
used, in compliance with this Compact and the PIA, to pay for (i)
reasonable expenditures for goods, works or services that are properly
incurred under or in furtherance of this Compact before expiration,
suspension or termination of this Compact; and (ii) reasonable
expenditures (including administrative expenses) properly incurred in
connection with the winding up of the Program within 120 days after the
expiration, suspension or termination of this Compact.
(d) Subject to subsection (c) of this Section 5.1, upon the
expiration, suspension or termination of this Compact, (i) any amounts
of MCC Funding not disbursed by MCC to the Government will be
automatically released from any obligation in connection with this
Compact and (ii) any amounts of MCC Funding disbursed by MCC but not
expended before the expiration, suspension or termination of
[[Page 40934]]
this Compact, plus accrued interest thereon will be returned to MCC
within thirty (30) days after the Government receives MCC's request for
such return; provided, however, that if this Compact is suspended or
terminated in part, MCC may request a refund for only the amount of MCC
Funding allocated to the suspended or terminated portion.
(e) MCC may reinstate any suspended or terminated MCC Funding under
this Compact if MCC determines that the Government or other relevant
person or entity has committed to correct each condition for which MCC
Funding was suspended or terminated.
Section 5.2 Refunds; Violation
(a) If any MCC Funding, any interest or earnings thereon, or any
asset acquired in whole or in part with MCC Funding is used for any
purpose in violation of the terms of this Compact, then MCC may require
the Government to repay to MCC in United States Dollars the value of
the misused MCC Funding, interest, earnings, or asset, plus interest
within thirty (30) days after the Government's receipt of MCC's request
for repayment. The Government must use national funds (and no assets of
the Program) to make such payment.
(b) Notwithstanding any other provision in this Compact or any
other agreement to the contrary, MCC's right under this Section 5.2 for
a refund will continue during the Compact Term and for a period of (i)
five years thereafter or (ii) one year after MCC receives actual
knowledge of such violation, whichever is later.
Section 5.3 Survival
The Government's responsibilities under Sections 2.4, 2.6, 2.7,
3.7, 3.8, 5.1(c), 5.1(d), 5.2 and 5.3 of this Compact will survive the
expiration, suspension or termination of this Compact.
Article 6. Compact Annexes; Amendments; Governing Law
Section 6.1 Annexes
Each annex attached hereto constitutes an integral part of this
Compact.
Section 6.2 Inconsistencies
In the event of any conflict or inconsistency between:
(a) Any annex to this Compact and any of Articles 1 through 8, such
Articles 1 through 8 will prevail; or
(b) This Compact and any other agreement between the Parties
regarding the Program, this Compact will prevail.
Section 6.3 Amendments
The Parties may amend this Compact only by a written agreement
signed by the Principal Representatives and subject to the respective
domestic approval requirements to which this Compact was subject.
Section 6.4 Governing Law
This Compact is an international agreement and as such will be
governed by the principles of international law.
Section 6.5 Additional Instruments
Any reference to activities, obligations or rights undertaken or
existing under or in furtherance of this Compact or similar language
will include activities, obligations and rights undertaken by, existing
under or in furtherance of any agreement, document or instrument
related to this Compact and the Program.
Section 6.6 References to MCC Web site
Any reference in this Compact, the PIA or any other agreement
entered into in connection with this Compact, to a document or
information available on, or notified by posting on the MCC Web site
will be deemed a reference to such document or information as updated
or substituted on the MCC Web site from time to time.
Article 7. Entry Into Force
Section 7.1 Domestic Requirements
The Government will take all steps necessary to ensure that (a)
this Compact and the PIA and all of the provisions of this Compact and
the PIA are valid and binding and are in full force and effect in
Mozambique and (b) each such agreement along with any other agreement
entered into in connection with this Compact to which the Government
and MCC are parties, if stipulated in such agreement, will be given the
status of an international agreement.
Section 7.2 Conditions Precedent
Before this Compact enters into force:
(a) The Government and MCC must have executed the PIA and it must
be effective;
(b) The Government will have delivered to MCC:
(i) A certificate signed and dated by the Principal Representative
of the Government, or such other duly authorized representative of the
Government acceptable to MCC, that the Government has completed all of
its domestic requirements in order that the requirements of Section 7.1
have been satisfied;
(ii) A legal opinion from the Attorney-General of Mozambique (or
other legal opinion acceptable to MCC), in form and substance
satisfactory to MCC; and
(iii) Complete, certified copies of all decrees, legislation,
regulations or other governmental documents relating to its domestic
requirements for this Compact to enter into force and the satisfaction
of Section 7.1, which MCC may post on its Web site or otherwise make
publicly available; and
(c) MCC must determine that after signature of this Compact, the
Government has not engaged in any action or omission that is
inconsistent with the eligibility criteria for MCC Funding.
Section 7.3 Date of Entry into Force
This Compact will enter into force on the later of (a) the date of
the last letter in an exchange of letters between the Principal
Representatives confirming that each Party has completed its domestic
requirements for entry into force of this Compact and (b) the date that
all conditions set forth in Section 7.2 have been satisfied.
Section 7.4 Compact Term
This Compact will remain in force for five years after its entry
into force, unless terminated earlier under Section 5.1 (the ``Compact
Term'').
Article 8. Additional Government Covenants
Section 8.1 Designated Entity
The Government affirms that:
(a) If and to the extent the Government elects to designate an
entity to implement some or all of the Government's obligations or to
exercise any rights of the Government under this Compact or the PIA
(any such entity the ``Accountable Entity''), the Government will
create such entity in accordance with the terms described in Annex I.
(b) The Accountable Entity will have the authority to bind the
Government to the full extent of the powers delegated thereto.
(c) The Accountable Entity will be a public institution under
Mozambican law with distinct legal personality and administrative and
patrimonial autonomy within the meaning of Law n[deg] 9/2002 of 12
February (the SISTAFE Law) and the regulations made thereunder. The
Accountable Entity will have the power fully to control its financial
management as required by the PIA and any related agreement
notwithstanding anything to the contrary in the SISTAFE Law.
[[Page 40935]]
Section 8.2 Administrative Court
The Government affirms that under the law of Mozambique:
(a) This Compact is a ``cooperation agreement'' within the meaning
of Article 4, paragraph 1, clause c of Law n[deg] 13/1997 of 10 July
(the ``Administrative Court Prior Review Law'').
(b) MCC Funding does not ``generate public expenditure'' within the
meaning of Article 3 of the Administrative Court Prior Review Law.
Section 8.3 Certain Financial Practices
(a) The Government affirms that MCC Funding does not comprise
Government funds and will be held separately from and never commingled
with Government funds.
(b) The Government will make explicit provision in the law
containing the annual governmental budget for Mozambique for an amount
necessary and adequate to cover the value-added tax, customs duties and
other tax obligations it assumes under this Compact, the PIA and any
related agreement.
Section 8.4 Procurement
The Minister of Finance of the Government will adopt the MCC
Program Procurement Guidelines as the rules governing procurement using
MCC Funding under the terms of Article 8, paragraph 2 of Decree n[deg]
54/2005 of 13 December and will ensure that such guidelines are
published in the official gazette of Mozambique, the Boletim da
Republica.
In Witness Whereof, the undersigned, duly authorized by their
respective governments, have signed this Compact this 13th day of
July, 2007.
Done at Washington, DC.
For Millennium Challenge Corporation, on behalf of the United
States of America, Name: John J. Danilovich, Title: Chief Executive
Officer.
For the Government of the Republic of Mozambique, Name: Aiuba
Cuereneia, Title: Minister of Planning and Development.
Annex I--Program Description
A. Overview
This Annex I to this Compact describes the Program that MCC Funding
will support in Mozambique during the Compact Term and the results to
be achieved using MCC Funding.
The Parties may agree to modify, amend, terminate or suspend the
projects described herein (collectively, the ``Projects'') or to create
a new project by written agreement signed by the Principal
Representative of each Party without amending this Compact; provided,
however, any such modification or amendment of a Project or creation of
a new project does not (1) cause the amount of MCC Funding to exceed
the aggregate amount specified in Section 2.1(a) of this Compact, or
(2) cause the Government's responsibilities or contribution of
resources to be less than specified in this Compact, or (3) extend the
Compact Term.
1. Program Background and Context--Country Background and the Poverty
Reduction Strategy
With a population of 20 million people living in Mozambique,
approximately 70 percent are located in rural areas. The urban
population represents about 30 percent of the national total. Emerging
from a devastating three-decade civil war in 1992, Mozambique has grown
rapidly. Since 2000, its growth rate has stabilized between 7 and 8
percent. As the Country Partnership Strategy (2007) notes, Mozambique
has achieved the highest average growth rate in the past 10 years among
the non-oil producing countries in Africa. Despite Mozambique's rapid
growth, half of the Mozambican population still lives in poverty.
Mozambique's next stage of economic recovery cannot succeed without
well-functioning public services in its cities, given Mozambique's
rapid urbanization.
The Government's action plans for poverty reduction in the past
decade, the Action Plan for the Reduction of Absolute Poverty
(``PARPA''), PARPA I (2001-2005) and PARPA II (2005-2009) are based on
the premise that broad-based economic growth is critical to poverty
reduction. In PARPA I, lack of basic infrastructure services was
identified as one of the major determinants of poverty in Mozambique,
and it focused on infrastructure investments to meet the Government's
ambitious growth objectives detailed in PARPA I. Building on the
lessons learned from PARPA I, the Government outlines investment in
human capital, including water and sanitation services, as one of the
three pillars to meet its sustained growth agenda in PARPA II. As PARPA
II notes, investing in water and sanitation services contributes to
meeting not only the short-term objectives of the Millennium
Development Goals, but also Mozambique's long-term growth and poverty
reduction intentions.
2. Program Description
(a) Compact Goal.
This Compact's goal is to reduce poverty in Mozambique through
economic growth, and increase economic opportunities for Mozambicans
living in the northern region.
(b) Program Objective.
The Program Objective is to increase the productive capacity of the
population in selected provinces in northern Mozambique with the
intended impact of reducing the poverty rate, increasing household
income, and reducing chronic malnutrition in the targeted districts.
(c) Program Results (Expected Impact).
The Program will increase regional Gross Domestic Product (GDP)
across four targeted northern Mozambique provinces--Cabo Delgado,
Nampula, Niassa and Zamb[eacute]zia--by nearly US$75,000,000 in 2015
and US$180,000,000 in 2025. A projected 33 percent of the population of
these provinces would have been poor in 2015 without the Program. The
Program can be expected to reduce the projected poverty rate by over 7
percent by 2015 and by over 16 percent by 2025. More than 270,000
persons will have been lifted out of poverty by 2015 and 440,000
persons will no longer be poor by 2025 as a result of Program
implementation.
(d) Beneficiaries Description.
The Program is expected to benefit nearly 5.0 million persons by
2015 both poor and non-poor, amounting to one half of the projected
population in the affected four provinces.
Over half of all the beneficiaries reside in Nampula, while the
rest reside in the other provinces. Activities specifically targeted to
rural areas account for around one third of Program beneficiaries,
while those focused specifically on urban areas account for another one
third. The roads activities benefit both rural and urban dwellers and
account for the remaining beneficiaries. Approximately 20 percent of
the households benefiting from the Program are headed by women. The
Land Project (as defined below) alone assists 2.6 million persons, but
many of these are also likely to benefit from road reconstruction,
farmer income support, and improved water and sanitation. Thus, to
avoid double-counting, the beneficiaries of the Land Project are not
added to the 5.0 million person total.
3. Consultative Process
Consultation has been an integral part of the development of the
Program. For the initial proposal submitted by the Government in July
2005, the Government conducted its MCC consultative process through two
organizations, the Poverty Observatory, a group of civil society
organizations
[[Page 40936]]
and non-governmental organizations (NGOs), and the Confederacao das
Associacoes Economicas de Mocambique, a private sector trade
association (the ``CTA''). The Poverty Observatory and CTA together
represent the preponderance of NGOs, not-for-profit, and domestic for-
profit businesses in Mozambique.
During the pre-Compact program preparation and definition process,
ongoing consultation continued through various forms including: Input
from a wide variety of stakeholders in the development of terms of
reference for key consultants; information dissemination and exchange
during kickoff sessions for the public of the key consultancies; and
circulation of the interim and final reports of these key consultants.
The Government also held informational sessions throughout this Compact
development process with interested stakeholder groups, including
national, provincial and municipal government representatives, private
sector meetings, donor working groups and other interested parties. The
Program will undergo further timely, participatory, and meaningful
public consultation during the development of the environmental,
social, and resettlement impact studies during implementation of the
Program.
