Republic of Yemen Fisheries Investment Project - Sept 2010

Document of The International Fund for Agricultural Development For Official Use Only
The International Fund for Agricultural Development REPUBLIC OF YEMEN FISHERIES INVESTMENT PROJECT Project Final Design Report
Volume I: Main report and Annexes
Near East and North Africa Division Project Management Department
CONFIDENTIAL REPORT No. 2306-YE September 2010

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without the authorisation of the International Fund for Agricultural Development (IFAD).
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT MAIN REPORT
REPUBLIC OF YEMEN FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT MAIN REPORT Table of Contents Page Currency equivalents Weights and measures Abbreviations and acronyms I. INTRODUCTION iii iii iii 1
II. STRATEGIC CONTEXT AND RATIONALE FOR IFAD INVOLVEMENT, COMMITMENT AND PARTNERSHIP (KSF 1) 1 A. Rural Development Context B. Policy, Governance and Institutional Issues, Political and Economic Issues C. The IFAD Country Programme III. POVERTY, SOCIAL CAPITAL AND TARGETING (KSF 2) A. Rural Poverty, Information and Analysis B. The Target Group, including Gender Issues C. Targeting Strategy and Gender Mainstreaming D. Geographic Coverage of the Project IV. PROJECT DESCRIPTION (KSF 3) A. The Knowledge Base: Lessons from Previous/Ongoing Projects B. Opportunities for Rural Development and Poverty Reduction C. Project Goal and Objectives D. Alignment with Country Rural Development Policies and IFAD Strategies E. Project Components V. IMPLEMENTATION AND INSTITUTIONAL ARRANGEMENTS (KSF 4) A. Institutional Development and Outcomes B. The Collaborative Framework C. Results-Based M&E VI. PROJECT BENEFITS, COSTS AND FINANCING A. Summary Benefit Analysis B. Summary Cost Table C. Project Financing VII. PROJECT RISKS AND SUSTAINABILITY (KSF 5) A. Risk Analysis B. Exit Strategy and Post-Project Sustainability VIII. INNOVATIVE FEATURES, LEARNING AND KNOWLEDGE MANAGEMENT (KSF 6) A. Innovative Features B. Project Knowledge Products and Learning Processes C. Regional Knowledge Networking 1 8 10 11 11 13 15 17 17 17 18 20 20 21 31 31 35 36 39 39 41 42 42 42 43 44 44 44 44
TABLES Table Table Table Table Table Table Table Table Table Table Table 1: Active Fishers and Boats 2: Fishers and Fish Production, 2000-2010 3: Rural Poverty by Governorate, 2005 4: Fishers Households Indicative Incomes 5: Estimated Project Beneficiaries 6: Project Phasing Value Chain Development 7: Project Phasing Sustainable Resource Management 8: Indicative Fishing Boat Models 9: Indicative Aquaculture and MSE Models 10: Summary Project Cost 11: Project Financing by Component (all figures in USD million) 2 3 11 12 39 39 40 40 40 42 42
FIGURES Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure 1: Fishers and Fish Production, 2000-2008/2009 2: Fish Production Total and Selected High Value Species - Selected Years 3: Production of Selected Low Value Demersal Stocks, 2000-2007 4: Increase in Global Aquaculture Production, 1970-2006 5: Poverty in Fishers Communities - Characteristics 6: Fishers Households in Yemen - Characteristics 7: Landing Site Selection Process 8: Fisheries Sector Indicative SWOT Analysis 9: Government, IFAD, and EOF Strategic Consistency 10: EOF Strategic Framework 11: EOF Management Structure 3 5 5 6 12 13 16 19 20 32 33
ANNEXES ANNEX ANNEX ANNEX ANNEX ANNEX ANNEX ANNEX 1: 2: 3: 4: 5: 6: 7: CONTENTS OF THE PROJECT LIFE FILE LOGFRAME SUMMARY COST TABLES DRAFT PROJECT IMPLEMENTATION MANUAL KEY FILES ENVIRONMENTAL AND SOCIAL REVIEW NOTE PROJECT ALIGNMENT WITH IFAD STRATEGY, PROCEDURE AND POLICY 1 3 9 13 57 67 83
WORKING PAPERS WP 1: Rural Poverty, Target Group, Gender Issues and Targeting Mechanisms WP 2: Sustainable Resource Management WP 3: Value Chain Development WP 4: Rural Finance and Financial Mechanisms WP 5: Economic Opportunities Fund WP 6: Project Costs and Financial Analysis
ii
Currency equivalents Monetary Unit 1 US$ 1 YER = = = Local currency YER 230 US$ 0.00465
Weights and measures 1 kilogram (kg) 1 000 kg 1 kilometre (km) 1 nautical mile (nm) 1 meter (m) 1 square meter (m2) 1 acre (ac) 1 hectare (ha) 1 gallon (gl) = = = = = = = = = 2.204 pounds 1 metric ton (t) 0.62 miles 1.15 miles 1.09 yards 10.76 square foots 0.405 hectares (ha) 2.47 acres 3.785 litres (l)
Abbreviations and acronyms AFD AGFUND AMB ARC CACB CFC CGAP DFI DPPR EEZ EIA EOF EOP EPA EU FA FAO FCU FIP FMP FRA GDP GNI GoY GTZ IFAD IFC IMF KfW KSF LLC MFI Agence Franaise Dveloppement Arab Gulf Programme for United Nations Development Organisations Al-Amal Bank Aquaculture Research Centre Cooperative and Agricultural Credit Bank Coastal Fisheries Corporation Consultative Group to Assist the Poor Direct Foreign Investment Development Plan for Poverty Reduction Exclusive Economic Zone Environmental Impact Assessment Economic Opportunities Fund Economics Opportunities Project Environmental Protection Authority European Union Fisheries Authority United Nations Food and Agriculture Organisation Fishers' Cooperative Union Fisheries Investment Programme Fisheries Management Plan Fisheries Research Authority Gross Domestic Product Gross National Income Government of Yemen Deutsche Gesellschaft fr Technische Zusammenarbeit International Fund for Agricultural Development International Finance Corporation International Monetary Fund German Development Bank Key Success Factor Limited Liability Company Micro-Finance Institution
iii
MFW MoF MOPIC MSE MSRRC MWE NCFSM PDRY RB-COSOP SEDF SFD SMART SME SNACC SO TMI UFC UN UNDP USD WB YAR YSEA
Ministry of Fish Wealth Ministry of Finance Ministry of Planning and International Cooperation Micro/Small Enterprise Marine Science and Resources Research Centre Ministry of Water and Environment National Corporation for Fisheries Services and Marketing People's Democratic Republic of Yemen Results Based Country Strategic Opportunities Paper Small Enterprise Development Fund Social Fund for Development Sector Management Adjustment and Restructuring Team Small/Medium Enterprise Supreme National Authority for Combating Corruption Strategic Objectives Tadhamon Microfinance Institution Union of Fisheries Cooperatives United Nations United Nations Development Programme United States Dollars World Bank Yemen Arab Republic Yemen Seafood Exporters Association
GOVERNMENT OF YEMEN Fiscal Year 1st January 31st December
iv
REPUBLIC OF YEMEN FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT MAIN REPORT
I. INTRODUCTION 1. In 2009, the Government of Yemen (GOY) requested IFAD to finance a fisheries sector development project which would focus on enhancing incomes within fishers communities without increasing pressure on the over-exploited resource base. An IFAD preliminary design mission visited Yemen in late 2009 to define constraints and identify opportunities across the fisheries value chain and develop a project concept note. The project concept was agreed with Government and approved by IFAD by early 2010. Subsequently, an IFAD mission visited Yemen in FebruaryMarch 2010 to design the Fisheries Investment Project and produce the project design document. 2. An IFAD mission1 visited Yemen in June-July 2010 to finalize the design of the Fisheries Investment Project and produce the final design report. In Sanaa, the mission worked closely with key Government authorities (Ministry of Planning and International Cooperation (MOPIC), Ministry of Fish Wealth (MFW), Ministry of Agriculture and Irrigation (MAI), Central Bank of Yemen (CBY), Environmental Protection Authority/MWE, General Investment Authority), public institutions (Yemen Coast Guard, Yemen Standardisation and Metrology Organization), financial institutions (Al Amal Microfinance Bank, United Insurance Company), and fisheries value chain stakeholders (Yemen Seafood Exporters Association (YSEA), Yemen Fisheries Cooperative Union (FCU), fish processors and exporters). Field visits were undertaken to Abyan, Aden, Hadramaut, Hodeida and Shabwah governorates, where the mission met with fishers, representatives of fishers cooperatives, and other members of fishers communities including women and their organisations. The mission also met with the governorate branches of MFW and other public or parastatal entities such as the Marine Science and Resources Research Centre (MSRRC), the Aquaculture Research Centre (ARC) and the National Corporation for Fisheries Services and Marketing (NCFSM). 3. The mission worked in close coordination with the representatives of other external financiers involved in the fisheries sector, particularly the European Union and the World Bank. It also met with officials of the United Nations Development Programme (UNDP), and the Japanese International Cooperation Agency (JICA). 4. The mission held numerous meetings with major departments of the Ministry of Fish Wealth. The missions Aide-Memoire was discussed in detail and agreed with MFW, and was endorsed by Government at a Wrap up meeting on 21 July 2010 which was chaired by the Deputy Prime Minister and Minister for Planning and International Cooperation. II. STRATEGIC CONTEXT AND RATIONALE FOR IFAD INVOLVEMENT, COMMITMENT AND PARTNERSHIP (KSF 1) A. Rural Development Context 5. Yemen is a low-income country with a population of about 22.9 million. GNI amounts to USD 21.9 billion and per capita GNI averages USD 960 in nominal terms (2008). Yemen has a human development index of 0.575 and ranks 140th out of 182 countries rated in 2009. The gender development index is 0.538, reflecting gender disparities in human development. About 40% of
1 The final design mission consisted of Mr Thierry Mahieux (mission leader & microfinance specialist), Ms Helen Lackner (sociologist), Mr Taoufik Jaballah (economist), Mr Leon Williams (fisheries specialist & country programme analyst) and Mr Flavio Corsin (aquaculture specialist). The mission covered the period 20 June to 23 July 2010. Mr. Anis Abdulla Shokah (civil engineer) accompanied the mission in Hadramout. Dr Fathia Bahran (country programme officer) joined the mission from 20 June to July 23, while Mr Omer Zafar (country programme manager) joined the mission from 14 to 23 July. Mr Giacomo Branca (economist) finalised the project costing and financial/economic analysis in Rome.
the population lives below the poverty line, and 80% of the poor reside in rural areas; another large population segment lives marginally above the poverty line and is vulnerable to economic and natural shocks. Almost half of the rural population is classified as poor. 6. Population pressure is a major challenge which makes the fight against poverty increasingly difficult. Although the annual population growth rate has dropped from 3.7% to 2.9%, Yemen still has one of the highest growth rates in the world. The proportion of those below 15 years of age is 45%, and over 62% of the population is under 25. It is projected that population will double over the next 20 years. Official unemployment rose from 12.0% in 2000 to 16.8% in 2005. Although women are increasingly joining the labour force to counteract declining real household incomes, female labour represents only 8.8% of total employment. 7. The Republic of Yemen was formed in 1990 when the Yemen Arab Republic and the Peoples Democratic Republic of Yemen were united. The social and cultural legacy of the previous division remains visible today and influences the fisheries sector and society in general, as evidenced by the stronger position of fisheries cooperatives, historically higher levels of gender equality, and lower levels of qat consumption in the Socotra Archipelago. Fisheries Sector 8. Yemens 2,520 km coastline extends from Saudi Arabia in the northwest to Oman in the east and is divided among the Red Sea (650 km), the Gulf of Aden (1,550 km) and the Socotra Archipelago (320 km). The 552,669 km2 Exclusive Economic Zone (EEZ) contains a variety of important ecosystems including coral reefs and mangroves supporting about sixty-five commercially important species. These include invertebrates (shrimp, lobsters, sea cucumbers, cuttlefish), pelagic species (yellow-fin tuna, long-tail tuna, kingfish, Indian mackerel, Indian oil sardines) and demersal species (groupers, emperor, threadfin bream). The major environmental influence on Yemen fisheries productivity is the Indian Ocean monsoon system, in particular the south-west monsoon which blows from May to September. This results in a strong upwelling of cold, nutrient-rich waters in the Gulf of Aden which also enter the southern parts of the Red Sea, creating levels of primary productivity which are amongst the highest in the world. Table 1: Active Fishers and Boats
Region Red Sea (avg. 5.5 fishers/boat) Gulf of Aden (avg. 3.5 fishers/boat) Governorate Hajjah Hodeidah Taiz Lahej Aden Abyan Shabwah Hadhramout Al Mahara Hadhramout Fishers (est. #) 1 969 33 969 3 927 1 4 5 1 16 8 750 785 831 635 335 166 Boats (est. #) 358 6 178 714 500 1 367 1 666 467 4 667 2 333 1 250 19 500
Socotra (avg. 4 fishers/boat) Total
5 000 83 367
9. Due to high productivity and a long fishing tradition, fisheries is of major importance for the Yemeni economy. The sector contributes about 3% of GDP and is consistently identified as a key sector in the Governments economic development and poverty reduction strategies. Furthermore, after petroleum products, fisheries constitutes Yemens main source of export earnings and is a major source of employment, income and food security throughout the coastal zone. Yemen is the major regional fish producer, accounting for more than 50% of fish production and exports across the Red Sea and Gulf of Aden. The fishing industry is dominated by the small-scale sector, which currently supports the livelihoods of an estimated 83,367 small-scale fishers and 583,625 of their household members, for a total of about 667,000 people (Table 1). Government sees the fisheries sector as a critical source of employment in coastal areas and has encouraged its expansion; the number of small fishers has increased at an average rate of 7.5% p.a. over the past two decades, resulting in significant increases in fish production from the early 1990s to date. Artisanal fishers
currently operate about 19,500 fishing boats and account for well over 90% of total production, despite the presence of both licensed and illegal foreign (and national) trawlers in Yemeni waters. 10. Production. Official MFW statistics indicate that total fisheries production in 2009 amounted to 107,000 mt, representing a major decline from the official peak level of 256,300 mt in 2004 (Figure 1, Table 2). However, these figures are likely to be grossly inaccurate due to logistical difficulties in data collection, poor auction management (including not weighing most of the fish sold), and deliberate under-reporting to avoid payment of the 3% levy on catch value introduced by Government in 2004. The MFW has unofficially indicated that total annual catch should be around 600,000 mt, and implies that fishers cooperatives are indeed misreporting catches to avoid the levy. Based on export and domestic consumption data as well as interviews with fishers across the coastal areas, the mission estimates that total annual catch is currently in the range of 247,000 264,000 mt, for an ex-vessel annual value ranging from USD 618 million to USD 660 million. In any case, it is evident that all estimates of total production are highly uncertain, and improved systems of data collection are required. Figure 1: Fishers and Fish Production, 2000-2008/2009
(Source: MFW / FAO Fishstat / Mission Estimates)
Table 2: Fishers and Fish Production, 2000-2010