B. Water Supply and Sanitation Project
The Water Supply and Sanitation Project (the ``WSS Project'')
interventions include rural and urban water supply, sanitation and
drainage, rehabilitation of the Nacala dam and reservoir, and capacity
building and institutional strengthening for water sector entities. The
objective of the WSS Project is to increase the accessibility,
reliability, and quality of water and sanitation services. The WSS
Project encompasses water supply and sanitation (including sewerage and
drainage) in cities and towns and an extensive rural water supply
program in three provinces. WSS Project activities address small rural
communities and large provincial capitals--but will notably include a
heretofore neglected market segment in Mozambique--small to mid-sized
town water supply and sanitation. The WSS Project will reduce the
onerous costs associated with the existing provision of water supply;
increase the reliability of water service; and improve the health and
productivity of individuals, households, and firms.
1. Background
Lack of access to water and sanitation is a major barrier to growth
and health, and this critical infrastructure is a major policy priority
of the Government. Mozambique has one of the lowest levels of per-
capita water consumption in the world. With an average of less than 10
liters per day, the country is far below global benchmarks. In
addition, girls and women spend hours fetching water which leaves
little time for child care, income-generating activities, or school
attendance.
Meeting the Millennium Development Goals is a major challenge for
Mozambique as coverage levels for water and sanitation services would
have to almost double for all categories by 2015. The Government
estimates that it would need to at least double its sector investments
in the next ten years in order to meet the Millennium Development Goals
for water and sanitation. Cholera is endemic in major urban areas
mainly due to inadequate sanitation and sewerage services, compounded
by poor water supply services. This prevalence of cholera and other
health impacts caused by poor sanitation also jeopardizes meeting the
Millennium Development Goal of reducing infant and child mortality.
2. Summary of Project and Related Activities
The WSS Project will improve access to safe, reliable water supply
and sanitation services. This project will thereby increase
productivity, reduce water-borne diseases--one of the causes of death
in children under five--and specifically benefit women and girls.
The WSS Project encompasses (a) water supply and sanitation
services in three large cities and three mid-sized towns in the
provinces of Zamb[eacute]zia, Nampula and Cabo Delgado and (b) a water
supply program in Nampula and Cabo Delgado provinces covering rural
areas and small towns. The water supply interventions will be divided
into interventions in cities where water supply services are owned and
managed by the Fundo de Investimento e Patrimonio do Abasticemento de
Agua (FIPAG) and cities where they will be managed by a new Ministry of
Public Works and Housing agency, the Asset Management Unit (AMU). The
AMU will be created by the Government consistent with its policies and
with the support of the World Bank and MCC as its key development
partners by the end of March 2009. The AMU will also manage the
implementation of the sanitation program.
The water supply interventions will focus on the sustainable
utilization of available water resources, maximizing connections to the
network, control of ``unaccounted for water,'' and will be designed
based on results of complete feasibility studies.
As a means of complementing the enhanced water supply, the WSS
Project will improve sanitation systems by investigating feasible
opportunities to expand wastewater treatment, improve the piped sewage
network, and increase the usage of septic systems in the urban centers
and latrines in the peri-urban areas. In addition, storm drains will be
rehabilitated or added to improve drainage efficiency which protects
urban land usage.
The rural water supply component is developed from the Government's
policy of demand-responsive planning, which is predicated on (a)
community articulation of demand and (b) local responsibility for
operations and maintenance. Taking into consideration the lack of local
capacity and concerns over the availability of spare parts and
specialized expertise to carry out complex repairs in rural areas, the
implementation plan will include procurements of well-construction
services in small lots in order to promote the development of local
construction and repair businesses.
The WSS Project includes the following activities:
(a) Improve water supply networks of Nampula, Pemba, and Quelimane,
currently operated by FIPAG.
(b) Build the capacity of local institutions to develop policies
and manage programs.
(c) Construct or rehabilitate water supply systems in Montepuez and
Monapo.
(d) Construct or rehabilitate water supply and sanitation systems
in Nacala, Gurue, and Mocuba under the management of AMU.
(e) Repair and raise the Nacala Dam and reservoir, the main bulk
water source for a city of 290,000 people.
(f) Install and rehabilitate approximately 600 rural water supply
points in Nampula and Cabo Delgado provinces.
3. Beneficiaries
The WSS Project is expected to assist some 1.9 million
beneficiaries by 2015 through improved water systems, wastewater
disposal and storm water drainage. Among the beneficiaries impacted by
the WSS Project by 2015, around one third is expected to be poor.
Nearly 1.6 beneficiaries in six large cities--Gurue, Mocuba, Nacala,
Nampula, Pemba and Quelimane--will have improved infrastructure from
both water supply and sanitation interventions. Virtually the entire
population of each city will be covered by effective storm water
drainage
[[Page 40937]]
improvements. New beneficiaries covered by water systems will vary
depending upon existing coverage, but, in general, water system gains
are considerable with coverage rates relative to projected populations
in 2015 reaching from 40 to 70 percent.
Economic benefits accrue through improved water and sanitation for
a number of reasons. Households with access to house and yard
connections will pay less for the water they consume and, because of
easier access, are likely to use more water for cooking and bathing,
thereby improving health outcomes. In particular, with better access to
water and sanitation, children will benefit from reductions in
morbidity and mortality from diarrhea and malaria. Adults will spend
less of their time incapacitated or caring for sick children. Further,
women will have more time to spend in productive activities when their
sources of water are closer to home, either through house connections
or neighborhood water points.
Improved water supplies also will be provided to 300,000
beneficiaries through small piped systems and rural water-points. These
improvements will reduce the incidence of disabling diarrhea and save
time for women that can be spent on more productive activities. Other
benefits that are not easily measured include improved opportunities
for girls to go to school, rather than assisting their mothers in
household tasks, and reductions in other diseases such as cholera.
4. Sustainability
The WSS Project will be sustainable if it is economically
justified, financially sound, and technologically appropriate and
includes the appropriate institutional arrangements.
Institutional Sustainability
For urban water, the WSS Project will help promote the sector's
evolution and solidify its institutions. The WSS Project will work in
collaboration with the Water Services and Institutional Support Project
(WASIS) funded by the World Bank to mitigate as many serious
institutional risks as possible. In large cities presently under the
responsibility of FIPAG, the WSS Project will facilitate graduating
from the World Bank's successfully piloted management contract
structure to leases that entail greater risk/reward for private
operators. For smaller cities and towns, the MCC program will pilot and
roll out an AMU based on the delegated management model. The AMU will
be empowered to manage assets and to plan and oversee the execution of
investments. The AMU will assist in the engagement of third-party
operators for these smaller cities and towns through contracts with the
Provincial Water Boards established to contract services on behalf of
their constituent municipalities. The AMU addresses the institutional
capacity gap for smaller cities and market towns, and will be
established in Zamb[eacute]zia, Nampula, and Cabo Delgado where the WSS
Project is focused.
Financial Sustainability
Design and planning of water supply and sanitation services for the
WSS Project will be based on the demand-responsive (rather than a
supply-led) approach and will be based on consumer preferences and
willingness to pay. In the FIPAG cities, tariffs will be set to ensure
full cost recovery. In the AMU municipalities and the rural areas,
tariffs will be set to recover, at a minimum, 100 percent of operations
and maintenance (including the replacement of all assets with a useful
economic life of less than seven years) after a period of tariff
adjustments, but no later than 2015.
Environmental and Social Sustainability
The key to ensuring environmental and social sustainability of the
WSS Project is ongoing public consultation. MCA-Mozambique (described
below) will ensure that comprehensive public consultation plans are
developed such that WSS Project stakeholders, including women and
vulnerable groups, are afforded consultation and an opportunity to
provide their inputs to WSS Project design and implementation. MCA-
Mozambique will also take steps to ensure that the interests and views
of women and vulnerable groups are represented in any of the provincial
or community water boards or other entities responsible for advising on
design, ownership, management, and operation of water and sanitation
systems funded under this Compact.
MCA-Mozambique will ensure that environmental and social mitigation
measures are followed for all Project activities in accordance with the
provisions set forth in this Compact and in relevant supplemental
agreements. The Stakeholders Forums (as defined in Section F of this
Annex I) will incorporate representatives of civil society that will
serve as a link between local NGOs and program managers.
5. Environmental and Social Issues
Overall, the WSS Project is classified as ``Category A'' according
to MCC Environmental Guidelines due to potential social and
environmental impacts associated with several Project activities,
including the rehabilitation of a large dam and the construction of
municipal sanitation systems and off-site wastewater treatment
facilities. However, a number of the individual Project activities will
be classified ``Category B'' and, as such, may not require full
Environmental Impact Assessments (``EIAs'') as defined in the MCC
Environmental Guidelines. All Project activities will require
Environmental Management Plans (``EMPs'') and, as applicable, Project
activity-specific Resettlement Action Plans (``RAPs'') will be
developed and implemented in compliance with the World Bank Policy on
Involuntary Resettlement (OP 4.12) prior to the start of construction
activities.
Environmental and Social Impacts
The rehabilitation of the Nacala Dam (considered a ``large'' dam
according to MCC Environmental Guidelines) has the potential for
resettlement, alteration of river flows and aquatic habitat, and the
significant but temporary reduction of the region's primary source of
potable water during re-construction and will thus require a full EIA.
Although the construction or rehabilitation of sanitation systems will
provide significant positive environmental benefits, the scope of
potential negative environmental and social impacts that may arise from
constructing off-site wastewater treatment facilities and potential
pollution problems related to discharges and operation of the systems
necessitate preparation of an EIA. Investments in expanding and
improving water supply networks have the potential for (a) limited
resettlement, (b) rehabilitation of several small dams, (c) over-
extraction of surface and/or groundwater resources, and (d) project
proximity to important cultural, natural, and archeological resources.
The rural water supply points activity may have potentially adverse
impacts resulting from limited resettlement and over-extraction of
ground water resources.
Potential direct, indirect, induced, and cumulative environmental
impacts of each of the WSS Project activities will be further examined
through the EIAs and environmental assessments that will be conducted
during the feasibility and design phase for each WSS Project activity.
For the water supply activities, MCA-Mozambique will ensure that
feasibility studies include efforts to identify the most appropriate
and environmentally sustainable water sources to meet future demand. In
addition, MCA-Mozambique will ensure that for all WSS Project
activities EMPs are developed, implemented and
[[Page 40938]]
monitored in accordance with the provisions of this Compact and any
relevant supplemental agreements. MCA-Mozambique will ensure that
environmental and social assessment responsibilities are included in
the bidding documents for the design or supervisory firms, construction
firms, independent technical auditing firms and any project management
advisors, as needed. Disbursement of MCC Funding for the WSS Project
will be contingent upon issuance of environmental licenses, as needed,
or any other required permits. WSS Project activities, for which MCC
disburses funds, should be consistent with the outcomes of the relevant
EIAs, MCC Environmental Guidelines, and in compliance with applicable
Mozambique environmental law and regulations.
To maximize the positive social impacts of the WSS Project and
ensure compliance with MCC's Gender Policy, MCA-Mozambique is required
to (a) develop a gender integration plan that includes approaches for
meaningful and inclusive consultations with women and vulnerable/
underrepresented groups; Project activity-specific gender analyses, as
appropriate; and strategies for incorporating findings of the gender
analyses into final Project designs; and (b) ensure that final Project
activity designs are consistent with and incorporate the outcomes of
the gender integration plan.
Environmental Permitting and Oversight
Through this Compact MCC has the option of providing a capacity
building grant to the Ministry of Coordination on Environment
(``MICOA'') to facilitate their ability to respond to the increased
workload arising from the Government's implementation of this Compact.
This assistance would enhance MICOA's ability to, inter alia,
adequately review all Compact-related environmental studies; issue
environmental permits on a timely basis as provided in Mozambique
environmental law and regulations; and hire, train and appropriately
resource additional staff, as needed, in the provincial offices to
carry-out effective environmental oversight and auditing of the
implementation of Compact Projects.
6. Consultative Process
AMU operation is envisioned to have strong municipal representation
through the creation of functioning Provincial Water Boards, and
represents the Government's preferred alternative to delegate the
management of water supply and sanitation in towns and smaller cities.
This representative structure for municipal services was the product of
consultation and discussion, including forums to solicit input from
stakeholders.
7. Donor Coordination
In developing the WSS Project, MCC participated in numerous donor
meetings to explain and receive comments on the Government proposal as
it changed over time. Through meetings with the Water Donors Working
Group and the Municipal Development Working Group, MCC was able to
gather information on how the WSS Project will fit into the planned
activities of other donors. The geographical focus of the WSS Project
complements the other water sector interventions financed by other
donors. The institutional development activities funded by MCC and the
World Bank will facilitate future operations by the Government and
development partners in the sector.
Successful execution of the WSS Project requires close coordination
with other donors and actors in the water sector. The Government and
the Water Donors Working Group are developing a Rural Water Supply
Sector Wide Approach and are beginning the process for an Urban Water
Strategy and Sanitation Strategy (as discussed below). The Government
through the WSS Project will work closely with the World Bank's WASIS
project, which will support institutional development of the AMU and
the Provincial Water Boards.
While United States Agency for International Development (USAID) is
not directly active in the Water Sector Working Group it does
participate in the Municipal Development Working Group and is active in
health related issues, both of which are strongly linked to water
supply and sanitation. MCC has coordinated with the USAID Mission in
Maputo and with the Global Health Bureau in Washington. Although USAID
will not be directly involved in the implementation of the WSS Project,
close coordination will be maintained to ensure synergies between
existing and future activities and to capitalize on USAID's long term
in-country presence.
8. Policy, Legal and Regulatory Reforms
In order to reach the full benefits of the WSS Project:
(a) Urban Water Strategy. The Government agrees to finalize an
Urban Water Strategy, which will be vetted and agreed to by the major
Government stakeholders (Dire[ccedil]ao Nacional de Agua (DNA), Fundo
de Investimento e Patrimonio do Abastecimento Auga- Water Supply
Investment Fund (FIPAG), Conselho de Regula[ccedil]ao de Agua (National
Regulatory Authority) (CRA), Ministerio da Administra[ccedil]ao Estatal
(Ministry of State Administration (MAE), and others) and have broad
consultation with the major water sector donors, as set out in the WSS
Project work plans.
(b) Sanitation Strategy. The Government agrees to finalize a
Sanitation Strategy, which will be vetted and agreed to by the major
Government stakeholders (DNA, CRA, MAE, and others) and have
consultation with the major water and sanitation sector donors, as set
out in the WSS Project work plans.
(c) Creation of the Asset Management Unit. The Government will
create an AMU according to the criteria set out in the PIA in the form
of conditions to Disbursements of MCC Funding.
(d) Expansion of CRA. The Government agrees to expand the
regulatory authority of CRA to cover delegated management under the AMU
for both water supply and sanitation, in addition to undertaking other
legal or regulatory measures as described in the PIA in the form of
conditions to Disbursements of MCC Funding.
(e) Operation and Maintenance Costs for Sanitation. The Government
agrees to develop the procedures to incorporate the operation and
maintenance costs for the sanitation activities into the FIPAG's water
supply billing.
(f) Rural Water Supply Strategy. The Government will create a
public and publishable Rural Water Supply Implementation Manual
(MIPAR).
C. Roads Project
The roads project interventions include key segments of the Estrada
Nacional/National Route 1 (``N1'') in Zamb[eacute]zia, Nampula and Cabo
Delgado Provinces (the ``Roads Project'').
1. Background
Two-thirds of Mozambique's population depend on agriculture (and
out of these about 90 percent on subsistence agriculture) for their
livelihood. The cash crop sector is in a reconstruction stage and is
experiencing development problems, especially the cashew sector. Other
planted cash crops are sugar cane, tea, tobacco, and coconut. The
importance of roads in agriculture is highlighted in the World Bank's
Mozambique Agriculture Strategy, 2006, which notes that ``Rebuilding
roads and bridges is now a priority and a necessary condition for any
growth in the agriculture sector.''
Extraction of timber is limited because of lack of infrastructure
including poor road conditions but has
[[Page 40939]]
a high development potential due to the richness of high quality timber
species. Fisheries, particularly shrimp and prawn, are of importance,
with a high potential for production increases. Mozambique has
considerable mineral resources, such as coal, tantalite, ilmenite,
graphite, iron ore, bauxite, salt, and potentially developable
resources such as gold, petroleum, and gas. All of these sectors depend
upon reliable transportation networks and roads in particular.
The Administrac[atilde]o Nacional de Estradas (ANE) and the Fundo
de Estradas, an independent agency that manages road maintenance
funding (the ``Road Fund''), prepared a Road Sector Strategy 2007-2011
(``RSS'') report. That strategy lays out the Government's plan to
enhance, improve, and preserve the classified road network of the
country.
The RSS provides the broad framework for the Government's road
sector development for the entire country. The Government and MCC
worked together to identify appropriate investments in the provinces of
the Roads Project based upon the strategic work of the Government under
an MCC grant and through other donors' efforts.
2. Summary of Project and Related Activities
The objective of the Roads Project is to improve access to markets,
resources, and services; reduce transport costs for the private sector
to facilitate investment and commercial traffic; expand connectivity
across the northern region and down towards the southern half of the
country; and increase public transport access for individuals to take
advantage of job and other economic opportunities.
It is planned that the Roads Project will rehabilitate 491
kilometers of high-priority roads in three (3) provinces. The road
segments will include Rio Lurio--Metoro in Cabo Delgado (74
kilometers), Namialo--Rio Lurio (148 kilometers) and Nampula--Rio
Ligonha (102 kilometers) in Nampula, and Nicoadala--Chimuara (167
kilometers) in Zamb[eacute]zia.
Specifically, MCC Funding for the Roads Project will support the
following:
(a) Design, environmental assessment, as needed (to include, if
necessary, supplemental EIAs), and construction activities for the
improvement of the N1;
(b) Implementation of environmental and social mitigation measures
as identified in the EIA, or as otherwise may be appropriate, to
include compensation for physical and economic displacement of
individuals, residences and businesses affected by such rehabilitation
and construction, consistent with the World Bank's Operational Policy
on Involuntary Resettlement (OP 4.12), and implementation of HIV/AIDS
awareness plans;
(c) Design and construction of drainage structures, as may be
required;
(d) Design and construction of all necessary new bridges and
rehabilitation of existing bridge structures, as may be required;
(e) Posting of signage and incorporating other safety improvements;
and
(f) Project management, supervision and auditing of such
improvements and upgrades.
3. Beneficiaries
In total, by 2015, nearly 2.3 million beneficiaries in districts
adjoining the roads will have improved access in the three provinces
affected. Over one third of those beneficiaries are likely to be poor.
More than 60 percent of the beneficiaries are in Nampula; somewhat less
than 40 percent are in the other two provinces. The beneficiaries in
Cabo Delgado are proportional to population, while relatively fewer
beneficiaries are in Zamb[eacute]zia. Benefits will accrue to vehicle
users on the rehabilitated and resurfaced roads as vehicle operating
costs go down, and time spent in travel is reduced with vehicles
traveling safely at higher speeds. In addition, road improvements will
induce additional growth in traffic as better roads make transportation
more affordable for agriculture, industry and commerce. These benefits
should result in reductions in the prices of goods and improvement in
farm-gate prices if savings in fuel and other vehicle operating costs
are passed on to producers and consumers. It is also expected that bus
operations will become more efficient, improving access to public
transportation. This should make it easier for the population to secure
access to health, education, and employment. Over half of the
population is of working age and will be able to take advantage of
improved employment opportunities.
4. Sustainability
Sustainability on the Roads Project is dependent on three factors.
First, the establishment of functional provincial ANE offices will be
crucial, since road maintenance will largely be implemented by such
offices. Secondly, the Programa Integrado do Sector de Estradas
(``PRISE'') is also critical to sustainability, because this sector-
wide approach for the road sector is designed to support a coherent
Mozambican-owned and led road program, which should be equipped to
plan, finance, implement, monitor and evaluate the road sector. Third,
the Road Fund established by the Government has been designed to manage
the financial resources intended for the road sector and to allocate
the resources for the maintenance of various categories of roads. The
Road Fund also has responsibility for road sector monitoring and
evaluation.
Environmental and Social Sustainability
The key to ensuring environmental and social sustainability of the
Roads Project is ongoing public consultation. MCA-Mozambique will
ensure that comprehensive public consultation plans are developed such
that Roads Project stakeholders, including women and vulnerable groups,
are afforded consultation and an opportunity to provide their inputs to
Roads Project design and implementation. MCA-Mozambique will ensure
that environmental and social mitigation measures are followed for all
Project activities in accordance with the provisions set forth in this
Compact and in relevant supplemental agreements. The Stakeholders
Forums will incorporate representatives of civil society that will
serve as a link between local NGOs and program managers.
5. Environmental and Social Issues
The Roads Project is classified as ``Category B'' according to the
MCC Environmental Guidelines given the potential for: (a) Increased
deforestation and related flooding; (b) resettlement; and (c) increased
human trafficking and disease transmission, including HIV/AIDS, along
the routes to be upgraded. All Roads Project activities will require
environmental assessments, EMPs, and, as applicable, Road-specific RAPs
that will be developed and implemented in compliance with the World
Bank Policy on Involuntary Resettlement (OP 4.12) prior to the start of
construction activities.
Environmental and Social Impacts
It is unlikely that the proposed Roads Project activities will
result in any significant negative environmental impacts given that the
Roads Project involves the rehabilitation and paving of existing roads
and not the construction of new roads. However, the potential direct,
indirect, induced, and cumulative environmental impacts of the Roads
Project activities will be further examined through the execution of
environmental assessments that will be conducted during the feasibility
and design phase of the Roads Project. In
[[Page 40940]]
addition, MCA-Mozambique will ensure that EMPs are developed,
implemented and monitored during the project in accordance with the
provisions of this Compact and any relevant supplemental agreements.
MCA-Mozambique will ensure that environmental and social assessment
responsibilities are included in the bidding documents for the design
or supervisory firms, construction firms, independent technical
auditing firms and any project management advisors, as needed.
Disbursement of MCC Funding for the Roads Project will be contingent
upon issuance of environmental licenses, as needed, or any other
required permits. Roads Project activities, for which MCC disburses
funds, should be consistent with the outcomes of the relevant
environmental assessments, MCC Environmental Guidelines, and in
compliance with applicable Mozambique environmental law and
regulations.
Given the strong evidence linking transport routes to the spread of
HIV/AIDS, MCA-Mozambique will also develop an action plan for
incorporating sustainable and well-targeted HIV/AIDS awareness programs
into all phases of road works implementation. To help address concerns
that the expansion/upgrade of the road network in northern Mozambique
does not exacerbate human trafficking problems in the region by opening
up or improving routes used by traffickers, MCA-Mozambique will develop
an action plan for incorporating targeted anti-trafficking in persons
awareness programs into the execution of road activities.
To maximize the positive social impacts of the Roads Project and
ensure compliance with MCC's Gender Policy, MCA-Mozambique is required
to (a) develop a gender integration plan that includes approaches for
meaningful and inclusive consultations with women and other vulnerable/
underrepresented groups; a Project-specific gender analysis, as
appropriate; and strategies for incorporating findings of the gender
analysis into final Project designs; and (b) ensure that final Project
activity designs are consistent with and incorporate the outcomes of
the gender integration plan.
Environmental Permitting and Oversight
Through this Compact MCC has the option of providing a capacity
building grant to the MICOA to facilitate their ability to respond to
the increased workload arising from the Government's implementation of
this Compact. This assistance would enhance MICOA's ability to, inter
alia, adequately review all Compact-related environmental studies;
issue environmental permits on a timely basis as provided in Mozambique
environmental law and regulations; and hire, train, and appropriately
resource additional staff in the provincial offices to carry-out
effective environmental oversight and auditing of the implementation of
Compact projects.
6. Consultative Process
In addition to the process mentioned in the WSS Project section for
the PARPA, the Government, in developing the PRISE, consulted a wide
range of stakeholders. The consultative process was timely, meaningful,
and participatory. It involved three different methods of obtaining
information, including: (a) A formal survey among donors and road
sector professionals; (b) consultations with provincial authorities;
and (c) focus groups with road users, government officials, and other
stakeholders. The stakeholder consultations included provincial
consultations with provincial government leaders, provincial road
authorities, directors of public works, ANE provincial delegates,
provincial roads consultants, and donors. They also included 18 focus
groups which were comprised of contractors, public servants,
agricultural bodies, tourism operators, transporters and road users,
public transport passengers, and private sector non-transporters.
7. Donor Coordination
In developing the Roads Project, MCC held coordination meetings
with many stakeholders in the donor community. MCC participated
actively in the planning meetings for the PRISE and, since November
2005, attended the Road Sector Donors meetings whenever MCC
representatives were in Mozambique. The interventions financed by other
entities do not conflict with the interventions of the Roads Project;
they contribute to create a more comprehensive road network by
incorporating roads that connect to the northern sections of the N1
that will be improved.