Indicator Fishers Boats Average Fishers / Boat Total Annnual Catch Average Annual Catch / Fisher Unit number number number mt mt 1995 30 000 10 000 3.0 107 790 3.6 2000 49 114 12 560 3.9 142 198 2.9 2005 65 198 16 890 3.9 238 400 3.7 2010 (est.) 83 367 19 500 4.3 256 000 3.1
Source: MFW, FAO Fishstat, Mission estimates)
11. Vessels and Landing Facilities. In the small-scale sector virtually all fishing is carried out using huris (long, narrow fibreglass boats of 7-16 m, with outboard engines, carrying 3-7 crew) and sambuks (larger wooden boats of 10-20 m, with an inboard or outboard engine, carrying up to 10 crew). Gillnets, traps and hook and line are the most common types of fishing gear, and fishing is highly seasonal with activity restricted by the monsoon winds (which peak in June-August) for reasons of safety and changes in fish behaviour. Huris were traditionally used for single day trips in inshore waters, but due to overfishing and low yields in Yemeni waters they now commonly travel to the EEZ edges and beyond and stay for up to 10 days. Sambuks are used for longer trips ranging from a few days to three weeks. Boats are generally privately owned with some individuals owning two or more, and occasionally up to five. Joint ownership is rare on the Red Sea coast but more common along the Gulf of Aden and Socotra, accounting for 30-40% of boats in some areas.
12. Only 12 of the 88 landing sites have a harbour with paved or concrete pier. A further 42 have an open-sided auction shed, while less than half have any basic services. The remaining landing sites lack modern landing facilities, and fish are brought ashore directly onto the beach. Boats are either moored near the beach or dragged up out of the water onto the beach itself. Fishers have no means of protecting their boats and gear from the monsoon winds and tropical storms to which the Yemeni coast is exposed. There are numerous ice plants (including those belonging to fish factories) which currently produce sufficient ice to meet the low demand; it is expected that ice demand will increase significantly as the fisheries value chain is upgraded. 13. Marketing. Domestic consumption of fish is around 5kg per capita per annum reflecting low fish consumption in inland areas. About 57% of total production is exported (2008) to regional markets and high value markets in the EU and Asia2. There are 35 fish factories, concentrated in Hodeida, Aden, Mukalla, Qishn and Al-Ghaydah, of which 17 are licensed to export to the EU. Up to 70% of catch on the Red Sea coast is exported fresh to Saudi Arabia by small traders equipped with insulated vehicles; it is estimated that there are 975 trucks of 5 mt exporting to Saudi Arabia and Oman. However, due to poor handling and hygiene standards, Yemeni fish receives low prices and has a poor reputation in the Saudi market. Processors and exporters often report increasing difficulties in obtaining sufficient quantities of high quality fish due to limited use of ice, poor onboard handling and processing, and the long periods vessels stay at sea due to declining catches. 14. Since 2004, all fish must be sold through official auctions where the gross sale value is subject to a 3% Government levy plus a service charge of up to 5%, for a total of 8%. The service charge is divided among the auctioneer (2%), the owner of the auction shed (1%) and the fishers cooperative (2%). Where the cooperative owns the auction shed and employs the auctioneer, it may charge as little as 2%. In other areas, particularly on the Red Sea coast where cooperatives are weak, wakeels (agents) have developed inter-locking factor markets and control the provision of fishing inputs and sale of fish, and often also act as auctioneers taking 5% of the value, while the owner of the auction shed gets 2%, the cooperative gets 1%, and the Government gets 3%, for a total to 11% of gross revenue. These auction systems are complex and not transparent, with significant opportunity for collusion between buyers and auctioneers. In areas where cooperatives do not control auctions, fishers often do not receive receipts for fish sold and are unaware of the precise weights landed. It is common for agents/auctioneers to act as moneylenders to fishers for operating costs, deducting the debts from sale of fish. 15. There are three prevailing systems of revenue distribution amongst fishers: Red Sea coast: net revenue is divided into two, with 50% for the boat (kept by the owner) and 50% for the crew which is divided equally among crew members and captain. If the captain is not the owner, it is normal that the owner still takes the 50% for the boat while the captain takes two crew shares. Gulf of Aden and Socotra: a more equitable system is applied; after costs are deducted, the revenue is divided with one share accruing for the boat (kept by the owner) and one share each for the fishers onboard, including the owner/captain and crew members. Gulf of Aden: a third system is also applied in places along the Gulf of Aden, under which the boat receives one third of net revenue (kept by the owner), the captain receives another third, and the crew members divide the remaining third among themselves. 16. Overfishing and Declining Resources. Increases in the number of fishers and in fishing effort have taken place in an uncontrolled manner, without adequate knowledge or consideration of the status of fish stocks, nor enforcement of measures for sustainable exploitation. Fisheries are currently effectively operating in an unregulated environment, although legislation and regulations exist. Due to the lack of funds for enforcement, complex and time consuming court cases, and insufficient awareness within MFW of the damage being caused to Yemens marine resources, many existing regulations are simply not enforced. 17. Official time-series estimates of total and high value species fish production are indicated in Figure 2. While the data may be somewhat unreliable, it is known that production of selected high value species is declining in recent years. All fisheries sector stakeholders report declining catches, particularly of high value species such as cuttlefish, tuna and shrimp. Some species such as lobster and sea cucumber have collapsed completely. Stakeholders also report a decline in the average
2
These figures are based on mission calculations and detailed in the Working Papers.
sizes of specimens caught, another indicator of overfishing and medium-term damage. As a result, fishing effort is increasing, fishing is taking place beyond the EEZ, and illegal/destructive fishing practices are expanding. A decade ago the Red Sea fishers could catch 550 kg of fish in 2-4 days, five years ago it took 4-6 days, and it now takes 6-10 days. On the Gulf of Aden and in Socotra, most fishers undertake single day trips but now use more powerful engines (commonly 75 hp) to travel further, faster and remain at sea for more hours. Figure 2: Fish Production Total and Selected High Value Species - Selected Years
(Source: MFW/FAO Fishstat)
18. There is evidence of increases in catches of low value species (Figure 3), suggesting shifts in focus of fishing effort. Overfishing of high value species followed by a shift of target to lower value species and an increase in fishing effort to maintain production levels is a phenomenon which has been repeated across the world in poorly managed fisheries. Figure 3: Production of Selected Low Value Demersal Stocks, 2000-2007
(Source: FAO Fishstat)
19. This trend of decline in Yemeni fish production is consistent with fish production trends in the wider Western Indian Ocean Region and globally. It is now believed that 52% of global stocks are fully or over-exploited, of which 28% are fully exploited, 19% are overexploited, 8% are depleted, and 1% are recovering from depletion. In the Western Indian Ocean, the share of stocks which are fully exploited is amongst the highest in the world. The causes of the decline in Yemeni fish production are also consistent with global trends uncontrolled increase in fishing effort, poor management, weak enforcement of regulations, and political preference for short-term increases in employment and revenue rather than the assurance of long term sustainability.
20. Aquaculture. The development of aquaculture has progressed very slowly in Yemen to date. There is just one commercial shrimp farm in operation3, producing approximately 400 mt per year, while domestic research capacity and activity is limited. However, given the over-exploitation of wild fisheries resources, the global trend of increasing aquaculture production (Figure 4), and the continuous increase in global demand for fisheries products, accelerating the development of aquaculture in Yemen is essential to ensure sufficient fish production to meet domestic and export demand. Aquaculture development will create economic opportunities in coastal areas with rapidly growing populations and limited alternative opportunities. Figure 4: Increase in Global Aquaculture Production, 1970-2006
(Source FA0 SOFA 2008)
21. Aquaculture development has been identified as a priority in Yemens Strategic Vision 2025. The potential for aquaculture in Yemen is significant due to the existence of favourable locations mainly along the Red Sea coast and in some locations in the Gulf of Aden, and the availability of large areas of low-lying unused coastal land. Micro and Small Enterprises (MSEs) 22. Based on a recent IFC credit demand survey4, it is conservatively estimated that there are 400,000 MSEs in Yemen (excluding the agriculture sector), of which 91% are micro enterprises and 9% are small enterprises. While 53% of MSEs are interested in obtaining loans, only 6% of this market is served by financial institutions. As typical loan sizes for MSEs range from USD 1 000 to USD 25 000, with an average of USD 2 500, the estimated financing demand for the MSE sector (excluding agriculture) amounts to USD 530 million. Since 2000 the MSE sector has grown by an average of 5% annually. The bulk of MSEs are engaged in several sectors: trade (66%), services (20%) and production (14%). Within the trade sector, 83% of MSEs are engaged in retail. 23. It is estimated that microenterprises employ some 1.1 million people while small enterprises employ another 0.3 million, for a total of 1.4 million jobs. Most employees are family members. About 24% of enterprises have an annual workforce growth of 10%, creating some 124,400 new jobs per year. It is estimated that women constitute only around 12% of the MSE workforce. 24. The MSE sector suffers from several key constraints. First, MSEs lack awareness about the availability of loans and other financial products from the financial sector. Most MSEs are familyowned and have little capacity for further capitalisation; their limited financial resources prevent them from leveraging sufficient funds to finance activity growth and investments. Second, insufficient MSE diversification resulting from inadequate markets and technical/business skills increases risks for both the entrepreneurs and financial institutions (womens MSEs are even less diversified due to cultural factors regarding womens roles). Third, the slow growth of medium and large enterprise sectors and limited direct foreign investment in Yemen constrains the growth of direct/indirect markets for the MSE sector.
3 4
The economic viability of shrimp farming in Yemen is currently threatened by rising fuel prices. Assessment of MSE Financial Needs in Yemen, International Finance Corp., Dec. 2007.
Financial Services 25. Supply. The commercial banking sector consists of fifteen active commercial banks, of which four are foreign-owned, three are publicly-owned, and eight are domestic privately-owned; four of the latter are Islamic banks. Commercial banks are over-liquid as indicated by their average credit to deposit ratio of 30% and their average investment in Treasury Bills (about 60%). The outreach of commercial banks is concentrated in the main cities and urban areas. Commercial bank loans are associated with high interest rates and sizable collateral requirements. Annual interest rates can run as high as 60% and banks can request collateral (preferably houses or land) for amounts of up to 400% of loan size. Banks regard SME lending as a strategic future goal, but have not yet addressed this market due to the high returns on Treasury Bills with low risk. 26. Microfinance institutions (MFIs) which are actively involved in the provision of microfinance services include eleven NGOs/foundations, Al-Amal Microfinance Bank, Tadhamon Microfinance Institution (TMI), and the Small Enterprise Development Fund (SEDF). Apart from Tadhamon, the other MFIs were created by the Social Fund for Development (SFD). These MFIs have an aggregate outreach of over 40 000 clients, a combined loan portfolio of around USD 15 million, and an average loan size of USD 115. The MFI with the largest outreach covers nine governorates, while others cover from one to four governorates each. 27. In October 2008, the Al-Amal Microfinance Bank (AMB) was created under Al-Amal Bank Law 23 of 2002, under Central Bank supervision. The AMB is owned by SFD (45%), the Arab Gulf Programme for UN Development (AGFUND, 35%), and 13 private investors/entities (20%). Trial period results and outcomes to date are well above projections, and indicate that AMB will breakeven in 2010; however, it will need additional financial resources to sustain its activity growth and geographical expansion. Several investors including the Economic Opportunities Fund (EOF) being created under the IFAD-financed Economic Opportunities Programme have expressed interest to invest in the share capital of AMB. The AMB Board has expressed interest for the EOFs proposed investment in the Banks share capital, which would enable financing of the Banks geographical expansion in IFADs areas of operation as well as the growth of its activity. Parliament is currently discussing the repealing of the Al-Amal Bank Law to enable the Bank to fall under the Microfinance Law (this would indeed facilitate the EOF investment in the Banks share capital). 28. In March 2009, a new microfinance bank law was adopted by Parliament. It allows licensed microfinance banks to collect savings and deposits and use them for lending, and places them under Central Bank supervision, to whom they have to submit audited financial statements. The Central Bank has developed a set of prudential rules and regulations. The AMB is licensed by the Central Bank, while TMI is licensed through its mother company. Due to their current structure and lack of compliance with CGAP microfinance best practices, it is unlikely that the SFDs microfinance entities will be licensed. Unlicensed MFIs are not allowed to collect savings. 29. Outreach. Fishers villages are scattered along the coast, and most have low populations. They are not well covered by microfinance institutions nor by commercial banks; the latter have developed relationships with the fisheries sector in large cities/ports such as Aden, Hodeida, and Mukalla. Financial outreach to coastal villages will require MFIs/banks to develop service points in these areas. Alternative financial products suited to the specific requirements and cash-flow cycles of fishers households and rural micro-businesses need to be developed. The Post Office is the only financial intermediary widely present in coastal areas and fishers villages. 30. Only those fishers who are members of cooperatives which are financially sustainable and have a good credit record (about 5 to 10% of cooperatives) have access to commercial bank loans (revolving short-term credit for the fishing season). In such cases, credit funds are provided to the cooperative and on-lent to fishers (individually or in groups) with a small cooperative mark-up to cover transaction costs. In some cases, cooperatives act as financial guarantors for their members, particularly for investment credits. Typically, however, cooperatives and their members do not have access to commercial credit due to bad credit ratings. In the Red Sea, access to credit for fishers is controlled by wakeels who serve as auctioneers, buyers, owners of boats, and financial service providers. An opaque and intricate financing system, partial repayment and social credit leave fishers in financial dependence of wakeels, without alternative means to access credit. 31. Demand. The WB/IFC Doing Business Report 2009 ranks Yemen 150th out of 182 countries for access to credit (up from 174th place in 2008). Demand for financial services in rural areas is generally unmet, mainly due to: (i) the absence of a rural network of commercial banks, with the
exception of the Post Office, CACB and the Yemen Bank for Reconstruction and Development; (ii) the limited ability of rural enterprises to meet the terms, conditions and collateral requirements of commercial banks; (iii) the very limited outreach of MFIs; (iv) the lack of adaptation of financial products for rural activities, particularly agriculture and fisheries. Due to the decline in fish catch and related income, and lack of collateral as a consequence of the reluctance of insurers to insure unlicensed boats, fishers have limited access to credit for investments and working capital. B. Policy, Governance and Institutional Issues, Political and Economic Issues 32. From 1995 to 2000 Yemen implemented an Economic, Financial and Administrative Reform Programme proposed by IMF and World Bank. The programme was fairly successful and resulted in robust GDP growth averaging 5.2% per annum. Since 2000, economic growth decelerated to levels below population growth due to internal security concerns, a slowdown in economic reforms, reduced private sector investment, and declining oil production. Between 2004 and 2008 GDP growth averaged 3.7% per annum. Oil and gas represented 66% of Government revenue in 2002, rose to 76% in 2006 and dropped to 70% in 2009. The budget deficit is maintained at about 2% largely due to significant oil price increases since 2004. Between 2001 and 2005, official inflation rates ranged from 11.8% to 12.2%, and increased to 18.9% in 2009. The Central Bank expects inflation to be maintained under 10% in 2010, ranging from 7% to 9% over the next three years. 33. Yemens strategic vision and objective is to reach middle-income prosperity by 2025. The achievement of a GDP per capita level of USD 2 375 will require a GDP growth rate of least 6.3% per annum over the next 20 years. To facilitate economic growth and reduce poverty, Government has been introducing significant measures to improve the business regulatory environment and investment climate, in cooperation with IFC and other partners. Yemens composite ranking in the IFC/WB Doing Business report improved from 123rd place in 2008 to 98th in 2009; in terms of starting a business Yemen jumped from 175th place in 2008 to 50th in 2009 (the top reformer in the world for this indicator). The reforms include streamlining business licensing and registration, restructuring taxation and customs systems, and further protecting investors. Government is fully committed to institute a private sector approach to economic growth and poverty reduction. 34. The Investment Law will be modified before the end of 2010. Tax and financial incentives will no longer be flat but will be performance-based and proportional to the size of the investment and the number of jobs created. Temporary tax exemption will no longer be granted, and profits will be taxed at 15% for new enterprises/companies. To facilitate the creation of new businesses, the General Investment Authority is implementing a one-stop shop mechanism where entrepreneurs can have their companies registered with all relevant governmental units, thereby reducing bureaucracy and red tape. These one-stop shops are established in major cities (Sanaa, Aden, Hodeida, Mukalla) and will be used under the project for the establishment of the limited liability companies by the EOF and fishers organizations, and for providing services to these organizations. 35. Yemens Development Plan for Poverty Reduction (DPPR) 2006-2010 indicates that poverty reduction depends on economic growth through private sector development, infrastructure, human resource development and social protection. In particular, economic growth led by the private sector is seen as the major poverty reduction instrument. The three key DPPR objectives are: DPPR 1: enhance partnership with the private sector, civil society, and external financiers to reduce poverty. DPPR 2: (i) promote SMEs for sustainable income generation, particularly in food processing, export-oriented agriculture, fisheries, tourism and related services; and, (ii) promote microfinance services for the poor, particularly for women in rural areas. DPPR 3: (i) increase efficiencies in the agriculture sector; (ii) enhance household food security; (iii) ensure optimal and sustainable use of fishery resources. 36. Fisheries. Yemens fisheries sector policy as defined by MFW includes: (i) maximise fisheries returns in a sustainable manner; (ii) develop the aquaculture sector to meet the rising demand for fish; (iii) ensure integrated development of fisheries communities; (iv) ensure stakeholder and community participation in fisheries and aquaculture by strengthening cooperatives; (v) promote private sector participation in all aspects of fisheries; (vi) increase quality, value addition, and fishers incomes through services and marketing efficiency; and, (vii) ensure basic food security.
Major Institutional Stakeholders 37. Cooperatives. There are currently 129 fisheries cooperatives and an apex organisation, the Fisheries Cooperative Union (FCU), located in Sanaa. The cooperative movement has a dynamic history in the coastal areas of the former socialist PDRY (including the Gulf of Aden and Socotra Archipelago), while in the Red Sea cooperatives are generally weak due to lack of a cooperative tradition, limited membership, and the influence wielded by wakeels who are at the centre of a system of interlocking factor markets and power relationships to keep fishers under their control. 38. Cooperatives are legally registered and fall under the responsibility and supervision of the Ministry of Social Affairs. For technical matters and compliance with fisheries laws and regulations, however, MFW serves as the supervising authority. A rapid assessment of fisheries cooperatives was carried out in 2007 to assess membership, basic organisation and services provided; it did not however include financial audit nor review of financial statements and liquidity positions. Despite its weaknesses, the assessment serves as an indicator of the quality of management of fisheries cooperatives, on the basis of which cooperatives have been ranked in three groups5: mature cooperatives: these include 25 cooperatives in the Gulf of Aden and Socotra Archipelago, and 2 along the Red Sea coast. They have a clear mission and vision, provide various production and social services to members, demonstrate good governance and have sound financial statements and cash positions. Financial statements show positive returns in recent years (despite declining catch levels) and are audited by local audit firms. These cooperatives are able to mobilise up to YER 8 million in cash from their own resources to contribute to productive investments. developing cooperatives: these include 24 cooperatives mainly in the Gulf of Aden and Socotra Archipelago, and 2 along the Red Sea coast. They require technical assistance and advisory services to improve/expand the provision of services to their members and attain maturity. Financial statements are audited by local firms. Most of these cooperatives are just breaking even or suffering minor losses mainly due declining catch levels. They may be able to mobilise up to YER 2 million in cash from their own resources or from additional members contributions to cofinance productive investments. underdeveloped cooperatives: these include 76 cooperatives mainly on the Red Sea coast. They have inadequate administrative structures, weak governance and management, poor financial statements and cash positions, absence of services for members, and lack of independence due to entrenched local political interference. They require substantial technical assistance and capacity building to improve; alternatively, they face closure. These cooperatives have very limited possibility to mobilise funds for investment purposes. 39. Fishers cooperatives and MFW have had a generally poor relationship. Cooperatives believe that MFW does not protect the interests of small fishers by not enforcing fisheries laws and regulations, leading to unsustainable over-exploitation of the resource base. MFW believes that fishers avoid paying taxes and under-report catch accordingly, and has implied that cooperatives should be closed. However, recent confidence-building measures, such as joint MFW/FCU study tours, have started to lay the foundations for dispute resolution and improved relationships. It is reported that the Ministry of Social Affairs is facing difficulties in enforcing the Cooperative Law due to budgetary constraints, while the FCU lacks resources for auditing cooperative accounts, as mandated, and is thus unable to recommend the closure of financially non-compliant cooperatives. 40. In any case, cooperatives are the key driving force in the fisheries sector in the Gulf of Aden and Socotra Archipelago; their history, large membership and often impressive levels of service provision (including healthcare, education, social welfare, water supply and electricity) mean that closing them would be socially and economically unacceptable for many coastal communities. 41. Ministry of Fish Wealth. The MFW is responsible for management of Yemens fish resources. Its current structure includes a Minister supported by eight Deputy Ministers. Professional roles are unclear and the structure has changed in recent years. MFW maintains branches in each coastal governorate but few functions are decentralised, there is limited communication between branches and head office, and branches lack budgetary resources for operating costs. The Marine Science
Estimates of cooperatives contributions to productive investments are based on discussions with the FCU and selected cooperatives in Socotra, the Gulf of Aden and the Red Sea. These estimates will be reviewed during the due diligence exercise to be carried for all cooperatives at project inception. Comments on the financial statements based on the missions analysis.
5
and Resources Research Centre (MSRRC) and the Aquaculture Research Centre (ARC), both based in Aden, are also under MFW control but lack operating budgets to implement research activities. 42. The WB has undertaken a major institutional assessment of MFW, supported by the WB/EUfinanced Fisheries Resource Management and Conservation Project. Based on this assessment, a major restructuring of MFW, its branches, MSRRC and ARC has been designed and is currently under implementation. It involves significant reductions in staff numbers, reorganisation of MFW in Sanaa, and replacement of its branches with four Fisheries Authorities (FAs). MSRRC and ARC will be replaced by a new Fisheries Research Authority (FRA). The restructuring process is expected to be completed by end-2010. The MFW will subsequently operate with about 70 staff in Sanaa and retain its role as Governments principal advisor on fisheries and fisheries management, with responsibility for monitoring the sector, planning strategic development, and formulating fisheries policy, legislation and regulations. MFW will also be responsible for international fisheries policy, export promotion, licensing of foreign vessels, and overseeing the FAs and FRA. 43. The responsibility for implementation of MFW fisheries policies will rest with the FAs, which will be located in Hodeida, Aden, Hadramaut and Al Mahara and will cover several governorates each. The FAs will have about 285 total staff members and will be responsible for: (i) monitoring, control, surveillance and enforcement of regulations; (ii) administration of local fisheries licensing; (iii) revenue collection; (iv) drafting of fisheries management plans; (v) stakeholders coordination and consultation; (vi) extension services; (vii) collection of landing site data; and (viii) fish quality control. FAs will be governed by Boards consisting of governorate representatives and fisheries sector stakeholders, and will report to MFW. The FAs will aim to develop strong relationships with stakeholders and involve them in decision making through the creation of local stakeholder liaison groups. Planned project activities such as licensing, strengthening of fisheries inspectors and execution of fisheries management plans will be carried out by the FAs. 44. The Fisheries Research Authority will be responsible for research in support of fisheries management and development, aquaculture development and marine environment management. This will include providing information on fish biology, population dynamics and stock assessment, scientific advice for fisheries management planning, and research support for private aquaculture development. The FRA will be governed by a Board consisting of representatives of MFW, FAs, and fisheries sector stakeholder groups. Its Aden head office will constitute the centre of a network of research stations at Hodeida, Mukalla and Aden operating with about 107 staff. The FRA will receive public budgetary resources but will also be required to raise funding from contract research for the FAs, private sector, external financiers and Government. 45. Environmental Protection Authority. The EPA constitutes part of the Ministry of Water and Environment. It is responsible for enforcing the Environmental Protection Law and reviewing the EIA for projects which may have adverse impacts on the environment. The EPA can issue an unqualified or qualified opinion, or can reject a project for environmental reasons. It has a specific department dealing with the coastal and marine environment and will be represented in the management committees for integrated coastal area management. C. The IFAD Country Programme 46. IFAD has supported nineteen development projects in Yemen valued at USD 610 million, of which USD 201 million financed by IFAD and the rest covered by external financiers and domestic resources. Five projects with IFAD investment of USD 78 million are currently under execution, focusing on area based participatory rural development, rainfed agriculture, and rural roads. 47. The December 2007 RB-COSOP indicates that IFADs response to rural poverty challenges will focus on three strategic objectives (SO): SO 1: empower rural communities; linked to DPPR 1. SO 2: promote sustainable rural financial services & pro-poor SMEs; linked to DPPR 2. SO 3: enhance rural household food security; linked to DPPR 3. 48. Government and IFAD are in continuous discussion regarding the country programme and pipeline. There is consensus regarding the need to: (i) focus on the creation of sustainable propoor investments aligned with Governments economic growth and poverty reduction policies and IFADs strategic objectives; (ii) introduce a private sector-led approach as the key instrument in
10
this respect; (iii) institute a public-private partnership to effectively, efficiently and transparently manage development resources and create synergies. 49. The IFAD country programme for the 2010-2012 resource allocation cycle, defined jointly with Government, envisages three investments: (i) the Economic Opportunities Programme (EOP) focusing on pro-poor agricultural value chain development; approved by IFADs Executive Board in April 2010; (ii) the Fisheries Investment Project (FIP) focusing on sustainable fisheries resource management and value chain upgrading; (iii) the Rural Employment Programme (REP) focusing on the creation of sustainable rural employment opportunities through venture capital investments and other services for rural businesses with growth potential. All three investments will be managed by a new public-private partnership the Economic Opportunities Fund (EOF) which is being created under the EOP. External and domestic co-financing have been secured for the EOP, and discussions are underway for similar cofinancing arrangements for the FIP and REP. III. POVERTY, SOCIAL CAPITAL AND TARGETING (KSF 2) A. Rural Poverty, Information and Analysis Table 3: Rural Poverty by Governorate, 2005
Governorate Total Population (number) 434,819 577,369 470,564 2,157,552 443,797 88,594 494,557 877,786 1,330,108 1,028,556 1,479,568 2,132,861 722,694 238,522 394,448 695,033 919,215 470,440 2,303,425 17,259,908 Rural Households (number) 43,430 53,933 51,562 236,549 51,008 8,125 64,464 87,359 162,763 65,022 177,134 253,183 95,699 24,141 55,744 71,455 113,948 44,244 286,077 1,945,840 Rural Population (number) 322,300 469,316 408,318 1,396,495 385,735 51,347 458,534 728,310 1,144,162 552,701 1,339,990 1,757,028 660,665 206,665 390,618 588,015 893,796 396,283 1,857,445 14,007,723 Rural Poor (number) 161,150 281,590 187,826 502,738 204,440 3,081 142,146 517,100 286,041 215,553 669,995 579,819 323,726 103,333 136,716 94,082 250,263 225,881 780,127 5,665,607 Rural Poor (%) 50% 60% 46% 36% 53% 6% 31% 71% 25% 39% 50% 33% 49% 50% 35% 16% 28% 57% 42% 40%
Abyan Al Baidha Al Dhala Al Hodeida Al Jawf Al Maharah Al Mahweet Amran Dhamar Hadramaut Hajja Ibb Lahej Mareb Raymah Saadah Sanaa Shabwa Taiz Total
Source: based on 2004 census data and WB analysis of 2005 household budget survey.
50. Yemen is an overwhelmingly rural country with 71% of the population living in rural areas. The most recent analysis of poverty, dated 2005, indicates that rural poverty is widespread (Table 3). Government estimates that there has been a modest reduction in rural poverty between 1998 and 2005 (from 42% to 40%); however, World Bank figures indicate that the total number of the rural poor is 1.75 million higher than Government data, due to population increase and worsening conditions in some areas. These estimates are considered as conservative by most institutions addressing poverty. The situation has deteriorated since mid-2007 due to the global food price crisis, the increasing frequency and severity of drought, and over-exploitation of fish resources. 51. The over-exploitation of fisheries resources, the relatively low domestic and regional value of fish, the inadequate access to lucrative international markets, and insufficient diversification of incomes has led to a stagnation of growth of fishers incomes. Despite the inability of the fisheries sector to provide sufficient incomes, the limited alternative economic opportunities in the coastal areas means that most households remain dependent on fisheries activities (or on remittances). Insufficient incomes from fisheries activities increases the importance of casual urban labour for household income, and enhances the need for income diversification within fishers households. While male casual labour in urban areas is usually a first step in the rural-urban migration of the whole household, cultural factors as well as the costs of living and housing conditions in urban
11
areas are slowing the process of urbanisation in Yemen. Opportunities for income diversification in rural coastal areas include aquaculture, fish processing for export markets, processing of low value fish for domestic markets, and non-fisheries related activities in line with market demand. 52. On the basis of official MFW statistics, data on annual boat engine sales, average daily catch estimates provided by fishers, and fish export statistics, it is estimated that the current number of active fishing boats is about 19,500. This implies there are about 19,500 boat captains and 63,867 crew members, for a total of 83,367 fishers in Yemen. With an estimated average of 8 people per fishers household, the fishers community contains over 667,000 people. In addition, it is estimated that about 9,000 people are working in fisheries related activities (processing, transport, storage). In total, fisheries and fisheries-related activities include at least 739,000 people. The incomes of fishers households in the Red Sea, Gulf of Aden and Socotra is illustrated in Table 4. Table 4: Fishers Households Indicative Incomes
Indicator Indicative Household Income (USD/day) Socotra Gulf of Aden Red Sea 1.6 1.2 0.7 0.5 2.2 1.8 1.2 0.7 2.7 1.0 0.4
Owner of one boat Owner of one share in boat Crew member (+ other activities) Fisheries-related labour Source: mission estimates
53. The deteriorating poverty situation in coastal areas is confirmed by the missions field visits; meetings with household members, supplemented by independent verification and triangulation, confirmed that standards of living are declining. Respondents also indicate that the development efforts of Government and financiers have not reached the majority of the rural poor and have largely not addressed their needs for jobs, market opportunities, and technical information. The fishers on Socotra, in particular, have received very little assistance to date. 54. The characteristics of rural poverty within fishers communities are presented in Figure 5. Figure 5: Poverty in Fishers Communities - Characteristics
Who are the poor fishers? crew members who dont own a share of a boat (casual labour); crew members and captains who own a share in a huri; households with high dependency ratios (adult unable to work or disabled); women-headed households; young women and men living in extended households. Where are the poor fishers? found throughout all coastal governorates; concentrated in dispersed villages with inadequate access to services. Why are they poor? improper and unsustainable resource management; inadequate enforcement of regulations; insufficient alternatives within the fisheries sector or outside the fishing season; inadequate access to knowledge and technology; poor/inconsistent fish quality limiting access to remunerative markets; inadequate access to financial services; weakness of local organisations, constraining collective action/negotiation; interlocking factor markets centred around wakeels especially in the Red Sea; other social and non-economic aspects. What are their coping strategies? out-migration (overseas; in-country); casual wage labour and seasonal or long-term migration to urban areas; borrowing from relatives and local traders; charity (e.g. Social Welfare Fund), further fuelling dependency; decapitalization.
12
55.
The typologies of fishers households are characterised in Figure 6. Figure 6: Fishers Households in Yemen - Characteristics
Very poor households: extremely high dependency ratio; living in a 1 or 2-room cement house or shack; work as casual labour on other boats; not owing a share of a boat or engine; may own an old net; owns 1 or 2 goats but no agricultural land; unable to finance education and medical expenses; destitute; depend on charity; indebted most of the year. Poor households: high dependency ratio; living in a 2-room cement house; own a share of a boat and engine in average or mediocre condition; part-time casual labour; owns not more than 5 small ruminants and up to 5 date palms; able to finance education for children, but not medical expenses; indebted for several months of the year. Marginally Poor Households: high dependency ratio; own a 3-room cement house with electricity and water if locally supplied; own a boat and engine in good condition; household member out-migrated for low-paid casual labour or employment; own up to 10 small ruminants, one cow, 10 date palms or agricultural land; able to finance educational and medical expenses; not dependent on charity. Non-poor Households: reasonable to high dependency ratio; own a 3-room stone/cement house with bathroom and kitchen; own a generator or access electricity and water (piped or large water tank); own one or more boats and engines in good condition; may own a truck with insulated container, a small shop, a vehicle; one member working as international long-term migrant; own more than 10 small ruminants, 2 cattle or camels; able to finance educational and medical expenses for all children; provides charity to poorest households within the community.
B. The Target Group, including Gender Issues 56. The project will strengthen the fisheries value chain through improved vertical integration, handling and processing, and will develop the aquaculture sector, to generate sustainable incomes and employment for fishers and others living in coastal areas. It will support the development of MSEs (fisheries and non-fisheries related) in coastal areas through business advice, training and improved access to financial services, to generate economic opportunities and reduce dependency on the fisheries sector. 57. Target groups. In the coastal zones of selected governorates, the projects direct target groups will consist of: Small fishers (small boat owners and crew members) who are interested to improve the quality of production. They will be supported to comply with regional and international food hygiene and quality standards. They will be offered training and access to credit to improve on-board cold storage and processing, and supported to comply with safety-atsea rules. Fishers organisations (mature and potentially mature cooperatives, as well as new fishers organisations) which are interested to invest in and manage modern integrated landing complexes, mother/transport ships and ice plants. They will be offered business advice, training, access to financial services, and forward contracts with processors/exporters.
13
Poor households (fishers and non-fishers), particularly with entrepreneurial young women and men, who are interested to develop coastal aquaculture. They will be supported to invest in aquaculture production units and enter into contracts with processors/exporters. Support will include training, advisory services, access to credit and marketing facilitation. Poor households (fishers and non-fishers), particularly with entrepreneurial young women and men, who are interested to establish micro-businesses responding to market demand for products and services. Project support will include skills/business training, advisory services, access to financial services and marketing support. 58. Institutional beneficiaries. The MFW, FAs and FRA will be supported to improve sustainable fisheries resource management. The MFW will be assisted to upgrade the legal framework for aquaculture. The MFW and the Yemen Coast Guard will be supported to update safety-at-sea rules. 59. Gender issues. Yemeni women have heavy workloads and are largely deprived of the benefits of modern society. In addition to child care and house maintenance, they are responsible for cooking and collecting water and fuel-wood. Despite their critical role in the economic life of households and society, women are faced with serious constraints that hinder improvement to their living conditions, such as limited control over fertility, inadequate access to assets, exclusion from marketing, restrictions on leaving the village, and limited decision-making roles at household and public levels. Rural women generally lack access to financing for micro-enterprises. 60. Within the fisheries value chain, womens participation is essentially limited to working in fish processing plants (where they constitute 45% of employees), small scale drying/salting and net mending, and quality control laboratories. Other than a few villages in Lahej where women have their own boats and are directly engaged in fishing, fishing at sea is a strictly male activity. Given that male fishers spend increasing amounts of time at sea, greater burdens are being placed on female household members with respect to child care, household tasks and shore-based income earning activities such as animal husbandry and agriculture. 61. Women continue to marry at a young age and have a high fertility rate. Although the total fertility rate has dropped, it still remains very high at 6.2. Life expectancy improved by three years between 1994 and 2004. Womens illiteracy levels, however, remain exceptionally high by international standards (69% in 2006), and as only 33% of rural school age girls are enrolled in primary school and the drop-out rate is high, adult female illiteracy is not about to be eradicated. 62. While 8% of households are officially women-headed, a further 10% are de-facto womenheaded as the male head is away for over six months per year. The incidence of poverty is not significantly different between women-headed households and other households, according to WB and FAO data; however, the household budget survey shows that resources are better allocated in women-headed households, which spend more on education and food than on tobacco and qat. 63. Fisheries-related activities are dominated by men, and in most places it is considered socially unacceptable or shameful for women to be involved. The idea to support women to increase their involvement in fisheries related activities faces fundamental social and cultural difficulties. Women who are involved in fisheries are members of the lowest social category within the Yemeni social structure; the involvement of other women is a result of extreme poverty. Most fishers households are of marginally less low social status; the suggestion that women from such households should assume fisheries related work is perceived as an attempt to further lower their social status, and is unwelcome. While deteriorating incomes for small fishers would encourage the women in their households to take up economic activities, this would be acceptable if done mainly in non-fisheries sectors. The project therefore needs to offer coastal women alternative activities in addition to fish processing, while supporting the poorest in increasing their incomes from fisheries related work.
14
C. Targeting Strategy and Gender Mainstreaming 64. Targeting strategy. While the project is national in scope, it will use a variety of mechanisms to ensure that the poorest fishers are given priority access to project investments. These include the full range of mechanisms indicated in IFADs pro-poor targeting policy: geographical targeting, giving priority to Socotra, Al Mahara and Shabwa on the Gulf of Aden, and to Hajja and Taiz on the Red Sea coast, where the incidence of poverty is high; enabling measures ensuring that all project implementers and service providers are fully aware of the projects aim to support the poor and are committed to this objective; self-targeting will be applied in non-fisheries related activities through credit and training, which are not expected to be of interest to the better-off; direct targeting will be applied to ensure that the poor are the primary beneficiaries of training in improved fish handling at sea and of associated equipment required to improve the quality of their catch. 65. On this basis, the project will target very poor, poor, and marginally poor households for upgrading fish quality and investing in micro-businesses and aquaculture. It will also target wellperforming fishers organisations and their communities through investments and services to improve resource management, develop infrastructure and upgrade the fisheries value chain, with benefits accruing to all households including the poorest ones. The selection process for landing sites will include poverty-related criteria. The beneficiaries for micro-businesses will be selected through a participatory approach to identify vulnerable households in fishing communities that are capable of engaging in such businesses. Priority will be given to poor women and the youth. 66. Gender mainstreaming. Gender issues will have to be addressed with considerable cultural sensitivity. As it will be difficult to encourage women to enter into fisheries related activities due to social status issues outlined above, the project will invest in non-fisheries activities (such as microbusinesses) for most targeted women, and will concentrate the fisheries related activities to the social category of women which is already involved and which is mostly poor. 67. Where appropriate, the project will support women to increase their incomes through valueaddition in the fisheries sector, with a specific focus on processing, and through micro-businesses. The project will implement positive discrimination or affirmative action measures to increase womens participation in the planning and execution of activities, and to play an influencing role towards a better gender balance in its areas of operation. Several measures will be introduced: (i) ensuring the maximum participation of women in micro-business training; (ii) supporting womens activities in processing; (iii) supporting womens access to financial services, individually or in groups, to develop micro-businesses; (iv) encouraging the inclusion of women in the staff and management of fishers organizations; and, (v) encouraging womens participation in shore-based fisheries activities such as quality control, fisheries management and research. Educated young women will be offered training for book-keeping and administration in fishers organizations. 68. Project staff and long-term consultants will participate in gender mainstreaming training in the projects early stages. Mobilisation teams will include female and male agents trained to appreciate and address gender aspects throughout their work. 69. Landing sites selection. The project will finance, through a combination of loans, grants and venture capital investments, the construction or rehabilitation of integrated landing complexes consisting of public fisheries infrastructure, social infrastructure, and productive infrastructure. It is estimated that 3 new integrated landing complexes will be constructed and 4 existing landing sites will be rehabilitated; another 5 existing sites will be upgraded with public and social infrastructure. 70. To avoid selecting landing sites without clear prospects of ownership and management, the selection of a site for project investment will be driven by the existence of a positively-evaluated fishers cooperative within the sites catchment area. Since some landing sites might be located in remote locations, it is possible that no private investor would be interested to own and operate such facilities. Site selection will also be based on the growth pole strategy being applied under IFADs fisheries investment in Mozambique and elsewhere, adapted to the Yemeni context. This strategy defines a growth pole as a development node that has accessibility to resources and markets and scope for developing services and infrastructure. Landing site locations chosen will
15
become nodes for the development of not only fishing activities and services but also SMEs engaged in post-harvest activities, catalysing further growth in the area and multiplying the benefits of the investment. 71. The site selection process for the development of integrated landing complexes under the project is outlined in Figure 7. Figure 7: Landing Site Selection Process
Step 1 Methodology Responsibility Outcome Long-list of cooperatives Assessment of all fishers cooperatives through a due diligence exercise. Priority given to Al Mahara, Shabwah, Socotra and the Red Sea. Audit firm contracted by EOF, approved by GOY and IFAD. Long-list of 25 eligible cooperatives classified as mature or potentially mature that are financially sustainable or can be strengthened to reach sustainability. The long-list will be discussed with MFW. Short-list of locations EOF staff to execute field visits to long-listed cooperatives to verify compliance with selection criteria. Within the catchment area of a long-listed cooperative: # of boats to benefit from infrastructure, within reasonable distance; # of fishers households within a reasonable distance; poverty level of fishers households (at least 70% should be poor); connection to main road, or feasibility of access road construction; sizeable market for fish within economic distance (up to 400km); availability of a site physically suitable for landing site construction; availability of environmentally acceptable site (EIA prior to civil works); current non-availability of mooring or protected beach landing site; physical condition & ownership/management of existing infrastructure; % of fishers who are members of cooperative; willingness of cooperative members to own productive assets, costshare construction, and manage the landing site complex. EOF mobilization teams. Short-list of 12 eligible geographical locations. Final list of locations (a) Short-list of locations; (b) Pre-feasibility study; (c) For locations passing (b), technical feasibility study; (d) For locations passing (c), environmental study; (e) For locations passing (d), financial viability study; EOF lead design engineer; engineering consulting companies contracted by EOF; EOF fisheries value chain manager; EOF mobilization teams. Final prioritised list of 7 sites where landing site development is technically, environmentally and financially feasible and which ranked highest of the 12 short-listed sites. The other 5 short-listed landing sites will be supported, on demand-driven basis, with improvements to public and social infrastructure.
Step 2 Methodology
Selection criteria
Responsibility Outcome Step 3 Methodology
Responsibility Outcome
72. Once the integrated landing complexes are selected, the EOF will issue a tender to procure an entity that will own the productive assets and manage/operate the complex. The tender will be open to the local fishers cooperative(s), as well as any qualified private third-party investor which may be interested including exporters/processors, private investors and private companies.
16
D. Geographic Coverage of the Project 73. The project is national in scope and covers all nine maritime governorates along the Yemeni coast, namely Hajjah, Hodeida, Taiz, Lahej, Aden, Abyan, Shabwah, Hadramaut and Al Mahara. It will initially cover fishers communities where positively-evaluated fishers cooperatives exist, and will then expand to other communities where new fishers organizations have been created. 74. Landing sites to be selected would share several characteristics: fisheries-related activities constitute the main sources of income; most sites are in remote areas and may require investment in access roads; very poor and poor households constitute the majority of households; access to social and economic services is inadequate; and, alternative sources of income outside the fishing season are limited. It should be noted that, due to environmental and economic considerations, the project will not finance integrated landing complexes in Socotra; however, Socotra will be considered for public and social infrastructure. For micro-business and aquaculture activities, all fishers communities along the coast would be covered, with aquaculture focusing on the Red Sea coast where conditions are technically more favourable. Aquaculture will be guided by environmental assessment and zoning plans to be prepared with project support. 75. Fisheries resource management activities will be executed at MFW headquarters in Sanaa, regional FAs in coastal areas, FRA headquarters in Aden and regional branches in Hodeida and Mukalla, and with fishers organisations themselves. IV. PROJECT DESCRIPTION (KSF 3) A. The Knowledge Base: Lessons from Previous/Ongoing Projects 76. The operational experiences of Government and financiers including IFAD in Yemen have generated lessons which should be considered in project design and execution. The key lessons of relevance for FIP which have been taken into consideration are outlined below: Institutional arrangements. While projects have suffered from institutional constraints and weak implementation capacity, major improvements are noted in recent years. However, further performance improvement requires operating outside the purely public sphere. The FIP will be implemented through the EOF which constitutes a public-private partnership for management and which will operate under principles of good governance, transparency, equity, business ethics, efficiency, sustainability, and corporate social responsibility. Economic opportunities. The development of viable economic opportunities for fishers is fundamental for sustained increases in household incomes and the creation of employment opportunities. Participatory community approaches should be combined with the promotion of economic opportunities to sustainably reduce poverty in coastal areas. Empowerment of rural communities is necessary but not sufficient for sustained rural poverty reduction. Fisheries resource management. Previous fisheries projects financed by IFAD, the WB and other partners focused on increasing fish catch without adequate investment in sustainable fisheries management. While these projects stimulated increases in catch, they contributed to the depletion of fish stocks, jeopardising the future of the sector. Governments laissezfaire approach to fisheries management, including inadequate research and enforcement, combined with the often unsustainable practices of fishers, have aggravated the situation. To ensure resource sustainability while maintaining fishers incomes, it is necessary to invest in fish stock assessment, sustainable resource management, capacity building for regulatory enforcement, and alternative opportunities across the value chain. Fisheries infrastructure. Previous projects have invested in fisheries infrastructure without proper consideration of ownership and management, often resulting in poor management and maintenance leading to disputes among the MFW, projects and fishers cooperatives. Ownership arrangements must be finalised prior to commencement of works. Under FIP, public infrastructure will be owned by the public sector and managed by the private sector, while productive infrastructure will be privately owned and managed. Financial services. Access to appropriate financial services by the rural poor is essential for adoption of improved technologies and establishment of micro-businesses in coastal areas. The current urban focus of the banking sector constrains the delivery of financial services. New modalities, such as cooperation with microfinance institutions, should be explored for
17
the provision of adapted financial services to fishers and their organizations. Other types of financial products should be proposed to fishers organizations for financing productive investments (based on existing Islamic financing products such as musharaka). Targeting. In working with fishers communities, it is essential to include all community members to ensure that the poorest ones (crew members) are reached. When developing landing site infrastructure it would be difficult and counter-productive to exclude better-off community members, as exclusion can lead to undesirable social tensions. It would be preferable to ensure inclusion of the poorest rather than exclusion of the slightly better off. Marketing. When developing pro-poor value chains such as the fisheries value chain, it is important to apply a market-driven, private sector-led approach. When market trends are analyzed and market opportunities identified, it is possible to promote linkages between fishers and exporters/processors, guaranteeing markets for fishers when production meets market demand in terms of quality and quantity. Fishers organizations. The formation/strengthening of fishers organizations is critical for empowering poor fishers and increasing their leverage with the market and the authorities. These organizations can channel resources and services to fishers communities, and can manage and operate fisheries-related infrastructure. B. Opportunities for Rural Development and Poverty Reduction 77. The FIPs rationale is anchored in IFADs mandate of poverty reduction and Governments policy to reduce economic and social disparities in coastal areas. The project has significant strategic poverty reduction and economic growth potential as it offers opportunities for export expansion, community empowerment and job creation in coastal areas, particularly for women. The project will also support micro-entrepreneurs to develop micro-businesses to meet market demand and support income diversification for fishers households. 78. The choice to invest in the fisheries sector is based on several elements: (i) the sector is of strategic importance, accounting for 3% of GDP, generating substantial foreign exchange earnings, and providing direct employment to 83,367 fishers and at least 9,000 workers in fisheries related businesses; (ii) there is a high level of knowledge and skills amongst fishers, and technologies for upgrading the value chain are available; (iii) fish products have robust and growing demand on domestic and export markets; the global value of fish exports increased by 9% annually from 2000 to 2008, reaching USD 15.9 billion in 2008; (iv) upgrading the fisheries value chain and ensuring compliance with international quality and safety standards can generate significant increases in the export prices of Yemeni fish in regional and international markets; (v) it is possible to upgrade the value chain and increase returns to the sector while at the same time introducing measures to reverse over-exploitation of valuable species (tuna, shrimp, cuttlefish); (vi) the sector is critically important for under-developed coastal communities, the majority of whose inhabitants live below the poverty line; and, (vii) there is ample scope for vertical integration across the value chain. 79. There is increasing interest among small fishers and cooperatives in Yemen to adopt a commercial approach to fisheries, and among fishers households to invest in aquaculture and rural micro-businesses; larger fish processors and exporters are also interested in the opportunities offered by aquaculture. These trends have been confirmed in meetings with fishers cooperatives and with the Fishers Cooperative Union. In this context, multiple areas need to be addressed: (i) access to investment and working capital and business services to facilitate business start up and growth; (ii) improved fishing and fish handling practices; (iii) improved access to technical services; (iv) development of contracts between fishers and exporters/ processors; (v) improved transparency in marketing systems; (vi) upgrading certification for compliance with international standards; (vii) improved legal framework for aquaculture; (viii) access to training and services. 80. The strengths, weaknesses, opportunities and threats facing Yemens fisheries sector are outlined in Figure 8. The project has been designed to build on these strengths and opportunities and address these weaknesses and threats.
18
Figure 8: Fisheries Sector Indicative SWOT Analysis