Donors with major commitments and experience in the road sector
include: European Union, World Bank, Japan, the Swedish International
Development Cooperation Agency, the African Development Bank, Agence
Fran[ccedil]aise de D[eacute]veloppement, the International Fund for
Agricultural Development, Irish Aid, Italian Cooperation, Germany's
Kreditanstalt f[uuml]r Wiederaufbau, USAID, the United Kingdom's
Department for International Development (DFID), the Danish
International Development Agency, the Norwegian Agency for Development
Cooperation, the Arab Bank for Economic Development in Africa, the
Islamic Development Bank, the Nordic Development Fund, and the
Organization of Petroleum Exporting Countries' Overseas Fund for
International Development.
USAID is involved with the Roads Sector Working Group and has
historically provided technical assistance and investments in the rural
road network. MCC has coordinated with the USAID Mission in Maputo.
Although USAID will not be directly involved in the implementation of
the Roads Project, close coordination will be maintained to ensure
synergies between existing and future activities and to capitalize on
USAID's long-term in-country presence.
8. Policy, Legal and Regulatory Reforms
In order to reach the full benefits of the Roads Project:
(a) The Government will ensure compliance of the roles and
responsibilities of the Road Fund and ANE, as set out in the PIA in the
form of conditions to Disbursement of MCC Funding.
(b) The Government will undertake the necessary policies to ensure
that they continue to meet all of the PRISE Performance Assessment
Framework indicators.
(c) The Government will undertake a program to ensure periodic
maintenance of the entire paved road system.
D. Land Tenure Services Project
1. Background
Land is an important asset for income generation and wealth
creation. Land has been at the center of a long-standing debate about
different choices and visions for growth in rural areas, and is of
increasing importance to urban development as well. In 1997 Mozambique
adopted a new legal framework on land tenure aiming to address
equitable access to land tenure security for local communities and
private sector including recognition of customary rights. This new
legal setup has been recognized by a broad range of actors as a good
policy and legal framework. However, implementation of this framework
has been slow and requires an efficient land administration system to
play the primary role in increasing land tenure security and improving
access to land, thereby enabling the use of this asset most effectively
for economic growth.
On one hand, the lack of simple, fair and clear procedures for
acquiring and
[[Page 40941]]
transferring rights to land is a constraining factor for private sector
investment. On the other hand, there have been concerns about improving
and securing local community and small farmer land-use rights. As
Mozambique has moved on from post-war reconstruction toward a market-
based economy, there is an increasing demand for land access and for
issuance of registered titles to land rights. This is placing increased
pressure on the land administration services, which are already limited
in their ability to effectively implement the existing legislation.
The Land Tenure Services Project (the ``Land Project'') will work
on improving policy, upgrading the public land administration agencies
(the title registry and cadastre), and facilitating site-specific land
access. These three main pillars will address concerns widely shared
across private sector, the Government, and civil society with solutions
that bring together their diverse perspectives. The benefits will reach
private sector and local communities in the four selected provinces.
The policy work and precedent set by the investments made in northern
Mozambique will have a national impact, thereby contributing to an
improved investment climate in the country and broader participation in
the rural economy. The Land Project will enable people to increase
their incomes and wealth as: (a) Risk and transactions costs are
reduced; and (b) more secure access to land induces increased
investment and more productive land uses.
2. Summary of Project and Related Activities
The objective of the Land Project is to establish more efficient
and secure access to land particularly in the four provinces included
in the Program. The Land Project will support the unified advance by
the Government and stakeholders on both policy development and its
implementation. This will enable the translation of local and
international best practices into an improved policy and regulatory
framework. At the same time, the Land Project will help specific
beneficiaries meet their immediate needs for registered land rights and
better access to land for investment.
The Land Project is comprised of three mutually reinforcing
activity areas: (a) Support for an improved policy environment,
including addressing implementation problems for the existing land law
and engaging in regulatory review to improve upon it (the ``Policy
Activity''); (b) building the institutional capacity to implement
policies and provide quality public land-related services (the
``Capacity Building Activity''); and (c) facilitating access to land
use by helping people and business with (i) clear information on land
rights and access; (ii) resolution of conflict with more predictable
and speedy resolution of land and commercial disputes--which in turn
creates better conditions for investment and business development; and
(iii) registering their grants of land use (land titles to long-term or
perpetual-use rights) (the ``Site Specific Activity'').
(a) Land Policy Monitoring (the Policy Activity)
The Land Law adopted in Mozambique in 1997 made significant
improvements to the legal, institutional and technical framework for
providing more secure land use rights and access to land for all groups
in society. However, land policy today is also under stress due to the
implications of having only partially implemented this framework. These
two trends suggest that Mozambique stands to significantly benefit from
a participatory engagement in monitoring progress; development of a
new, coherent vision that links together all levels of responsibility
and capacity for the provision of land services; and, the pursuit of an
agenda of regulatory and administrative change. Additionally, an
aggressive approach to non-judicial dispute resolution (conciliation,
mediation and arbitration) as well as legal professional training and
public education about land administration and land rights is important
to the transformational goals of the Land Project. Land tenure disputes
are plentiful, yet, there are few sources of legal support for rural
people. Even private enterprises find it difficult to access high
quality legal services related to land issues. The Policy Activity will
help address these issues.
Specifically, MCC Funding will support the following five sub-
activities under the Policy Activity: (i) The further development of a
national land administration vision and a coherent implementation
strategy based on a needs assessment that will examine regulations,
administrative processes, information systems, institutional structure,
and human resources; (ii) the provision of technical and logistical
support for a process to assess and monitor progress on land
legislation, in coordination with the Land Policy Consultative Forum
created with support from the Land Project; (iii) the development and
implementation of a broad campaign of public education, outreach and
awareness raising of non-judicial dispute resolution methods with
partners, including but not limited to Centro de Arbitragem,
Concilia[ccedil][atilde]o e Media[ccedil][atilde]o, as effective cost
and time-saving mechanisms to resolve disputes; (iv) investment in
expanding an on-going program for legal and judicial training, training
for mediators and arbitrators, studies and advocacy of the Legal and
Judicial Training Center (``CFJJ''), as well as developing new
curriculum on mediation and arbitration training for CFJJ's paralegal
students working in the northern provinces on commercial and land
issues; and (v) provision of advisory services, including international
best-practice knowledge transfer, to the National Directorate of Lands
and Forests.
(b) Land Administration Capacity Building (the Capacity Building
Activity)
The institutional capacity to implement and enforce the present
land law and its regulations and to provide high quality efficient
services to clients is limited. Limitations include procedural
complexity, insufficiently trained personnel and inadequate
information, communications and profession-specific technology access
at the national, regional and local offices. Addressing these
limitations to establish an effective land registry system will yield
more transparent, reliable and faster processes for accessing land and
meet--as well as further motivate--a growing demand for formal land
rights registration. This, in turn, will improve the investment climate
while ensuring security of tenure for land-holding households and local
communities. At the same time, while allowing for more affordable
service fees, these improvements will generate the revenue base to
sustain high quality services over time. At the municipal level,
effective land administration capacity will reinforce decentralization
by bolstering the information base for investment and fiscal planning.
Under the Capacity Building Activity, MCC Funding will support
investments and reform processes that will go a long way toward
strengthening public land administration services.
Specifically, MCC Funding will support the following intervention
areas: (i) Implementation of a comprehensive approach to professional
development and training (including in local requirements and
international best practices in cadastral and registration information
systems, surveying and titling procedures, land law, and other topics)
at the national, provincial and local levels, thereby increasing
knowledge and awareness of
[[Page 40942]]
land tenure issues, land records management and surveying techniques,
and providing a better understanding of development trends in land
policy and in the demand for their services; (ii) the further
development of the National Land Information System (LIMS), which was
first funded by the Italian government but still requires strategic
planning, final design and completion of implementation at the
provincial level; (iii) investment in and technical assistance to the
upgrading of facilities for four provincial and selected district land
service offices; (iv) investment in and technical assistance for
cadastral development in selected municipalities, including pilot
implementation of cadastral registration in selected neighborhoods
within each municipality. The Land Project will develop methods and
criteria to select the particular districts, municipalities and
neighborhoods. Such criteria and methods will be subject to approval by
MCC.
(c) Site Specific Facilitation of Land Access (the Site Specific
Activity)
In the PARPA, the Government committed to undertaking a mapping and
inventory initiative to identify and record the actual legal and
economic situation of land holdings including the type of land rights
(by state authorization, good faith and community) and existing land
uses. In the selected, more economically dynamic areas, this will
result in readily available information for many purposes including for
the planning and the management of access to natural resources
(including land), a reduction in the risk of land disputes, and quicker
and easier access to land for investors and small businesses (farm and
non-farm). At the same time and often in these same dynamic areas,
communities increasingly seek to enhance the security of their tenure
or to engage in business relations with investors through joint
ventures or the leasing out of their lands (as allowed for in the land
law upon boundary delimitation and title issuance). Several donors
worked with the Government to establish the Community Land Initiative.
This ``land fund'' responds to demand with grants of financial support
and technical assistance, ensuring an approach fully compliant with the
technical annex to the land law and thereby reducing the risk of
disputes and errors. Finally, it is important to provide immediate
solutions to help investors and small businesses more expediently meet
their land access and registration needs. Discussions with CTA and
others suggests that some simple information and facilitation services
will allow progress within the current institutional and regulatory
climate while the other Land Project activities work to transform the
land administration system.
Specifically, MCC Funding will support: (i) The implementation of
the mapping and inventory exercise and, as part of that process, the
piloting of a sound approach to area-wide registration of land rights
in selected areas characterized as more dynamic and/or conflictive;
(ii) provision of additional funding to the existing program of support
for the Community Land Initiative to allow its operation in
Zamb[eacute]zia, Nampula and Niassa Provinces (the land fund is already
operating in Gaza, Manica and Cabo Delgado with support from other
donors); and (iii) make available simple informational tools to
streamline investor and farmer access to land in northern Mozambique,
such as legal information, guidelines regarding the requirements for
negotiating land access with local communities, printed site maps
showing land use and existing titles, and other tools, e.g.,
specialized seminars.
3. Beneficiaries
The Land Project supports the national policy monitoring and reform
process by introducing improved approaches to land registration and
records management. Broadly speaking, the Project will assist anyone
(local community and private sector) who has or acquires land-use
rights. In particular, the Land Project is projected to benefit 1.9
million people by 2015 and 2.6 million people by 2029 by assisting four
groups of beneficiaries. As a result, the value of investment on land
affected by the Project will increase and the time and cost to register
a land use right will be reduced.
Local communities that solicit assistance from the Community Land
Initiative will benefit from registration of land rights and reduced
transaction costs through improved security for productive activities
on their land and increased opportunity for arrangements with outside
investors for business development. Approximately 200 communities are
projected to have their lands delimited over four years under the Land
Project, enabling an estimated average of 3000 hectares per community
to become available for commercial uses. Urban households in selected
municipalities and rural smallholders in selected districts and sites
selected for land service upgrading and mapping will save time and
expense when accessing and/or registering land rights. These
beneficiaries include nearly half a million urban parcel holders and
over 220,000 rural smallholders. Investors (both local and foreign),
who currently can face high transactions costs in gaining access to a
registered land use right, will also have substantial savings. Benefits
are expected to accrue to more than 150 firms. Additional value added
can be expected from reduced conflict and increased job creation over
time as a result of new commercial investments encouraged by a more
efficient land use regime; however, these benefits are not easily
quantifiable.
4. Sustainability
The Land Project addresses sustainability by supporting the
development of an overall strategy for modernization of land services
that emphasizes client service, adoption of technology solutions
adapted to the local context, and financial and human resource
capacity. Re-establishing trust and creating efficiency in public land
services will increase citizen and business use of services, thereby
contributing to records being kept up-to-date. The increased ability to
collect land rents from leases of public land and expanded collection
of rationalized service fees will provide a major improvement in
capacity to fund public land services at the national, provincial, and
municipal levels. Finally, the program will enable significant progress
toward access to and security of land tenure, which will help
facilitate sustainable economic development.
5. Environmental and Social Issues
The Land Project is classified as ``Category C'' according to the
MCC Environmental Guidelines as Project activities are unlikely to have
immitigable, adverse environmental or social impacts.