strategic sector contributing to food security and exports an Exclusive Economic Zone larger than the entire country one of the highest level of marine productivity in the world high level of fishing skills and traditional fishing knowledge Strengths some strong fishers cooperatives desire amongst fishers to improve fisheries management robust and growing domestic and global demand for fish unexploited potential for aquaculture improving business environment inaccurate data and limited knowledge of stock status poor regulation and enforcement, and lack of fisheries management slow and complex process for MFW restructuring weak Fishers Cooperatives Union Weaknesses low fish quality due to poor handling and storage lack of compliance with international standards seasonality of fishing and insufficient income diversification high levels of poverty in fishers communities limited access to financial services improve sustainable fisheries management strengthen fishers cooperatives or community-based organisations reduce poverty and increase skills and incomes of poor fisher households Opportunities improve quality of fish and add value on exports enhance compliance with international standards develop untapped aquaculture potential support micro-businesses in coastal communities increase financial services outreach uncontrolled expansion of fishing effort uncertainty regarding stock status Threats potential sudden decline in stocks insecurity on land and at sea powerful local elites with monopolistic behaviour
81. Climate change. Yemens National Adaptation Programme of Action (NAPA) was endorsed by Government in April 2009. It reports on the vulnerability of the countrys social and biophysical environment from climate variability and climate change, and lists the major impacts of climate change which may be summarised as follows: increased water scarcity and reduced water quality; increased drought frequency, increased temperatures, and changes in precipitation patterns; deterioration of habitats and biodiversity; reduced agricultural productivity; increased sea levels; increased climatic variability; and, impacts on coastal zones. 82. With respect to impacts on coastal zones, the NAPA includes three objectives which will be executed under the project: (i) sustainable fisheries resource management through strengthened research, planning, regulation and monitoring; (ii) increased incomes from fisheries development through better fish handling, quality and marketing; and, (iii) establishment of rules and norms taking into consideration the requirements of fish habitats in planning costal development. The
19
project will respond to these priority requirements by assisting MFW to enforce rules and regulations, by assisting stakeholders to develop and implement fisheries management plans, by providing TA and advisory services to fishers and fishers organizations on international health and quality standards, and by linking fishers organizations with exporters/processors. 83. Given the uncertainty surrounding the precise local or regional impacts of climate change on fisheries, the main recognised means of adaptation is improving management and ensuring fish stocks and marine and coastal ecosystems are not under pressure from overexploitation, pollution or other environmental degradation. Improvements to integrated coastal zone management which take into account climate change adaptation are the focus of WB financing currently under design. The project will introduce aquaculture as a substitute activity for capture fishing and an alternative for non-fishers. Specific benefits in relation to climate change are outlined in the benefits section below and discussed in greater detail in the Environmental and Social Impact Assessment. C. Project Goal and Objectives 84. The projects goal is to improve the economic status of small fisher households. Its objective is to create sustainable economic opportunities for poor women and men in fishing communities. 85. The projects outputs are to: improve knowledge regarding the status of fisheries resources; develop and implement plans for regeneration and sustainable management of fisheries resources; improve the licensing system and expand it to all value chain actors; empower fisheries inspectors to enforce conservation, management and quality regulations; develop safety-at-sea regulations and improve awareness of safety aspects; stimulate the growth and technological improvement of the fisheries value chain and rural businesses; link fishers organisations with processors/exporters through contractual arrangements; promote compliance with international food quality and safety standards; develop modern economic infrastructure in support of the fisheries value chain; create a legal framework and services for aquaculture; strengthen fishers cooperatives and assist fishers to form new organizations where cooperatives are very weak; and, expand the rural outreach of financial institutions and enhance access to sustainable rural financial services. 86. The projects outcomes will be the enhanced sustainability of fisheries resource exploitation, increased incomes in coastal communities, and increased access to economic opportunities across the fisheries value chain, in aquaculture and micro-businesses. D. Alignment with Country Rural Development Policies and IFAD Strategies Figure 9: Government, IFAD, and EOF Strategic Consistency
National Strategy (NS) DPPR 2006-2010 NS 1: enhance partnership with private sector, civil society, donors to reduce poverty IFAD COSOP Strategic Objective (SO) SO1: empower rural communities Economic Opportunities Fund (EOF) the EOF constitutes a sustainable public-private partnership serving rural areas; it will buy equity shares in pro-poor financial institution(s) and provide venture capital financing to strengthened fishers' organisations and private sector the EOF will support all value chain actors and promote financial services for export growth the EOF will support microfinance services that focus on lending to women; and will support new financial mechanisms and products SO3: improve rural household food security the EOF will enhance efficiencies in the fisheries value chain the EOF will stimulate increased sustainable household incomes the EOF will support government to enforce regulations and implement management plans for fisheries sector
NS2(a): promote SMEs for sustainable incomes; in food processing and export-oriented agriculture & fisheries NS2(b): promote micro finance services for the poor, especially for women in rural areas
SO2: promote sustainable rural financial services and pro-poor SMEs
NS3(a): increase efficiencies for agricultureand fisheries sector NS3(b): enhance household food security NS3(c): ensure optimal and sustainable use of fishery resources
20
87. The project concept has been developed jointly by IFAD and Government (MFW, MOPIC). Its EOF management arrangement is closely aligned with the Governments Development Plan for Poverty Reduction and IFADs COSOP Strategic Objectives for Yemen (Figure 10). It is consistent with IFADs Strategic Framework 2007-2010 and its Principles of Engagement which focus on the creation of economic opportunities for the rural poor, and with IFADs Innovation Strategy, Guiding Framework for Rural Finance in NENA, Gender Strategy, and Environmental and Social Assessment Procedures. It is complementary to WB, EU, UNDP, and JICA fisheries operations as well as public sector fisheries and coastal management programmes. E. Project Components 88. The project consists of two investment components: (i) sustainable resource management; and, (ii) value chain development. Consistent with IFADs country programme approach under the 2010-2012 PBAS cycle, the project will be managed by the Economic Opportunities Fund. Component 1: Sustainable Resource Management 89. This component aims to enable MFW to develop, execute and enforce fisheries management measures in order to ensure the sustainability of the fisheries resource base. It will create the required legal, institutional and human resource capabilities and will support the development of fisheries research capacity to improve the scientific knowledge base on which informed fisheries management decisions can be taken. It will also integrate measures to enhance safety-at-sea and reduce vulnerability of fishers and their households to shocks by increasing access to insurance. 90. Five important elements of an effective fisheries management system will be supported: (i) the improvement and expansion of the licensing system to cover all fisheries value chain actors (fishers, transporters, traders, processors, exporters); (ii) the training and equipping of MFW and YCG inspectors to enforce compliance with fisheries regulations; (iii) improved safety-at-sea based on updated regulations regarding vessel construction and compulsory safety equipment; (iv) a programme of fisheries research, collecting oceanographic and biological data to accurately assess fisheries stocks and provide scientific management advice; and, (v) fisheries management plans for the most vulnerable stocks based on updated information on stock status and potential yields, defined in consultation with stakeholders such as fishers organisations and the private sector. All activities will be planned and implemented in consultation with fisheries sector stakeholders. Sub-component 1.1: Regulatory Compliance and Risk Management 91. The future of the fisheries sector is seriously threatened by weak management, uncontrolled increases in fishing efforts, and limited enforcement of regulations, all leading to over-exploitation. This sub-component will support the improvement and expansion of the licensing system and will train and equip MFW fisheries inspectors and YCG officers to enforce regulations, and improve atsea and on-shore monitoring, control and surveillance. Licensing and enforcement capacity are pre-conditions for successful fisheries management. Safety-at-sea will be improved by introducing regulations on safety equipment and fishing vessel construction, and access to adapted insurance products will further reduce fishers vulnerability to risk. Activity 1.1.1: Fisheries Licensing System 92. The licensing system will be improved and expanded to cover the entire fisheries value chain in order to: control increases in fishing effort; facilitate enforcement of regulations and traceability of fisheries resources; improve accuracy of data collection; and, create a valuable asset for fishers enabling them to obtain vessel insurance. In addition, a study will be undertaken to assess the feasibility of using the licensing system to replace the existing ineffective system of taxation and to generate revenue for Government. Provisions for a basic fisheries licensing system exist in Yemeni fisheries law, but they do not cover all value chain actors, do not facilitate fisheries management objectives, and are neither fully implemented nor enforced. Many boats and fishers operate without licenses, and there is no limit on the number of licenses that are issued. This makes it impossible to control the growth of the fishing fleet, hinders the enforcement of regulations and accurate data collection, and prevents fishers from obtaining boat insurance as individual vessels cannot be identified. A major source of Government revenue from the fisheries sector is a 3% levy imposed on revenue from fish at first point of sale. This acts as an incentive to under-report catch or land at unofficial landing sites; it also creates mistrust between fishers and the public sector.
21
93. International TA will be provided to review the existing licensing system, propose changes and operational modalities, and study the feasibility of introducing an annual license fee to replace the current 3% levy and fund fisheries management. While the enhanced licensing system should cover all value chain actors and help to control increases in fishing effort, it will be carefully designed, with extensive stakeholder consultation, to avoid potential adverse social consequences. National TA will be provided in PY1 and PY2 to support the creation of a licensing database linked to the national Fisheries Information System and the implementation of the new licensing system. An awareness campaign will also be supported. Registry departments in FAs and YCG branches will be provided with necessary equipment (computers, digital cameras, laminating machines). Activity 1.1.2: Regulations and Inspection Capacity 94. This activity aims to strengthen the fisheries regulatory framework, establish the planned monitoring, control and surveillance units within each new FA, and provide training for fisheries inspectors and YCG officers. The purpose is to improve the implementability and enforceability of fisheries regulations, including those related to food safety and hygiene, and to create a deterrent against illegal and destructive fishing practices. It is expected to improve the effectiveness of fisheries management measures and the quality of fisheries products, ensuring the sustainability of the sector and enhancing access to high value markets. 95. Fisheries regulations are currently weakly enforced and inspectors are poorly trained, underequipped and under-funded. This undermines MFWs capacity to manage fisheries and renders most existing fisheries management measures ineffective. The regulations themselves are difficult to enforce due to contradictions and the absence of administrative fines. The mandate of YCG includes the protection of fisheries resources, but YCG officers lack appropriate training. 96. The project will provide international TA to review existing fisheries regulations and draft amendments to remove contradictions. This will include the review and amendment of regulations on fisheries inspectors, to remove uncertainty about their appointment, status and responsibilities. The TA will also draft the regulations for a system of administrative fines which fisheries inspectors may administer. National TA will be provided to develop training curricula, materials and exams, to train the inspectors and to support MCS managers in the new FAs. Training will focus on fisheries regulations and fish quality/hygiene requirements. The successful completion of the training course and associated exam will be a statutory requirement to become a fisheries inspector. Four training sessions will be supported in each FA, two in PY1 and two in PY3. The project will also build the capacity of YCG to enforce fisheries regulations through training and curriculum development for its training centre in Aden. An inspection programme for fisheries inspectors and coast guards will be developed covering all licensed value chain actors. The FAs will be provided with 2 vehicles each and a total of 40 motorcycles, as well as portable inspection and communications equipment for inspectors. The achievements of the inspection programme will be reviewed by the TA in PY3, and training materials will be updated before the second round of training courses is executed. Support will be provided for an awareness campaign for fishers regarding fisheries regulations and penalties. The project will also finance the translation into English of existing fisheries regulations, in order to facilitate the activities of the FIP and other projects. Activity 1.1.3: Safety-at-sea and Insurance 97. The project aims to reduce the incidence of death and injury at sea amongst fishers, and to reduce the number of boats lost each year, by promoting the utilisation of safety equipment and enhancing fishers awareness of safety issues. It will also promote insurance products for fishers in order to reduce their vulnerability to such events. Fishers place themselves at great risk when they go to sea; due to declining fisheries resources, they are now forced to travel further and for longer periods in worse weather conditions, all of which increase the level of risk. Few artisanal fishing boats are equipped with safety equipment, and many do not carry communications equipment. It is believed that up to 180 fishers may be lost at sea annually. As insurance companies do not insure artisanal boats, when a boat sinks a household may be left without assets or compensation, though some cooperatives do provide members with support in such cases. 98. The project will provide international TA to: (i) update safety-at-sea rules and fishing vessel construction regulations; (ii) develop extension materials on safety issues for fishers and boat builders, and training materials for inspectors and licensing officers; and, (iii) develop adequate insurance products. As appropriate, the issuance of the vessel license will be subject to compliance with safety-at-sea requirements and boat insurance. The project will also support the Coast Guard
22
to train safety-at-sea officers responsible for raising awareness on safety issues among fishers through training activities, and to administer a cost-sharing system for safety equipment on small boats. Vehicles and equipment will be provided to support the work of safety-at-sea officers. 99. The project will commission viability studies for insurance products such as boat, life, and credit insurance, and will facilitate linkages with an insurance company to introduce such products. It is envisaged that the insurance products will be designed, tested and offered to fishers starting in PY1, with the development costs borne by the participating insurance company. The project will also work with selected cooperatives to strengthen their existing welfare and insurance services. Sub-component 1.2: Fisheries Research and Management 100. There has been no thorough stock assessment in Yemen since the 1970s-1980s, and existing data on fishing effort and catch is inaccurate. As a result, while stakeholders report declining catches and the virtual disappearance of some species, the precise biological status of stocks is unknown and there is insufficient knowledge on which to base fisheries management measures. Fisheries management plans were drafted for some areas and species in the past, but were not implemented due to insufficient awareness, capacity and funding. The restructuring of MFW, the improvement of the licensing system and the capacity building of fisheries inspectors will increase MFWs ability to enforce regulations. This justifies the proposed support for the re-establishment of fisheries research activities and the development and implementation of new and updated fisheries management plans. To ensure proper coordination of support to FRA, the latter will be contracted (on performance basis) to implement fisheries research and management activities. The EOF and MFW will provide close support to FRA in this respect. Activity 1.2.1: Fisheries Research Authority 101. The project aims to build FRAs capacity to fulfil its mandate of providing research services and technical, scientific and strategic advice for fisheries management. It will upgrade FRAs equipment and facilities, train research staff, and strengthen management capacity for planning and coordination. There is currently no active fisheries research programme apart from occasional project-supported activities in which FRA has varied levels of involvement and which provide limited knowledge of fish stocks and little impact on staff skill levels. Project support for regulatory compliance and risk management will create a conducive environment for investment in fish stock assessment and fisheries management planning. 102. The project will provide short-term international TA to FRA in PY1-PY4 to develop its research capabilities and programme. This will be coordinated with the EUs planned support to FRA, and will support specific research activities as well as extensive staff training (in quantitative analysis, bio-economic modelling, etc). The network of research stations in Aden, Hodeidah and Mukalla will be provided with office, laboratory and research equipment. The FRA will be supported to obtain contracts to conduct research for the public and private sectors, to establish linkages with MFWs management information system (currently being developed), and to regularly publish research results. Research facilities on Socotra will be enhanced, in cooperation with EPA, through the provision of research equipment. An agreement will be established between FRA and EPA for knowledge sharing and joint research, and for EPA participation in training events. The project will seek agreement with GOY/MFW for a fixed share of licensing revenue (or revenue from the 3% levy) to be retained by FAs and allocated for contracting research. The involvement of fisheries stakeholders in developing management plans and collecting research data will be encouraged through the planned fisheries liaison groups in the Regional Fisheries Management Units of FAs. Activity 1.2.2: Fisheries Management Plans 103. The project will support the development and implementation of fisheries management plans (FMPs) for a number of species/geographical regions of commercial and/or ecological importance which are currently threatened by fishing activities. The FMPs should be both strategic documents for planning and practical guides for achieving particular objectives (e.g. preventing overfishing, protecting fishers livelihoods) and targets (e.g. target biomass levels, target fishing mortality rates) by specifying the measures required to achieve them (e.g. restrictions on fishing effort, total allowable catch limits, temporal and spatial closures, minimum specimen sizes and restrictions on gear). The FMPs should include guidelines for monitoring implementation and procedures for regular updating based on emerging evidence regarding the impact of the management measures and on other stock assessment and research activities. As several key commercial stocks have suffered drastic declines in recorded catches in recent years, reducing fishers incomes and forcing
23
many processors and exporters to close, it is essential that FMPs are rapidly implemented in order to reverse these trends and protect other stocks from collapse. 104. Over the last decade, various FMPs have been developed but not implemented due to lack of funding, lack of MFW interest, absence of proper legal instruments, and insufficient enforcement capacity. However, with some updating and annual adjustment of objectives and measures based on ongoing research, these FMPs could be implemented rapidly and their impact monitored and evaluated. Several FMPs are tentatively identified as priorities: (i) Socotra archipelago; (ii) lobster in Al-Mahara/Hadramaut; (iii) shrimp in Hodeida; (iv) cuttlefish; (v) sea cucumber; (vi) sharks. Decisions on priority FMPs will be made during implementation based on discussions with the stakeholders involved in developing the plans themselves. The EUs Fisheries Development Project is supporting efforts to improve tuna management; other species will be targeted under the FIP. 105. International TA will be provided in PY1-PY3 for the development of at least six FMPs, which would entail the coordination of research, policy and stakeholder consultations, and extensive onthe-job training for FRA and EPA staff. Funding will also be provided for focused research activities in support of these FMPs, and use will be made of the training and equipment provided to FRA. The technical advisors will work with appointed counterparts from the Regional Fisheries Management Units of FAs and will assist in updating/developing the FMPs. The advisors will also have nominated counterparts in FRA branches to coordinate research activities undertaken in support of each FMP. Fisheries stakeholder liaison groups to be formed by the Regional Fisheries Management Units of each FA will provide a forum for engaging stakeholders in developing FMPs. When FMP execution regulations are developed and approved, they will be enforced by fisheries inspectors as part of their regular duties. Each advisor, in coordination with counterparts and FA extension officers, will develop an extension programme and awareness campaign relating to each FMP. Activity 1.2.3: Stock Assessment 106. While access to detailed knowledge on fish stocks is a prerequisite for the development and implementation of effective fisheries management, the existing information is incomplete and outdated, and fisheries sector management is currently lacking a scientific basis. It is likely that this is leading to severe damage of fisheries resources. The EU-financed Fisheries Development Project is financing a review of available data on the status of fisheries resources which will provide: (i) a baseline for what is known on the status of fish stocks in Yemen; (ii) a basis for the preparation of stock assessment reports for major species, which can guide the drafting of fisheries management plans; and, (iii) a platform upon which further sea-going surveys and stock assessment work can be planned. Subsequently, the FIP will support a major stock assessment programme (co-financed by the EU). This will generate updated data (spawning areas, biomass, recruitment levels, etc.) on the commercially important species in the Red Sea and Gulf of Aden, will enable the determination of the full extent of overfishing, will inform sustainable resource management, and will allow longterm strategic development of the fisheries sector. 107. The stock assessment is likely to start during the last stages of the baseline study (in PY3), at which time licensing and inspection activities should be finalised and six fisheries management plans developed and implemented. This will demonstrate MFWs commitment to implementing improved fisheries management. The stock assessment will be conducted over a two year period, covering the entire Yemeni EEZ. The precise format of the assessment will be based on the results of the baseline study financed by the EU, which is expected to be completed in 2013. Component 2: Value Chain Development 108. This component aims to sustainably increase the incomes of poor fishers, micro and small entrepreneurs, and women and men workers in fisheries communities within the project area. It provides a systematic approach to the sustainable development of economic opportunities for the target groups, which is expected to generate increased incomes and employment. The approach is based on improving the integrity of the fisheries cold chain and quality of raw material produced, and on promoting profitable linkages among fishers and other value chain actors. A comprehensive package of appropriate technology and capacity building will be provided to increase access to high value export markets and to target profitable opportunities within domestic markets. Fisheries infrastructure and basic services will be developed or upgraded in selected coastal communities, fishers organisations will be strengthened, and access to microfinance services will be enhanced. Micro and small enterprises will be supported with training and credit, and aquaculture will be
24
developed. Activities will be closely integrated with those of partners, and it is expected that the EU and IDB will cofinance different activities under the component. Sub-component 2.1: Value Chain Modernisation 109. This sub-component will invest in fisheries value chain upgrading, aquaculture development, export and domestic market expansion, and micro and small enterprise development. Activity 2.1.1: Fisheries Value Chain Upgrading 110. A key constraint for fish processors and exporters to access high value markets for fisheries products, and thus increase the prices they can pay fishers, is obtaining sufficient fish of adequate quality. The project will support fishers to improve the quality of landed fish, facilitate integration with processors/exporters producing for premium markets, and foster the creation of contractual linkages between fishers organisations and processors/exporters. The fisheries value chain will be upgraded by providing fishers with training, enhancing access to improved technologies, improving fish handling practices, ensuring the integrity of the cold chain, and promoting compliance with hygiene and quality standards. In this respect the project will support the activities outlined below. 111. Processors/exporters. They will be selected based on a public announcement for expressions of interest and an evaluation mechanism based on criteria such as proximity to upgraded landing sites, operational transparency, willingness to pay increased prices for higher quality fish, levels of poverty in their purchasing areas, and willingness to enter into contractual arrangements with fishers organisations. At least one processor/exporter employing one supply chain manager will be selected for each upgraded landing site. 112. Supply chain managers. The project will introduce supply chain managers who will constitute the interface between fishers organizations and processors/exporters, provide technical advisory and supervision services to fishers organizations to ensure compliance with technical parameters, and train selected trainers within fishers organizations, enabling them to provide simple advise to other members. The selected processors/exporters will recruit one supply chain manager each, with the cost shared by the project on a declining basis (the project covering 70%, 30%, and 0% of costs over three years). The recruitment of supply chain managers will be undertaken in PY1PY2, and performance will be evaluated annually using focus groups including processors/ exporters, EOF staff, and members of fishers organizations. Continued project cost-sharing will be subject to positive evaluation of performance. 113. Improved fish handling. Fishers will be trained to improve fish handling from catch to landing (particularly gutting, icing and properly storing catch on board) and from boat to landing site/ auction hall for weighing and sale. They will also receive training in proper boat cleaning and the avoidance of fish contamination by bacteria and germs. The training sessions will be executed by local specialists contracted by the project. 114. Provision of credit. The project will assist fishers from Socotra Archipelago and the Gulf of Aden6 to access collateral-free micro-loans from licensed microfinance institution(s) to upgrade fishing boats with insulated cold storage for ice and fish7. These micro-loans will finance the purchase of insulated ice boxes costing USD 200 each. The EUs Fisheries Development Project will design ice boxes that minimise impact on boat handling and fuel consumption, which the FIP will promote subject to acceptance by fishers. It is estimated that an ice box will increase the value of landed fish by an average of 20%. 115. Equity financing for mother/transport boats. The project will promote mother/transport boats (typically 20m Abari boats) for fishers who currently travel long distances in small vessels (huris) to find fish or are based far from major markets. Each mother boat will serve a group of huris, towing them to fishing grounds, providing large and well-insulated storage facilities and supplying fishers with ice and services, allowing them to remain at sea for longer, reducing transport costs and improving the quality of landed catch. Fishers will benefit from higher prices for catch due to improved fish quality, and from reduced fuel consumption; they will also be able to travel further to catch species such as tuna whose migratory paths are shifting, possibly due to climate change. Transport boats will be used to transport fish to markets; they will serve cooperatives in Socotra
6 7
Fishers on the Red Sea coast already use ice, although in less than optimum quantities. Cold storage facilities will be required by law under new boat construction and licensing regulations.
25
which need to transport fish to mainland markets. Mother/transport boats will contain facilities and processes in compliance with food safety and hygiene standards. TA will be provided to advise on international food standards and HACCP requirements and develop standard operating procedures particularly for pricing and payment mechanisms for catches transhipped from fishing boats. 116. The project is expected to finance 28 mother ships/transport boats, of which tentatively 16 in Socotra (primarily transport boats), 6 in the Gulf of Aden and 6 on the Red Sea coast (primarily mother boats). It will also finance about 8 stand-alone ice plants on Socotra to provide ice for the transport boats, as the project will not finance integrated landing complexes in Socotra. 117. The financing of each mother/transport boat and ice plant will follow a typical venture capital modality. This modality is analogous to the musharaka (joint venture) Islamic banking product and is well known in Yemen and within fishers communities. The key elements are outlined below: Ownership. A limited liability company (LLC) will be created, the shareholders of which will be the EOF and the relevant fishers organisation(s), with the mother/transport boat and ice plant as the only productive assets of the LLC. Management. The management of the LLC, the mother/transport boat and/or the ice plant will be vested with the relevant fishers organization(s). Training will be provided for the operation and maintenance of the boat and ice plant, and TA will be offered to selected members of the fishers organization(s) in business management. Financing. The LLC share capital will amount to 70% of the proposed investment. The contribution of fishers organization(s) in the LLC share capital will range from 5% to 50% of the amount, depending on its financial and cash positions; the balance of LLC equity will be held by the EOF. The EOF will also provide to the LLC a grant amounting to 30% of the proposed investment and 100% of LLC registration costs. Share Buy-Back Mechanism. A LLC share buy-back mechanism will operate as follows: the fishers organisation(s) will periodically receive dividends which it may use to gradually buy back the EOFs shares in the LLC under a pre-established put option, eventually becoming the sole owner of the LLC and its assets. In this process, the EOFs shares will be valued at nominal price. Dividends will be distributed according to the equity held by each partner, while the EOF grant may be integrated into the share capital of the fishers organization(s). 118. Investments in integrated landing complexes. Grant-financed public and social infrastructure and equity-financed productive infrastructure will be developed at landing sites selected through the process outlined earlier. The 7 top-ranked landing sites will be targeted with grant and equity financing for investments in integrated landing complexes, while another 5 landing sites will be upgraded with public and social infrastructure. Landing complexes will not be developed, however, in Socotra for environmental and economic reasons; it is a UNESCO World Heritage Site, and most fish caught is transhipped at sea for transport to auction markets on the mainland. 119. Each integrated landing complex will consist of: (i) public infrastructure on public property including a jetty, a breakwater (where necessary to provide protection from waves), a sand barrier (where necessary to prevent siltation), a landing area, an access road from the landing complex to the nearest road, and basic services (water, electricity, dispensary, etc.); and, (ii) productive infrastructure within the public landing site area consisting of a fish handling facility which would include an enclosed air-conditioned auction hall, cold storage units, an ice plant, fish processing facilities and a small workshop. Facilities will be compliant with food safety and hygiene standards and HACCP requirements (for eventual certification). These complexes will enable fishers to obtain higher prices (up to 30%) for catch due to improved fish quality and compliance with international standards. Integrated landing complexes will also provide safe places to moor vessels which are currently moored in exposed locations or dragged up on beaches, and will simplify the transfer of fish, ice and other goods on and off boats. The complexes will serve as focal points and catalysts for MSEs providing services to fishers or processing and trading fish products. 120. Each complex will be designed (and its construction supervised) by engineering consultants, while civil works will be executed by contractors. The EOF will be responsible for preparing the prefeasibility study, drafting tender documents and supervising contractors. Each investment will be subject to a thorough Environmental Impact Assessment.
26
121. The development of integrated landing complexes will also follow a typical venture capital modality analogous to the musharaka (joint venture) Islamic banking product which is well known in Yemen and within fishers communities. The key elements are outlined below: Ownership. The public fisheries-related infrastructure will be owned by MFW, the social infrastructure by relevant ministries, and the productive infrastructure by a private limited liability company (LLC) the shares of which will be held by the EOF, the relevant fishers organisation(s) and possibly third party investors (such as processors/exporters). Management. The relevant fishers organisation(s) will manage the LLC, which will in turn manage the public and productive facilities of the integrated landing complex. The public infrastructure will be managed by the LLC based on a long-term leasing contract (at least 25 years) signed with MFW, while the social infrastructure will be managed by the relevant ministries unless an alternative agreement is signed with the LLC or relevant community organisation. MFW will supervise landing site activities to ensure collection of catch data, enforcement of regulations, and collection of taxes and other charges. All contractual arrangements relating to ownership and management of the integrated landing complexes will have to be finalised as an irrevocable pre-condition to civil works. Financing. The public and social infrastructure will be financed by the project on a grant basis. The LLCs share capital will amount to 70% of the cost of productive infrastructure. The contribution of fishers organization(s) in the LLCs share capital will range from 5% to 50%, depending on its financial and cash positions, while third party investors, such as processors/exporters, will not be allowed to own more than 20%; the balance of LLC equity will be held by the EOF. The EOF will also finance on grant basis 30% of the cost of productive infrastructure and 100% of the cost of LLC registration. Shareholders. All private investors (fishers organisations and third party investors) will be selected based on a competitive procurement procedure acceptable to IFAD. To prevent elite capture, the relevant fishers organisation(s) will have the option to gradually buy the EOFs shares at nominal value, possibly financed through dividend income. Other entities will not be allowed to buy the EOFs shares unless the fishers organisation(s) renounces its buy-back option. Through a shareholders agreement, the EOF will ensure that the fishers organisation(s) continues to hold the majority of the LLCs share capital for a minimum of 5 years after all EOF shares have been sold to the fishers organisation(s). 122. The LLC and landing complex will be managed by a chief executive officer supported by a fish inspector, auctioneer, ice plant supervisor, auction hall/cold store supervisor and accountant. Staff will be recruited from the local fishers community or externally. The project will provide TA, training and advisory services to ensure effective management of the LLC and landing complex. The LLC will enter into contracts with selected processors/exporters, while supply chain managers will assist the LLC to comply with international food standards and HACCP procedures. Processors/ exporters will benefit from improved access to high quality fish for export to high value markets. 123. LLC registration. The EOF will assist the relevant fishers organisation(s) to register their LLC at the General Investment Authoritys one-stop windows, while the legal and operational structure of the LLC will comply with the Company Law of Yemen. The LLCs manager and staff will be trained in business management, accounting, pricing, legal aspects and tax issues. The Board of the LLC will consist of five members, of which three (including the chairperson) from the fishers organisation, one from the EOF and one from the third party investor. The LLC will be audited annually by an independent audit firm selected by Board members and by the EOFs auditors. 124. Additional public and social infrastructure. Grant financing for additional public and social infrastructure will be provided at the 7 locations selected for integrated landing complexes and at 5 of the remaining short-listed landing sites. In both cases, investments will be identified in response to demand from local communities and needs identified through a participatory planning process coordinated by EOF mobilisation teams. Based on the results of the poverty assessment carried out by the mobilisation teams during the selection process for landing site locations, a cash or inkind contribution will be required from fishers communities, particularly for social infrastructure. In most cases, contribution from beneficiaries would be in the form of labour. Activity 2.1.2: Aquaculture Development 125. While aquaculture has not yet been developed in Yemen, it has the potential to contribute significantly to food security, employment for women and men in coastal communities, income
27
diversification and export earnings. Aquaculture can also utilise existing fish processing capacity and reduce the dependence of coastal communities, processors and exporters on heavily exploited wild fish stocks. The project will develop aquaculture in a technically sound and environmentally sustainable manner, applying the latest advances in aquaculture technology to avoid mistakes made elsewhere which have resulted in its occasionally negative public image. 126. The project will assist Government to develop a proper legal and institutional framework and strategy for aquaculture. It will subsequently (i) provide support for capacity building in the field of aquatic animal health; (ii) establish a sea cucumber hatchery in collaboration with the Aquaculture Research Centre (ARC) to supply small-scale producers; and, (iii) provide technical training, credit and business support to poor coastal women and men interested aquaculture, and facilitate vertical integration with processors/exporters through supply chain managers; (iv) promote joint venture investments between processors/exporters and women and men fish farmers. The creation of a positive environment for investment in aquaculture will be prioritised. 127. National aquaculture strategy. A thorough review of the existing framework for aquaculture will be undertaken. The project will subsequently promote a broad consultative process for the formulation of a national aquaculture strategy through a series of workshops in Sanaa and Aden involving Government, the private sector and civil society, combined with extensive field work by technical specialists. Ongoing technical support from an international aquaculture specialist will be provided to monitor the implementation of the strategy and facilitate annual review workshops. 128. The aquaculture strategy will be based on FAOs Code of Conduct for Responsible Fisheries, FAOs Aquaculture Development Technical Guidelines, and the Aquaculture Stewardship Councils standards. It will include: the legal and administrative framework for aquaculture development; aquaculture suitability maps and a zoning map, identifying areas where small-scale production can be practiced; and, guidelines for aquatic animal health management, biosecurity, environmental sustainability, voluntary certification and investment promotion. The strategy will take into account the Yemeni environmental and social context, available infrastructure, and the biological, chemical and physical requirements of target species. Priority will be given to low-trophic species such as seaweed, sea cucumbers and bivalves. 129. The project will support ARC to conduct simple co-habitation trials to assess risks associated with the introduction of exotic species (particularly bivalves and seaweed). In addition, support will be provided for research aimed at further development of aquaculture, with specific focus on the potential of rearing indigenous species. 130. Health management and biosecurity. Given the current absence of aquatic animal diseases commonly found in countries with developed aquaculture sectors, the importance of proper aquatic animal health management as a potential competitive advantage for Yemen, and the risks of the unregulated introduction of exotic species, the project will support the preservation of a healthy aquaculture sector. Training courses in aquatic animal health management and laboratory disease diagnostics will be provided for relevant public laboratories and ARC, and in aquatic animal health for fish farmers. The economic potential of local seaweed species and strains will be explored to minimise the introduction of exotic species. TA will be provided for import risk assessments on selected exotic species of economic value with potential for successful farming in Yemen. 131. Aquaculture farming models. The project will support surveys and EIAs in six pilot locations (two each for seaweed, sea cucumbers and bivalves) for the establishment of aquaculture farms, and in one location for a sea cucumber hatchery. Sites will be selected based on criteria including physical suitability and the interest of local inhabitants to engage in aquaculture activities. 132. Sea cucumber hatchery. A sea cucumber hatchery capable of producing up to 2.9 million juveniles annually will be established, in collaboration with the private sector and ARC, with TA provided by the project. The hatchery will be financed through a typical venture capital mechanism. A LLC will be created, the shareholders of which will be a private investor (such as a fishers cooperative or a processor/exporter), the local community and the EOF; the hatchery will constitute the LLCs sole asset. The LLC will be managed by the private investor, who may employ ARC staff on part-time basis. The project will provide TA and training on cost-sharing basis. 133. The LLC will finance 90% of the sea cucumber hatchery, while the project will provide a 10% start up grant. The LLCs contribution will be financed by the private investor (51%), the EOF
28
(44%), and the local community (5%), and each will obtain an equivalent share of the LLCs assets and profits. Any surplus production may be purchased by community groups to restock wild populations in closed areas established by the sea cucumber management plan. 134. Aquaculture enterprises. During the selection process for the six pilot aquaculture locations, the EOFs mobilisation teams will identify entrepreneurial poor women and youth, including young crew members on fishing boats, who are interested to establish aquaculture farms. They will be assisted to form groups and trained in better management practices for selected aquaculture products (two 5-day training courses will be held in each selected location). TA will be provided to develop and lead the training courses. Subsequently, trainees will be supported to access credit or equity financing, depending on the nature and size of the proposed investment. The project will assist the aquaculture enterprises to enter into contracts with processors/exporters for marketing output, while supply chain managers embedded with the processors/exporters will provide support in business planning, quality control, post-harvest handling, processing and marketing. It is envisaged that 180 sea cucumber, 80 seaweed, and 40 mussels farms will be established. 135. While not a core element of the project, the EOF may consider to promote joint venture investments among processors/exporters, small fish farmers and the EOF to develop vertically integrated aquaculture parks. These can provide a feasible entry into aquaculture as well as a supportive environment for small producers with limited background knowledge. Aquaculture parks would be considered by the mid-term review mission and, if found to be feasible, planned and implemented accordingly; they would be financed through the EOFs revolving fund. Activity 2.1.3: Export and Domestic Market Expansion 136. The project will enhance access to regional and international markets for Yemeni fisheries products by supporting: (i) marketing studies in countries of strategic importance for fish exports; (ii) the upgrading of public and private export certification laboratories; (iii) the participation of value chain stakeholders in international trade fairs; (iv) trial shipments to new markets; (v) the development of an export catalogue on international industry standards for fish products including HACCP and ISO standards. Relevant TA will be provided to guide this process. The project will also offer business advice to stakeholders for the expansion of domestic marketing. Activity 2.1.4: Micro & Small Enterprise Development 137. The project will promote the creation or expansion of MSEs in coastal communities by investing in: (i) the identification of profitable markets with growth potential for MSE products and services; (ii) awareness creation in coastal communities and the identification of entrepreneurial women and young labour market entrants, particularly young crew members on fishing boats; (iii) TA, skills/business training and advisory services; (iv) the provision of credit from microfinance institutions for MSE start-up and growth; and, (v) business services. Activities will be organised and executed by contracted service providers, in close coordination with ongoing MSE support entities such as the Small and Micro Enterprise Promotion Service of SFD. 138. The types of MSE activities envisaged for project support include: fisheries-related activities such as fish processing (drying, salting, smoking, fish meal production), and non-fisheries related activities. For the latter, no specific activities are predefined. To be eligible for support, MSEs must be market-driven; MSEs for which sustainable markets exist will be supported, and forward contracts between entrepreneurs and markets will be promoted. Beneficiaries may be individuals or groups, with priority given to women and womens groups. Sub-component 2.2: Fishers Organizations and Financial Services 139. This sub-component will strengthen the capacities of fishers organisations, and will enhance the access of coastal communities to adapted and diversified financial services. Activity 2.2.1: Fishers Organizations 140. Strong fishers organizations which are financially sustainable and provide valuable services are important instruments for the economic and social development of coastal communities. The project will strengthen the capabilities of fishers organisations to represent their communities at policy and strategic levels, to own and manage assets, and to provide services to their members.
29
141. The status and performance of existing fishers cooperatives varies considerably (ref. section II.B). In light of IFADs strategic approach as well as its positive experiences with communitybased organisations in Yemen and elsewhere, the project will work with fishers cooperatives for value chain upgrading investments. However, it will support exclusively those cooperatives which are mature (well-governed, well-managed and financially sound), or which may become mature with some support (developing cooperatives). In selected locations where such cooperatives are not available, the project will assist fishers communities to form new organizations. 142. Due diligence. The EOF will contract one or more recognised and reputable audit firm(s) to undertake a due diligence exercise for all existing fishers cooperatives in Yemen. The exercise will assess key performance indicators for each cooperative: governance and management structure; quality of management and staff; current and projected financial position (including earning potential, operating efficiency, and liquidity); compliance with cooperative and tax laws; quality and pricing of services; experience in managing productive assets; prospects for sustainability. Due diligence will be initiated at project start up and is expected to last for about 4 months. 143. Capacity building. Based on the due diligence exercise, the project and MFW will select a number of cooperatives which are mature or almost mature. They will be provided with capacity building and advisory services in governance and management, finance and accounting, conflict resolution, development and pricing of new services, gender mainstreaming, environmental issues, and policy dialogue with MFW. Capacity building will be executed by the EOF while advisory services may be outsourced. They will also be provided with office equipment. 144. New fishers organizations. In coastal locations where existing cooperatives are weak, the project will assist local communities to establish new fishers organisations. The EOFs support will include community sensitisation, assistance for legal registration, capacity building, and advisory services for governance and management. Office equipment will also be provided. 145. Fishers Cooperative Union. The project will support FCU through training, office equipment and study tours to strengthen its capacity to serve as an apex institution for fishers organizations. Activity 2.2.2: Financial Services 146. The project aims to: (i) increase the outreach of microfinance institutions in coastal areas; and, (ii) develop new products and services adapted to fishers, fishers organizations, and the fisheries sector. The objective will be to enable fishers, their households and their organisations to access adapted and diversified financial products and services. 147. Increased outreach. The development of bank branches in coastal areas is often not possible due to the scattered and isolated nature of settlements. To facilitate fishers access to financial services, the project will support licensed microfinance institutions to utilise the Post Office network for channelling funds to and from fishers communities. An agreement in this respect has already been signed by Al-Amal Microfinance Bank and the Post Office. The Post Office will collect credit applications, disburse loans and collect repayments and savings on behalf of the Bank; financial and client data transfers between the post office and closest Bank branch will be executed on daily basis. Loans will be provided to fishers with the cooperative acting as financial guarantor, or to the cooperatives themselves. To enable the Post Office to effectively provide services, the project will offer office equipment, internet connections, staff training and software development. 148. New products and services. In late 2009, several partners (GTZ, AFD, IFC, KfW) entered into an agreement with Al Amal Microfinance Bank for the provision of TA. This agreement covers the Banks TA requirements identified during the FIPs design process. The EOF will sign the agreement and also offer TA to the Bank, focusing on the adaptation of loan products to the requirements of target groups, and the introduction of new savings and deposits services for fishers communities. The projects TA to the Bank will be closely coordinated with that of partners. 149. The project will develop a venture capital financing mechanism (similar to the well-known and widespread musharaka modality) with fishers organizations, as outlined earlier, to enable them to access larger financial resources for productive investments. The proposed investments will be developed by the relevant fishers organization(s) and the EOFs specialists, while the final decision will be taken by the EOF Board following management review. Notwithstanding the audit reports of each LLC, the EOF will closely follow up on each LLC, assessing the companys financial
30
reports, activity reports and monthly cash flow projections, and following up on dividend payments and legal transfers of ownership of shares purchased by fishers organizations. 150. Traditional forms of financing will also be used for some activities: short-term credit for ice boxes for fishers; short-term working capital for cooperatives or new fishers organizations; and, investment and working capital for aquaculture activities and MSEs. Credit will be extended by commercial banks (through their own resources) or microfinance institutions. The lending activities of licensed microfinance institution(s) in which the EOF holds equity will be financed by an increase in the EOFs shareholders current account, as per the estimated incremental requirements. 151. The project will assist partner microfinance institutions to register and publish their financial statements and activity performance ratios on the MIXMarket. This will ensure that partner institutions comply with microfinance best practises and other CGAP regulations. V. IMPLEMENTATION AND INSTITUTIONAL ARRANGEMENTS (KSF 4) A. Institutional Development and Outcomes 152. The Economic Opportunities Fund, which is established under the Economic Opportunities Programme, will be responsible and accountable for the management of the Fisheries Investment Project. The EOF is expected to also manage the third investment of IFADs 2010-2012 resource allocation cycle the Rural Employment Programme and possibly the rural investments of other financiers. Through its strategic investments, the EOF will influence the policies and operations of pro-poor financial and other institutions. Strategic alliances may be considered with institutions which share a similar private sector orientation towards rural development. 153. Rationale. The EOF constitutes an institutional arrangement which will allow the application of the following core principles: (i) cost recovery & sustainability: the EOF minimises recurrent costs, introduces cost recovery mechanisms, and aims to achieve medium-term sustainability; (ii) multi-sectoral approach: the IFAD country programme for the 2010-2012 cycle is multi-sectoral; the EOF constitutes a multi-sectoral institutional arrangement; (iii) private sector orientation: the EOF is managed and operated based on private sector principles and speed, with a clear business orientation; (iv) equity participation: the EOF is legally capable of equity participation in licensed microfinance institution(s); its shareholding position will allow it to place a long-term deposit in a shareholders current account, with terms and conditions negotiated among shareholders; (v) venture capital: the EOF is legally capable of venture capital investments in rural businesses which have growth potential and generate sustainable rural jobs; and, (vi) corporate social responsibility: the EOF will blend financial viability, sustainability and profit with social and targeting objectives. 154. Strategic framework. The EOF is created by Presidential Decree (to be eventually ratified by Parliament) as a public-private partnership working to improve the economic status of poor women and men in rural areas, with the objective of creating economic opportunities for the target groups. Its foundation is the improvement of market relationship governance through improved linkages of producers/fishers organisations with markets and services. Its structure is based on three core pillars: value chain development; economic infrastructure; rural financial services. The EOFs outcomes focus on sustainable increases in household assets, employment and incomes, in support of rural poverty reduction. The EOFs strategic framework is presented in Figure 10.
31
Figure 10: EOF Strategic Framework

ECONOMIC OPPORTUNITIES FUND Vision: a sustainable public-private partnership serving rural areas Mission: to improve the economic status of poor women and men in rural areas Objective: to create economic opportunities for poor women and men in rural areas Foundation Process improved market relationship governance Action Priorities development of producers' associations creation of linkages with markets and services Pillar 1 value chain development Outputs upgraded productivity and production ensured compliance with quality standards enhanced market access Pillar 2 economic infrastructure Outputs enhanced resource use efficiency increased value addition for value chain actors Pillar 3 rural financial services Outputs equity participation in pro-poor licensed MFIs improved outreach and diversified products venture capital for rural businesses
Outcome: increased household assets, employment and incomes reducing rural poverty
155. Governance. The EOF is to be governed by a Board of Directors representing the public and private sectors. The public sector is initially represented by the Prime Minister, MOPIC, MAI, and MOF, and the private sector by the union of chambers of commerce, the womens section of the union of chambers of commerce, the bankers association, the businessmens club and the auditors and accountants association. The Prime Minister serves as the Chair of the Board, while a private sector representative serves as Vice-Chair. All financiers are invited to participate in Board meetings as observers. The Board is responsible and accountable to Government and financiers for guiding EOF strategy and operations under the principles of good governance, transparency, equity, business ethics, efficiency, sustainability and corporate social responsibility. Under the FIP, MFW and the Yemeni Seafood Exporters Association will become EOF Board members. 156. As stipulated in the draft Presidential Decree for EOF establishment, and to safeguard the specific nature of the EOF, the distribution of membership between public and private sectors on the Board should not be modified, nor should the EOF be merged with any other institution. 157. The EOF is steered by a Management Board that will review investments and operations prior to approval by the Chief Executive Officer (CEO). It will consist of the CEO, chief financial officer, chief procurement officer, agriculture value chain manager, fisheries value chain manager, rural finance manager, venture capital specialist, lead design engineer and field mobilizer. An annual work plan and budget (AWPB) for each project implemented by EOF will be prepared by unit managers through a participatory approach with stakeholders. Each AWPB will be consolidated and reviewed by the Management Board, with the final decision vested with the CEO. Each AWPB will subsequently be submitted to the Board of Directors for final approval, and then submitted to Government, IFAD and cofinanciers for concurrence. The EOF will convene quarterly or semiannual meetings with participating producers and fishers organizations to ensure that its strategic and operational agenda is driven by the concerns of the target groups. 158. Structure. The EOF will be located in Sanaa. Its management structure (Figure 11) reflects project components and requirements. It is managed by a CEO whose nomination by the Board is based on a competitive recruitment process subject to IFAD approval. The EOF consists of three offices: (i) the administration office responsible for financial management, procurement and contracting, monitoring and evaluation; (ii) the investment office responsible for managing value chain investments, economic infrastructure and financial services; (iii) the capacity building office responsible for mobilising producers and fishers organizations and organising business advisory services; this unit will include a small decentralised field office in the South. The EOF will have an internal audit unit reporting directly to the CEO to analyse and improve business processes, ensure financial control including internal checks and balances, verify the accuracy of financial reporting, and ensure compliance with laws, regulations, and Board decisions. A small project liaison unit will be established within MFW for coordination of the sustainable resource management component.
32
Figure 11: EOF Management Structure

BoardofDirectors (PrivatePublicPartnership) PublicSector PrivateSector Pri meMi ni s ter MOPIC MAI MFW MF Uni onofCha mber ofCommerce(UCC) Ba nkers 'As s . Women's Dept.UCC Bus i nes s men's Cl ub Audi tors 'As s . YemenSea food ExporterAs s .
ProjectLi a i s on Uni t(a tMFW)
ExecutiveManagement
Pol i cy Advi s or Interna l Audi t
AdministrationOffice Fi na nci a l Procurement Moni tori nga nd Ma na gement a ndContra cti ng Eva l ua ti onUni t Uni t Uni t Va l ueCha i n Devel opment Uni t Depa rtments (i)Agriculture (ii)Fisheries
InvestmentOffice Economi c Infra s tructure Uni t
CapacityBuildingOffice Producers ' As s oci a ti ons Mobi l i za ti on Uni t Bus i nes s Advi s orya nd Tra i ni ngUni t
Fi na nci a l Servi ces Uni t Depa rtments (i)Ruralfinance (ii)Venture capital
SouthFieldOffice
159. The implementation of the FIP by the EOF will result in minor changes in the management structure: (i) within the investment office, a new fisheries section will be added in the value chain unit, and a new venture capital investments section will be added in the financial services unit; (ii) a new policy advisory unit will be created, reporting directly to the CEO. The administration and capacity building offices and the other investment offices will work for both EOP and FIP. 160. Staffing. All staff members will be recruited on competitive basis in compliance with IFADs guidelines, and will receive highly competitive performance-based salary levels. All staff contracts will be for an initial probationary period, with the possibility of extension subject to satisfactory performance. As the quality of staff is of fundamental importance in determining the quality of the EOFs performance, staff will be closely monitored by the Board of Directors during the initial project years. Additional staff will be recruited on competitive basis for the FIP; they will include a fisheries value chain manager, an aquaculture specialist, a venture capital specialist and an assistant, an M&E assistant, a business advisor, a policy advisor and 6 teams of 2 mobilisation agents each (one man and one woman per team) located in the maritime governorates. If required, additional administrative staff may be contracted to cope with the incremental workload. 161. Cost recovery and sustainability. The EOFs legal framework and capabilities will allow it to buy equity participation in licensed microfinance institutions and finance their activities through long-term shareholders accounts, and to engage in equity financing of start-up or existing MSEs. While the EOFs initial costs will be fully financed by the EOP and FIP, the income generated by equity participation and venture capital investments (dividends) and by deposits in shareholders account (interest) will gradually enable the EOF to cover its operating costs. The mobilisation of incremental funds for financial services, such as those channelled under future IFAD operations, will increase the EOFs income stream and allow it to cover a greater proportion of its recurrent costs, paving the way for medium term sustainability. 162. The EOFs shareholders current account will have an interest rate of LIBOR plus 3.25%, currently amounting to 4.00% p.a. (this is harmonised with proposed rates of other financiers). Equity participation in MSEs held by the EOF will generate dividends, the amount of which will depend on the percentage of equity holding and MSE profits. Venture capital investments will be based on the musharaka model which is a common and well-known Islamic banking modality.
33
163. The equity financing mechanism will be part of a larger package consisting of management advise and technical assistance to enhance business development, and improved market linkages to increase market access. It also creates the opportunity for entrepreneurs and MSEs to access larger financial resources to finance the growth of their activities. 164. Financial Management. For the FIP, the EOF will open and maintain a Designated Account in USD and an Operating Account in YER in commercial bank(s) acceptable to the respective financiers. The EOFs CEO and chief financial officer will be authorized to operate these accounts. The authorised allocation to the Designated Account will be set at a sufficiently high level in light of the expected pattern of expenditures, withdrawal application processing timeframe and costs, and the need to ensure sufficient EOF liquidity and financial efficiency. Operating Accounts will be used to process YER payments for contractors, suppliers, service providers, and operating costs. Implementation Arrangements and Responsibilities 165. The project will be managed by the EOF and implemented by contractual service providers on performance-based and results-oriented annual contracts. Contract renewal will be subject to positive evaluation of performance by a panel which includes the various stakeholders including representatives of fishers communities. Service providers include pre-selected public institutions such as the FRA and FAs, Aquaculture Research Authority, GIA and SMEPS, as well as private sector entities such as fishers organizations, processors/exporters, engineering companies, construction firms, microfinance institutions (particularly Al Amal Microfinance Bank) and insurance companies. The procurement and contracting of service providers will be based on Government, IFAD and cofinanciers guidelines. The implementation responsibilities for sub-components and activities have already been detailed earlier, and are summarised below. Regulatory compliance and risk management will be implemented by MFW, the Fisheries Authorities, the Yemeni Coast Guard, participating fishers organisations, and an insurance company which will be procured and contracted on competitive basis. Fisheries research and management will be implemented by MFW, the Fisheries Research Authority, and participating fishers organisations. Value chain upgrading for fisheries will be implemented by selected processors/exporters and their supply chain managers, selected fishers organisations, limited liability companies (owned by the EOF, fishers organisation(s) and possibly third-party private investors), and participating microfinance institutions. Value chain upgrading for aquaculture will be implemented by the Aquaculture Research Centre, aquaculture enterprises and limited liability companies owned by private investors (fishers organisation, processors/exporters) and the EOF. Infrastructure will be developed by private engineering firms and contractors procured on the basis of Government procurement procedures and the requirements of cofinanciers. Pre-qualification exercises for designers, supervisors and contractors will be conducted by the EOF at project start-up, and repeated periodically, to develop long-lists of prequalified firms, a sub-set of which will be invited to bid for specific contracts. Export and domestic market expansion will be implemented by an international specialised institution (procured through a quality-based competitive selection process), the Yemeni Seafood Exporters Association, and the National Fish Quality Control Laboratory. MSE development will be implemented by private sector service providers selected through competitive process, the Small and Micro Enterprise Promotion Service of SFD, and other public sector MSE support entities and projects. Fishers organisations will be selected based on the due diligence exercise and the selection procedures for integrated landing complexes. They will be supported by the EOF and third party investors as appropriate. Microfinance institutions eligible for participation must be licensed by the Central Bank of Yemen. The Al Amal Microfinance Bank as well as other interested licensed microfinance institutions will be invited to participate in the project. The Post Office will participate in the channelling of financial resources on the basis of contracts with the selected MFIs.
34
Transparency & Good Governance 166. Yemen has a Corruption Perception Index score of 2.1 (2009) indicating significant lack of transparency in Government institutions. Project design includes specific measures to ensure transparency: (i) institutional arrangements: the project will be implemented by the EOF, a publicprivate partnership, based on principles of good governance, transparency, equity, efficiency, sustainability, and corporate social responsibility; (ii) business ethics: a code of business ethics will be applicable to, and signed by, the EOFs Board members, managers and employees; (iii) internal audit: the EOFs management structure includes an internal audit unit reporting to the CEO; (iv) independent audit: the EOF will be audited annually by an independent external recognised audit firm selected based on IFADs procurement and audit guidelines; audits will be conducted in line with internationally accepted auditing standards; audits will also include limited liability companies in which the EOF is holding equity (v) supervision: IFADs direct supervision process includes modules on fiduciary compliance and the responsibility and accountability framework. 167. Fishers organisations and other beneficiary organisations will be involved in all phases of project decision-making, planning, implementation and evaluation, as documented throughout this report and as enshrined in the operational modalities of the EOF. The Fishers Cooperative Union, the apex organisation for fishers cooperatives, will be strengthened to enable it to effectively represent its members at policy, strategic and advocacy levels. The enhancement of capacities and improvement of relationships among key stakeholders (MFW, fishers' cooperatives, FCU) will result in strengthened sectoral governance. Project evaluation studies and impact assessment exercises will be outsourced to independent institutions to ensure analytical objectivity. Mechanisms will be established within the framework of the administrative fine system to allow fishers to challenge the decisions of fisheries inspectors and the Yemen Coast Guard. B. The Collaborative Framework The Main Implementing Agencies and their Roles 168. The projects implementing agencies and their roles are indicated above. With respect to partners, the EOF will develop appropriate partnerships, on a case-by-case basis, in response to the effective needs of the target groups or to strategic programmatic considerations, rather than to satisfy external priorities and requirements on a supply-driven basis. Technical Partners in Implementation 169. Technical partners in implementation are also outlined earlier. The EOF will partner with a range of public and private institutions for implementation purposes, as indicated earlier. Links with Complementary Projects 170. Policy dialogue with MFW. The project will build on the ongoing MFW restructuring financed by the WB/EU Fisheries Resources Management and Conservation Project and the EU Sustainable Development for Fisheries Sector to accelerate implementation of improved fisheries management practices. The FIPs support for MFW capacity building will be aligned with the operations of the WB/EU-financed projects and will contribute to implementing their recommendations. The FIP will also be aligned with the WB/EU operations regarding ownership and management of productive assets on landing sites, and the role of fishers cooperatives across the fisheries sector. The EOF will develop linkages with partners (WB, EU, UNDP-financed Economic Diversification Programme, JICA) to ensure consistency regarding licensing and the allocation of licensing proceeds, research and stock assessment, fisheries management planning, and regulatory enforcement. 171. Stock assessment and management. Considering the inaccuracy of data on the status of fish stocks, the possible depletion of some high value species, and the urgent need to implement fisheries management plans to prevent further damage to stocks and facilitate their regeneration, the project will collaborate closely with the EU-financed Sustainable Development for Fisheries Sector which is currently being designed. To avoid overlap, it is agreed that the EU project will focus on the baseline study of existing stock data, at-sea surveys, and the stock assessment while the FIP will focus on fisheries and aquaculture value chain development. The FIP will contribute to stock management activities, such as regulatory enforcement, implementation of a licensing system, capacity building support for fisheries stakeholders, preparation and implementation of fisheries management plans for high value species, and technical assistance for the FRA.
35
172. Infrastructure. The FIP will finance the construction and rehabilitation of integrated landing complexes. It will also finance social infrastructure at sites where a landing site is rehabilitated or constructed. The WB has several on-going infrastructure projects focusing on sea ports, access roads, and social infrastructure, while the Public Works Project will focus on the construction of modern auction halls. The project will seek partnership with such projects to coordinate field activities and ensure coherent planning of infrastructure development. It will also explore collaboration with the WBs Rural Water Supply and Sanitation Project for drinking water schemes. 173. Aquaculture. The project will develop linkages with the JICA-funded TA support for the Aquaculture Research Centre which aims to promote aquaculture in fishers communities. 174. Export promotion. The project will develop linkages with the UNDP-funded Fishery Quality Control for Export Promotion to increase the export competitiveness of Yemeni fish products and to develop procedures and controls for compliance with international food quality standards. 175. Microfinance. The EOF will adhere to the MOU signed by KfW, IFC, GTZ and AFD which aims to strengthen the capacity of Al-Amal Microfinance Bank. Under the FIP, the EOF will focus its TA to support the Bank in developing rural outreach and new financial products adapted to fishers and fishers communities. This will include new lending and savings products as well as transfers, remittances and leasing. The EOF will assist financial institutions to enter into agreements with the Post Office to channel funds to and from fishers communities. 176. Microenterprise development. The EOF will partner with SMEPS and the GTZ-funded Private Sector Development Project for training and advisory services for micro-entrepreneurs. It will also seek to facilitate market access through linkages with exporters or foreign importers. Integration within the IFAD Country Programme 177. The IFAD-Government collaboration programme focuses on the design and implementation of sustainable pro-poor investments which are aligned with Governments economic growth and poverty reduction policies and IFADs strategic objectives. There is consensus on the need to institute a private sector-led approach and develop a public-private partnership to efficiently and transparently manage development resources. The 2010-2012 cycle envisages three investments: the Economic Opportunities Programme investing in pro-poor agriculture value chain development; the Fisheries Investment Project focusing on sustainable fisheries resource management and value chain development; and, the Rural Employment Programme aiming to create sustainable rural job opportunities through venture capital investments and related services for rural businesses with growth potential. The FIP is integrated within the country programme. 178. The establishment of the EOF as a management entity (aiming for cost recovery and medium term financial sustainability) for current and future IFAD operations will guarantee continuity in terms of organisation, approach and content. The project will become a member of the IFADsupported regional network Knowledge Access in Rural Inter-Connected Areas (KARIANET) which covers most IFAD-financed projects in the region. C. Results-Based M&E 179. The projects M&E system is designed to offer comprehensive and reliable information to improve decision-making for results-based management. Considering the extent to which project impact depends on improved value chain competitiveness, beneficiary investment and marketing decisions, the system will be participatory and decentralised, actively involving target groups and executing partners. The logical framework will constitute the basis for results-based M&E, and includes an initial list of indicators to track progress and achievements. The EOF will establish and maintaining the system. All M&E data, analysis, and reporting will be disaggregated by gender. 180. The M&E system will have a three-level structure. The first level - output monitoring - will focus on physical and financial inputs, activities and outputs. Data will flow directly from records at different management levels (EOF, MFW, FRA, FA, MFIs, fishers organisations, service providers) and from periodic management reporting. Simple indicators will be agreed at start up and monitored quarterly. They will include relevant first-level indicators of IFADs Results and Impact Management System (RIMS). AWPBs will provide the targets for first level monitoring.
36
181. The second level - outcome monitoring - will assess the use of outputs and measure their benefits at beneficiary and value chain levels. At beneficiary level, it will focus on the accessibility of project outputs and the extent to which they provided benefits to the target groups in terms of access to finance, services, secure/remunerative markets. It will also include MSEs achievements in terms of returns, added value, direct and indirect job creation, and prospects for sustainability. 182. At fisheries value chain level, the system will focus on incremental returns, margins and value added generated at each strategic value chain link, and on the distribution of benefits for the key actors. It will be based on a variety of targets and performance indicators relevant for value chain analysis and agreed with stakeholders. Key performance indicators may include the volume and value of fisheries products traded, actual market outlets, improved value chain performance (increased quality products sold on international markets, marketing costs, etc), profit distribution among value chain actors, and value chain efficiency relative to sectoral norms. It will include indirect beneficiaries and job creation effects. Performance indicators will be compared with historical values and expected targets. This level will include second-level RIMS indicators. 183. Fishers communities, mobilisation teams and supply chain managers will be responsible for data collection and participatory data analysis. The M&E officer will develop templates and methods for data collection and analysis. Benchmark data will be derived from value chain analyses, infrastructure investments and venture capital feasibility studies. Data collection will be periodic while participatory analysis and reporting will be annual through workshops, with results fed into AWPBs and progress reports. Annual workshops will be undertaken with stakeholders for participatory evaluation purposes. This will enable the assessment of progress towards objectives, enabling the EOFs management, beneficiaries and stakeholders to take corrective measures. The data will be cross-checked with statistics collected by FA inspectors. The statistics transmitted by each FA to MFW will be collected by the project liaison unit and communicated to the M&E officer. 184. The third level impact assessment - will assess project impact for the target groups in comparison with objectives. It will focus on higher level impact indicators such as household incomes, employment conditions, gender equality, fishers community poverty status, and changes in the resource base. It will be based on a sampling universe consisting of selected zones in the nine maritime governorates that will remain constant during the project life. Economic multiplier analysis will be applied to assess the wider impact on the rural economy generated by the project. Impact assessment will also assess the institutional, policy, and industry changes arising from the project with respect to the increased competitiveness of fisheries value chains and their impact for the rural poor. The EOF will conduct a formal impact assessment in the projects final stages, jointly with stakeholders and beneficiaries, which will include an assessment of achievements, capturing of lessons and best practices, and analysis of prospects for sustainability. 185. The project will utilize locally adapted RIMS surveys at baseline, mid-term, and completion as the main quantitative survey tools; they will be carried out at sites where landing complexes and aquaculture have been developed. This will allow simple and cost-effective data collection and impact assessment. Guided by the M&E officers, the EOFs mobilization teams and supply chain managers will undertake these surveys. Ad hoc surveys, qualitative case studies and thematic reviews will also be out-sourced to independent institutions to capture lessons on themes such as market access, new financing mechanisms, and MSE development. The project will monitor, together with FRA and MFW, the results of fisheries management plans and their impact on fish stocks and fishers revenues. 186. A Mid-Term Review will be undertaken in PY3. Its coverage will include: (i) physical and financial progress in comparison with AWPBs; (ii) the performance of service providers; and, (iii) overall progress towards the achievement of project objectives. It will also look at institutional and policy changes arising from the project with respect to stock assessment, fisheries management plans, enforcement, and the participation of fishers organizations in infrastructure management. Supervision 187. The project will be directly supervised by IFAD. Direct supervision will encompass three discrete processes: (i) loan administration; (ii) project supervision; and, (iii) implementation support. Direct supervision will be perceived and applied as a continuous process which requires ongoing communication and engagement with Government and project management.
37
188. Project design will invariably be superseded by reality over time as a result of changing conditions, emerging operational experiences, political and macro-economic changes, exogenous developments and force majeure. The process of supervision will guide the project towards the achievement of strategic objectives and broader poverty reduction outcomes, while ensuring fiduciary compliance and responsiveness to the accountability framework. Several instruments will be applied to influence the direction of implementation: ongoing policy dialogue with Government; adjustment of annual work plans and budgets; revision of implementation manuals; undertaking of supervision and mid-term review missions; and, legal amendments as appropriate. 189. The key supervision processes which will be applied are outlined below. Loan administration: ensuring fiduciary compliance, with focus on: legal conditions; financial management; procurement and contracting.
Project supervision: assessing implementation performance, with focus on: overall implementation performance and progress towards objectives; project investments, activities and outputs; statutory requirements (AWPB, monitoring, reporting); steering, management, implementing institutions; targeting and gender mainstreaming.
Supporting implementation, project level: with focus on: providing guidance towards achievement of objectives; supporting adaptation in response to evolving conditions; creating systems for sustainable flow of benefits; resolving operational issues and problems; generating lessons and articulating best practices.
Supporting implementation, country level: with focus on: introducing a broad programmatic view of development investments; influencing policy on the basis of operational experiences; developing systems and institutions for poverty reduction; facilitating financial and operational partnerships.
Supporting implementation, IFAD level: with focus on: generating knowledge and lessons; feeding operational lessons into new project design; creating innovative instruments, investments, pilot activities; enabling portfolio restructuring to improve outcomes and results
190. Supervision missions will be undertaken annually and complemented by short and focused follow-up missions as appropriate. Supervision will be based on operational modalities and best practices developed by IFADs former Cooperating Institutions. The frequency and composition of supervision missions will be determined in light of actual emerging requirements.
38
VI. PROJECT BENEFITS, COSTS AND FINANCING A. Summary Benefit Analysis 191. Project beneficiaries will include poor households in coastal areas, primarily fishers and their households but also others such as micro-entrepreneurs and labourers as well as their households. The projects benefits will accrue at three levels: (i) systemic benefits for the entire fisheries sector through investments in sustainable resource management and policy influence; (ii) direct benefits for households in coastal communities through value chain investments such as iceboxes, mother/ transport boats, integrated landing complexes, aquaculture and micro/small enterprises, as well as the direct job creation effects of such investments; (iii) economic multiplier effects and indirect job creation across the broader coastal economy. 192. The envisaged number of the projects direct beneficiaries by type of investment is outlined in Table 5. While it is not possible to simply aggregate the numbers of beneficiaries of each activity as this would lead to double-counting (many households would benefit from several investments), the project is expected to directly benefit 45,000 households consisting of some 360,000 people. Table 5: Estimated Project Beneficiaries
Activity Units (#) 10 000 16 12 12 300 360 Beneficiaries per Unit (#) 4 312.5 90 900 1 5 Total Direct Beneficiaries (#) 40 000 5 000 1 080 10 800 300 1 800 1 468 Total Household Members (#) 320 000 40 000 8 640 86 400 2 400 14 400 11 744
Iceboxes Transport Boats - Socotra Mother Boats - Gulf of Aden & Red Sea Integrated Landing Complexes Aquaculture Investments Micro/Small Enterprises Jobs Created from All Investments
193. The phasing of value chain development investments is indicated in Table 6. It is expected that the majority of activities will be implemented in the first four project years, and consolidated with intensive project support in years five and six. Table 6: Project Phasing Value Chain Development
Investment Integrated landing complex Construction Rehabilitation Total Social Infrastructure At selected landing sites At other short-listed landing sites Total Other Value Chain Investments Iceboxes Ice plants Mother/transport boats Total Aquaculture Development Mussels Seaweed Sea cucumber Total Micro/Small Enterprises Drying/salting Smoking Fish meal Total PY1 PY2 PY3 PY4 PY5 PY6 Total
1 1 2 2 2 4 1 500 2 7 1 509 10 10 30 20 125 175
2 2 4 4 3 7 4 500 3 10 4 513 10 30 60 100 40 20 75 135
1 1 1 1 4 000 3 11 4 014 20 30 70 120 50 10 60
10 10 50 70 -
3 4 7 7 5 12 10 000 8 28 10 036 40 80 180 300 120 50 200 370
194. The phasing of sustainable resource management investments is indicated in Table 7. It is expected that the core activities of safety-at-sea and insurance, fisheries management planning and implementation, and stock assessment activities will be undertaken throughout the project life and will continue indefinitely thereafter.
39
Table 7: Project Phasing Sustainable Resource Management

Activity Fisheries Licensing System* Action - Development - Impementation - Reviewing regulations Regulatory & Inspection - Introducing changes & system of fines Capacity - Training inspectors & awareness raising - Reviewing regulations & introducing changes Safety-at-Sea & Insurance - Trng. & equip. safety-at-sea officers & fishers - Development & implementation of insurance Fisheries Research - Upgrading of faciltiies & provision of training Authority - Development fisheries management plans Fisheries Management Plans - Implementation fisheries management plans Stock Assessment - Undertaking of stock assessment PY1 PY2 Project Year PY3 PY4 PY5 PY6
* includes strengthened quality and hygiene regulations, safety standards and insurance requirements
195. Three basic fishing boat enterprise models have been developed based on primary and secondary data, interviews with fishers and other informed sources, and analytical work. They are representative of small vessels in coastal areas and the different catches, crew sizes and means of dividing revenue typical in each area. The models are utilised to assess the financial impact of improvements to fish quality and access to export markets resulting from investments in on-board cold storage, improved on-board processing and handling, and improved cold chain integrity at landing sites. They also reflect changes to the taxation structure and additional costs of safety equipment and licensing. The models show increases in net annual incomes ranging from 26% to 85% (Table 8) implying high returns to investment. Table 8: Indicative Fishing Boat Models
Region / Type of boat Red Sea (15 m sambuk ) Gulf of Aden (10 m huri ) Socotra (10 m huri ) Annual Yield (kg) WOP WP 11 000 13 000 33 000 11 000 13 000 33 000 Avg. Price (USD/kg) WOP WP 3.56 2.22 0.89 3.91 2.93 1.21 Annual Net Income - Crew (USD) WOP WP % Incr. 1 454 2 725 2 072 1 825 3 690 3 828 26% 35% 85%
196. Three aquaculture enterprise models have been developed, for seaweed, sea cucumber and mussels production. Net income at maturity ranges from USD 2,250 to USD 9,052 accruing to the entrepreneur and household. Three micro/small enterprise models have also been developed for dried/salted fish, smoked fish, and fishmeal production. Net income at maturity ranges from USD 710 to USD 1,182 accruing to the entrepreneur and household. These models are contained in the working papers and are summarised in Table 9. Table 9: Indicative Aquaculture and MSE Models
Enterprise Net Returns at Maturity (YER) 506 188 622 250 2 036 651 1 264 000 1 379 586 159 725 Average Annual Income per Household (YER) (USD) 506 188 622 250 2 036 651 265 900 223 459 159 725 2 250 2 766 9 052 1 182 993 710 Beneficiary Households (number) 80 180 40 1 200 400 200
Aquaculture seaweed sea cucumber mussels Micro/Small Enterprises drying/salting fish smoked fish fishmeal
40
197. The project will also generate benefits which are difficult to quantify, particularly under the sustainable resource management component, and are instrumental for achievement of project objectives as well as the long-term sustainability of fishers livelihoods and the fisheries sector as a whole. These benefits will include: environmental benefits: (i) rebuilding of over-exploited fish stocks through development and implementation of fisheries management plans and improved enforcement capacity; (ii) reduced pressure on wild fish resources through aquaculture and MSE development, and increased income per unit of fish caught through value chain upgrading; and, (iii) preservation of Yemens scarce water resources by enhancing rural food security, income and employment in a sector with lower fresh water requirements than agriculture. fisheries management benefits: (i) improved capacity to develop and enforce fisheries management through improved licensing, enhanced research capacity and trained fisheries inspectors and coast guards; (ii) increased knowledge of the status of fisheries resources, facilitating sectoral strategy formulation and enhancing the investment environment. governance benefits: (i) strengthened sectoral governance based on enhanced capacities and improved relationships among key stakeholders (MFW, fishers' cooperatives, FCU); (ii) improved management of the resource base by MFW; (iii) replacement of the 3% levy with the transparent license fee system and better financial management by cooperatives; (iv) greater vertical value chain integration by linking cooperatives and processors/exporters. social benefits: (i) reduced risk of injuries and loss of life through improved safety-at-sea, reduced risk of damage to assets due to sheltered mooring areas for boats at landing sites, and reduced vulnerability through access to insurance; (ii) improved quality of fish which provides greater access to high value markets and reduces health risks to consumers; (iii) reduced dependence on wild fish stocks for income, employment and food security as a result of aquaculture and MSE development. 198. Gender mainstreaming. Very few women are directly involved in fishing, and they are among the poorest fishers and members of the lowest social status category. They constitute a priority target group for project investments in improved fish quality, particularly training and provision of iceboxes. Poor entrepreneurial women in coastal communities will be supported to develop viable MSEs; the project will ensure that women constitute 70% of the beneficiaries of MSE activities, particularly in Shabwa, Lahej, and Al Mahara where women traditionally have a higher involvement in the fisheries sector. Similarly, women will constitute 70% of the beneficiaries of aquaculture activities. The project will make efforts to ensure that educated women constitute 30% of the staff of the integrated landing complexes. In overall terms, it is expected that under the project women will benefit from greater opportunities to develop their own small businesses, higher household incomes, and improved access to social infrastructure. Furthermore, the introduction of safety-atsea measures for fishers will reduce the risk of losing economically active household members, while insurance products will provide compensation in case of accidents. 199. The projects economic internal rate of return is 32% and the net present value is USD 105.1 million over a 15-year analysis period. Sensitivity analysis indicates that the project is fairly robust in the event of delays in the flow of benefits or unforeseen cost overruns. B. Summary Cost Table 200. The total project cost amounts to YER 6.9 billion equivalent to USD 30.9 million (Table 7). It will be implemented over a six-year period from 2011 to 2016. The aggregate physical and price contingencies account for 7% of base cost, while the foreign exchange component accounts for 14% of total cost. The sustainable resource management component accounts for 17% of base cost, the value chain development component for 69%, and the Economic Opportunities Fund for 15%. The project is costed in Yemeni Rial using an average exchange rate of YER 225 to the USD.
41
Table 10: Summary Project Cost