Environment and Social Impacts
Given that the major proposed interventions in the Land Project do
not contemplate the construction of new, or the significant expansion
of existing buildings or structures, or the introduction of new
technologies or productive processes, this Project is unlikely to
generate any significant adverse environmental, health or safety
impacts or risks. While the implementation of the Land Project will
likely lead to an increase in the demand of certain public services
(e.g., electricity, potable water, waste disposal) and products (e.g.,
office supplies, printed materials) for the operation of new equipment
or the performance of training, consultation and information
activities, this increase
[[Page 40943]]
in demand would be negligible. Thus, neither specific environmental
studies nor environmental impact management measures are anticipated
for the Land Project.
The Land Project includes several activities that will deliver
positive social impacts, such as the delimitation of `common hold' land
rights held by local communities, which can protect the long-term
tenure security of many rural dwellers and reduce the potential for
conflict with smallholders and investors. However, several Land Project
activities could potentially induce some negative social and gender-
based impacts. This risk will be managed through adequate approaches to
implementation and the impacts properly mitigated during
implementation. For example, plans to adjudicate and register
individual titles to smallholder plots may pose risks to the tenure
security of certain vulnerable groups including women and those
affected indirectly or directly by HIV/AIDS. Adjudication and
registration of plots can lead to cancellation of access agreements and
therefore greater tenure insecurity for these vulnerable groups.
Initial project design has taken into account most of these potential
negative impacts and gender-based constraints to participation. These
issues will be furthered explored and appropriate mitigation strategies
incorporated into final activity/sub-activity designs, which will be
reflected in the gender integration plan. Finally, the Land Project is
not expected to negatively impact public health and safety, child labor
or human trafficking.
6. Consultative Process
In addition to the overall Compact development consultative
process, extensive consultations were conducted on the conceptual
framework for the Land Project objectives and approaches, as well as on
specific aspects of the design. Consultations were conducted at both an
individual-level with representatives of the proposed implementing
agents, NGOs and the private sector, as well as at a national and
provincial level, in all four of the northern provinces, usually
through the Permanent Secretaries in the office of the Provincial
Governor. Donors were also involved in the consultations, such as the
National Program for Agrarian Development (``PROAGRI'') Working Group
and donor focus groups at a Southern African Development Community
(SADC) conference.
7. Donor Coordination
MCC has consulted with many donors, most extensively with USAID,
DFID and the World Bank. As designed, the Land Project builds on prior
initiatives and complements existing ones. For example, this Compact
will support the expansion of a multi-donor program called the
Community Land Initiative (which is supported by DFID, the Swiss Agency
for Development and Cooperation, the Danish Embassy, The Swedish
International Development Cooperation Agency and the Development
Cooperation Ireland). The Land Project also benefited from technical
support from Food and Agriculture Organization of the United Nations
(FAO), Deutsche Gesellschaft f[uuml]r Technische Zusammenarbeit (GTZ),
the United Nations Development Programme, and USAID. As a part of this
Compact's support to expand a paralegal training and legal education
through the CFJJ, MCC will be working alongside FAO and the Government
of the Netherlands. The African Development Bank is supporting efforts
to make the registry of deeds more efficient and this will link to the
land administration strategy and information system development under
this Compact. Finally, the Land Project indirectly complements the
Government use of budget support (e.g., from the Irish and Spanish
Cooperation and previous initiatives of the Italian Cooperation, GTZ,
the International Fund for Agricultural Development (IFAD) and others).
In fact, measures such as the ones to be supported under this Land
Project are consistent with discussions held by the donor working group
on agriculture (PROAGRI) under the Program Aid Partnership's (G-18)
joint review of progress on the PARPA in 2007 as well as in previous
years' joint review of progress on the PARPA.
USAID was particularly engaged throughout the development and
review of the Land Project. Improved efficiency and security of land
access is relevant to its programs in private sector development,
trade, rural incomes, and municipal development. USAID and its
stakeholders provided information useful to the design of activities,
including technical guidance from USAID Washington. An area for
potential coordination under this Compact will be the USAID funded
pilot cadastre activity in five municipalities in northern Mozambique.
8. Policy, Legal and Regulatory Review
The Government agrees to engage in a process of regulatory and
administrative reform to significantly improve the efficiency,
transparency and security of the processes for transferring and
acquiring land rights, in both rural and urban areas. The Government
also agrees to support a related regulatory reform, which will result
from a list of targeted reforms proposed in the design study ``Land
Tenure Services Final Report (February 2007)'' and as refined by
additional analyses and efforts under this Compact.
E. Farmer Income Support Project
1. Background
Mozambique is an internationally significant exporter of coconuts
and coconut products. These are grown in Zamb[eacute]zia and Nampula
Provinces. Coconut is one of the few crops growing on the impoverished,
sandy, and sometimes saline coastal soils of northern Mozambique. It
has unique value as a low input, environmentally beneficial, year-round
source of nutrition, income and shelter for coastal communities. In the
late 1990s, outbreaks of Coconut Lethal Yellowing Disease (``CLYD'')
were confirmed in areas of commercial smallholder plantings in coastal
Zamb[eacute]zia. By 2003 about one percent of the total area was
affected but with several new disease foci in both provinces. Disease-
affected areas in Zamb[eacute]zia have expanded considerably since
2003, and new foci are present in Nampula as well. At the present rate
of spread, more than 50 percent of the coconut area is likely to be
lost over the next nine years. As the infection rate is considerably
slower than that experienced in Florida and the Caribbean, the disease
could be controlled by the same type of phytosanitary measures that
were used in Ghana. Currently, about five percent of the total coconut
area of Zamb[eacute]zia is likely to be affected, although in certain
areas there is no remaining production. Trees that are no longer
productive must be removed and replaced. Technical support is necessary
to assist farm enterprises in recovering income that they formerly had
from coconut trees. Unless sustained measures are taken over a large
area, coconut cultivation will cease in large areas of central
Mozambique, with the resulting loss of export earnings and rural
livelihood for over 1.7 million people in coastal Zamb[eacute]zia and
Nampula.
In conjunction with tree removal and replacement, this Project
would assist farmers to adopt new cropping systems and develop
alternative sources of cash income during the time the coconut trees
reach productive age at seven years and beyond (the ``Farmer Income
Support Project''). Chickpeas, pigeon peas, cowpeas and pineapples have
the potential to generate alternative income for these farm
enterprises, compatible with rehabilitation of coconut and
[[Page 40944]]
diversification to reduce risks and improve livelihood options. Pulses
have become increasingly significant exports, increasing by over 400
percent per year from 2000-2004. Like coconuts, they are suited to the
sandy and loamy soils that are dominant in the coastal region. They are
advantageous because they fix nitrogen in the soil. At the same time,
crop yields in the region are extremely low due to poor practices
including lack of crop rotation, poor seed selection, inadequate field
preparation, untimely weeding, and other practices. Technical support
to introduce better practices would increase yields considerably.
2. Summary of Project and Related Activities
The objective of the Farmer Income Support Project is to improve
productivity of coconut products and encourage diversification into
other cash crop production. The Project will eliminate biological and
technical barriers hindering economic growth among farms and targeted
enterprises located in this Compact area's eastern coastal belt
(Zamb[eacute]zia and Nampula provinces), and it will increase incomes
lost to CLYD through crop diversification and improved farming
practices.
The Project will deliver two essential services to farm enterprises
over the duration of this Compact to significantly improve and sustain
incomes derived from cash crops and newly introduced crop
diversification options: (a) CLYD control and mitigation will provide
the short-term control measures of surveillance, prompt eradication of
diseased palms and replanting with the less susceptible Mozambican
Green Tall coconut variety. The Project will replant all cleared
coconut trees. In the endemic areas, this activity will support
planting 160,000 new coconut seedlings, the equivalent of 2,000
hectares, benefiting 7,500-10,000 smallholder families. In the epidemic
areas, this activity will support clearing and also replanting of
650,000 seedlings on 6,100 hectares; and (b) Technical Advisory
Services will introduce alternate crop-diversification options that
demonstrate strong market demand and income generation potential,
especially for farm enterprises participating in the CLYD control and
mitigation program that are seeking short-term income alternatives
during period of coconut tree re-growth. These services will supply
productive inputs and training to small farm enterprises operating on
some 4,000 hectares (2,000 in epidemic areas and 2,000 in endemic
areas).
The Farmer Income Support Project activities are as follows:
(a) Activity 1 (CLYD Control and Mitigation Services)
The objective of this activity is to control and mitigate the
spread of CLYD among the holdings of commercial farmers in
Zamb[eacute]zia and Nampula Provinces. The first step under this
activity will be a Government-led public awareness campaign about the
disease and the measures needed to mitigate its effects. Short-term
control measures include surveillance and scouting to detect early
cases of disease; prompt eradication of diseased palms (by cutting and
burning); and replanting with selected seedlings from local Mozambique
Green Tall coconut types (some of which show a measure of resistance).
CLYD control and mitigation strategies will be tailored to
different stages of the disease epidemic and are likely to be most
effective at, or in advance of, the margins of active spread of
disease. Infected trees must be culled since they attract populations
of rhinoceros beetle that breed in dead palm trunks and will kill or
damage replacement palms. There is thus a need for collective and
continuous action--by all growers and over a sustained period--not just
to prevent infection moving from diseased to healthy palms, but also to
remove and destroy dead palm trunks. Three sub-activities are
envisioned: (i) In the endemic zone, help smallholders to clear their
land of dead palms and replant with selected Mozambique Green Tall
seedlings and alternative short-term crops; (ii) in the epidemic zone,
control spread of disease by prompt removal and destruction of
infection sources and provision of new planting material; and (iii) a
research initiative that will emphasize germplasm resistance screening,
epidemiological analysis, and early disease detection.
(b) Activity 2 (Technical Advisory Services)
The Farmer Income Support Project will target smallholders impacted
by CLYD control and mitigation measures to engage in crop
diversification to generate income during the period of coconut tree
re-growth. Emphasis will be given to improving farming practices that
will increase yields and link farmers to processors and other buyers in
the supported value chains. They will be provided options to diversify
their production in response to proven market demand, which will lead
to additional revenue streams. Dissemination of improved farming
practices and market linkages will be done by experienced field agents
to: (i) Support demonstration trials; (ii) strengthen producer
organizations' marketing capacities; and (iii) provide extensive on-
farm training in intercropping methods, integrated pest management
practices, and CLYD surveillance capabilities. The principal sub-
activities will be: (i) In zones with lower risk profiles, improve the
productivity and yield of existing aging and under-productive palms in
smallholder plantings; and (ii) enable stakeholders, through business
development support, to help safeguard and/or improve profitability of
the coconut industry for smallholders through innovative strategies,
including linking them to carbon offset credit investment initiatives.
The Farmer Income Support Project Manager will be located in MCA-
Mozambique. The Coconut Working Group, composed of Government entities
in the agricultural area, will provide the Project Manager with
guidance on technical matters concerning project implementation.
DNEA is the entity responsible for Government public outreach to
communities about the CLYD mitigation and control activities. DNEA will
mobilize the outreach campaign through media (radio, television,
bulletins, posters), extension agents, coconut estate employees and
other means of information dissemination as appropriate.
3. Beneficiaries
The Farmer Income Support Project benefits 1.7 million smallholders
in the coconut belts of Zamb[eacute]zia and Nampula who depend on
coconut tree-products for cash and in-kind income. Half of these
smallholders would be in poverty by 2015 even without income losses
from CLYD. If CLYD is allowed to proliferate, the poverty rate would
undoubtedly be higher. Coconuts are also produced on estates, which
account for some 5,000 workers as additional Project beneficiaries. In
addition, the Farmer Income Support Project provides targeted technical
assistance to over 3,000 smallholders to mitigate significant income
loss due to CLYD and assist them in improving the quality of other
crops planted on their holdings. With their families, over 15,000
persons directly benefit from this technical assistance. While about
two thirds of the financial benefits accrue to the estates, the estates
do not receive technical assistance and benefit entirely from disease
eradication. If eradication were not to include infected trees on both
smallholder plots and the larger estates, CLYD would continue to
spread.