Component A. Sustainable Resource Management Regulatory Compliance & Risk Management Fisheries Research & Management Subtotal B. Value Chain Development Value Chain Modernisation Fishers' Organisations & Financial Services Subtotal C. Economic Opportunities Fund Total Baseline Costs Physical Contingencies Price Contingencies Total Project Costs (YER Million) Local Foreign Total (US$ Million) Local Foreign Total % For. % Base Exch. Cost
133 646 778 3 927 119 4 046 737 5 560 90 321 5 971
185 138 323 323 88 411 211 944 27 8 978
1 4 4 6 6
318 783 101 0 250 207 457 947 505 116 328 949
0.6 2.9 3.5 17.5 0.5 18.0 3.3 24.7 0.4 1.4 26.5
0.8 0.6 1.4 1.4 0.4 1.8 0.9 4.2 0.1 0.0 4.4
1.4 3.5 4.9 18.9 0.9 19.8 4.2 28.9 0.5 1.5 30.9
58% 18% 29% 8% 42% 9% 22% 15% 23% 2% 14%
5% 12% 17% 65% 3% 69% 15% 100% 2% 5% 107%
C. Project Financing 201. The projects financing plan is indicated in Table 8. The project will be financed by IFAD resources of USD 9.1 million (29% of cost), an IDB loan of USD 11.3 million (37%), an EU grant of USD 5.3 million (17%), an EOF contribution of USD 2.8 million (9%), beneficiaries contribution of USD 1.5 million (5%), MFIs contribution of USD 0.8 million (2%), and a Government contribution of USD 0.1 million (0.5%). The Governments contribution covers duties and taxes, while the EOFs contribution will derive from revenues earned on its financial investments. Table 11: Project Financing by Component (all figures in USD million)
Component A. Sustainable Resource Management Regulatory Compliance & Risk Management Fisheries Research & Management Subtotal B. Value Chain Development Value Chain Modernisation Fishers' Organisations & Financial Services Subtotal C. Economic Opportunities Fund Total Project Cost % of Total IFAD IDB EU EOF GOY MFIs Benefic. Total
1.0 0.3 1.4 5.5 0.7 6.2 1.6 9.1 29%
0.0 0.0 0.0 11.3 0.0 11.3 0.0 11.3 37%
0.4 3.2 3.6 0.9 0.3 1.2 0.5 5.3 17%
0.0 0.0 0.0 0.0 0.0 0.0 2.8 2.8 9%
0.1 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0%
0.0 0.0 0.0 0.8 0.0 0.8 0.0 0.8 2%
0.0 0.0 0.0 1.5 0.0 1.5 0.0 1.5 5%
1.5 3.5 5.0 20.0 1.0 20.9 4.9 30.9 100%
VII. PROJECT RISKS AND SUSTAINABILITY (KSF 5) A. Risk Analysis 202. The project has a number of inherent risks which are mitigated in the project design or will be transferred to third parties. These are summarised below: Security. Yemens territory is currently classified as Security Phase 3 by UNDSS, indicating multiple threats to security. Security problems are often faced by fishers communities and coastal settlements, and it may be difficult to recruit project staff to operate in potentially insecure locations. Insecurity also has adverse implications for obtaining security clearance for internal travel, which constrains project supervision and implementation support. While it is impossible to transfer this risk, it will be mitigated to some degree through the selection of project locations where security conditions are stable and travel is possible. Piracy. Unstable conditions prevail in the Gulf of Aden and along the Somali coast. Yemeni fishers suffer from acts of piracy and destruction of boats and gear in international waters or along the Somali coast. This risk will be mitigated by executing fisheries management plans to regenerate fish stocks in Yemeni waters, increasing the use of on-board security equipment, introducing insurance products, and partnering with the Coast Guard to enforce regulations and safety-at-sea. Ministry of Fish Wealth. MFW is currently undergoing restructuring under the WB-financed FRMCP. The FIP is designed to complement this process and support the newly
42
restructured MFW. Specific aspects of project implementation may be adversely affected by any failure to fully implement restructuring. This risk is mitigated by ensuring that the FIP is managed by the EOF and implemented by service providers, in coordination with the project liaison unit in MFW. Furthermore, many sustainable resource management activities can be implemented within the existing Ministry structure, while fisheries value chain development activities can operate directly through the EOF. Institutional weaknesses. Previous projects have been constrained by institutional weaknesses and poor implementation capacity. This risk is mitigated as the FIP will be managed by a new public-private partnership (the EOF) and implemented by contracted service providers on performance-based contracts. Although EOF is an innovative entity, it is designed to specifically address previously-identified institutional weaknesses and to overcome implementation difficulties by operating through contracted service providers. Governance. To mitigate the risk of poor governance, the project will be managed by a new public-private partnership (the EOF) operating on the basis of good governance, transparency, equity, business ethics, efficiency, sustainability and corporate social responsibility. Beneficiary organisations such as mature fishers cooperatives will be further strengthened and will subsequently participate in decision-making, planning, execution and evaluation. Impact assessment process will be outsourced to ensure objectivity. Flow of funds. The FIP will work with private sector partners who operate on international markets. Procedures for flow of funds to country level are known to be slow and complex. Delays in transfer of resources to the EOF will have adverse implications for execution and credibility. This will be mitigated through the establishment of a Designated Account with a sizeable authorised allocation, resulting in substantial advance funding and a reduced flow of withdrawal applications. Interlocking factor markets. Fishers in some areas are disadvantaged by monopolistic agents who provide inputs and credit, manage fish auctions and influence prices, and purchase output. This risk will be mitigated by promoting contractual arrangements between fishers organisations and processors/exporters, and the introduction of mother/ transport boats. This will reduce the grip of agents and impose transparency in pricing. Elite capture. To reach the poorest members of fishers communities (crew members), all fishers will be supported. Alternative income diversification measures such as aquaculture and micro-businesses will be promoted, directly targeted to poor fishers households and poor women. Equity holding by private investors in limited liability companies created for mother/transport boats and integrated landing complexes will be restricted. B. Exit Strategy and Post-Project Sustainability 203. The exit strategy and post-project sustainability considerations are built into the design of the project, as reflected below. Institutional sustainability. The EOF is being constituted as an independent and sustainable institution; its public-private ownership is configured to ensure stability of governance and decision-making equity. Its financial investments will generate a flow of income allowing it to gradually cover its costs and achieve financial sustainability in the medium-term. Sustainable resource management. The project will assist Government to implement fisheries management plans to protect resources, increase the accuracy of catch and effort data, enforce existing regulations and develop the aquaculture framework. The adoption of the license fee system will provide budgetary resources to sustain the operations of MFW, FAs and FRA, combined with focus on low-cost fisheries management techniques. Value chains. Vertical value chain integration will create financial incentives for improved collaboration between fishers organisations and processors/exporters. The operations of supply chain managers recruited by processors/exporters (and initially cost-shared by the project) will generate increased returns for all value chain actors. Export market demand for Yemeni fish products will increase through certification of compliance with international standards. These factors which assure value chain profitability for all actors will ensure project sustainability. Infrastructure. Professional contractual management arrangements with the private sector for landing site infrastructure and mother/transport boats (limited liability companies), the
43
participation of mature cooperatives, and the financial incentive framework across the upgraded value chain, will ensure sustainable infrastructure management. VIII. INNOVATIVE FEATURES, LEARNING AND KNOWLEDGE MANAGEMENT (KSF 6) A. Innovative Features 204. The project is innovative for Yemen and IFAD, as confirmed by OSC at concept note stage, at all three levels of intensity identified in the IFAD innovation strategy (adoption, adaptation and creation). The key innovations are outlined below. Institutional arrangements. The project will be managed by the EOF, a new public-private partnership, and managed by contracted service providers. Sustainable resource management. The project strategy to improve fishers incomes through sustainable resource management and enhancing catch value rather than volume is innovative in the Yemen fisheries sector and was recognised as such by the OSC. Venture capital financing. The EOF will provide a venture capital financing modality for fishers organisations to invest in productive investments such as fish handling facilities, ice plants, and mother/transport boats. Microfinance rural outreach. The project will support licensed microfinance institutions to develop operational linkages with the Post Office to channel funds to and from fishers communities, another innovation in Yemen. B. Project Knowledge Products and Learning Processes 205. The FIP will introduce new approaches to value chain development, investment financing, and institutional arrangements in Yemen. Implementation will create knowledge in these areas, to be applied by the EOF for wider purposes (the EOF itself will serve as a focal institution for poverty reduction) including the third IFAD investment of the 2010-2012 cycle. Knowledge will be captured by the EOF, concerned public institutions, and the IFAD country team, and applied for improving implementation and sharing operational experiences, lessons learned and best practices on a wider scale. Support will be provided for the publication of the results of fisheries and aquaculture research, of microfinance institutions (on the MIXMarket), and of project-supported LLCs. 206. Scaling-up. The project is purposefully designed to create the potential for systematically expanding, replicating, adapting and sustaining successful resource management and value chain investments over time and across new locations. Through its innovative venture capital modality for integrated landing complexes and other investments, and through its forward-looking resource management instruments, the project will create the pathways, drivers and space for scaling up, while the EOFs public-private partnership nature is configured to mobilise additional resources from other financiers. C. Regional Knowledge Networking 207. The project will contribute to (i) in-country knowledge networking through periodic seminars and workshops; (ii) in-house knowledge networking primarily within the programme management department; (iii) regional knowledge networking; (iv) regional research networks including those supported by IFAD grants. 208. Increased engagement with regional fisheries management organisations will be supported by the EUs Fisheries Development Project, and knowledge generated through the FIPs fisheries research activities will be shared through this channel. Efforts will also be continued in developing closer partnerships with the EU, WB, IDB, Saudi Fund, JICA, UNDP and FAO operations.
44
REPUBLIC OF YEMEN FISHERIES INVESTMENT PROJECT PROJECT FINAL DESIGN REPORT ANNEXES
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 1: CONTENTS OF THE PROJECT LIFE FILE
ANNEX 1: CONTENTS OF THE PROJECT LIFE FILE A. Knowledge Base not generated by the Project (IFAD Policies) Country Strategic Opportunities Paper (COSOP) 2008-2013 (Dec. 2007) IFADs Rural Finance Strategy Good Practice IFAD Learning Notes Country portfolio of loans and grants Previous projects supervision reports B. Knowledge Base not generated by the Project Review of fisheries resources of the Red Sea and Gulf of Aden, FAO Fisheries Technical Paper 304 (1989) Fisheries Management Plan for the Socotra Island Group (2000) Economic Growth in the Republic of Yemen, World Bank (2002) Status of the Living Marine Resources in the Red Sea and Gulf of Aden and Their Management, PERSGA, World Bank (2002) Small-scale Fisheries in Yemen: Social Assessment and Development Prospects, FAO & World Bank (2004). Yemens Development Plan for Poverty Reduction, 2006-2010, MOPIC (2006) Assessment of MSE Financial Needs in Yemen, IFC (2007) Investment Law and regulations, General Investment Authority (2009) Trade and Environment Dimensions of the Fisheries Sector in the Arab Countries: The Case of Yemen and Oman, United Nations ESCWA (2007) Yemen, National Statistics Yearbook, MAI (2008) The State of World Fisheries and Aquaculture, FAO (2008) Small and Medium Enterprise Development in Yemen, World Bank (2009) Pilot Programme for Climate Resilience, World Bank (2009) Coping with Climate Change Impacts, Development of Options, GEF (2009) Community Resilience to Climate Change, Aide Memoire, World Bank (2009) Yemen Country Report, Economist Intelligence Unit (2010) International Trade Centre Trade Statistics FAO Yearly Statistics (FISHSTAT) FAO Country Profiles (Fisheries, Aquaculture, Fisheries Management) C. Knowledge generated by the Project Design Process Fisheries Investment Project Concept Note (February 2010) OSC Minutes (February 2010) Project Design Mission, Aide Memoire (March 2010) Project Design Report, Formulation (April 2010) CPMT Minutes ( 2010) Maturity Assessment Template (2010) QE Reviewers Recommendations Note ( 2010) QE Panel Report (May 2010) Project Final Design Mission, Aide Memoire (July 2010) D. CPMT and Partners List of CPMT members
ANNEX 2: LOGFRAME
Objective Hierarchy Goal Economic status of poor rural women and men improved Households with improvement in asset ownership index (RIMS Mandatory impact) Reduction in the prevalence of malnutrition for children (RIMS mandatory impact); Households or persons receiving programme services: direct, by gender (RIMS 1st level); Households with increased income and improved food security (RIMS 2nd level). Baseline & impact surveys (gender disaggregated on asset ownership, child malnutrition, household incomes) M&E and impact assessments (including success of targeting strategy); Government socio-economic survey and statistics, health welfare surveys; Project completion report; RIMS annual reporting and impact surveys. Stable internal security (A); Reduction of acts of piracy (A); Governance improves (A); Macro-economic conditions improve (A). Key Performance Indicators Monitoring Mechanisms and Information Sources Assumptions(A)/Risks (R)
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 2: LOGFRAME
Purpose/Objective Sustainable economic opportunities for poor fishers and fishers households created Economically sustainable fully integrated landing complexes in production (#); Economically sustainable mother ships and transport boats in operation (#); Economically sustainable aquaculture farms in production (#); Viable MSEs after 3 years (RIMS 2nd level); Full-time job equivalents created and share of jobs for women and those in lowest income groups (RIMS 2nd level); Individuals, households, groups and communities receiving services (disaggregated by gender and poverty level) (RIMS 1st level); Fisheries Management Plans implemented (#). M&E evaluation and assessment; MCS data from MFW; Union of Fishers Cooperatives and Yemen Seafood Exporters Associations statistics; Fisheries Development Plans; Business plans. Fisheries Authorities Annual Review Stable internal security (A); Reduction of acts of piracy (A); MFW restructuring completed (A); Law and regulations enforcement by accredited trained officers (A); Specific Law for aquaculture enacted (A); Drop in fish prices on the international/regional market (R); Decline in fish stocks and production reduces economic viability of enterprises in fisheries value chain (R).
3
Ministry of Fish Wealths capacities strengthened
Outputs Output 1: Sustainable Resource Management Laws/regulations enforced by trained inspectors; Controls on quality and compliance with regulation carried out; Licensing system strengthened; Licensing fees between MOF and MFW allocated; Safety-at-sea regulations enforced; MFW and YCG relevant staff has been trained and equipped. M&E evaluation and assessment; Minutes of training sessions; Law of the Republic of Yemen; MFW regulations; Cabinet decrees; MCS data from MFW Fisheries Authorities Annual Review Project reports. MFW restructuring completed (A)
Objective Hierarchy Assessed fisheries resources properly managed by MFW and fisheries sector
Key Performance Indicators Biological status of high value fish stocks updated; FMPs for high value species are implemented; Adequate legislation for FMPs is passed; Reduction in reports of illegal/destructive fishing; Clear evidence of recovery of depleted stocks; FRA staff capacities strengthened; FRA equipped; Fishers organizations are involved in designing and monitoring FMPs.
Monitoring Mechanisms and Information Sources M&E evaluation and assessment; Minutes of training sessions; Law of the Republic of Yemen; MFW regulations; EU Fisheries Development Project reports; Fisheries Management Plans; MCS annual reports; Project reports; Fisheries Research Authority publications.
Assumptions(A)/Risks (R) MFW restructuring completed (A); Licensing system implemented (A); Involvement of fishers organizations (A).
Output 2: Value Chain Development Diversified value chains within fisheries sector are upgraded or developed Cold chain integrity is preserved; Health and quality standards are complied with; Contracts between fishers organisations and exporters/processors are signed; Supply Chain Managers are recruited; Landing sites are constructed or rehabilitated; Legislation regarding aquaculture is passed; Exotic species are assessed before implementation; Aquaculture activities are implemented; Fish processing carried out by women and groups; More fish products exported to high value markets; Public and private laboratories are certified. Existing or newly created fishers organizations are complying with legal and tax regulations; Fishers organizations capacities are strengthened; Fishers organizations are involved in ownership and management of Limited Liability Companies Fishers organizations are involved in ownership and management of productive investments; Union of Fishers Cooperatives is strengthened. Yemeni Post Office are involved in channelling loan products from licensed MFIs in coastal areas; Productive investments are financed through venture capital between EOF and fishers organizations; Long-term lease agreement have been signed between Limited Liability Companies and MFW for public infrastructure management; Private sector investors participate in financing mechanism; EOF is involved in Al-Amal Bank capacity building. M&E evaluation and assessment; Companies legal registry; Contracts; Export statistics from Government; Statistics from exporters; Fishers Cooperative Reports; Project reports. Exporters/processors interested in forward contracts with fishers organizations and aquaculture producers (A); Export market in high value markets accessible to Yemeni products (A); Part of incremental profit in passed to fishers organizations (A); Rate of adoption of new techniques by fishers (A).
4
Fishers organizations are capable of managing fisheries resources and investments Innovative financing mechanisms are implemented for fisheries productive investments
M&E evaluation and assessment; Ministry of Social Affairs registry; Companies legal registry; Tax authority registry; Fishers Cooperative Reports; Project reports.
All existing cooperatives are closed down by Government (R).
M&E evaluation and assessment; Yemeni Post Office activity reports; MFIs financial statements; EOF financial statements; Business plans; MoU signatories reports; Project reports.
Activities Policy dialogue and law enforcement undertaken
RIMS 1st level Fisheries Authorities inspectors trained (# from MFW and # from YCG); Fisheries Authorities safety-at-sea officers trained (# from MFW and # from YCG); Licensing department staff trained (#); MFW staff trained (#);
RIMS 2nd level Licensing policy promulgated; Allocation of licensing fees decree promulgated; Creation of safety-at sea officer decree promulgated; Inspector final exam validated.
Other indicators Inspectors in each FA (#); Annual inspections (#); Fines extended (#); Boats licensed (# type of licenses); Other fisheries stakeholders licensed (# by type); license fees amount; % of license fees allocated to MFW, MoF; Cost of license (by type boat/gear); Safety-at-sea Officer (#); Boats with safety equipment (#); Reported accidents (#, casualties); Boats insured (#); Life insurance (#); Insurance claim payout (#, amount). % FRA budget by external funds; Research mandated by FAs (#); Stocks updated biological status (#); Publications by FRA (#); FRA participations to fora (#); Meetings of the FSL Group (#); Boats equipped with ice box (#); Incr. revenue generated by ice box; Integrated landing complex (#); Profitability of landing complex; Mother ships constructed (#); Profit generated by mother ships; Transport boats constructed (#); Profit generated by transport boats; Profit earned by cooperatives and bonuses earned by each member; Yield for aquaculture (type of fish); Profit generated by MSEs and incr. revenue earned by each member of the cooperative or investment group; Global added value per selected sites; Incremental tax revenue generated by project-supported activities.
Resource base assessed and managed
MFW including FAs and FRA staff trained (#);
Number of policies promulgated (FMPs and FMPs regulations); Fishers with secure access to resource base (#)
Value chain diversified and upgraded
Fishers trained in fish production practices and technologies (#); People trained in infrastructure management (#); Fishers community-based organizations managing infrastructure formed and/or strengthened (#); Fishers organizations managing infrastructure (#); Fishers organizations managing infrastructure with women in leadership positions (#); Environmental management plans formulated (#); Access roads constructed (km); Storage, processing facilities constructed (#); Aquaculture operations established (#); People trained in Income Generating activities (#); People receiving vocational training (#); People trained in post production, processing (#); People trained in business/entrepreneurship (#); Enterprises accessing non-financial services (#); Enterprises accessing facilitated finance (#). Community organizations formed/strengthened (#); People in community organizations formed/strengthened (#); Community organizations with women in leadership positions (#).
Fishers adopting new technologies (#); Fishers organizations operational/functional (#); Storage, processing facilities functioning (#); Aquaculture operations operational after 3 yrs; Jobs generated by MSEs (#); Investments groups functional (#).
5
Fishers community-based organizations strengthened
Fishers organizations functional/operational (#).
Community-based organizations as shareholders of venture capital financed companies (#); Global incremental revenue for project-supported organizations; Global incremental revenue for each member of organizations.
Financial services diversified
Financial institutions participating (#); Staff of financial institutions trained (#); Active borrowers (#); Voluntary savers (#); Value of voluntary savings; Value of gross equity participation; Value of gross loan portfolio.
Improved access of fishers to financial services; PAR.
Venture capital investment (#); ROI (by type of investment); Avg. duration equity interest holding (yrs); Incremental credit financed (#, vol.); Credit financed by PFIs own resources (# and volume); Yemeni Post Office branches channelling funds for PFIs (#, vol.); Yemeni Post Office branches equipped (#); New products/services offered (#).
Inputs
(USD mil.) Investment costs Civil works Vehicle/equipment/material Training/TA/contr. services Project Funds Total investment costs Recurrent costs Salaries and Allowances O&M Total recurrent costs Total Project Cost 7 1.91 0.28 2.18 30.88 3.88 0.98 7.86 15.97 28.70
Key activities and target

1 licensing system implemented; 60 MFW Inspectors & 20 YCG Inspectors trained and able to give administrative fines when enforcing laws/regulations; 6 safety-at-sea Officers trained; > 50% of Huris, > 75% of Sambuks and 100% of mother ships and transport boats comply with safety requirement; 10 000 boats equipped with ice box in Gulf of Aden and Socotra; 3 integrated landing sites constructed and fully functional; 4 existing landing sites rehabilitated and fully functional; 5 locations equipped with public and social infrastructure; 16 transport boats and 12 mother boats equipped and operational; 8 ice plants constructed and fully operational; 300 aquaculture operations established; 360 sustainable MSEs established in coastal communities; 71 limited liability companies implemented with on-going EOF shares buy-back mechanism; 10 supply chain managers employed by processors/exporters; 10 processors/exporters engaged in contractual arrangements with fishers organizations; 28 fishers cooperatives strengthened or fishers organizations created.
Financing
IFAD IDB EU Government MFIs Beneficiaries EOF
29% 37% 17% 0.5% 2% 5% 9%
ANNEX 3: SUMMARY COST TABLES ANNEX 3.1: COMPONENT PROJECT COST SUMMARY
Republic of Yemen Fisheries Investment Project Components Project Cost Summary % Components A. Sustainable Resource Management Regulatory Compliance & Risk Management Fisheries Research & Management Subtotal Sustainable Resource Management B. Value Chain Development Value Chain Modernisation Fishers' Organisations & Financial Services Subtotal Value Chain Development C. Economic Opportunities Fund (EOF) Total BASELINE COSTS Physical Contingencies Price Contingencies Total PROJECT COSTS (YER Million) Local Foreign 132,6 645,5 778,1 3.926,9 118,7 4.045,6 736,5 5.560,2 89,5 320,8 5.970,6 185,0 137,5 322,5 323,3 87,8 411,1 210,7 944,4 26,5 7,5 978,4 Total 317,6 783,0 1.100,6 4.250,2 206,5 4.456,7 947,3 6.504,6 116,0 328,3 6.949,0 (US$ Million) Local Foreign Total 0,59 2,87 3,46 17,45 0,53 17,98 3,27 24,71 0,40 1,43 26,54 0,82 0,61 1,43 1,44 0,39 1,83 0,94 4,20 0,12 0,03 4,35 1,41 3,48 4,89 18,89 0,92 19,81 4,21 28,91 0,52 1,46 30,88 Foreign Exchange 58 18 29 8 43 9 22 15 23 2 14 % Total Base Costs 5 12 17 65 3 69 15 100 2 5 107
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 3: SUMMARY COST TABLES
ANNEX 3.2: COMPONENTS BY FINANCIER (All Figures in USD Million)

Republic of Yemen Fisheries Investment Project Components by Financiers (US$ Million) Local (Excl. Taxes) 0,59 2,90 3,49 18,39 0,56 18,96 3,94 26,39
Components by Financiers (US$ Million) A. Sustainable Resource Management Regulatory Compliance & Risk Management Fisheries Research & Management Subtotal Sustainable Resource Management B. Value Chain Development Value Chain Modernisation Fishers' Organisations & Financial Services Subtotal Value Chain Development C. Economic Opportunities Fund (EOF) Total PROJECT COSTS
IFAD Amount 1,04 0,32 1,36 5,50 0,66 6,16 1,59 9,11
% 70,1 9,0 27,0 27,6 67,8 29,4 32,2 29,5
MFIs Amount 0,76 0,76 0,76
% 3,8 3,6 2,5
IDB Amount 11,30 11,30 11,30
% 56,6 54,0 36,6
EU Amount 0,39 3,21 3,60 0,85 0,30 1,15 0,54 5,29
Beneficiaries % Amount % 26,2 90,6 71,6 4,3 31,0 5,5 11,0 17,1 1,53 1,53 1,53 7,7 7,3 5,0
EOF Amount 2,75 2,75
% 55,8 8,9
GOY Amount 0,05 0,01 0,07 0,01 0,01 0,02 0,05 0,14
% 3,7 0,4 1,3 0,1 1,2 0,1 1,0 0,5
Total Amount 1,48 3,54 5,02 19,96 0,97 20,92 4,94 30,88
% 4,8 11,5 16,3 64,6 3,1 67,7 16,0 100,0
For. Exch. 0,83 0,63 1,46 1,55 0,39 1,95 0,94 4,35
Duties & Taxes 0,05 0,01 0,07 0,01 0,01 0,02 0,05 0,14
10
ANNEX 3.3: EXPENDITURE ACCOUNTS PROJECT COST SUMMARY

Republic of Yemen Fisheries Investment Project Expenditure Accounts Project Cost Summary % % Total Foreign Base Exchange Costs 25 86 36 15 15 23 2 14 11 3 24 46 9 55 94 5 1 6 100 2 5 107
Expenditure categories I. Investment Costs A. Infrastructure B. Vehicles, Equipment and Materials C. Training, TA and Contractual Services D. Project funds 1. Financial Instruments 2. Studies Subtotal Project funds Total Investment Costs II. Recurrent Costs A. Salaries & Allowances B. Operation and Maintenance Total Recurrent Costs Total BASELINE COSTS Physical Contingencies Price Contingencies Total PROJECT COSTS
(YER Million) Local Foreign 546,8 30,8 998,5 2.978,0 614,3 3.592,2 5.168,3 342,5 49,4 391,9 5.560,2 89,5 320,8 5.970,6 182,3 189,2 572,9 944,4 944,4 26,5 7,5 978,4
Total 729,0 220,0 1.571,5 2.978,0 614,3 3.592,2 6.112,7 342,5 49,4 391,9 6.504,6 116,0 328,3 6.949,0
(US$ Million) Local Foreign Total 2,43 0,14 4,44 13,24 2,73 15,97 22,97 1,52 0,22 1,74 24,71 0,40 1,43 26,54 0,81 0,84 2,55 4,20 4,20 0,12 0,03 4,35 3,24 0,98 6,98 13,24 2,73 15,97 27,17 1,52 0,22 1,74 28,91 0,52 1,46 30,88
11
ANNEX 3.4: EXPENDITURE ACCOUNTS BY COMPONENT BASE COSTS

Republic of Yemen Fisheries Investment Project Expenditure Accounts by Components - Base Costs (US$ Million) Sustainable Resource Management Regulatory Compliance Fisheries & Risk Research & Mgmt Mgmt 0,49 0,79 0,13 0,13 1,41 1,41 0,02 0,05 1,48 0,05 0,83 0,12 0,76 2,60 2,60 3,48 3,48 0,02 0,04 3,54 0,01 0,63
(US$ Million)
Value Chain Development Fishers' Organisations Value Chain & Financial Modernisation Services 3,24 0,09 2,32 13,24 13,24 18,89 18,89 0,40 0,66 19,96 0,01 1,55 0,10 0,81 0,92 0,92 0,00 0,05 0,97 0,01 0,39
Economic Opportunities Fund (EOF) 0,17 2,30 2,47 1,52 0,22 1,74 4,21 0,07 0,66 4,94 0,05 0,94
Total 3,24 0,98 6,98 13,24 2,73 15,97 27,17 1,52 0,22 1,74 28,91 0,52 1,46 30,88 0,14 4,35
Physical Contingencies % Amount 10,0 2,6 0,1 1,9 1,8 3,4 1,8 0,4 2,7 0,32 0,18 0,01 0,01 0,52 0,52 0,05 0,56 0,00 0,12
I. Investment Costs A. Infrastructure B. Vehicles, Equipment and Materials C. Training, TA and Contractual Services D. Project funds 1. Financial Instruments 2. Studies Subtotal Project funds Total Investment Costs II. Recurrent Costs A. Salaries & Allowances B. Operation and Maintenance Total Recurrent Costs Total BASELINE COSTS Physical Contingencies Price Contingencies Total PROJECT COSTS Taxes Foreign Exchange
12
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4: DRAFT PROJECT IMPLEMENTATION MANUAL
ANNEX 4: DRAFT PROJECT IMPLEMENTATION MANUAL 1. Key elements of the project implementation manual (PIM) have been drafted and are included in this document. The manual will be finalized during the initial stages of project implementation by EOF managers and staff, with IFAD support. 2. The draft table of contents of the PIM, and the location of the relevant information within the project final design report, is presented below. The PIM will be finalized on the basis of this table of contents.
TABLE OF CONTENTS PART A: PLANNING Project Framework Project Description Organizational Set-up Costs and Financing Participants Duties, Responsibilities and TORs Economic Opportunities Fund Participating Financial Institutions Exporters/Processors & Supply Chain Managers Mobilization Teams External Service Providers PART B: OPERATIONAL PROCEDURES Implementation Arrangements Sustainable Resource Management Economic Infrastructure Value Chain Development Rural Financial Services Financial Management Project Costs & Financing Flow of Funds Bank Accounts Disbursement Procedures Audit Processes Financial Statements Closure & Completion Annual Work Plan & Budget Procurement & Contracting Procurement Procedures Procurement Plan (18 months) Targeting & Gender Mainstreaming PART C: M&E, REPORTING, SUPERVISION Monitoring & Evaluation RIMS Processes and Indicators Project Logframe Progress Reporting Direct Supervision Mid-Term Review Project Completion Report Sustainability PDR-MR PDR-MR PDR-MR PDR-MR PDR-MR & WP5 PDR-MR PDR-MR PDR-MR PDR-MR PDR-MR & WP5 PDR-MR & WP6 PDR-MR & WP5 PDR-MR & WP4 PDR-MR & WP3 PDR-MR & WP1 PDR-MR & WP2-5 REFERENCE
PDR-MR & WP3 PDR-MR & WP3 PDR-MR & WP4 PDR-MR PDR-MR PDR-MR PDR-MR PDR-MR PDR-MR PDR-MR & & & & & & & WP6 WP5 WP5 WP5 WP5 WP5 WP5
to be completed by EOF PDR-MR & WP5 PDR-MR & WP5 PDR-MR & WP1
13
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4: DRAFT PROJECT IMPLEMENTATION MANUAL
3. Key sections of the PIM are contained in the following Appendices. These and other sections are also contained in the Main Report and Working Papers, as referenced in the table above. Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix 1: 2: 3: 4: 5: 6: 7: 8: 9: 10: 11: 12: Selection Process for Exporters/Processors Cooperatives Assessment Process Selection Process for Locations of Landing Sites Establishment of Limited Liability Companies Implementation of activities under component 1 Implementation of activities under component 2 Financial Management Procurement & Contracting Procurement Plan (18 months) References/Locations for Staff Terms of Reference Monitoring & Evaluation Project Supervision
4. The Annual Work Plan and Budget for PY1 will be completed by EOF personnel, with IFAD support as required, during the projects initial phases.
14
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4 APPENDICES
ANNEX 4 - APPENDIX 1: SELECTION PROCESS FOR EXPORTERS/PROCESSORS 1. The selection of processors/exporters will be based on a public announcement for expressions of interest and an evaluation process to measure the degree of compliance with stipulated eligibility criteria. The selection criteria will include: Poverty Reduction Potential: the proportion of marginal poor, poor and very poor fishers using the auctions/landing sites from which they purchase fish. Location: Proximity to locations with potential to be used for integrated landing sites and near areas of high aquaculture potential. Transparency: transparency in their purchase pricing and transactions procedures. Contracting: their willingness to enter into contracts with fishers organisations and transfer a substantial portion of incremental value resulting from the improvement of production. Staff: their willingness to recruit and pay for supply chain managers (initially cost-shared with the project). 2. The selection process will be carried out by the EOFs Management Board. Prior to final selection, the EOFs mobilizers will visit each proposed location to analyse and verify the poverty status. Once the selection process is completed, each selected exporter/processor will sign a Memorandum of Understanding (MOU) with the EOF which describes the roles and responsibilities of all partners. The MOU will cover the following aspects: the exporter/processor will recruit a supply chain manager who will provide technical assistance to fishers/fish farmers/fish processing SMEs. the exporter/processor will cost-share the supply chain manager with the project (the projects share will reduce every year to reach 0% by year 3). the exporter/processor will enter into agreements with fishers organisations (e.g. contract fish farming agreement; tripartite agreement including a microfinance institution). the EOF will support fishers by investing in fishers organisations, executing economic infrastructure works to enhance cold chain integrity and improve handling and storage of fish and organising rural financial services for investment and working capital purposes. the exporter/processor will revise the purchase price from fishers to account for the improvement in quality of fisheries products produced. 3. An MOU will be signed by the EOF Board of Directors with each selected exporter/processor for the duration of the project. An evaluation of contractual performance will be organised annually, involving fishers, supply chain managers, exporters/processors, and the EOF. This evaluation will consist of a focus group discussion and assessment of changes in selected indicators between contract signature and the date of the evaluation. The indicators include: a/ changes in the price received by fishers for their output (changes in the breakdown of profit among the various stakeholders); b/ number of days spent by supply chain managers at cooperative-controlled landing sites, ice plants and mother-transport boats; c/ adoption rate for ice boxes and improved on-board handling (gutting and gilling at sea); d/ the change in the membership of the fishers organization, and e/ the change in the fishers net income. 4. In case of negative performance evaluation of the exporter/processor and/or supply chain managers, the EOF may terminate the cost-sharing arrangements for the supply chain managers.
15
ANNEX 4 - APPENDIX 2: COOPERATIVES ASSESSMENT PROCESS 1. Most investments considered in FIP will be implemented together with fishers organizations including already existing cooperatives. Due to the significant variation in quality of management and financial sustainability of these existing cooperatives the project will only directly support those cooperatives which have sound financial statements and governance. The following methodology will be applied and financed by the project with regards to fishers organizations: Due diligence assessment of all existing cooperatives. The EOF will recruit an audit firm through quality based selection procedures. The due diligence will focus on: Management and Board - the most important element is the assessment of the quality of the cooperative management team and its staff. Through interviews and numerous discussions, it will attempt to gauge the mission, qualifications, and overall attitude of the staff and will seek to understand the current governance structure; Financial - the financial analysis will include a thorough review of the cooperatives historical and projected financial position, including earnings potential, operating efficiency, and liquidity; Legal and tax - the analysis will focus on compliance with the Cooperative Law and regulations as well as on compliance with the Tax Law (especially the payment of the 3% contribution levied on auctioned fish and any arrears in payments and means of record keeping of weight of fish landed and value etc.); and Services offered to members - the assessment will review the different services and products offered by the cooperative to its members, their pricing, sustainability, effectiveness, monitoring and outreach. The due diligence exercise will be fully financed by the FIP and should not last more than 2 months (one day for small cooperatives and 2 days for large cooperatives);
Capacity building of selected cooperatives. Based on the due diligence exercise, the project will select cooperatives that have been assessed as mature and those which can be upgraded (developing). It will finance capacity building and advisory services in: General management of cooperative and accountability of governing body members; Financial and accounting procedures and controls; Conflict resolution; Design and implementation of new products and services for members; Pricing of products and services; Gender and environmental issues; and Policy dialogue with the MFW.
Capacity building activities will be carried out by EOF Mobilization Teams while advisory services might be provided by short-term local consultants. The project will also provide equipment (computers and other office equipment) to these cooperatives; Assistance in creating new fishers organizations. In locations where existing cooperatives do not comply with regulations and good practices or where no cooperatives exist, the project will assist the population to form its own organization. Project support will include: a/ sensitization of the population; b/ assistance for legal registration of the organization (either in the form of a cooperative or an association); c/ provision of capacity building and advisory services to governing bodies members, staff and leaders of the fishers community, and d/ training in different aspects (see strengthening of existing cooperatives). Capacity building activities will be carried out by the EOF Mobilization Teams. The project will also provide these organizations with office equipment. 2. The recruited audit firm will make 6 auditors available during 1.5 month to carry out the due diligence exercise. Prior to that exercise, the management of the audit firm and the EOF will closely work together to determine the scope of the exercise and elaborate the questionnaire and financial templates (2 persons during one month). Data processing will be carried out by the 6 auditors under the supervision of one senior auditor during 0.5 month each. Finally the data analysis, conclusions and report writing would be made by the 6 auditors (during one month) and by 2 senior auditors during an additional one month each. In total, the due diligence exercise will amount to 24.5 person-months and will last 4 months.
16
ANNEX 4 - APPENDIX 3: SELECTION PROCESS FOR LOCATIONS OF LANDING SITES 1. The project will finance the rehabilitation/construction of 7 integrated landing complexes consisting of: Public infrastructure such as a jetty, sand barrier (where appropriate), break waves and landing site with an access road linking the complex to the coastal road; Productive infrastructure such as an enclosed auction hall complete with refrigerated storage room, ice plants, and processing units. Social infrastructure such as access to electricity or to drinkable water, secondary roads, schools, or dispensaries. These infrastructures will be financed by the project on demand emanating from the fishers community after a participatory planning process carried out with the assistance of the EOF Mobilization Teams. 2. It is estimated that 3 landing sites will be constructed and 4 existing landing sites will be rehabilitated. 3. Ownership. The public infrastructure will be owned by MFW while the productive infrastructure will be owned by a private company (limited liability company) the share of which will be primarily held by the EOF, fishers organizations and eventually private investors (the latter two selected on a competitive basis). To avoid elite capture, private entrepreneurs, comprising of exporters/processors, private entrepreneurs, will not be allowed to hold more than 20% of the LLC share capital. Part of the profit earned by the fishers organizations through dividends would be used by them to gradually buy back the EOF shares at their nominal value (only fishers organizations will be eligible to the EOF shares buy back mechanism). In addition, the EOF will ensure through an adequate shareholders agreement that the fishers organization holds the majority in the share capital of the limited liability company for at least 5 years after the EOF shares have been completely bought back (avoidance of elite capture). Social infrastructure will be owned by the relevant ministry. 4. Management. Operational management of the integrated landing site complex will be vested with the limited liability company. The limited liability company will be managed by representatives from the fishers organizations with an eventual assistance from the private investor. The public infrastructure will also be managed by the limited liability company through a leasing contract to be signed between the public authority and the limited liability company. All landing site activities will also be supervised by the MFW to collect catch data; to enforce regulations, and to ensure the collection of all legally approved taxes, charges and fees. Management of social infrastructure will be vested with the relevant ministry unless otherwise agreed between the ministry and fishers communities. 5. Selection process. The selection of a landing site for project investment will be driven by the existence of a positively-evaluated fishers cooperative within the sites catchment area. Since some landing sites might be located in remote locations, it is possible that no private investor would be interested to own and operate such facilities. To avoid selecting sites without clear prospects of ownership and management, only sites where a positively-evaluated cooperative is operational will be selected. Site selection will also be based on the growth pole strategy being applied under IFADs fisheries investment in Mozambique, adapted to the Yemeni context. This strategy defines a growth pole as a development node that has accessibility to resources and markets and scope for developing services and infrastructure. Landing site locations chosen will become nodes for the development of not just fishing activities and related services but also SMEs engaged in post-harvest activities, catalysing further development in the area and multiplying the benefits of the investment. 6. The site selection process for the development of integrated landing complexes under the project is outlined in Figure 1.
17
Figure 1: Landing Site Selection Process

Step 1 Methodology Responsibility Outcome Long-list of cooperatives Assessment of all fishers cooperatives through a due diligence exercise. Priority given to Al Mahara, Shabwah, Socotra and the Red Sea. Audit firm contracted by EOF, approved by GOY and IFAD. Long-list of 25 eligible cooperatives classified as mature or potentially mature that are financially sustainable or can be strengthened to reach sustainability. The long-list will be discussed with MFW. Short-list of locations EOF staff to execute field visits to long-listed cooperatives to verify compliance with selection criteria. Within the catchment area of a long-listed cooperative: # of boats to benefit from infrastructure, within reasonable distance; # of fishers households within a reasonable distance; poverty level of fishers households (at least 70% should be poor); connection to main road, or feasibility of access road construction; sizeable market for fish within economic distance (up to 400km); availability of a site physically suitable for landing site construction; availability of environmentally acceptable site (EIA prior to civil works); current non-availability of mooring or protected beach landing site; physical condition & ownership/management of existing infrastructure; % of fishers who are members of cooperative; willingness of cooperative members to own productive assets, costshare construction, and manage the landing site complex. EOF mobilization teams. Short-list of 12 eligible geographical locations. Final list of locations (a) Short-list of locations; (b) Pre-feasibility study; (c) For locations passing (b), technical feasibility study; (d) For locations passing (c), environmental study; (e) For locations passing (d), financial viability study; EOF lead design engineer; engineering consulting companies contracted by EOF; EOF fisheries value chain manager; EOF mobilization teams. Final prioritised list of 7 sites where landing site development is technically, environmentally and financially feasible and which ranked highest of the 12 short-listed as per the criteria above. Another 5 short-listed landing sites will be supported, on a demand-driven basis, with improvements to public infrastructure at the landing site and other public services such as water and electricity.
Step 2 Methodology
Selection criteria
Responsibility Outcome Step 3 Methodology
Responsibility Outcome
7. Once the 7 sites for integrated landing complexes are selected, the EOF will issue a tender to procure an entity that will own the productive assets and manage/operate the complex. The tender will be open to the local fishers cooperative(s) or their consortia, as well as any qualified private investors/companies which may be interested i.e. processors/exporters, private entrepreneurs, private companies, private investors. However, to prevent elite capture, a/ no more than 20% of the LLC share capital will be held by third-party investors in the initial LLC share capital, and b/ a shareholders agreement will be signed between the EOF, fishers community-based organizations and third party investors to ensure that: (i) only fishers community-based organizations can buy back the EOF shares, and (ii) the majority in the share capital of any specific limited liability company will be held by fishers community-based organizations (once the EOF has entirely sold its equity participation) at least during 5 years after the last EOF share has been bought back by the fishers community-based organization.
18
8. No construction activities will commence at any landing site until all contractual arrangements for ownership and management of facilities are finalised. The project will not finance integrated landing complexes in Socotra; however, Socotra will be considered for public and social infrastructure. 9. For selected locations, the EOF Mobilization Team will also ensure that social infrastructure is identified and selected on the basis of a participatory selection process opened to the entire fishers community/communities. The EOF Mobilization team will ensure that women, poor households and young people are effectively included in the process and that their specific needs are taken into consideration and included in the selection process. 10. The same process of community mobilization for a participatory selection process will be implemented for the 5 remaining locations (those that have not been selected for the landing site construction/rehabilitation) on which social and public infrastructure will be constructed. The EOF Mobilization team will ensure that members representing the different interest groups in the community are effectively part of the selection process. The community will prioritize social and public infrastructures.
19
ANNEX 4 - APPENDIX 4: ESTABLISHMENT OF LIMITED LIABILITY COMPANIES 1. The project will support a venture capital financing mechanism for large productive investments such as: (i) fully integrated landing complexes, and (ii) mother/transport boats. The venture capital mechanism is as follows: Mother/transport boats and Ice plants The LLC share capital will amount 70% of the proposed investment. The contribution of fishers organizations in the LLC share capital will range from 5 to 50% of the amount depending on its financial and cash positions and the balance of LLC equity will be held by the EOF. The EOF will also provide to the LLC a grant the amount of which will equal 30% of the proposed investment and 100% of LLC registration costs; The management of the LLC as well as of the mother/transport boat will be vested with the fishers organizations. The project will also provide technical assistance in business management to selected members of the fishers organizations; With dividends generated by the LLC, fishers organizations will gradually buy back the EOFs shares under a pre-established put option, and eventually become the sole owner of the LLC and its mother/transport boat. Landing sites Ownership. The MFW will assume ownership of the public infrastructure, while private investor(s) (fishers cooperative, consortium of cooperatives, fish processor/exporter, or other private entity) will hold equity in a new limited liability company which will own the productive infrastructure. The LLC will benefit from all incentives stated in the Investment Law of 20098. Management. Private investor(s) will assume responsibility for operational management of the entire complex (both public and productive assets) under MFW supervision of all landing sites activities to ensure: a/ collection of catch data; b/ enforcement of all regulations, and c/ collection of legally approved tax, duties and other charges. A long-term leasing contract (at least 25 years) will be signed between the public authority (MFW or local Governor) and the LLC for the management of the public infrastructure. Shareholders and shareholders agreement. All private investors will be selected on the basis of a procurement procedure subject to IFAD concurrence. To avoid elite capture, a shareholders agreement will specify that, once the EOF has sold its shares, fishers organizations or a consortium of fishers organizations would hold the majority in the LLC share capital for at least 5 years after EOFs last shares have been bought back by fishers organizations/consortium. Financing. The public infrastructure will be financed by the project as a grant. The LLC share capital will represent 70% of the cost of the productive infrastructure. Both EOF and private investors will capitalize the LLC (fishers organizations/consortium contribution will range from 5 to 50% of the LLC share capital while the contribution of private investors exporters/processors or private entrepreneurs will be limited to 20% of the LLC share capital, the remaining share capital being held by the EOF). In addition, the EOF will finance 30% of the cost of the productive infrastructure and 100% of the cost of the LLC registration in the form of a grant. EOFs shares buying back mechanism. From the dividends distributed by the LLC to fishers organizations/consortium, these latter will be able to gradually buy back the EOFs shares under a pre-established put option. For the buy-back operation, the EOFs shares will be valued at nominal price. Dividends will be distributed according to equity held by each partner but the grant element provided by the EOF will be integrated in the share capital of the fishers organizations/consortium to maximize their profit.
2.
The legal status of the LLC provides a protection to fishers organizations members. Unlike LLC, cooperatives members are unlimitedly liable in case of losses at the level of the cooperative (all fishers organizations in Yemen have been implemented as cooperatives). To avoid such
8 Tax and financial incentives will be modified by a new Law that is going to be enacted late 2010. Tax exemption will no longer be automatic but will be performance-based. Income tax will be set at 15% and will remain the only tax to be paid on the activity (no sales tax).
20
unlimited liability of fishers organizations members in the case of unprofitable productive investment, the project will support the adoption of the LLC status for productive investments. 3. The EOF will assist the fishers communities to register each LLC at the General Investment Authority One-stop windows. Legal and operational structure of the LLC will comply with the Company Law of Yemen. Management of each LLC will be vested with fishers organization(s). In that respect, each position will be given to a member of fishers organizations and adequate training and capacity building will be provided by the EOF business advisors and contracted service providers. Trainings will include: business management, accounting, pricing, legal and tax issues. The Board of each LLC will be composed of 5 members: 3 representatives from fishers organization(s); 1 representative from the EOF, and 1 representative from the third-party investor. The Chairperson will be a representative from fishers organization(s). LLCs will be audited by an external independent audit firm to be selected by the Board Members as well as by the EOF auditors and LLCs will also be supervised by IFAD supervision missions. 4. Once the partners of the EOF have been identified, the EOF business advisors will contact the General Investment Authority nearest one-stop window to have the necessary documents required for the registration of the LLC. He will together with a representative of each partner open a bank account in the name of the LLC in creation on which each partner will deposit their share of the capital of the LLC. 5. Once the LLC is registered, the Board members will nominate the chief executive officer of the LLC who will be at the same time the chief executive officer of the landing site. The LLC will be staffed with a fish receiving inspector, fish auctioneers, ice plant supervisor, auction hall/cold store supervisor, and an accountant. Staff will be recruited from the fishers community or externally. The project will provide technical assistance, capacity building, and advisory services to ensure effective management of the LLC and landing complex.
21
ANNEX 4 - APPENDIX 5: IMPLEMENTATION OF ACTIVITIES UNDER COMPONENT 1 A. Improvement and Expansion of the Fisheries Licensing System 1. A 4 month international TA will be provided to work with the MFW and YCG to review the existing licensing system, propose necessary changes and operational modalities, forms etc. and conduct a feasibility study on introducing an annual license fee to replace the 3% levy and fund fisheries management. The licensing system should cover all relevant actors in the fisheries value chain and distinguish between: (i) harvest licenses (fisher licence, fishing vessel licence, fishing gear license); (ii) post-harvest licenses (transport vessels/mother ships, traders/processors/exporters). It is essential that the licensing system creates a means to control increases in fishing effort but is designed to avoid potential negative social consequences. Extensive stakeholder consultation will be undertaken as part of this activity. An additional 6 months of national TA will be provided (4 months in PY1 and 2 months in PY2) to support the creation of a licensing database linked to the national Fisheries Information System and provide technical support on the implementation of the new licensing system. A national awareness campaign will also be supported. In addition Registry departments in FAs and YCG branches will be provided with necessary equipment (computers, digital cameras, laminating machines). Steps, Responsibility and Financing Licensing
1 Steps Prepare TOR and hire ITA to review of existing licensing system; propose changes and develop necessary supporting regulations, operational modalities, forms etc.; prepare national awareness campaign; and conduct license fee feasibility study Prepare TOR and hire NTA to conduct national awareness campaign, develop a licensing database, train staff of MFW and YCG and support implementation of new licensing system Conduct national awareness campaign Responsible EOF, EOF-PO, MFW-PLU, Financing Timing/Deadline
Project.
Q2 2011
EOF, EOP-PO, MFW-PLU, NTA, MFW, YCG, FCU, YSEA, MFWPLU EOF, PO, CFO, CEO, MFW-PLU, MFW, YCG NTA, MFW, YCG, MFW-PLU
Project.
Q3 2011
Project.
Q3/Q4 2011
Procure necessary equipment (computers, digital cameras) for Registry departments of FAs and YCG branches Implement new licensing system
Project. Project.
Q3 2011 Q4 2011/Q1 2012
B. Streamlining Regulations and Enhancing Inspection Capacity 2. The activity will include development and implementation of an efficient, cost-effective, legally and administratively simple system of fisheries inspections and punishment of violations, to be undertaken by well-trained and formally qualified fisheries inspectors and YCG Officers. The project will finance a 3 month National TA to translate into English all existing fisheries regulations in order to facilitate the activities of this and other projects. A 5 month International TA will be provided to review all existing fisheries regulations and draft necessary amendments to remove errors or contradictory regulations. This will include reviewing and making amendments to regulations regarding fisheries inspectors to remove uncertainty about status and responsibilities of fisheries inspectors and the process of their appointment, including a requirement to pass an exam. The ITA will also draft necessary regulations to create a system of administrative fines which fisheries inspectors may administer. 3. Once this has been completed, two National TA to develop training curricula, teaching materials and examinations, to train the fisheries inspectors and to support MCS managers in the new FAs. Inspectors will be trained in one of two areas: (i) fisheries regulations; or (ii) fish quality and hygiene regulations. Successful completion of the training course and an exam will become a statutory requirement to become a fisheries inspector. The training of inspectors will last 4-6 weeks and include extensive practical and field work. Four training sessions will be supported in each FA, two (regulations and quality) in PY1 and two more (regulations and quality) in PY3 as a refresher and to train new inspectors (12 sessions in total). The project will also build capacity of the Coast Guards to enforce fisheries regulations through training including training of trainers and curriculum development for their training centre in Aden. An inspection programme including MFW inspectors and Coast Guards will be developed targeting all licensed actors across the fisheries
22
value chain. 5 months NTA will be provided for training in enforcement of fisheries regulations in PY1 and again in PY3. 4 months NTA will be provided in enforcement of fish quality and hygiene regulations in PY1 and again in PY3. The FAs will be provided with 2 vehicles each and a total of 40 motorbikes, as well as sufficient portable inspection and communications equipment for all inspectors including digital probe thermometers, measuring equipment, digital cameras and mobile phones. The success of the inspection programme will be reviewed by the NTA in PY3 and training materials updated before the second round of training courses is provided. Support will also be provided for the development of an awareness campaign to raise awareness amongst fishers of fisheries regulations and penalties for breaking them. Steps, Responsibility and Financing Regulations and Inspectors
1 2 Steps Prepare TOR and hire NTA to translate existing regulations Prepare TOR and hire ITA to review existing regulations, propose amendments and draft regulations for the introduction of a system of administrative fines Finalise regulatory changes and introduce new regulations Prepare TOR and hire NTA to develop training materials, conduct training for fisheries inspectors and YCG Officers and support development of fisheries inspection programme Procure necessary equipment for training sessions and equipment for fisheries inspectors including vehicles and motorbikes Produce training materials and conduct training sessions. Conduct awareness campaign Prepare TOR and hire NTA to review success of inspection programme, recommend changes, update training materials and conduct a second series of training programmes and awareness campaign Responsible EOF, EOF-PO, MFW-PLU EOF, EOF-PO, MFW-PLU ITA, MFW, Ministry of Interior, MFWPLU, EOF EOF, EOF-PO MFWPLU EOF, EOF-PO, EOFCFO, MFW-PLU, NTA, MFW-PLU, MFW, YCG EOF, EOF-PO MFWPLU, MFW, YCG Financing Project. Timing/Deadline Q1 2011
Project.
Q2 2011
Project.
Q3 2011
Project.
Q3 2011
Project. Project.
Q3 2011 Q3/Q4 2011
6 7
Project.
Q3/Q4 2013
C. Safety-at-Sea and Insurance 4. The project will provide 4 months International Technical Assistance to: (i) update safety-atsea and fishing vessel construction regulations; (ii) develop extension materials on safety issues for fishers and boat builders, and training materials for inspectors and licensing officers; (iii) develop adequate insurance products. As appropriate, the issuance of the vessel license will be subject to compliance with safety-at-sea requirements and boat insurance. It will also support the Coast Guard to train safety-at-sea officers responsible, among other duties, for raising awareness on safety issues among fishers through training programmes and awareness campaigns, and administering a cost-sharing system for safety equipment on small boats. The project will explore with partners, such as the Social Fund for Development, a financing mechanism for safety equipment. Vehicles and equipment will be provided to safety-at-sea officers to support their work. 5. The project will also facilitate linkages with an insurance company to introduce products such as boat, life, and credit insurance and commission technical and financial viability studies for these products. It is envisaged that the insurance products will be designed, tested and offered to fishers starting in PY1, with the development costs borne by the participating insurance company. In addition the project will work with selected cooperatives to strengthen and expand existing social welfare and insurance services they provide as part of support to be provided to cooperatives in Component 2.
23
Steps, Responsibility and Financing Safety-at-Sea