[[Page 40945]]
4. Sustainability.
The Farmer Income Support Project is envisioned as a short-term
intervention to eliminate significant biological and technical barriers
to economic growth of farm enterprises located in the Program target
areas. Through the delivery of the CLYD control and mitigation service,
the spread of a highly contagious disease that could have significant
negative repercussions on the coconut industry, a key agricultural
business in the coastal belt, will be halted. This, in turn, will help
ensure the sustainability of a healthy coconut industry in
Zamb[eacute]zia and Nampula Provinces. Without ridding the area of the
disease, healthy coconut groves will be susceptible to infection or re-
infection, thereby affecting the continued commercial viability of the
raw material suppliers and processors. Applied research and replanting
of the selected variety will improve productivity of the region's
``coconut economy.'' Research on varietal improvements will be done in
conjunction with the Ministry of Agriculture, thereby transferring
skills and technology in coconut-resistance trials, screening and
selection. Sustainability is linked to the overall market performance
of coconuts and alternate crops. The market for coconuts and its
processed products is growing domestically and internationally, as are
markets for targeted alternate crops. Yield improvements will be
sustainable through smallholders' adoption of improved farming
practices and crop diversification, which reduces their risks and
vulnerability. And, there may be opportunities to improve smallholder
incomes through carbon offset, which may be monetizable over five years
to supplement smallholders' income until replanted trees reach
productive age. MCC is consulting with carbon credit experts and will
be providing MCA-Mozambique with guidance on options for Mozambique to
pursue to qualify for carbon offset credits.
Environment and Social Sustainability
The key to ensuring environmental and social sustainability of the
Farmer Income Support Project is ongoing public consultation. MCA-
Mozambique will ensure that comprehensive public consultation plans are
developed such that Project stakeholders, including women and
vulnerable groups, are afforded consultation and an opportunity to
provide their inputs to Project design and implementation. MCA-
Mozambique will ensure that environmental and social mitigation
measures are followed for all Project activities in accordance with the
provisions set forth in this Compact and in relevant supplemental
agreements. MCA-Mozambique will serve as the point of contact for
comments and concerns of parties affected by the implementation of all
Project activities under this Compact and will lead the effort to find
feasible resolutions to those problems. MCA-Mozambique will convene
periodic public meetings to provide implementation updates and to
identify and address public concerns. The Stakeholders Forum for this
Project will also incorporate representatives of civil society that
will serve as a link between local NGOs and program managers.
5. Environmental and Social Issues
The Farmer Income Support Project is classified as ``Category B''
according to the MCC Environmental Guidelines. An environmental
assessment and an EMP that includes provisions to address (a) safety
and health risks related to the handling, use, and disposal of
pesticides and fertilizers; (b) tree-cutting and disposal equipment;
and (c) integrated pest and nutrient management strategies will be
developed prior to full Project implementation.
Environmental and Social Impacts
Although it is unlikely that the Farmer Income Support Project will
generate any significant environmental, health or safety hazards, the
potential negative direct, indirect, induced, and cumulative
environmental impacts of the Project will be assessed through an
environmental assessment that will be conducted prior to the
implementation of the Project. A number of positive environmental and
social benefits should emerge from this Project. As stated, coconut is
regarded as an environmentally benign and often beneficial, low-input,
crop which tolerates and can help to stabilize nutrient-poor and saline
soils, especially in coastal regions that are often subject to periodic
floods that destroy other crops. In addition, MCA-Mozambique will
ensure that a Project-specific EMP is developed, implemented and
monitored during the Project in accordance with the provisions of this
Compact and any relevant supplemental agreements.
Per the MCC Environmental Guidelines, the use of the following
pesticides is prohibited under the Project: (a) Persistent Organic
Pollutants that the United States Environmental Protection Agency has
identified as of greatest concern to the global community; or (b) any
pesticide listed by the United States Environmental Protection Agency
as ``banned'' or ``severely restricted'' under the Prior Informed
Consent Program. MCA-Mozambique will ensure that Project operators
require pesticides to be handled, stored, applied, and disposed of in
accordance with FAO's International Code of Conduct on the Distribution
and Use of Pesticides.
To maximize the positive social impacts of the Farmer Income
Support Project and ensure compliance with MCC's Gender Policy, MCA-
Mozambique is required to: (a) Develop a gender integration plan that
includes: (i) Approaches for meaningful and inclusive consultations
with women and vulnerable/under-represented groups; (ii) Project-
specific gender analyses, as appropriate; and (iii) strategies for
incorporating findings of the gender analyses into final Project
designs; and (b) ensure that final Project activity designs are
consistent with and incorporate the outcomes of the gender integration
plan. MCA-Mozambique will also take steps to ensure that the interests
and views of women and vulnerable groups are represented in any
entities responsible for advising on design, ownership, management, and
operation of the Project activities.
Environmental Permitting
MCA-Mozambique will ensure that environmental and social assessment
responsibilities are included in the bidding documents for the
procurement of Project implementers and advisors, as needed.
Disbursement of MCC Funding for activities under this Project requiring
environmental licenses will be contingent upon issuance of such
environmental licenses, as needed, or any other required permits.
Project activities, for which MCC disburses funds, should be consistent
with the outcomes of the relevant environmental assessments, and MCC
Environmental Guidelines, and comply with applicable Mozambique
environmental law and regulations.
6. Consultative Process
During the development of the Farmer Income Support Project in the
pre-Compact program definition process, the consultant, working on
behalf of the Government, consulted with a broad spectrum of
stakeholders, including government officials (national and provincial),
NGOs and the private sector, through local Chambers of Commerce and the
coconut trade association. Ongoing consultation is envisioned through
the Project Advisory Group that will be established during the Compact
Implementation Funding period.
[[Page 40946]]
7. Donor Coordination
Although the Centre de coop[eacute]ration internationale en
recherche agronomique pour le d[eacute]veloppement (CIRAD) has provided
support to combat against CLYD in Zamb[eacute]zia in the past, there
are currently no other donors providing support to address this issue
in the northern provinces. Through the Farmer Income Support Project,
there are opportunities to work with other donors in the future. In
particular, USAID provides assistance through its Title II Implementing
Partners in Zamb[eacute]zia to introduce nutrient-rich crops as a means
of improving their food security. In addition, USAID is providing
technical assistance to the Ministry of Agriculture for strengthening
institutional capacity in policy analysis. USAID also adapted one new
agricultural technology in 2006 through continued assistance to the
National Agricultural Research Institute and the agricultural zonal
research centers and its continued funding is helping to replicate the
producer-owned trading company model in other geographic areas.
Moreover, USAID will continue to provide technical assistance in
management and marketing to farmers and rural enterprises.
F. Overview of Implementation Framework
1. Overview of Implementation
The implementation framework and the plan for ensuring adequate
governance, oversight, management, monitoring and evaluation and fiscal
accountability for the use of MCC Funding is summarized below and will
be described in more detail in the internal regulations of MCA-
Mozambique (``Internal Regulations'') or as otherwise agreed in writing
by the Parties.
2. Government
The Government will empower the Minister of Planning and
Development in conjunction with the Minister of Finance to create a
public institution within the Ministry of Planning and Development
(``MCA-Mozambique''), which will be the Accountable Entity and will be
authorized to act on behalf of the Government in order to manage and
oversee the implementation of this Compact and the Program. MCA-
Mozambique will have administrative and patrimonial autonomy, in
addition to the financial control to engage in practices such as (a)
establishing an account in a financial institution in the name of MCA-
Mozambique and holding MCC funds in that account; (b) expending MCC
funds without an appropriation in the national budget; (c) engaging a
fiscal agent to undertake expenditures and to account for them; (d)
engaging a procurement agent who will act on behalf of MCA-Mozambique
to manage the acquisition of the goods, works and services requested by
MCA-Mozambique to implement the activities funded by this Compact; and
(e) engaging an auditor competitively to conduct audits of its
accounts.
The Government will grant the Minister of Planning and Development
oversight authority or ``tutela'' over MCA-Mozambique, whereby the
Minister will ensure that MCA-Mozambique is complying with the terms of
this Compact, fulfilling the Government's responsibilities under this
Compact, and other duties of MCA-Mozambique as described in the
Internal Regulations.
MCA-Mozambique will be headquartered in Maputo, with initially one
regional office in Nampula, and other provincial offices in northern
Mozambique, as determined in the Internal Regulations.
MCA-Mozambique will be composed of (a) a supervisory decision-
making body, the Board of Directors (the ``Board''); (b) a smaller
working group of representatives from the Board or an executive
committee (the ``Executive Committee''); and (c) the day-to-day
management body or management unit (the ``Management Unit''). The
Internal Regulations will define the governance details of MCA-
Mozambique.
3. MCC
MCC will provide technical oversight and accountability in the
implementation of the Program. MCC will establish a small office in
Mozambique, designed to provide feedback and increased communication
between MCC and the Government throughout Compact implementation.
MCC will require prior approval of certain transactions,
activities, agreements and documents, as described in the PIA.
4. MCA-Mozambique Description
(a) Board of Directors.
(i) Composition.
The Board will be composed of nine voting members; six of which are
governmental representatives, two civil society representatives and one
private sector representative. There will be three non-voting members,
consisting of an MCC representative, a representative from an
environmental NGO and the executive director of the Management Unit.
The governmental representatives will be Ministers from certain
Ministries involved in the Program, as agreed and defined in the
Internal Regulations. The Minister of Planning and Development will
serve as the chair of the Board, while the executive director of the
Management Unit will serve as secretary. The civil society
representatives and the private sector representatives will be
determined as defined in the Internal Regulations. In the event that
one of the civil society voting members is not from an environmentally
focused NGO, an additional observer from such an organization, subject
to the prior receipt of a no-objection notice from MCC, will be
appointed. No remuneration will be paid to any Government
representative on the Board, although other Board members may receive
remuneration as set out in the Governance Guidelines (as defined in the
PIA).
(ii) Location.
The Board will be based in Maputo, but may also conduct rotating
meetings in one of the four northern provinces from time to time.
(iii) Roles and Responsibilities.
The Board will be responsible for exercising oversight and taking
major decisions, such as approving annual implementation plans,
Disbursement requests, annual progress reports, key contracts and
policy reforms, as well as other responsibilities defined in the
Internal Regulations. The Board will meet once every three months and
may meet more frequently as necessary for extraordinary meetings. The
specific roles of the voting and non-voting members will be set out in
the Internal Regulations.
(b) Executive Committee.
(i) Composition.
The Executive Committee will be composed of seven members, who
represent certain Ministries or organizations on the Board, as further
defined in the Internal Regulations. The Secretariat of the Executive
Committee will be the executive director of the Management Unit.
Governmental members on the Executive Committee will be represented by
the relevant Ministries' National Director. The private sector
representative will be the same as on the Board.
(ii) Location.
The Executive Committee will be located in Maputo, but may also
conduct rotating meetings in one of the four northern provinces from
time to time.
(iii) Roles and Responsibilities.
The Executive Committee is a smaller working group of the Board
that will be empowered to take certain limited actions normally
required to be taken by the Board, such as approving quarterly
implementation plans, quarterly
[[Page 40947]]
progress reports, certain procurement decisions, as well as other
actions defined in the Internal Regulations. The Executive Committee
will meet as often as necessary to adequately perform its functions.
(c) Management Unit.
(i) Composition.
The Management Unit will be responsible for assisting the Board and
the Executive Committee in managing and overseeing the day-to-day
operations of the Program. The Management Unit will be composed of
staff, competitively selected. Key staff members of the Management Unit
include: The executive director, deputy director, chief financial
officer, M&E/planning officer, procurement officer, environmental and
social manager, legal advisory service, and Project managers for each
of the four Projects will be defined in the Internal Regulations.
(ii) Location.
The Management Unit will have offices in at least two locations.
One office will be based in Maputo and initially one office will be
located in Nampula. If justified, other regional offices may be opened
in the northern provinces, as provided for in the Internal Regulations.
(iii) Roles and Responsibility.
The Maputo office of the Management Unit will provide ``back office
support'' services, such as financial management, legal, procurement,
administrative, public relations and other activities defined in the
Internal Regulations. The Nampula office and other provincial offices
that may be established as part of the Management Unit will provide
direct support to the programs being implemented in the provinces. The
regional Management Unit offices will be responsible for preparing
reports, implementation plans and budgets, preparing Disbursement
requests, reviewing and approving bidding and contract documents,
monitoring and evaluating project implementation, ensuring technical
support to Implementing Entities (as defined in the PIA), coordinating
stakeholder participation and other functions as defined in the
Internal Regulations of MCA-Mozambique.
(d) Stakeholders' Participation.
Stakeholders will continue to be involved and participate
throughout Compact implementation. Through semi-annual and/or annual
participatory monitoring and evaluation forums, stakeholders will be
able to provide feedback to the overall Program (the ``Stakeholders
Forums''). In addition, the mechanisms for ensuring this consultative
process occurs will be structured at a Project-level, allowing
representatives of the private sector, civil society and local and
regional governments to provide advice and input to MCA-Mozambique. In
the WSS Project, autonomous Provincial Water Boards will be created,
which will incorporate stakeholder participation on their respective
boards.
In the Roads Project, stakeholder participation will be
incorporated through the Stakeholders Forums.