1 Steps Prepare TOR and hire ITA to update safety regulations, develop extension and training materials and train safety officers, inspectors and licensing officers. Establish financing mechanism for safety equipment with suitable domestic fund Identify YCG Officers to be nominated as safety-at-sea officers Procure vehicles and equipment for safety-atsea officers Provide training to safety-at-sea officers, fisheries inspectors and licensing officers Conduct awareness campaign, organize training sessions for fishers and distribute safety equipment Provide support to fishers in relation to safety issues including arranging training and assistance in mobilizing funding from domestic/ international sources to purchase equipment Responsibility EOF, EOF-PO, MFWPLU, MFW, YCG EOF, ITA, YCG EOF, YCG EOF, ITA, EOF-PO, YCG ITA, EOF, MFW-PLU, MFW, YCG ITA, Safety-at-sea Officers, EOF, YCG Safety-at-sea Officers, YCG Financing Project. Timing/Deadline Q2 2011
2 2 4 3 4
Project. Project. Project. Project. Project/to be identified YCG, Other donors
Q2 2011 Q2 2011 Q2/Q3 2011 Q2/Q3 2011 Q2/Q3/Q4 2011
Ongoing
D. Support to Fisheries Research Authority 6. The project will provide a total of 9 months international TA to the FRA over project years 1-4 to develop the FRA research capabilities and programme. The ITA will be coordinated with ITA to be provided by the EU under its planned support to the FRA and will support specific research projects as well as providing staff with extensive training (in quantitative analysis, bio-economic modelling, etc.) and assisting in the preparation of the FRAs research programme and coordination of donor support. The project will also support the network of research stations (Aden, Hodeidah and Mukalla) with office, laboratory and research equipment (including computers and necessary software) as well as assisting the FRA to obtain contracts to conduct research for the public and private sectors. Linkage with the Management Information System currently being developed by MFW will be ensured and support provided for regular publication of results. Facilities for fisheries research on Socotra will also be enhanced in cooperation with the EPA by providing research equipment, including EPA officers in training programmes and establishing an agreement between the EPA and FRA to share knowledge and expertise and undertake joint research programmes. The project will seek agreement for a fixed share of the licensing revenue or revenue from the 3% levy to be retained by FAs and allocated for contracting research activities by tender, providing an incentive for the FRA to produce results. Formal involvement of stakeholders in the fisheries sector in the development of management plans and, in the case of fishers, in collection of data for research purposes will be supported and encouraged through support to establishment of planned fisheries liaison groups in the Regional Fisheries Management Units of the FAs. Steps, Responsibility and Financing Support to FRA
1 Steps Contract FRA to implement Subcomponent 1.2 Fisheries Research and Management Prepare TOR and hire first ITA to undertake needs assessment, establish plan of action for project duration, assist MFW in procurement of new equipment, upgrading of facilities and establishing timetable for training and research activities, particularly the preparation of fisheries management plans and stock assessment, ensuring careful coordination and maximisation of synergies with other projects (e.g. EU baseline stock assessment study) Prepare FRA plan of action for duration of project including detailed needs assessment (training, equipment etc.), timetable for training activities and procurement of equipment, draft TOR for all necessary TA, and donor support coordination matrix Responsibility EOF, EOF-PO, EOFCFO, EOF-CEO, MFW, MFW-PLU Financing Project. Timing/Deadline Q1 2011
FRA, EOF, MFW-PLU
Project.
Q2 2011
ITA, FRA
Project.
Q2 2011
24
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4 APPENDICES Steps Support establishment of stakeholder consultation forum for fisheries management and planning Responsibility ITA, FRA, MFW, Coastal Area Management Committees, FCU, YSEA, EPA, EOF ITA, FRA, EPA, EOF, EOF-PO ITA, FRA, EPA, EOF ITA, FRA, EOF ITA, FRA, MFW-PLU, EOF ITA, FRA, EPA, EOF, MFW-PLU FRA, EOF Financing Timing/Deadline
Project.
Q2/Q3 2011
5 6 7 8
9 10
Procurement of new equipment for FRA in Aden, Hodeidah and Mukalla and EPA in Socotra First training of FRA and EPA staff according to identified priorities Finalise TOR and hire ITA for fisheries management plans Liaise closely with public and private sectors to generate contract research opportunities for the FRA Strengthen relationship with EPA through joint training and research activities Finance publication of results of research activities
Project. Project. Project. Project. Project. Project.
Q2/Q3 2011 Q2/Q3 2011 Q3 2011 on-going Ongoing Ongoing Ongoing
E. Fisheries Management Plans 7. A total of 15 months of International Technical Assistance based in Aden with frequent travel internally will be provided over PY1-PY3 in order to develop at least 6 fisheries management plans including coordination of research, policy and stakeholder consultations and providing extensive on-the-job training to FRA and EPA staff. Funding will also be provided for focused research activities in support of these FMPs and use will be made of training and equipment provided to the FRA. The TA will have a nominated counterpart from the Regional Fisheries Management Units of each FA to assist in updating/developing the FMPs, in particular with policy development and stakeholder consultation. In addition the TA will have a nominated counterpart in each branch of the FRA to coordinate the research activities to be undertaken in support of each FMP. Fisheries stakeholder liaison groups to be formed by the Regional Fisheries Management Units (RFMUs) of each Fisheries Authority will provide a forum and means of engaging stakeholders in the development of FMPs. Once implementing regulations for FMPs have been developed and approved they will be enforced by fisheries inspectors as part of their regular duties. Each TA, in coordination with his counterparts and the extension officers at the FAs will develop an extension programme and awareness campaign to inform fishers about the management plans, to discourage them from applying illegal and destructive fishing practices, and to train them in fishing methods which minimize damage to stocks and the marine environment. 8. The following FMPs have been tentatively identified as priorities: (i) Socotra archipelago; (ii) lobster in Al-Mahara/Hadramout; (iii) shrimp in Hodeida; (iv) cuttlefish; (v) sea cucumber; (vi) sharks. However final decisions on priority plans will be made during implementation based on discussions with stakeholders, who will also be closely involved in the development of the plans themselves. The EU funded Fisheries Development Project is supporting efforts to improve management of tuna therefore other species will be targeted by IFAD. Steps, Responsibility and Financing Fisheries Management Plans
1 Steps During FIP start-up workshop identify key species/areas for which management plans need to be developed Coordinate planned order of development of management plans with research activities financed by other donors to maximise synergies Procure necessary equipment for development of each management plan Identify ITA counterparts in RFMUs of FAs and in branches of FRA Responsibility FRA, MFW, EOF, FCU, YSEA, MFWPLU FRA, MFW-PLU, EOF ITA, FRA, MFW-PLU, EOF, EOF-PO, EOFCFO MFW-PLU, FRA, MFW, EOF Financing Project. Timing/Deadline Q1 2011
Project.
Ongoing
Project. Project.
Q2 2011-Q2 2012 Q2 2011
25
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4 APPENDICES Steps Finalise TOR and hire ITA to develop a specific fisheries management plan, conducting necessary research activities and providing relevant on-the-job training to staff of the FRA (X 2) Finalise TOR and hire ITA to develop a specific fisheries management plan, conducting necessary research activities and providing relevant on-the-job training to staff of the FRA (X 3) Finalise TOR and hire ITA to develop a specific fisheries management plan, conducting necessary research activities and providing relevant on-the-job training to staff of the FRA (X 1) Develop and implement extension programmes and awareness campaigns in relation to each fisheries management plan Implement regulations and monitoring programmes as prescribed in FMPs Complete annual report on each management plan including progress towards targets and recommended changes in management measures Responsibility ITA, FRA, EOF, EPA, MFW-PLU Financing Timing/Deadline
Project.
Q3 2011
FRA, EOF, EPA, MFW-PLU
Project.
Q1 2012
FRA, EOF, EPA, MFW-PLU
Project.
Q2 2012
ITA, FRA, MFW, EPA, MFW-PLU, EOF MFW, YCG, EPA, FRA, EOF
Project.
Ongoing from Q3 2011 Ongoing from approval of first FMP Ongoing from 2012
Government
10
FRA, MFW-PLU, EOF
Government
F. Stock Assessment 9. The stock assessment is likely to commence during the last stages of the baseline study (PY3) by which time licensing and inspection activities should have been completed and six fisheries management plans developed and implemented. This will demonstrate the MFWs commitment to implement improved fisheries management. The stock assessment will be conducted over a two year period and will cover the entire Yemeni EEZ. The precise format of the assessment will be based on the results of the baseline study financed by the EU which is estimated to be completed in 2013. A number of options for conducting at sea surveys are available: Purchase of a fully equipped research vessel and recruitment of international experts to support research activities. This option would enable the FRA to continue research activities following the project, however there is currently no guarantee that funding will be available in the future to maintain such a vessel and the purchase price is likely to be prohibitive. Chartering of fully equipped research vessels and recruitment of international experts to support research activities. This option would be less expensive but would leave a minimum legacy and would not increase FRAs capacity to continue research after the project. Purchase of research equipment and chartering of suitable vessel to which equipment can be temporarily attached. This option is likely to be the least costly, particularly if an agreement can be reached with the owner of the vessel to accept part payment in kind (i.e. in fish caught incidentally during research). In addition, the FRA would be left with research equipment to undertake further research in partnership with local vessels. 10. At-sea surveys would include acoustic surveys, trawl surveys and surveys and trial fishing with typical fishing gear used by local artisanal fishers. This would be combined with collaboration with fishers whereby researchers would go to sea on board ordinary fishing vessels in order to carry out biological sampling data and collect detailed catch, effort and fishing location data. A long-term rolling programme of research post-project would also be developed, in consultation with stakeholders, the MFW and the FAs. Steps, Responsibility and Timing Stock Assessment
1 Steps TBD based on the outcomes of the EU financed baseline study Responsibility FRA, MFW-PLU, MFW, EOF, Financing Project. Timing/Deadline TBC (likely 2013)
26
ANNEX 4 - APPENDIX 6: IMPLEMENTATION OF ACTIVITIES UNDER COMPONENT 2 A. Introducing Supply Chain Managers 1. The project will support the introduction of Supply Chain Managers (SCMs) who will constitute the interface between fishers organizations and selected exporters/processors where the SCMs will be based and who will share the cost of the SCMs. The exporters/processors will be selected on the basis of: a/ interest in working with fishers organisations to increase vertical integration of the supply chain; b/ commitment to offer higher prices for higher quality fish; and c/ based with catchment area of FIP supported integrated landing site. The SCMs will provide technical advisory services on a continuing basis to fishers organizations, supervise these latter to ensure compliance with the technical production parameters particularly in relation to the management of landing sites, auctions and ice plants, and also train selected members of fishers organizations in the selected locations, enabling them to provide simple advisory services to other members. The recruitment of SCMs will take place during the first two years of the project. It is expected that each selected processor/exporter will recruit one SCM, with the cost shared by the project and the processor/exporter on a declining basis (the project covering 60%, 30%, and 0% of the costs over three years). The performance of the SCMs will be evaluated annually using focus groups including processors/exporters, EOF staff, and members of fishers organizations. Continued project cost-sharing will be subject to a positive evaluation of the SCMs. Steps, Responsibility and Financing Supply Chain Managers
1 2 Steps Identify processors/exporters to be involved in the project Finalise TOR and hire SCMs Responsibility EOF, FVCM EOF, FVCM, selected processors/exporters EOF, FVCM Financing Project Project, processors, exporters (cost-sharing basis) Project Timing/Deadline Q3 PY1 Q1 PY1 Q4 PY2
Organise annual focus groups to evaluate SCM performance
Q4 of each project year
B. Upgrading of Fishing Boats and Fish Handling from Sea to Landing 2. The Project will organise fish handling training for fishers at cooperatives, landing sites and auction-sheds throughout the Project area. The fisher would be trained in gutting and removing gills immediately after the fish is caught, icing and packing the fish in the cold storage. The fishers would also be taught how to divide the ice box into sections reducing the movement of the fish during transportation avoiding bruising of the meat. The fishers would also be trained in handling the fish from the boats cold storage into standard boxes for weighing at the landing site followed by icing of the fish before transfer to the auction hall. Finally, the fishers would be taught how to clean their boats to limit contagious bacteria and germs which otherwise could contaminate the next catch. Training will be provided by a local specialist contracted by the EOF who will train the more experienced fishers among the cooperatives; these experienced fishers will then train the rest of the fishers. Training will be adapted to fish species caught locally and the types of boat in use. 3. In order to utilise this training and comply with regulations9, the project will assist boat owners from the Socotra Archipelago and the Gulf of Aden to access a micro-loan extended by a licensed micro-finance institution to purchase an insulated ice box/ install on-board cold storage facilities (boats on the Red Sea are already equipped with ice boxes). The estimated cost is USD 200 each. The project will benefit from an EU Fisheries Development Project supported study to develop ice boxes which meet the regulatory requirements and which minimise impact on boat handling and fuel consumption. The ice box will generate immediate net financial returns from an anticipated 20% increase in the value of fish landed. It is expected that these micro-loans will be uncollateralized and will be repaid within a few months. It has been estimated that around 10 000 vessels will benefit from this assistance. Fishers belonging to a catchment area of the integrated landing sites should be given priority in training, and SCMs should be involved where appropriate.
9 It is anticipated that new regulations on licensing and boat construction will require fishing boats to have cold storage, and improving enforcement of regulations on fish quality will necessitate cold storage of fish on board.
27
Steps, Responsibility and Financing - Upgrading of Fishing Boats and Fish Handling
Steps Hire NTA Awareness/Training Teams (3) to support training of fishers (and boat builders as necessary) in upgrading boats with cold storage and in proper fish handling. Training of fishers and boat builders Assist fishers to access micro-loans for ice boxes Responsibility Financing Timing/Deadline
EOF, FVCM, FMTs
Project.
Q2 PY1
2 3
NTA, EOF, FVCM, FMTs, FCU, SCM FMTs, EOF, FVCM, SCM
Project. Project.
Q2 PY1 Q2 PY2 Q2 PY1 - Ongoing
C. Transport and Mother Boats 4. Through the EOF, the project will provide equity financing for investment in mother/transport boats. The project is expected to finance a total of 28 mother/transport boats (tentatively 16 in Socotra, 6 in the Gulf of Aden and 6 in the Red Sea). These will be used by fishers who currently travel long distances in small vessels to find fish or are based far from the major markets. Each motherboat will serve a group of 9-10 smaller Huris, towing them to fishing grounds, providing large, well-insulated storage facilities, and supplying fishers with ice and services, allowing them to remain at sea for longer, reducing transport costs and improving the quality of landed catch. Other boats would also be able to offload catch onto motherboats and obtain supplies. Transport boats will be similar but will their main function will be transport of fish rather than acting as a support/supply boat. They are expected to be used by cooperatives on the Socotra Archipelago from where fishers need to transport their fish to mainland Yemen to get a reasonable price for it. On board the mother/transport boat facilities and practices will comply with food safety and hygiene standards to avoid a break in the integrity of the cold chain. Technical assistance will be provided to train and advise on food safety and hygiene standards, HACCP requirements and develop standard operating procedures, particularly for pricing and payment (voucher) mechanisms for catches transhipped from fishing boats. Up to 8 ice plants will also be financed to support the transport boats and motherships as they may operate from landing sites other than those selected as locations for the construction of integrated landing sites. 5. The financing of mother/transport boats and ice plants will follow a typical venture capital modality. The EOF will assist a fishers organization to create a limited liability company (LLC) which will own the transport/mother boats. The shareholders will be the EOF and relevant fishers organisation(s), with the mother/transport boat or the ice plant as the only productive asset of the LLC. The LLC share capital will amount 70% of the proposed investment. The contribution of fishers organizations in the LLC share capital will range from 5 to 50% of the amount depending on its financial and cash positions; the balance of LLC equity will be held by the EOF. The EOF will also provide to the LLC a grant the amount of which will equal 30% of the proposed investment and 100% of LLC registration costs; The management of the LLC as well as of the mother/transport boat or ice plant will be vested with the fishers organizations. The project will also provide technical assistance in business management to selected members of the fishers organizations; A LLC share buy-back mechanism will operate as follows - with the dividends distributed by the LLC to the fishers organizations/consortium, the latter will be able to gradually buy back the EOFs shares in the LLC under a pre-established put option, eventually becoming the sole owner of the LLC and its assets. For the buy-back operation, the EOFs shares will be valued at nominal price. Dividends will be distributed according to equity held by each partner but the grant element provided by the EOF will be integrated in the share capital of the fishers organizations/consortium to maximize their profit. 6. The appropriate transport/mother ship would be a 20 meter Abari with a crew of six, equipped with a 75hp diesel engine; an ice based cold storage with a gross payload of 25mt, galley kitchen facility to provide meals and simple deck sleeping accommodation for fishers delivering fish to the mother boat at sea. Using a fish to ice ratio of 1:1.3 the net-payload of fish would be 9mt. The choice of ice plant would depend on local requirements of capacity and availability of a suitable
28
water supply brackish or sea water would be used where there are limited local supplies of freshwater. 7. The preliminary financial analysis and business assessment of a transport/motherboat show good prospects for success both financially and developmentally. However, to ensure optimum impact, these initial analyses should be complemented by a substantial business plan for each investment acceptable to EOF and IFAD. Steps, Responsibility and Financing Transport/Motherboats
1 Steps Based on the due diligence undertaken (see below) select cooperatives eligible to jointly own transport/motherboats and ice plants Promote the concept to selected fishers cooperatives and identify those interested Hire NTAs for preparation of business plans for the transport/motherboats and for feasibility study and design of ice plants. Prepare business plans and undertake feasibility studies and design Register LLCs Hire transport/motherboat and ice plant staff Prepare contracts for construction of ice plants, tender and evaluate bids Supervision of the construction of the ice plants Hire NTAs for training of staff and HACCP certification Train ice plant staff HACCP certification of ice plants Procurement of transport/motherboats following best practice procurement rules Train captains and crew in fish handling and operation of the boat HACCP certification of the boat and crew. Assist LLCs to established vertical integration of boats to integrated landing sites and processors/exporters Responsibility EOF Financing Project Timing Q2 PY1
EOF, FVCM, SCM, FMTs EOF, FVCM, SCM NTAs EOF, PO, CEO LLC EOF, PO, CFO, CEO, LLC EOF engineers EOF, FVCM, SCM, LLC NTA NTA EOF-PO, EOF-CFO, EOF-CEO, FVCM, LLC NTA NTA CEO-FHF and FVCM, SCM
Project
Q2-3 PY1 Q3 PY1 Q3 PY2 Q3 Q3 Q4 Q3 Q4 Q3 PY1 PY2 PY1 PY2 PY1 PY2
3 4 5 6 7 8 9 10 11 12 13 14 15
Project. Project. Project. Project. Project grant, project equity and investors equity. Project. Project Project. Project. Project grant, project equity and investors equity. Project. Project. Project
Q4 PY1 Q3 PY2 PY1 PY2 Q1-Q4 PY2 Q1-Q4 PY2 Q1 PY2 Q2 PY3 Q4 PY1 Q2 PY3 PY2 PY3 PY2 PY3 PY2 Ongoing
D. Integrated Landing Complexes 8. The project will invest in the upgrading of landing sites in order to ensure cold chain integrity, improve fish handling and hygiene, provide fishers with the support services such as ice and workshops which they require. Grant-financed public and social infrastructure and equity-financed productive infrastructure will be developed at landing sites selected through the process outlined in Working Paper 1. The 7 top-ranked landing sites will be targeted with grant and equity financing for investments in integrated landing complexes, while another 5 landing sites will be upgraded with public and social infrastructure. Landing sites will not be developed, however, in the Socotra Archipelago for environmental and economic reasons; it is a UNESCO World Heritage Site, and most fish caught is transhipped at sea for transport to auction markets on the mainland. 9. Each integrated landing complex will consist of: (i) public infrastructure on public property including a jetty, a breakwater (where necessary to provide protection from waves), a sand barrier (where necessary to prevent siltation), a landing area, an access road from the landing complex to the nearest road, and basic services (water, electricity, dispensary, etc.); and, (ii) productive infrastructure within the public landing site area consisting of a fish handling facility which would include an enclosed air-conditioned auction hall, cold storage units, an ice plant, fish processing facilities and a small workshop. Facilities will be compliant with food safety and hygiene standards and HACCP requirements (for eventual certification). These complexes will enable fishers to obtain
29
higher prices (up to 30%) for catch due to improved fish quality and compliance with international standards. Integrated landing complexes will also provide safe places to moor vessels which are currently moored in exposed locations or dragged up on beaches, and will simplify the transfer of fish, ice and other goods on and off boats. The complexes will serve as focal points and catalysts for MSEs providing services to fishers or processing and trading fish products. 10. Each complex will be designed (and its construction supervised) by engineering consultants, comprehensive technical audits will be undertaken through outsourcing, and civil works will be executed by contractors. The EOF will be responsible for preparing the pre-feasibility study, drafting tender documents and supervising contractors. Each investment will be subject to a thorough Environmental Impact Assessment. 11. The development of integrated landing complexes will also follow a typical venture capital modality analogous to the musharaka (joint venture) Islamic banking product which is well known in Yemen and within fishers communities. The key elements are outlined below: Ownership. The public fisheries-related infrastructure will be owned by MFW, the social infrastructure by relevant ministries, and the productive infrastructure by a private limited liability company (LLC) the shares of which will be held by the EOF, the relevant fishers organisation(s) and possibly third party investors (such as processors/exporters). Management. The relevant fishers organisation(s) will manage the LLC, which will in turn manage the public and productive facilities of the integrated landing complex. The public infrastructure will be managed by the LLC based on a long-term leasing contract (at least 25 years) signed with MFW, while the social infrastructure will be managed by the relevant ministries unless an alternative agreement is signed with the LLC or relevant community organisation. MFW will supervise landing site activities to ensure collection of catch data, enforcement of regulations, and collection of taxes and other charges. All contractual arrangements relating to ownership and management of the integrated landing complexes will have to be finalised as an irrevocable pre-condition to civil works. Financing. The public and social infrastructure will be financed by the project on a grant basis. The LLCs share capital will amount to 70% of the cost of productive infrastructure. The contribution of fishers organization(s) in the LLCs share capital will range from 5% to 50%, depending on its financial and cash positions, while third party investors, such as processors/exporters, will not be allowed to own more than 20%; the balance of LLC equity will be held by the EOF. The EOF will also finance on grant basis 30% of the cost of productive infrastructure and 100% of the cost of LLC registration. Shareholders. All private investors (fishers organisations and third party investors) will be selected based on a competitive procurement procedure acceptable to IFAD. To prevent elite capture, the relevant fishers organisation(s) will have the option to gradually buy the EOFs shares at nominal value, possibly financed through dividend income. Other entities will not be allowed to buy the EOFs shares unless the fishers organisation(s) renounces its buy-back option. Through a shareholders agreement, the EOF will ensure that the fishers organisation(s) continues to hold the majority of the LLCs share capital for a minimum of 5 years after all EOF shares have been sold to the fishers organisation(s). 12. The LLC and landing complex will be managed by a chief executive officer supported by a fish inspector, auctioneer, ice plant supervisor, auction hall/cold store supervisor and accountant. Staff will be recruited from the local fishers community or externally. The project will provide TA, training and advisory services to ensure effective management of the LLC and landing complex. The LLC will enter into contracts with selected processors/exporters, while supply chain managers will assist the LLC to comply with international food standards and HACCP procedures. Processors/ exporters will benefit from improved access to high quality fish for export to high value markets. 13. LLC registration. The EOF will assist the relevant fishers organisation(s) to register their LLC at the General Investment Authoritys one-stop windows, while the legal and operational structure of the LLC will comply with the Company Law of Yemen. The LLCs manager and staff will be trained in business management, accounting, pricing, legal aspects and tax issues. The Board of the LLC will consist of five members, of which three (including the chairperson) from the fishers organisation, one from the EOF and one from the third party investor. The LLC will be audited annually by an independent audit firm selected by Board members and by the EOFs auditors.
30
14. Additional public and social infrastructure. Grant financing for additional public and social infrastructure will be provided at the 7 locations selected for integrated landing complexes and at 5 of the remaining short-listed landing sites. In both cases, investments will be identified in response to demand from local communities and needs identified through a participatory planning process coordinated by EOF mobilisation teams. Based on the results of the poverty assessment carried out by the mobilisation teams during the selection process for landing site locations, a cash or in-kind contribution will be required from fishers communities, particularly for social infrastructure. In most cases, contribution from beneficiaries would be in the form of labour. Steps, Responsibility & Financing Integrated Landing Complexes
Steps 1 2 3 4 Finalize landing site selection criteria Based on the due diligence assessment of cooperatives conduct landing site selection exercise in accordance with agreed criteria Issue tender to identify equity partners in LLCs to own and manage ILCs Finalise TORs and hire TAs as necessary for feasibility studies, ILC design, EIAs and preparation of ILC business plans Prepare feasibility studies, undertake ILCs design, conduct EIAs, prepare ILC business plans, undertake technical audit Register LLCs and begin capacity building and training Hire core ILC staff Prepare contracts for construction the ILCs, tender and bid evaluation Procurement of equipment for the ILC Participatory planning with communities to identify productive and social investments and Supervision of construction of the integrated ILC and construction of the ILC Train ILC staff HACCP certification of ILCs Assist to established vertical integration FHF and processors/exporter Finalise TORs and hire TAs as necessary for feasibility studies, design productive and social infrastructure, EIAs Prepare feasibility studies, design productive and social infrastructure, conduct EIAs Supervision of construction of the productive and social infrastructure and construction EOF EOF EOF EOF, SCM and CFO, CEO EOF, LLC BoD, TA from step 4 EOF, SCMs, CEO LLC BoD EOF,EOF BoD, PO, CFO, CEO, LLC BoD, EOF, PO, CFO, CEO, BoD EOF, FMT, EOF BoD EOF engineers, EOF FVCM, EOF - CEO, LLC BoD, LLC EOF, LLC, NTA EOF, LLC, NTA CEO-ILC, LLC BoD and EOF-FVCM, SCMs EOF, SCM and CFO, CEO EOF, LLC BoD, TA from step 5 EOF engineers, EOF FVCM, EOF - CEO, LLC BoD, LLC Responsible Financing Project Project. Project. Project. Timing Q1 PY1 Q1 PY1 Q2 PY2 Q3 PY1 Q2 PY2 Q3 PY1 Q3 PY1 Q4 PY3 Q4 PY1 Q3 PY2 Q1 Q4 Q1 Q4 PY2 PY2 PY2 PY3
5 6 7 8
Project. Project. Project. Project Project. Project grant financing, EOF and investors equity financing Project Project. Project grant financing, EOF and investors equity financing Project. Project. Project Project. Project. Project. Community contributions
Q1 PY2 Q4 PY4 Q2 PY2 Q4 PY2 Q2 PY2 Q4 PY4 Q2 PY2 Q2 PY5 Q2 PY2 Q2 PY5 Q2 PY2 Ongoing Q3 PY2 Q1 PY3 Q3 PY2 Q2 PY3 Q1 PY3 Q4 PY4
10
11
12 13 14 15 16 17
E. Aquaculture Strategy Development and Implementation 15. Strategy Development. An aquaculture strategy aimed at guiding all efforts concerning aquaculture development in Yemen will be developed. The strategy will be developed using The Code of Conduct for Responsible Fisheries (FAO 1995), the FAO Aquaculture Development Technical Guidelines for Responsible Fisheries N.5 (FAO 1997) and the Aquaculture Stewardship Council (ASC) standards as guiding documents. The strategy will be developed through a series of workshops in Sanaa (PY1) and Aden (PY2) involving Government (MFW, MAI, EPA, MLWE, YSMO, GIA etc.), private sector (YSEA, FCU, private investors), and civil society (womens associations,
31
NGOs) representatives from Sanaa and each coastal area (Red Sea, Gulf of Aden and Socotra) and will be revised yearly to ensure it adequately keeps up with the development of the sector. Extensive support from ITA and NTA will be given throughout the strategy development effort. 16. The strategy would consist of a core document in addition to supplements describing in more detail how Yemen will tackle each individual element. These would include: a legal and administrative framework including issues relating to land tenure and licensing; aquaculture suitability maps and an aquaculture zoning map to guide future development of the sector, including identifying areas where only small-scale production could be practiced; guidelines in aquatic animal health management and biosecurity, environmental sustainability, voluntary certification and investment promotion. The strategy will take into account the Yemeni environmental and social context in addition to infrastructure and the biological, chemical and physical requirements of the target species. Focus will be given to low-trophic species such as seaweed, sea cucumbers and bivalves. 17. Recognising that the only aquaculture research expertise in Yemen is currently hosted by the ARC, the project will support simple co-habitation trials to assess the risks associated with introduction of exotic species (especially bivalves and seaweed). In addition, support will be given to conduct need-based research aimed at exploring further avenues for the development of the Yemeni aquaculture sector. It is envisioned that some of such research projects will be focused on the potential of rearing indigenous species. 18. The FIP will finance ongoing ITA from the sustainable aquaculture specialist to support the implementation of the strategy and workshops (c.25 people) will be held annually from PY3-PY6, following completion of the initial strategy, in order to monitor progress and address problems. The location of the workshop should change annually, for example Sanaa (PY3), Aden (PY4), Hodeidah (PY5) and Mukalla (PY6). 19. Strategy Implementation. As the strategy will cover a range of areas, the FIP will focus support on implementing specific components of the strategy which are necessary for the rapid establishment of small scale aquaculture by members of the project target group. Specifically this will include: Aquatic animal health and biosecurity. Recognising the importance of proper aquatic animal health management as a competitive advantage for Yemen and the risks associated with the irresponsible introduction of exotic species, the FIP will support several activities to preserve a healthy aquaculture sector. A training courses will be organised in aquatic animal health management in Aden during PY2 (1 session, 15 participants) and laboratory disease diagnostics in Sanaa during PY2 (2 sessions on PCR and histophatology/quick mounts, 6-7 participants each). During PY3 a ring-testing exercise will also be conducted to assess validity of laboratory results. Training on aquatic animal health for farming communities will be incorporated into the training activities for aquaculture operations. The potential of profitably using local seaweed species and strains will be explored to avoid introducing exotic species to the extent possible. In addition, IRA for selected exotic species of economic value and with potential of successful farming in Yemen will also be conducted under the supervision of an IRA expert. Sea cucumber hatchery. A sea cucumber hatchery capable of providing 2.88 million juveniles per year will be established by the ARC. The model will also be used to provide potential scaling up of sea cucumber production in Yemen. FIP will provide the necessary technical support to make this a profitable and attractive investment. Any surplus production could be used to restock wild populations in closed areas established by the sea cucumber management plan to be support under Component 1 of the FIP. Support to development of sustainable aquaculture farming models. The FIP will support the implementation of surveys and EIAs in 6 pilot locations (2 for each seaweed, sea cucumbers and bivalves) for the establishment of farms and one other location for a sea cucumber hatchery. Locations will be selected as part of the process of strategy development, involving ITA, the AVCM, FMTs and local stakeholders on the basis of criteria including physical suitability and willingness of member of the local community to engage with aquaculture activities. Locally available seaweed species will be tested for suitability for seaweed farming by the YSMO who have the necessary laboratory equipment.
32
Support to establishment of sustainable aquaculture enterprises. As part of the process of selection of the 6 pilot locations, the EOFs FMTs will identify interested entrepreneurial poor women and youths, including young people working as crew on fishing boats, to establish aquaculture farms. These individuals will be assisted to form groups and trained in group management. Potential farmers will be trained in Better Management Practices (BMP) for the production of the selected aquaculture products to increase chances of success, reduce the disease risks and improve quality and the environmental and social sustainability of farming operations. Two 5-day training courses will be held at each of the 6 selected locations (12 in total), for 20-25 individuals each. The focus will be on establishing seaweed farms during PY2-3 and bivalves and sea cucumber in PY3-4. ITA from species specific specialists will be provided to develop and lead the training courses. 20. The groups will apply for credit or equity financing, depending on the nature and size of the investment. Beneficiaries will decide whether the aquaculture farm is owned collectively by the group or individually by each member. Additional TA will be offered to beneficiaries, focusing on compliance with environmental, quality and hygiene standards. They will be supported by the AVCM, FMTs and ARC staff. Supply-chain managers (SCM) embedded with processor/exporters as part of the fisheries value chain upgrading would also provide support on business planning, quality control, post-harvest handling, processing and marketing to fish farmers. It is envisioned that a total of 180 sea cucumber, 80 seaweed, and 40 mussels farms will be established. While not a core element of the project the EOFs Aquaculture Value Chain Manager would promote joint venture equity investments between processors/exporters, small-scale fish farms and the EOF to develop vertically integrated aquaculture parks. These would provide a feasible entry into aquaculture and a supportive environment for small-scale producers with little or no background knowledge. Steps, Responsibility and Financing Aquaculture Development
1 Steps Finalise TORs and hire ITA and NTA to develop strategy and legal framework for aquaculture development Organise aquaculture strategy workshop in Sanaa (PY1) and Aden (PY2) Pilot research farming of local species at ARC Test suitability of locally available seaweed species for seaweed farming. Organize cohabitation study by ARC Conducting EIA and surveys in 7 selected sites Conduct qualitative IRAs for introducing a species of bivalve and of seaweed Training course on AAH management (in Aden, for 15 people) Training on lab testing (in Sanaa, 2 sessions, on PCR and histophatology/ quick mounts. for 6-7 people each) Establish a sea cucumber hatchery to provide seed for the pilot communities Support 6 pilot communities to establish seaweed farms incl. group formation, business planning and credit 6x 5-day training courses to build capacity of farmers to produce seaweed Provide support to the 6 pilot communities to establish bivalves and sea cucumber farms including business planning, group formation and credit 6x 5-day training courses to build capacity of farmers to produce sea cucumbers and bivalves Ring testing to assess the withinlaboratory and between-laboratory repeatability of tests (PY3) Responsibility EOF, AVCM, PO CEO, ITA sustainable aquaculture in PY1 EOF, AVCM, ITA Sustainable Aquaculture EOF, AVCM, ARC, ITA EOF, AVCM, ITA seaweed, YSMO, ARC EOF, AVCM, ARC, ITA ITA and NTA, EOF, AVCM, ARC ITAs on IRA, bivalves, seaweed, AVCM, EOF ITA AAH, EOF, AVCM, DAH, MFW-PLU ITA AAH, EOF, AVCM, DAH, YMSO, MFWPLU Project, CAC Bank EOF, AVCM, SCM, ITA, FMTs, ARC Species-specific ITA, EOF, AVCM, SCM, FMTs, ARC EOF, AVCM, SCM, ITA, FMTs, ARC Financing Project Timing/Deadline For TA in PY1 by end Q2 and then ongoing Sanaa Q3 PY1; Aden Q3 PY2 Q1 PY3 Q4 PY4 Q4 PY1 Q1-Q4 PY2 Q1-Q4 PY2 Q2-PY2 (seaweed) Q2-PY3 (Bivalves) Q4 PY2 Q4 PY2
2 3 4 5 6 7 8 9
Project Project Project Project Project Project Project Project
10 11
Project Project/EOF/M FIs Project
Q4 PY2 Q1 PY3 Q2 PY2 - Ongoing
12
Q3-Q4 PY2
13
Project/EOF/M FIs
Q2 PY3 Ongoing
14
15
Species-specific ITA, EOF, AVCM, SCM, FMTs, ARC ITA Aquatic Animal Health
Project
Q3-Q4 PY3
Q4 PY3
33
F. Export and Domestic Market Expansion 21. The project will enhance access to regional and international markets for Yemeni fisheries products by supporting: (i) marketing studies in countries of strategic importance for Yemeni fish exports; (ii) the upgrading of public and private export certification laboratories; (iii) the participation of value chain stakeholders in international trade fairs; (iv) trial shipments to new markets; (v) the development of an export catalogue on international industry standards for fish products including GlobalGAP, HACCP and ISO standards; and (vi) assist fishers cooperatives to establish a system for sharing daily price information to assist in setting prices in contracts with processors/exporters. Relevant international and national technical assistance will be provided to guide this process. In addition, through the EOF business advisors, the project will assist stakeholders to develop domestic marketing strategies to reach the smaller but also lucrative domestic market. Steps, Responsibility & Financing for Export Promotion
Steps Prepare ToRs and hire NTAs to conduct marketing studies for countries of strategic importance for Yemeni fish export. Prepare ToRs, hire TAs and purchase essential laboratory equipments. Provide training to laboratories in ISO 9001 together with other identified training needs. Support MSEs, processors and exporters to participate in trade fairs and follow up with trial shipments Prepare ToRs and hire NTA for establishing an export catalogue and a webpage for public access. Prepare ToRs and hire TA to assist FCU to establish daily price-sharing system Identify domestic marketing opportunities and support MSEs, processors, fishers organizations etc. to access them Responsible EOF, FVCM, PO, CEO, YSEA and NTAs Financing Project. Timing Q1Q4 PY2
EOF, FVCM, SCM, PO, CEO, YSEA and TAs EOF, FVCM, SCM, PO, CEO, YSEA and TAs EOF, PO, CEO, YSEA and NTAs EOF, FVCM, FCU and NTAs
Project.
Q2 PY1 Q4 PY3
Project.
Q1 PY2 Ongoing
Project.
Q2 PY1
Project.
Q1 PY2
EOF, FVCM, SCM
Project
Q2 PY1 Ongoing
G. Micro and Small Enterprise Development 22. The project will support the creation or expansion of MSMEs in coastal communities, by investing in: (i) identification of profitable markets with growth potential for MSME products and services; (ii) sensitization of coastal communities and identification of interested entrepreneurial women and young labour market entrants, in particular young crew on fishing boats, based on a participatory approach; (iii) TA, advisory services, and skills/business training; (iv) credit for MSE start-up and growth extended by microfinance institutions, and (v) business services. Activities will be executed by the EOF and contracted service providers, in coordination with ongoing MSME support programmes such as the Small Micro Enterprise Promotion Service of the SFD. 23. MSMEs activities which would be supported by the project include: a/ fisheries-related activities (such as fish processing: drying, salting, smoking, fish meal), and b/ non-fisheries related activities. For the latter, no specific activities will be predetermined, only local market opportunities and demand will guide the projects support. These MSMEs will be financed through loans from microfinance institutions. Beneficiaries could be individuals or groups, with priority given to women and womens groups. Micro- and small entrepreneurs will be identified through a participatory approach targeting all fisheries/coastal communities in the Project area. 24. The identification process of potential women and men entrepreneurs will be carried out by the EOF Field Mobilization Teams. Once identified, the project will assist entrepreneurs in these areas: provision of business management training and advice including accounting, finance and marketing/commercialisation provided by the EOF business advisors;
34
provision of skill/technical training relevant to the activity he/she/they will engage in focusing on technical aspects, quality control, food safety standards and means of accessing new techniques, technologies and support, all provided by national consultants or local entrepreneurs contracted out by the EOF; following completion of trainings, provision of advisory services by international or local consultants contracted out on demand by the EOF, in order to develop business plans and draft loan applications either to a microfinance institution or to a commercial bank depending on the size of the requested loan/leasing requirement; ongoing support from the mobilization teams to ensure that lessons learnt from training are implemented and entrepreneurs are provided with appropriate support if facing challenges or issues. implementation of an awareness campaign for women and young people explaining the different possibilities to generate an alternative income within or outside the fisheries sector, the non-financial services and assistance provided by the project as well as the different financing modalities; assistance in identifying market opportunities though several market studies on potential markets for specific activities (furniture and the Fair Trade market) or on potential demand that can be met by local entrepreneurs in Yemen; assistance to obtain HACCP certification as well as the other Fair Trade certificates through the contracting of specialized international consultant whose main role will be to assist groups of women to organize their production in relation with Fair Trade demand and to organize them to manage every single activity from production to commercialization; organization of study tours and assistance to participation in international and regional fairs. Costs related to fairs will be jointly financed by the project and the beneficiaries. 25. Apart from non-financial services, the project will also assist entrepreneurs (women groups or young entrepreneurs) to finance their investment and their activities. This financing could be twofold: a/ for small investment that are below USD 5 000, the project will assist women groups and entrepreneurs to access a loan from a licensed micro-finance institution, and b/ for larger investments, the EOF will assist the women groups and entrepreneurs to establish a LLC and the investment will be financed through a venture capital operation (such as the one described above) with the same conditions for the buy-back of the EOF shares by the group/entrepreneur. Steps, Responsibility & Financing for Developing MSEs
Steps Finalise TOR and hire ITA as necessary to conduct marketing studies to identify MSE opportunities Conduct awareness campaign of the MSE support under the project, including aquaculture Finalise TOR and hire NTAs (women & men) for business administrative training for entrepreneurs, and assist them develop business plans Prepare TOR and hires NTA for conducting technical skills training for identified women, youth and men entrepreneurs in identified businesses Prepare TORs and hire NTA for conducting technical skills training for HACCP for relevant MSEs. Assist entrepreneurs to access credit from MFIs Provide ongoing support to entrepreneurs Responsible EOF Financing Project Timing Q2 PY1 Q4 PY1
EOF, FMTs
Project
Q2 PY1 Q4 PY2
EOF, FMTs, NTAs
Project.
Q1 PY2 - Ongoing
EOF, SCM, FMTs, NTAs
Project.
Q1 PY2 - Ongoing
5 6 7
EOF, FMTs, NTAs EOF, FMTs EOF, FMTs, NTAs
Project. Project. Project.
Q1 PY2 - Ongoing Q1 PY2 - Ongoing Q1 PY2 - Ongoing
35
H. Fishers Cooperatives (i) Due diligence assessment of all existing cooperatives.
26. The project needs to work with groups - it cannot deal directly with individuals. This means that suitable producers organisations need to exist and must be identified or their establishment supported. The EOF will recruit an audit firm through quality based selection procedures to conduct a due diligence exercise on all registered cooperatives. The main focuses of the due diligence exercise will include: a/ Management and Board - assessment of the quality of the cooperative management team and its staff. Through interviews and numerous discussions, it will attempt to gauge the mission, qualifications, and overall attitude of the staff and management board, and will seek to understand the current governance structure; b/ Financial - the financial analysis will include a thorough review of the cooperatives historical and projected financial position, including earnings potential, operating efficiency, and liquidity; c/ Legal and tax - the analysis will focus on compliance with the Cooperative Law and regulations as well as on compliance with the Tax Law (especially the payment of the 3% contribution levied on auctioned fish and any arrears in payments and means of record keeping of weight of fish landed and value etc.), and d/ Membership and Services offered to members - the assessment will review the socioeconomic status of members [% owners, % part owners, % crew] and examine the level of services and products offered by the cooperative to its members, their pricing, sustainability, effectiveness, monitoring and outreach. The due diligence exercise will be financed by the FIP. 27. The recruited audit firm will make 6 auditors available during 1.5 month to carry out the due diligence exercise. Prior to that exercise, the management of the audit firm and the EOF will closely work together to determine the scope of the exercise and elaborate the questionnaire and financial templates (2 persons during one month). Data processing will be carried out by the 6 auditors under the supervision of one senior auditor during 0.5 month each. Finally the data analysis, conclusions and report writing would be made by the 6 auditors (during one month) and by 2 senior auditors during an additional one month each. In total, the due diligence exercise will amount to 24.5 person-months and will last 4 months. 28. The due diligence assessment would be conducted as soon as project is effective so the cooperative ranking and assessment would be submitted to one of the first meeting of the Management Board of the EOF. The TOR for the Due Diligence exercise are provided in WP1. (ii) Capacity building of selected cooperatives
29. Based on the results of the due diligence exercise, the project in close collaboration with the MFW will select the cooperatives that have been assessed as good (or in compliance with good practices) and those which can be upgraded. The project will finance capacity building and advisory services for these cooperatives in: a/ general management of cooperative and accountability of governing body members; b/ financial and accounting procedures and controls; c/ conflict resolution; d/ design and implementation of new products and services for members; e/ pricing of products and services; f/ gender and environmental issues, and g/ policy dialogue with the MFW. Capacity building activities will be carried out by EOF Mobilization Teams while advisory services might be provided by short-term local consultants. In addition, the project will also provide equipment (computers and other office equipment) to these cooperatives. (iii) Assistance in creating new fishers community-based organizations 30. In locations where existing cooperatives do not comply with regulations and good practices or where no cooperative exists, the project will assist the local fishers to form their own communitybased organizations. Project support will include: a/ sensitization of the population; b/ assistance in the legal registration of the organization (either in the form of a cooperative or an association); c/ provision of capacity building and advisory services to governing bodies members, staff and leaders of the fishers community, and d/ additional technical training similar to that offered to the existing cooperatives. Capacity building activities will be carried out by the EOF Mobilization Teams and the project will also provide these organizations with equipment (computers and other office equipment). In this case the project needs to ensure that the new organisations are committed to project objectives and specificities and in particular its primary objective of enabling the poor to overcome poverty. The EOF Mobilization Teams will also benefit from the Unique Window of the General Investment Authority to facilitate the establishment of companies. These Unique Windows provide assistance for the registration of companies in all relevant Ministries and Administrative offices. This service is provided free of charge by a professional who also provides additional
36
advisory services with regards to accessing finance, auditing (if required). The EOF will ensure that the newly created fishers organizations take advantage of these Unique Window. 31. The project will also investigate working with the FCU to establish mentoring relationships between strong and weak cooperatives or to facilitate the expansion of strong cooperatives into areas where fishers currently do not have access to such support. (iv) Capacity building of the FCU 32. The project will provide TA and capacity building to the FCU to ensure that this latter extends adequate and relevant services to its members. The project will closely work with the current FCU management to determine the typology of services that are required by fishers cooperatives and other fishers organizations in all domains (organization, management, accounting, compliance to regulations and laws, marketing, advocacy and lobbying, training) and will assist the current management to implement these services. The project will also finance a study tour in a neighbouring country for FCU senior managers to identify the role of an apex institution and the types of services provided. Finally, the project will also finance training and equipment to the FCU to facilitate its activities. The project will also ensure that a proper financing mechanism is implement so as to ensure the sustainability of the FCU through fees paid by each of its members including newly created fishers organizations and by collecting the 2% withheld on fish auctioned. Steps, Responsibility and Financing for Fishers Cooperatives
1 2 3 Step Recruit audit firm to conduct due diligence exercise Finalise TOR and hire TA for FCU Based on results of due diligence, identify mature, developing, weak cooperatives and plan capacity building\creation of new fishers organisations. Assist in the formation of new cooperatives where necessary Undertake capacity building of cooperatives and FCU Procure necessary equipment for cooperatives and FCU Arrange study tour for FCU Management Responsibility EOF EOF, FCU EOF, EOF BoD, FCU, MFW FMTs, FCU FMTs, NTA as necessary, FCU EOF, FCU EOF, FCU Financing Project Project Project Timing/Deadline Q1 PY1 Q2 PY1 Q3 PY1
4 5 6 7
Project Project Project Project
Q3 PY1 Q2 PY1 - Ongoing Q2 PY1 - Ongoing Q3 PY1
I. Financial Institutions Outreach (i) Outreach expansion with the Post Office.
33. To facilitate the access of fishers in each fishers villages to financial products and services, the project will support the utilization of the Yemeni Post Office network by licensed microfinance institutions to channel funds to and from fishers communities. A Memorandum of Understanding has already been signed between Al-Amal Bank and the Yemeni Post Office in that perspective. Post Office branches would collect credit applications from fishers communities members or organizations, disburse loans and collect repayments and savings on behalf of project partner microfinance institutions. At least every week, the Post Office will transfer funds collected to the project partner microfinance institution nearest branch while the latter would transfer the necessary funds for approved loans. On a daily basis, each Post Office branch would also submit all relevant data on transactions related to the project partner microfinance institutions clientele. Project partner microfinance institutions would extend loans to fishers in accordance with their terms and conditions. Service fees will be paid to the Post Office from the current mark-up applied by microfinance institutions. Loans would be extended either to individual fishers with the cooperative acting as financial guarantor or to cooperatives themselves. To enable Post Office to efficiently provide services required by licensed microfinance institutions, the project will finance: a/ fully equipped computers together with internet connection; b/ training to Post Office staff, and c/ technical assistance with a view to design a data base and to adapt the Post Office software.
37
Steps, Responsibility and Financing for Financial Institutions Outreach Expansion through the Post Office
1 2 3 4 5 6 7 8 9 Step Finalize MOU between Al-Amal Bank and the Post Office Identify Post Office branches within the project area Elaborate database integrated in the Post Office MIS to record transactions with projects beneficiaries Procure computers for branches of Post Office in project area as well as internet connections Implement data base in each branch Provide training to Post Office Staff in branches located in the project area Test the database and the integration with the Post Office MIS Procure TA for reporting aspects between the Post Office branches and Al-Amal Bank Negotiate MOU with other microfinance institutions and/or commercial banks Responsibility EOF EOF EOF EOF EOF EOF EOF EOF EOF Financing Project Project Project Project Project Project Project Project Project Timing/Deadline Q1 PY1 Q1 PY1 Q1 PY1 Q2 PY1 Q2 PY1 Q2 PY1 Q3 PY1 on-going Q3 PY1 on-going PY2 on-going
(ii)
Capacity Building for Microfinance Institutions
34. The project will integrate the capacity building framework elaborated and implemented through the Memorandum of Understanding signed between AFD, KfW, GTZ, the IFC and the AlAmal Bank. This framework details specific areas for which each donor will finance capacity building in the form of training, advisory services, study tours, short- and medium-term technical assistance, and equipment. Within this framework, the project will focus on the adaptation of products and services to IFAD-funded programmes/projects beneficiaries, namely: agriculture producers (coffee, horticulture and honey producers); fishers and small and micro-entrepreneurs in aquaculture, agriculture and fisheries sectors as well as other sectors. It will focus on: a/ microloan products; b/ specific savings products; c/ leasing products, and d/ training and technical assistance to microfinance institutions staff with regards to SMEs financing. Steps, Responsibility and Financing for Capacity Building of MFIs
1 2 3 Step Sign the MOU with the Al-Amal Bank (as a partner with AFD, KfW, GTZ and the ILC) Identify products/services that require adaptation for IFAD-financed projects (EOP, FIP) Procure International and National TA to assist Al-Amal Bank to adapt its products and services to the needs of value chain stakeholders (fishers, processors, exporters, etc) and SMEs financing. Negotiate similar arrangements with other microfinance institutions and eventually commercial banks Responsibility EOF EOF, Al-Amal Financing Project Project Timing/Deadline Q1 PY1 Q1 PY1 PY1 on-going PY2 on-going
EOF
Project
EOF
Project
38
ANNEX 4 - APPENDIX 7: FINANCIAL MANAGEMENT Bank Accounts 1. Designated Accounts. The EOF will open and maintain a separate Designated Account for the funds of each external financier and of each project that it will manage and supervise. These Accounts in hard currency will be opened in commercial banks acceptable to the respective financiers. The EOFs CEO and CFO will be authorised to operate the Accounts. These Accounts will receive advance liquidity from financiers and be utilised to effect hard currency payments to contractors, suppliers and service providers, and to pre-finance local currency EOF Operating Accounts. Authorised allocations for the Designated Accounts will be set at a sufficiently high level in light of expected patterns of expenditure, withdrawal application processing timeframes and costs, and the need to ensure sufficient EOF liquidity and financial efficiency. The Designated Account for IFAD resources is expected to amount to at least USD 2.0 million. 2. EOF Operating Accounts. The EOF will open and maintain separate Operating Accounts for the funds of each financier and for each project it is managing and supervising. These Accounts in YER will be established in commercial banks acceptable to the respective financiers. The EOF CEO and CFO will be authorised to operate them. The Accounts will receive advance liquidity from the respective Designated Accounts and be utilised to effect YER payments to contractors, suppliers, and service providers, and for operating costs. The ceilings for Operating Accounts will also be set at sufficiently high levels to enable the EOF to operate rapidly and effectively. 3. EOF Revolving Fund Account. For the FIP, the EOF will open and maintain a Revolving Fund Account in YER in a commercial bank acceptable to IFAD. This Account will be used to participate in venture capital investments (LLCs) with fishers cooperatives and third-party investors. Proceeds from the buy-back mechanism applied to the EOF shares in each LLC will be used to finance additional venture capital operations, while profit generated by these investments will be deposited in the revolving Fund Account and be used to cover the EOF operating expenses. Accounting Systems and Audit 4. Accounting Systems. The EOF will adopt accounting systems consistent with international accounting standards and principles and Government requirements. It will be responsible and accountable to Government and financiers for proper use of funds in line with the respective legal agreements. The EOF will provide quarterly financial reports to the financiers as well as annual financial statements to all partners within two months of the end of each fiscal year. 5. Audit. The EOF will appoint independent auditors on annual basis, subject to financiers prior review, to audit the project accounts and financial statements for each fiscal year. The selection of the auditor and the audit process itself will comply with IFADs Guidelines for Project Audits, the requirements of co-financiers, and international auditing standards. The audit report will contain a management letter addressing the adequacy of the accounting and internal control systems, and will provide separate opinions on financial statements, sources and uses of funds, certified statements of expenditure, and operation of Designated Accounts. Audit reports will be submitted to Government and financiers within six months after the end of each fiscal year. Each co-financier may finance an annual audit specifically related to the use of its funds. The conclusions of each audit will be communicated to EOF Board of Directors as well as to other financiers. 6. The auditors will also review the financial statement of each LLC in which the EOF is holding equity. Documents to be reviewed include: financial statements, budgets, cash and financial projections. Auditors will duly depreciate the EOF equity investment portfolio if any of the reviewed investment appears not to be sustainable and to face losses. A specific provision should be included in the annual Auditors report related to the EOF investments.
39
Flow of funds 7. The flow of funds under the project is presented in the following diagram. Fisheries Investment Project - Flow of Funds
IFADAccount Currency:SDR Operatedby:IFAD EU.GrantAccount Currency:EUR Operatedby:IFAD IDBLoanAccount Currency:ISD Opera tedby:IDB
SpecialAccount IFADresources Currency:USD Operatedby:EOFCEO&CFO
SpecialAccount E.U.Grant Currency:EUR Operatedby:EOFCEO&CFO
SpecialAccount IDBloan Currency:USD Opera tedby:EOFCEO&CFO
SpecialAccount IFADResources Currency:YER Operatedby:EOFCEO&CFO
SpecialAccount E.U.GrantResources Currency:YER Operatedby:EOFCEO&CFO
SpecialAccount IDBLoanResources Currency:YER Opera tedby:EOFCEO&CFO
RevolvingFundAccount Currency:YER Operatedby:EOFCEO&CFO TwoSuba ccounts Principal Interest
RevolvingFundAccount Currency:YER Opera tedby:EOFCEO&CFO TwoSubaccounts Sharecapital Profit
Payments forcontractors a ndcivil works
Longtermdepos itin microfina nceins titutionwhere EOFholdsequity
Venturecapita linlimited liabilitycompanies
Paymentstos uppliers a nd ServiceProvidersforgoods and s ervices
PaymentsofEOFs a laries and operatingcos ts Borrowers and Borrowers 'groups
Fis hers 'coopera tives
40
ANNEX 4 - APPENDIX 8: PROCUREMENT AND CONTRACTING 1. Goods, Works and Services. The procurement of goods, works and services to be financed out of the proceeds of IFAD financing will be carried out by the EOF in accordance with IFADs Procurement Guidelines and by observing the following specific principles: Procurement would be carried out in accordance with Financing Agreement and any duly agreed amendments thereto; Procurement would be conducted within the project implementation period, except as provided under Article 4.10(a)(ii) of IFAD General Conditions; The cost of the procurement is not to exceed the availability of duly allocated funds as per the Financing Agreement; Procurement is to be consistent with the duly approved annual work plan and budget (AWP/B) including a procurement plan for at least 18 months; Procurement is to result in the best value of money. 2. Where appropriate, the procurement of goods, works and services will be carried out in accordance with the guidelines of Government and/or co-financiers as appropriate. 3. All goods, works and services procured will be exempt from duties and taxes.
4. Civil Works. All contracts for engineering design, supervision and civil works under the project will be financed directly by IDB or through the LLCs implemented for each investment. Contracts financed by IDB will be governed by IDB Procurement Guidelines. Two pre-qualification exercises (one for engineering consulting, the other for contractors) will be conducted at the outset of the project, and repeated every two years, to develop long-lists of prequalified engineering design companies and civil works contractors respectively. Both prequalification processes will be executed by the EOF Management Board on the basis of pre-determined eligibility criteria such as location, experience and capacity. Between three and six pre-qualified companies will be invited to bid for each engineering design, supervision or civil works contract. Contracts will be awarded to bidders who are responsive to the tender documents and who offer the lowest evaluated costs. Contracts to be financed by the LLCs will also be governed by the IDB Procurement Guidelines and will follow the same procedures for the selection of engineering design companies and civil works contractors. However, no payment will be processed by any LLC without prior approval from the EOF and financiers (IFAD, IDB). 5. Goods. Contracts for procurement of goods costing USD 250 000 or more will be awarded based on international competitive bidding; those costing USD 10 000 or more but less than USD 250 000 will be based on national competitive bidding; while those costing less than USD 10 000 will be based on national shopping. 6. Services. Contracts for procurement of contractual services costing USD 10 000 or more will be awarded based on national competitive bidding; while those costing less than USD 10 000 will be based on local shopping. Contracts for procurement of individual consultancy or TA services costing USD 5 000 or more will be based on national shopping, while those costing less than USD 5 000 will be based on direct contracting. These financial thresholds may be adjusted as appropriate, with prior IFAD approval, depending on the nature of the assignment. 7. Procedure. The EOF will be responsible and accountable for executing procurement in compliance with the stipulated procedures of financiers and Government. The EOF bid evaluation committee will consist of EOF staff and its composition will be determined depending on the nature of the contract. The CEO will be the signatory of all EOF contracts. The award of any contract estimated to cost more than USD 100 000 equivalent, for any category of procurement, would be subject to prior review by IFAD in accordance with the provisions of the Procurement Guidelines. 8. Contracting. Contracts for civil works will be based on unit costs and bills of quantities, while contracts for services will be based on achievement of deliverables and compliance with milestones rather than based on inputs, to the extent feasible.
41
9. Service Providers. The project will be managed by the EOF and executed by contracted service providers. Service providers will include preselected public institutions such as the FRA, FA, SMEPS and Aquaculture Research Authority, and private sector entities such as fishers organizations and their apex institution, processors/exporters, contractors, insurance firms and microfinance institutions. Service providers will be either pre-selected or procured on the basis of IFAD (or co-financiers) procurement guidelines. 10. The EOF will develop appropriate partnerships, on a case-by-case basis, in response to the effective needs of the projects target groups or to strategic programmatic considerations, rather than simply to satisfy external priorities and requirements on a supply-driven basis. 11. Exporters/processors selection. Several exporters/processors will be selected for the fisheries and aquaculture value chains by the EOF Management Board. Selection will be based on public announcement for expressions of interest and an evaluation process to measure the degree of compliance with stipulated eligibility criteria. Transparency in pricing, willingness to adopt contract farming, location of existing business relationships with fishers communities, and potential to enhance the incomes of fishers communities will constitute key eligibility criteria. 12. Fishers Organisations. The project will undertake a due diligence exercise on all registered fishers cooperatives to assess the quality of management and financial sustainability. The project will support existing fishers cooperatives that have been rated as mature and developing and will support the creation of alternative fishers organizations where cooperatives have been assessed as weak or in places where no cooperative exists. The project will also assist fishers communities to form specific groups (mainly women or young people) for smaller investments. 13. Supply chain managers. The project will assist each selected exporter/processor to recruit a supply chain manager to guide and supervise fishers organizations (for traditional fishing) and, later, fishers community groups (for aquaculture). The recruitment process will be advertised and competitive. These managers will support fishers organizations and community groups with: advisory services; specific skills training, and support to enter into contractual arrangements with exporters/producers. They will also support processors/exporters to manage contracts with producers and/or their associations. 14. Export promotion. The programme will contract an international specialised institution to develop the capacity of the Yemeni Seafood Exporters Associations to maximise export competitiveness. The quality based selection procedure for consultancy services will be applied to procure the relevant institution. 15. Insurance. The project will contract an international consultant to undertake the study on insurance products for fishers i.e. boat, life and credit insurance. To present the recommendations and outcomes of the study, the project will organize a workshop for all stakeholders during which the main features of the insurance products will be decided. A national insurance company will be selected based on an expression of interest and on the compliance to some eligibility criteria that the participants of the workshop will define. Once selected, the insurance company will work with the international consultant to finalize the design and the implementation of the insurance products. It has to be noted that these products will be compulsory for the licensing system. 16. Microfinance institutions. The project will work with the Al-Amal Bank in which the EOF holds 10% equity participation but also with other licensed MFIs. Regarding Al-Amal Bank, the project will increase the EOF shareholders account deposit to finance incremental credit for fishers and fishers organizations. As for other licensed microfinance institutions, the project may envisage to extend them a credit line the proceeds of which would be used only to finance incremental credits to fishers and their organizations. The EOF will participate in strengthening Al-Amal Bank capacities together with partners (GTZ, AFD, IFC, KfW) with focus on the development of products and services adapted to fishers and fishers communities. The EOF will sign the Memorandum of Understanding already signed by Al-Amal Bank and these organizations.
42
ANNEX 4 - APPENDIX 9: PROCUREMENT PLAN (18 MONTHS) 1. The projects 18-month procurement plan is detailed in the following tables, which indicate the required procurement actions for civil works, goods and equipment, and consultancy services. These plans have been developed to allow up-front planning and to ensure economy and efficiency in processing and the delivery of the right goods, works and services at the right time. 2. The assumptions used in the preparation of these procurement plans are as follows: to the extent feasible, goods have been bulked into annual procurement packages; goods, works and consultancy services are intended for ownership and use by the EOF. 3. Similar items have been packaged together to avoid splitting of contracts to attain economies of scale and ensure efficiency and economy in the procurement process. 4. The procurement plan is based on the following concepts.
Reference Description Estimated cost Number of Packages Procurement Method Start Date A unique reference for the procurement contract A description of the procurement contract This is the base cost and the expected physical and price contingencies for the procurement item. An estimate of the expected economical packages for the procurement items. The method of procurement as per the IFAD guidelines. The date the procurement has to be planned, including initial stages of establishing detailed requirements, preparation of bidding documents and gaining all the necessary approvals as Public Procurement Act. The expected date for opening of the bids. Domestic preference will be applicable for all ICB contracts. The award of any contract estimated to cost more than USD 100 000 equivalent, for whatever category of procurement, would be subject to prior review by IFAD in accordance with the provisions of the Procurement Guidelines.
Bid Opening Date Domestic Preference Prior Review
43
18-month Procurement Plan for Works
1aWORKS:FisheriesValueChainUpgradingInfrastructure Pack. Ref. W10 W11 W2 W3 USD Description CivilWorksonnewlandingsites CivilWorksonexistinglandingsites(rehabilitation) CivilWorksonotherlocations CivilWorksoniceplants TotalCivilWorks Unit # # # # Quantity 3 3 5 5 UnitCost 800.000 480.000 300.000 70.000 TotalCost 2.400.000 1.440.000 1.500.000 350.000 5.690.000 #of Selection Prior Domestic packs method Review Preference n.a. n.a. n.a. n.a. NCB NCB NCB NCB n.a. n.a. n.a. n.a. Yes Yes Yes Yes StartDate January2011 January2011 January2011 January2011 Technical Proposal OpeningDate April2011 April2011 April2011 April2011 EndDate June2012 June2012 June2012 June2012 Responsible Entity EOF EOF EOF EOF Remarks
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 4: APPENDICES
44
18-month Procurement Plan for Goods and Services
1bGOODSandEQUIPMENTS:FisheriesValueChainUpgradingInfrastructure Pack. Ref. G10 G11 G3 G4 USD Description Equipmentsonnewlandingsites Equipmentsonexistinglandingsites(rehabilitation) Equipmentsoniceplants Equipmentsonmothershipsandtransportboats TotalGoodsandEquipmentsrelatedtoCivilWorks Unit # # # # Quantity 3 3 5 17 UnitCost 640.000 511.000 86.000 85.000 TotalCost 1.920.000 1.533.000 430.000 1.445.000 5.328.000 #of Selection Prior Domestic StartDate packs method Review Preference n.a. n.a. n.a. n.a. NCB NCB NCB NCB n.a. n.a. n.a. n.a. Yes Yes Yes Yes January2011 January2011 January2011 January2011 Technical Proposal OpeningDate April2011 April2011 April2011 April2011 EndDate June2012 June2012 June2012 June2012 Responsible Entity EOF EOF EOF EOF Remarks
2GOODSandEQUIPMENTS Pack. Ref. G10 Vehicles G11 Motocycles G20 G21 G22 G23 G24 G25 G26 G27 Computers Laptops Officeequipment Officefurniture Otherequipment:licensinginspectors Otherequipment:researchstation Otherequipment:laboratory Otherequipment:projectliaisonunit TotalGoodsandEquipments
45
USD Description Unit # # # # LS LS set set set LS Quantity UnitCost TotalCost
#of Selection Prior Domestic StartDate packs method Review Preference ICB ICB NCB NCB NCB LS LS NCB NCB NCB Yes Yes No No No No No No No No n.a. n.a. n.a. n.a. n.a. Yes Yes n.a. n.a. n.a.
21 28.000 588.000 n.a. 40 3.000 120.000 n.a. 46 1.800 82.800 12 2.000 24.000 67.500 21.000 80 200 16.000 4 30.000 120.000 3 30.000 90.000 15.000 1.144.300 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Technical Proposal OpeningDate January2011 March2011 January2011 March2011 January2011 January2011 January2011 January2011 January2011 January2011 January2011 January2011 February2011 February2011 February2011 February2011 February2011 February2011 February2011 February2011
EndDate June2011 June2011 April2012 April2012 April2011 April2011 April2011 April2011 April2012 April2011
Responsible Entity EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF
Remarks
18-month Procurement Plan for Consultancy Services