In the Land Project, there are two forums designed to facilitate
feedback and input from interested stakeholders. First, the Land Policy
Consultative Forum, comprised of relevant governmental ministries,
civil society organizations and academic institutions will conduct
regular semi-annual meetings. Secondly, the National Land Project
Advisory Group provides a forum for both national and local
governmental representatives to provide meaningful feedback throughout
Compact implementation.
In the Farmer Income Support Project, stakeholder participation is
incorporated through the Coconut Working Group, whereby relevant
governmental agencies, the private sector and civil society
organizations may provide regular input to the implementation of the
Project.
Annex II--Summary of Multi-Year Financial Plan
1. General
The Multi-Year Financial Plan Summary below sets forth the
estimated annual contribution of MCC Funding for Program
administration, Program monitoring and evaluation, and implementing
each Project. The Government's contribution of resources will consist
of ``in-kind'' and other contributions or amounts required effectively
to satisfy the requirements of Section 2.5(a) of this Compact. In
accordance with the PIA, the Government will develop and adopt on a
quarterly basis a detailed financial plan (as approved by MCC) setting
forth annual and quarterly funding requirements for the Program
(including administrative costs) and for each project, projected both
on a commitment and cash requirement basis.
2. Modifications
To preserve administrative flexibility, the Parties may by written
agreement (or as otherwise provided in the PIA), without amending this
Compact, change the designations and allocations of funds among the
Projects, the Project activities, or any activity under Program
administration or monitoring and evaluation, or between a Project
identified as of the entry into force of this Compact and a new
project; provided, however, that any such change (a) is consistent with
the Program Objective and Project Objectives and the PIA, (b) does not
materially adversely affect the applicable Project or any activity
under Program administration or monitoring and evaluation, (c) does not
cause the amount of MCC Funding to exceed the aggregate amount
specified in Section 2.1(a) of this Compact, and (d) does not cause the
Government's obligations or responsibilities or overall contribution of
resources to be less than specified in Section 2.5(a) of this Compact.
Multi-Year Financial Plan Summary *
----------------------------------------------------------------------------------------------------------------
Projects Year 1 ** Year 2 Year 3 Year 4 Year 5 Total
----------------------------------------------------------------------------------------------------------------
1. Water Supply and Sanitation:
A. Technical Assistance and 6,675,220 5,095,804 3,293,268 3,137,075 2,814,675 21,016,042
Capacity Building to Water
Supply and Sanitation
Project...................
B. Rehabilitation/expansion 6,377,175 6,783,982 34,182,450 25,553,040 18,187,233 91,083,880
of water supply systems in
urban areas...............
C. Rehabilitation/expansion 2,291,750 19,294,284 19,770,123 20,563,193 20,576,077 82,495,427
of six municipal
sanitation and drainage
systems...................
D. Construction/ 906,441 2,312,470 3,108,668 2,324,169 338,296 8,990,044
reconstruction of wells
and bore holes (rural
water points).............
--------------------------------------------------------------------------------
Sub-Total.............. 16,250,586 33,486,540 60,354,509 51,577,477 41,916,281 203,585,393
2. Rehabilitation/Construction
of Roads:
A. Technical Assistance for 507,700 688,914 710,817 733,374 374,925 3,015,730
Roads Project.............
[[Page 40948]]
B. Rehabilitation Costs.... 4,922,862 3,731,628 39,023,067 78,845,125 46,769,068 173,291,750
--------------------------------------------------------------------------------
Sub-Total.............. 5,430,562 4,420,542 39,733,884 79,578,499 47,143,993 176,307,480
3. Land Tenure Services:
A. Support for National 2,186,408 2,521,723 2,049,460 1,929,674 1,757,958 10,445,223
Policy monitoring process.
B. Land administration 1,812,980 5,552,512 3,769,560 1,534,915 757,829 13,427,796
capacity building.........
C. Site specific secure 1,261,886 4,295,706 3,722,369 3,359,342 2,555,985 15,195,288
land access...............
Sub-Total.............. 5,261,274 12,369,941 9,541,389 6,823,931 5,071,772 39,068,307
4. Farmer Income Support:
A. Rehabilitation of 704,022 676,612 624,771 636,683 210,505 2,852,593
endemic areas.............
B. Control of epidemic 2,099,262 1,660,535 1,450,524 868,610 914,518 6,993,449
disease...................
C. Research and Development 444,405 435,548 519,295 513,503 529,612 2,442,363
Support...................
D. Improvement of 252,728 427,022 737,993 1,097,880 1,168,584 3,684,207
productivity..............
E. Business Development 254,000 291,915 519,295 258,770 135,619 1,459,599
Support...................
--------------------------------------------------------------------------------
Sub-Total.............. 3,754,417 3,491,632 3,851,878 3,375,446 2,958,838 17,432,211
5. Monitoring and Evaluation:
Monitoring and Evaluation.. 2,195,000 955,000 1,880,000 920,000 2,255,000 8,205,000
--------------------------------------------------------------------------------
Sub-Total.............. 2,195,000 955,000 1,880,000 920,000 2,255,000 8,205,000
6. Program Administration and
Oversight
A. MCA-Mozambique.......... 9,651,474 5,012,630 5,583,165 5,254,627 5,379,999 30,881,895
B. Fiscal and Procurement 12,300,000 4,800,000 3,300,000 2,550,000 2,050,000 25,000,000
Agent.....................
C. Bank Contract........... 10,000 5,000 5,000 5,000 5,000 30,000
D. Auditing................ 1,440,000 1,140,000 1,140,000 1,140,000 1,140,000 6,000,000
E. Environmental 176,000 57,344 58,720 60,130 61,573 413,767
Management--MICOA Capacity
Building..................
--------------------------------------------------------------------------------
Sub-Total.............. 23,577,474 11,014,974 10,086,885 9,009,757 8,636,572 62,325,662
================================================================================
Total Estimated MCC 56,469,313 65,738,629 125,448,545 151,285,110 107,982,456 506,924,053
Contribution..........
----------------------------------------------------------------------------------------------------------------
* It is anticipated that there will be at least a one-quarter lag in disbursements of these budget totals.
** Year 1 amounts include amounts for Compact Implementation Funding.
Annex III--Description of The Monitoring And Evaluation Plan
This Annex III to this Compact (the ``M&E Annex'') generally
describes the components of the monitoring and evaluation plan for the
Program (the ``M&E Plan''). Each capitalized term in this Annex III
will have the same meaning given such term elsewhere in this Compact.
1. Overview.
MCC and the Government (or a mutually acceptable Government
affiliate or permitted designee) will formulate, agree to and the
Government will implement, or cause to be implemented, an M&E Plan that
specifies (a) how progress toward the program goal and Program
Objective will be monitored (``Monitoring Component''); (b) process and
timeline for the monitoring of planned, ongoing, or completed Project
activities to determine their efficiency and effectiveness; and (c) a
methodology for assessment and rigorous evaluation of the outcomes and
impact of the Program (``Evaluation Component''). Information regarding
the Program's performance, including the M&E Plan, and any amendments
or modifications thereto, as well as progress and other reports, will
be made publicly available on the MCA-Mozambique Web site and
elsewhere.
BILLING CODE 9211-03-P
[[Page 40949]]
[GRAPHIC] [TIFF OMITTED] TN25JY07.000
2. Program Logic
The Mozambique M&E Plan will be built on the program logic model
described above showing how the Program is intended to work. The
program logic is a visual representation of the Program showing the
sequence of outcomes and intended causality from the Project
Objectives. The overall goal of the Program is to contribute to poverty
reduction in Mozambique through economic growth. The stated Program
Objective is to increase the productive capacity of the population in
selected districts of northern Mozambique with the intended impact of
reducing the poverty rate, increasing household income, and reducing
chronic malnutrition in the targeted districts.
3. Monitoring Component
To monitor progress toward the achievement of the impact and
outcomes, the Monitoring Component of the M&E Plan will identify (a)
the indicators, (b) the definitions of the indicators, (c) the sources
and methods for data collection, (d) the frequency for data collection,
(e) the party or parties responsible, (f) the timeline and format for
reporting on each Indicator (as defined below) to MCA-Mozambique, and
(g) the method by which the reported data will be validated.
(a) Indicators. The M&E Plan will measure the results of the
Program using quantitative, objective and reliable data
(``Indicators''). Each Indicator will have benchmarks that specify the
expected value and the expected time by which that result will be
achieved (``Target''). The M&E Plan will be based on a logical
framework approach that classifies indicators as impact, outcome,
output, process and input. The impact indicators (``Goal and Program
Objective Level'') will measure the results for the overall Program.
Second, the outcome indicators (``Project Objective Level ``) will
measure the final and the intermediate results of the Projects in order
to monitor their success in meeting each of the Project Objectives,
including results for the intended beneficiaries identified in
accordance with Annex I (collectively, the ``Beneficiaries''). Third,
output indicators (``Project Activity Level'') will measure the direct
outputs of the Project activities in order to provide an early measure
of the likely impact of the Project activities. A fourth level of
indicators, input and process indicators (``Institutional Process
Level'') will be included in the M&E Plan to measure the delivery of
materials, goods and actions necessary to carry out the primary Project
activities. All Indicators will be disaggregated by gender, income
level and age, and beneficiary types to the extent practicable. Subject
to prior written approval from MCC, MCA-Mozambique may add Indicators
or refine the Targets of existing Indicators.
(i) Impact Indicators (Goal and Program Objective Level). The M&E
Plan will contain the impact indicators listed in the table below, with
their definitions and unit of observation, baseline, and targets for
the end of the compact year.
[[Page 40950]]
----------------------------------------------------------------------------------------------------------------
Indicator Definition of indicators Unit of observation Baseline Year 5
----------------------------------------------------------------------------------------------------------------
Poverty Rate....................... Percentage of the Household............ 45.80% 36.64%
population in northern
Mozambique who lack the
ability and opportunity
to have access to satisfy
the necessary basic
nutritional and non-
nutritional requirements
(2150 nutritional
calories plus basic non
food items).
Increased Household Income......... The total value of Household............ $202.30 $264.12
household food production
for consumption, all crop
and livestock sales, cash
and in-kind pay received
from off-the-farm
activities and
remittances, net cash and
in-kind payments made to
hired members of
household.
Percent of stunted children, 0-59 Percentage of children Household............ 41% 28%
months (height/age z-score). under 5 years in northern
Mozambique who show
chronic malnutrition as a
result of cumulative
inadequacies in nutrition
status.
----------------------------------------------------------------------------------------------------------------
(ii) Outcome Indicators (Project Objective Level). The M&E Plan
will contain the outcome indicators which will measure the results at
the project objective levels. The outcome indicators for the four main
Projects are listed below with their definitions and units of
observation.
----------------------------------------------------------------------------------------------------------------
Indicators Definition Unit of observation Baseline Year 5
----------------------------------------------------------------------------------------------------------------
Project I: Water and Sanitation
----------------------------------------------------------------------------------------------------------------
Value of productive days gained due Value of time gained by Household............ 0 US$3.04
to less diarrhea illness. household members due to
not having to attend to
other household members
with diarrhea or not
being absent from
productive activities due
to incidence of diarrhea
(number of days
multiplied by the value
of average adult
household consumption).
Value of productive days gained due Value of time gained by Household............ 0 US$3.04
to less malaria. household members due to
not having to attend to
household members with
malaria or not being
absent from productive
activities due to
incidence of malaria
(number of days
multiplied by the value
of average adult
household consumption).
School attendance days gained due Days gained by each school- Number of school-aged 0 3
to less diarrhea. aged child in household children in
to attend school due to household.
less incidence of
diarrhea.
School attendance days gained due Days gained by each school- Number of school-aged 0 3
to less malaria. aged child in household children in
to attend school due to household.
less incidence of malaria.
Number of businesses connected to Number of formal Business............. 495 947
an improved water source. businesses in target
districts with water
connection.
Time to get to water source (Urban- Number of minutes to water Household............ 32/39 15/27
/Rural). source, by source.
Percent of urban population with Proportion of the urban Urban households..... 30% 47% (17%)
improved water sources (percent population in the target
increase). districts with access to
improved water sources,
defined as access to
private connections or
standpipes.
Percent of rural population with Proportion of the rural Rural households..... 31% 33%
access to improved water sources population in the target (1,417,439) (1,657,439)
(number of persons). districts with access to
improved water sources,
defined as access to
potable water from a deep-
well.
Percent of urban population with Proportion of urban Urban households..... TBD TBD
improved sanitation facilities. population with access to
improved sanitation
facilities, defined as
access to networked
sanitation, septic tanks,
or an improved pit-
latrine.
----------------------------------------------------------------------------------------------------------------
Project II: Road Rehabilitation
----------------------------------------------------------------------------------------------------------------
Value of net agricultural Net value of new Rural households..... TBD TBD
production (yield per hectare). agricultural production
for both cash and
subsistence crops in the
road economic area of
influence (15km radius
each side of targeted
roads).
Change in vehicle operating cost Average change in the Target roads......... 0.47 0.37
($$/vehicle-/km). fixed and variable cost
of operating vehicles on
a km of target upgraded
roads.
Total time savings (US$m).......... Value of travel time Target Roads......... 0 US$1.15
savings for road users
due to change in speed on
target roads.
Change in International Roughness Measurement of pavement IRI units of either m/ 10 3.5
Index (IRI). roughness on targeted km or m/mi.
roads (correlated with
vehicle operating costs).
[[Page 40951]]
Average annual daily traffic volume Number of vehicles by type Target roads 1908 2558
on the target upgraded (disaggregated by
roads. vehicle type).
----------------------------------------------------------------------------------------------------------------
Project III: Land Tenure Services
----------------------------------------------------------------------------------------------------------------
Percent increase in value of new Summation of investments Rural households 0 10%
investments on land. including agricultural (small- medium-
investments, fixed holder); businesses;
investments, and urban parcels;
improvements to existing communities.
structures.
Number of new businesses........... Number of new businesses Businesses (small, TBD TBD
formally registered and medium, large).
established.
Percent reduction in time to get Number of days required to Community, 0 50%
land usage rights (DUAT). obtain land usage rights individual, urban,
(DUAT), disaggregated by commercial.
beneficiary type.
Percent reduction in costs to get Amount of money required, Community, 0 50%
land usage rights (DUAT). in local currency, to individual, urban,
obtain land usage rights commercial.
(DUAT), disaggregated by
beneficiary type.
----------------------------------------------------------------------------------------------------------------
Project IV: Farmer Income Support
----------------------------------------------------------------------------------------------------------------
Reduction in loss of coconut and Total household and estate Rural households 0 3.75%
coconut products' sales. sales of coconuts and (small-medium
coconut products within a holders) & Estates.
calendar year.
Percent increase in sales from Total household sales of Rural households US$65,000 167%
intercropping. surplus crops (small-medium-
intercropped in replanted holders).
coconut farms.
Percent increase in yield among Additional production of Rural households 0 167%
fertilized coconut trees in risk coconuts per tree (small- medium- (30) (80)
areas (number of fruits per tree). resulting from adoption holders).
of CLYD control and
mitigation measures.
Percent increase in yield of Additional production of Rural households 0 TBD
selected intercropping crops. cash and food crops (small- medium-
intercropped in replanted holders).
coconut farms.
Increase in improved coconut trees Total number of recently Rural households 0 224,000
2 years old or greater. planted resistant, (small- medium-
healthy coconut trees holders).
that are 2 or more years
old.
Percent change of the area infested Total endemic and epidemic Rural land (trees per 5036 71%
by CLYD. land area, in trees per hectare). hectares
hectare, with CLYD
control and mitigation
measures.
Destruction of infected coconut Total number of CLYD Trees................ 0 1.225
palms. infected palms cleared
(in millions).
Number of farmers adopting improved Total number of rural Rural households 0 2260
varieties of coconut trees. holders adopting the (small- medium-
planting of the improved holders).
variety of coconuts.
----------------------------------------------------------------------------------------------------------------
TBD = To be determined.
*Targets for water and sanitation indicators are for end of year 5/start of year 6.
(iii) Process and Output Indicators. The M&E Plan will describe the
process and timeline for developing a full and comprehensive activity
monitoring plan that will outline most of the process and output
indicators, the instruments for collecting data for the indicators, and
the frequency for collecting and reporting on those indicators. The M&E
Plan budget will make provision for resources to support and build on
the capacity of service providers and other service agencies to collect
and report the output and process indicators that will be outlined in
the activity monitoring plan. Technical assistance will be provided
when needed to facilitate the development of the activity monitoring
plan.
(b) Data Collection and Reporting. The M&E Plan will establish
guidelines for data collection and a reporting framework, including a
schedule of Program reporting and responsible parties. The M&E Plan
will use both qualitative and quantitative methods for data collection.
The plan will outline various data collection methodologies,
assessments, and surveys necessary to reporting on the results of the
outcome indicators. It will also develop and establish instruments and
procedures as part of the regular project monitoring activities to
track Project activity output indicators. It will also draw
quantitative information from the INE (National Statistics Institute)
surveys such as the IAF (Household Survey), QUIBB (Questionnaire on
Basic Indicators of Well-Being), and DHS (Demographic and Health
Survey) and the TIA (National Agricultural Survey) for most of the
outcome and impact indicators.
(c) Collaboration with National Statistic Institute and the
National Directorate of Studies and Policy Analysis, Ministry of
Planning and Development. The M&E Plan will identify areas of
collaboration with INE and the National Directorate of Studies and
Policy Analysis, Ministry of Planning and Development (MPD) on surveys
and other data collection initiatives. The plan will specify and
contain an agreement with the INE and MPD on a schedule of surveys and
other data collection activities and the types of economic analysis
that will be obtained by MCA-Mozambique as part of reporting
requirements. The M&E Plan budget will make provision for funding for
such collaborative initiatives.
(d) Data Quality Reviews. From time to time, as determined in the
M&E Plan or as otherwise requested by MCC, the quality of the data
gathered through the M&E Plan will be reviewed to ensure that data
reported are as valid, reliable, and timely as resources will allow.
The objective of any data quality review will be to verify the quality
and the
[[Page 40952]]
consistency of performance data, across different implementation units
and reporting institutions. Such data quality reviews also will serve
to identify where those levels of quality are not possible, given the
realities of data collection.
(e) Participatory Monitoring and Evaluation. The M&E Plan will
outline a process for encouraging participation of program stakeholders
in the collection and dissemination of the information about progress
being made towards the achievement of the program objectives. The
effectiveness and efficiency of the Program will be jointly monitored
with the beneficiary population and various stakeholders at different
levels of decision-making. The M&E Plan will foster national
``ownership'' of the Program and will periodically disseminate program
results and achievement through transparent strategies and a format of
communication with the public.
(f) Management Information System. The M&E Plan will describe the
information system that will be used to collect data, store, process
and deliver information to relevant stakeholders in such a way that the
program information is at all times accessible and useful to those who
wish to use it. The system development will take into consideration the
requirement and data needs of the components of the Program, and will
be aligned with MCC existing systems, other service providers, and
government ministries.
4. Evaluation Component
The Evaluation Component of the M&E Plan will contain two types of
evaluations: Project-Level impact evaluations and Program-Level impact
evaluations. The evaluation plans will be finalized before disbursement
for specific Program or Project activities. The Evaluation Component
will contain a methodology and timeline for analyzing data in order to
assess planned, ongoing, or completed Project activities to determine
their contribution to the Program's intended impact.
(a) Impact Evaluation. The M&E Plan will outline rigorous design
methods that will be used to evaluate the impact of the Program's four
components. Based on in-country consultation with stakeholders, the
following strategies outlined below were jointly determined as having
the strongest potential for rigorous impact evaluation. The M&E Plan
will further outline in detail these methodologies. Final impact
evaluation strategies are to be jointly determined before the approval
of the M&E Plan and before entry into force (EIF) of this Compact. The
following are a summary of the potential impact evaluation
methodologies:
(i) The WSS Project could be evaluated using rigorous randomized
design methods. In the rural water component, communities could be
selected randomly over time to allow for comparison between unbiased
control and treatment groups. In the urban water and sanitation
components, randomized allocation of instruments such as private
connection subsidies (where subsidy demand outstrips subsidy supply)
and health and hygiene outreach efforts, but not direct services, could
serve as the basis for an instrumental variable approach to evaluating
the urban and peri-urban W&S interventions.
(ii) The Roads and Land Projects could be evaluated using
propensity score matching methods with treatment and control groups.
Additionally, the Land Tenure Services Project also demonstrated
potential, contingent on favorable conditions at EIF, for randomized
evaluations of the site specific interventions.
(iii) The Farmer Income Support Project's inter-cropping and
Technical Advisory Services components could be evaluated through
rigorous randomized design methods. Favorable conditions at EIF
permitting randomized allocation of particular interventions such as
agricultural information will allow for comparison between unbiased
control and treatment groups.
(iv) Additionally, linkages between the water, roads, and land
interventions could be rigorously evaluated. For example, areas that
receive more than one intervention will be compared to areas that only
receive one of the interventions.
Impact evaluations will be used to assess Program and Project
progress and effectiveness. The M&E Plan will take into consideration
the time period various projects will demonstrate their benefits and
impacts. It is anticipated that the impact evaluations' lifespan could
extend well beyond the five-year implementation period and flexibility
of design should be a priority. The M&E Plan also will specify
different modes of contracting to carry out the evaluations, including
independent and specialized contractors and agreements where necessary.
If deemed appropriate, MCC or MCA-Mozambique may request ad-hoc
evaluations or special studies of Projects, Project activities, or the
Program as a whole at any time during or after the implementation.
(b) Program-Level Evaluation. The M&E Plan will make provision for
program-level evaluation. MCA-Mozambique, with the prior written
approval of MCC, will engage an independent evaluator to conduct an
evaluation at the expiration or termination of the Compact Term
(``Final Evaluation'') or at MCC's election, MCC will engage such an
independent evaluator. The program-level evaluation must at a minimum
(i) evaluate the efficiency and effectiveness of the Program
activities; (ii) estimate, quantitatively and in a statistically valid
way, the causal relationship between the expected impact (to the extent
possible), the intended outcomes and outputs; (iii) determine if and
analyze the reasons why the Compact goal, Program Objective and Project
Objectives were or were not achieved; (iv) identify positive and
negative unintended results of the Program; (v) provide lessons learned
that may be applied to similar projects; (vi) assess the likelihood
that results will be sustained over time; and (vii) any other guidance
and direction that will be provided in the M&E Plan. To the extent
engaged by MCA-Mozambique, such an independent evaluator will enter
into an auditor/reviewer agreement with MCA-Mozambique in accordance
with this Compact.
(c) Special Studies. The M&E Plan will identify and make provision
for special studies, ad-hoc evaluations, and research that may be
needed as part of the monitoring and evaluating of this Compact. Either
MCC or MCA-Mozambique may request special studies or ad-hoc evaluations
of Projects, Project activities, or the Program as a whole prior to the
expiration of the Compact Term. If MCA-Mozambique engages an evaluator,
the evaluator will be an externally contracted independent source
selected by MCA-Mozambique, subject to the prior written approval of
MCC, following a tender in accordance with the MCC Program Procurement
Guidelines, and otherwise in accordance with any relevant
Implementation Letter or supplemental agreement. The cost of an
independent evaluation or special study may be paid from MCC Funding.
(d) Government Request for Ad hoc Evaluation or Special Study. If
MCA-Mozambique requires an ad hoc independent evaluation or special
study at the request of the Government for any reason, including for
the purpose of contesting an MCC determination with respect to a
Project or Project activity or to seek funding from other donors, no
MCC Funding or MCA-Mozambique resources may be applied to such
evaluation or special study without MCC's prior written approval.
[[Page 40953]]
5. Other Components of the M&E Plan
In addition to the Monitoring and Evaluation Components, the M&E
Plan will include the following components for the Program, Projects
and Project activities, including, where appropriate, roles and
responsibilities of the relevant parties and Providers:
(a) Costs. A detailed cost estimate for all components of the M&E
Plan.
(b) Assumptions and Risks. Any assumptions and risks external to
the Program that underlie the accomplishment of the Program and Project
Objectives and Project activity outcomes; provided, however, such
assumptions and risks will not excuse performance of the Parties,
unless otherwise expressly agreed to in writing by the Parties.
6. Implementation of the M&E Plan
(a) Approval and Implementation. The approval and implementation of
the M&E Plan, as amended from time to time, will be in accordance with
this M&E Annex, the PIA, and any other relevant supplemental agreement.
(b) Modifications. Notwithstanding anything to the contrary in this
Compact, including the requirements of this M&E Annex, MCC and the
Government (or a mutually acceptable Government Affiliate or Permitted
Designee) may modify or amend the M&E Plan or any component thereof,
including those elements described herein, without amending this
Compact; provided, any such modification or amendment of the M&E Plan
has been approved by MCC in writing and is otherwise consistent with
the requirements of this Compact and any relevant supplemental
agreement between the Parties.
[FR Doc. E7-14130 Filed 7-24-07; 8:45 am]
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