3CONSULTANCYSERVICES Pack. Ref. C1 C1.1 C1.1.1 C1.1.10 C1.1.11 C1.1.12 C1.1.13 C1.1.2 C1.1.20 C1.1.21 C1.1.22 C1.1.23 C1.1.3 C1.1.30 C1.1.32 C1.1.33 C1.1.4 C1.1.40 C1.1.41 C1.1.43 C1.2 C1.2.1 C1.2.10 C1.2.11 C1.2.3 C1.2.30 C1.2.31 C1.2.32 C1.2.33 USD Description SustainableResourceManagement RegulatoryComplianceandRiskManagement LawandRegulatoryEnforcement InternationalT/A NationalT/A Awarenesscampaign Trainingandworkshops Licensing InternationalT/A NationalT/A Awarenesscampaign Trainingandworkshops SafetyatSea InternationalT/A Awarenesscampaign Trainingandworkshops(incl.Equipment) Insurance InternationalT/A NationalT/A Workshop Subtotal FisheriesResearchandManagement SupporttoFisheriesResearchAuthorities InternationalT/A Training FisheriesManagementPlans InternationalT/A Awarenesscampaign Training Studies Subtotal TotalComponent1 Unit Quantity UnitCost TotalCost #of Selection Prior Domestic bid method Review Preference packs StartDate Technical Proposal OpeningDate EndDate Responsible Entity Remarks
P/M P/M camp. session P/M P/M camp. session P/M camp. session P/M P/M session
5 12 1 7
20.000 6.000 20.000 3.300
100.000 72.000 20.000 23.100
1 1 1 1 1 1 1 1 1 1 1 1 1 1
ICB QCBS QCBS QCBS ICB QCBS QCBS QCBS ICB QCBS NCB ICB QCBS LS
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Yes Yes
January2011 January2011 January2011 January2011 January2011 January2011 January2011 January2011
February2011 February2011 February2011 February2011 February2011 February2011 February2011 February2011
June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012
EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF
4 20.000 80.000 6 6.000 36.000 2 20.000 40.000 37.000 3 20.000 60.000 1 20.000 20.000 130.000 6 20.000 120.000 9 6.000 54.000 4.500 796.600
Yes Yes
Yes
January2011 February2011 January2011 February2011 January2011 February2011 January2011 February2011 January2011 February2011 January2011 February2011
46
Yes Yes
P/M session P/M camp. session study
5 20.000 100.000 2 4.000 8.000 13 5 5 5 20.000 20.000 4.000 20.000 250.000 100.000 20.000 100.000 578.000 1.374.600
1 1 1 1 1 1
ICB QCBS ICB QCBS QCBS QCBS
Yes Yes Yes Yes Yes Yes
January2011 February2011 January2011 February2011 January2011 January2011 January2011 January2011 February2011 February2011 February2011 February2011
June2012 June2012 June2012 June2012 June2012 June2012
EOF EOF EOF EOF EOF EOF
Yes
18-month Procurement Plan for Consultancy Services (contd)

3CONSULTANCYSERVICES Pack. Ref. C2 C2.1 C2.1.1 C2.1.10 C2.1.11 C2.1.12 C2.1.13 C2.1.14 C2.1.15 C2.1.2 C2.1.20 C2.1.21 C2.1.22 C2.1.23 C2.1.24 C2.1.3 C2.1.30 C2.1.31 C2.1.32 C2.1.33 C2.1.4 C2.1.40 C2.1.41 C2.1.42 C2.1.43 C2.2 C2.2.1 C2.2.10 C2.2.11 C2.2.13 C2.2.2 C2.2.20 C2.2.21 USD Description ValueChainDevelopment ValueChainModernization FisheriesValueChainUpgrading NationalT/A SupplyChainManagers Training EnvironmentalImpactAssessment Design/Supervisionnewlandingsites Design/Supervisionlandingsitesrehabilitated AquacultureDevelopment InternationalT/A NationalT/A Trainingandresearch Implementationtraining EnvironmentalImpactAssessment ExportPromotion InternationalT/A NationalT/A Studies Training SBMDevelopment InternationalT/A NationalT/A Awarenesscampaign Studytour Subtotal Fisheries'OrganizationandFinancialServices Creation/StrengtheningofCBOs InternationalT/A NationalT/A Studytour FinancialInstitutionsOutreach InternationalT/A NationalT/A Subtotal TotalComponent2 C3 C3.1 C3.2 C3.3 C3.4 C3.5 C3.6 EconomicOpportunitiesFund InternationalT/A EOFMobilizationTeams Baselinesurvey Startupworkshop Training Audit TotalComponent3 TotalConsultancyServices P/M LS survey workshop LS audit 4 20.000 Unit Quantity UnitCost TotalCost #of bid packs Selection method Prior Review Domestic Preference StartDate Technical Proposal OpeningDate EndDate Responsible Entity Remarks
P/M P/M LS assessment study study
4 78
6.000 800
3 3
47.000 29.000 20.000 6.000
24.000 62.400 10.000 127.500 141.000 87.000 280.000 48.000 37.000 10.000 50.000 112.000 84.000 210.000 20.000 40.000 48.000 30.000 10.000 1.430.900
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
QCBS IC QCBS QCBS LS LS ICB QCBS QCBS QCBS QCBS ICB QCBS ICB QCBS ICB QCBS QCBS LS
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No
Yes Yes Yes Yes Yes Yes
January2011 February2011 April2011 May2011 January2011 February2011 April2011 May2011 January2011 April2011 January2011 April2011 January2011 February2011 January2011 February2011 January2011 February2011 June2011 July2011 April2011 May2011 April2011 April2011 April2011 April2011 April2011 April2011 April2011 April2011 May2011 May2011 May2011 May2011 May2011 May2011 May2011 May2011
June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012 June2012
EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF
P/M 14 P/M 8 LS LS assessment P/M P/M study LS P/M P/M camp. tour 6 14 3
Yes
Yes
20.000 6.000 70.000
Yes
2 8 2 2
20.000 6.000 15.000 5.000
47
Yes Yes Yes
P/M P/M LS P/M P/M
2 51
20.000 6.000
40.000 306.000 10.000 180.000 102.000 638.000 2.068.900
1 1 1 1 1
ICB QCBS LS ICB QCBS
Yes Yes No Yes Yes
Yes Yes
January2011 February2011 January2011 February2011 January2012 February2012 January2011 February2011 January2011 February2011
June2012 June2012 June2012 June2012 June2012
EOF EOF EOF EOF EOF
9 17
20.000 6.000
Yes
80.000 570.000 1 40.000 40.000 1 50.000 50.000 30.000 2 15.000 30.000 800.000 4.243.500
1 1 1 1 1 1
ICB IC QCBS QCBS QCBS QCBS
Yes No Yes Yes Yes Yes
Yes
Yes
January2011 January2011 January2011 January2011 January2011 JunePY1
June2012 June2012 February2011 December2011 February2011 December2011 February2011 June2012 JunePY2 JunePY3
February2011
EOF EOF EOF EOF EOF EOF
ANNEX 4 - APPENDIX 10: REFERENCES/LOCATIONS FOR STAFF TERMS OF REFERENCE 1. The complete and detailed terms of reference for all managerial and staff positions under the programme have been prepared and are contained in the working papers. The specific position, and the location of its detailed terms of reference, is indicated below. Working Paper 1: Working Paper 2: Field Mobilisation Teams Fisheries Management Specialist (ITA) Fisheries Legislation/MCS Specialist (ITA) Public Administration Specialist (NTA) Database Development Specialist (NTA) Legal Translator (NTA) Fisheries Inspection Trainer/MCS Specialist (NTA) Fisheries Inspection Trainer/Quality Control Specialist (NTA) Safety-At-Sea Officer EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF EOF Board of Directors Chief Executive Officer Fisheries Value Chain Manager Aquaculture Specialist Chief Financial Officer Chief Procurement Officer Lead Design Engineer Lead Construction Engineer Rural Finance Manager Venture Capital Specialist Mobilisation Officer Senior M&E Officer Assistant M&E Officer Accountant Internal Auditor Policy Advisor Manager of the Project Liaison Unit
Working Paper 5:
Working Paper 3:
Fisheries Supply Chain Manager Senior Management Staff of Fish Handling Facility Manager Deputy Manager/Food Technologist Auctioneer Accountant Field Engineer Formulation of Aquaculture Strategy and Legislative Framework Sustainable Aquaculture Specialist (ITA) Post-Harvest and Marketing Specialist (ITA) Aquatic Animal Health Specialist (ITA) Import Risk Assessment Specialist (ITA) Bivalve Aquaculture Specialist (ITA) Seaweed Aquaculture Specialist (ITA) Sea Cucumber Aquaculture Specialist (ITA) Agriculture and Fisheries Legal Specialist (NTA) GIS and Planning Specialist (NTA) Aquatic Environment Specialist (NTA) Communication Specialist (NTA)
48
ANNEX 4 - APPENDIX 11: MONITORING & EVALUATION 1. The M&E system will aim to ensure that the project is implemented as planned, is effective, is producing the intended impact for beneficiaries, is relevant for beneficiaries, and is able to identify the necessary corrections needed to keep progress on track. The system will be divided into two key inter-linked functions progress monitoring and evaluation (impact assessment). 2. Progress Monitoring. This relates to the collection of qualitative and quantitative data on project activities, inputs and outputs that can help project management to self evaluate and improve performance. Progress monitoring will be undertaken by the EOF, by service providers, and by beneficiaries. It will involve the collection and processing of data on inputs and outputs, and the analysis and consolidation of data at Governorate and programme levels. 3. Evaluation. This relates to the regular review and evaluation of the performance, relevance and sustainability of programme activities and the changes occurring in beneficiary living standards. It will be undertaken through: regular data collection and analysis; special studies; beneficiary participatory assessment; and, preparation of the project completion report. 4. External M&E. The project will be externally monitored and evaluated by IFAD through various measures, including: annual IFAD supervision and follow up missions; RIMS impact surveys (at mid-term and completion); the Mid-Term Review exercise (at end-PY3 or beginningPY4); the Programme Completion Report exercise; any thematic or diagnostic studies; and, annual independent audit exercises. Cofinanciers will also evaluate the programme with focus on the use of their funds in compliance with the respective legal agreements. This may be achieved through participation in supervision missions and the mid-term review, and annual audit exercises. A. The Operations of the M&E System 5. The responsibility for project M&E activities will rest with the M&E Officer and assistant (MEOs) within the EOF. The MEOs will be under the supervision of, and will report directly to, the Chief Financial Officer. The M&E assistant will be responsible for collecting and initially analysing data gathered from service providers in each governorate on the basis of an agreed reporting format and timeframe. The MEO will provide support, consolidate and further analyse data, and prepare project reports. All M&E activities will be based on the IFAD Guide for Project M&E. 6. At project start up, the EOF will recruit an experienced international M&E consultant, with suitable qualifications and experience, for a short term contract (max. 2 months) to help develop a comprehensive M&E system, including indicators and reporting formats for service providers. 7. The projects M&E system is designed to offer comprehensive and reliable information to improve decision-making for results-based management. Considering the projects nature and the extent to which impact depends on improved value chain competitiveness, beneficiary investment and marketing decisions, the system will be participatory and decentralised, actively involving target groups and executing partners. The logical framework will constitute the basis for resultsbased M&E, and includes an initial list of indicators to track progress and achievements. The EOF, through its M&E officer, will be responsible for establishing and maintaining the system. All M&E data, analysis, and reporting will be disaggregated by gender. 8. The M&E system will have a three-level structure. The first level - output monitoring - will focus on physical and financial inputs, activities and outputs. Data will flow directly from records at different management levels (EOF, PFIs, service providers, etc.) as well as from the periodic reporting of management and executing partners. Simple indicators will be agreed at start up and monitored on quarterly basis. They will include relevant first level indicators of IFADs Results and Impact Management System (RIMS). AWPBs will provide the targets for first level monitoring. 9. The second level - outcome monitoring - will assess the use of outputs and measure their benefits at beneficiary and value chain levels. At beneficiary level, it will focus on the accessibility of project outputs and the extent to which they provided benefits to target groups in terms of access to finance, services, secure/remunerative markets. It will also include SMEs achievements in terms of returns, added value, direct and indirect job creation, and prospects for sustainability.
49
10. At value chain level, the system will focus on incremental returns, margins and value added generated at each strategic value chain link, and on the distribution of benefits for the key actors. It will be based on a variety of targets and performance indicators identified in the course of value chain analysis and agreed with stakeholders. Key performance indicators may include the volume and value of commodities traded, actual market outlets, improved value chain performance (e.g. increased quality products sold on international markets, cost of production, marketing costs), profit distribution among value chain actors, and value chain efficiency/ effectiveness relative to targets and sub-sector norms. At this level, M&E will include indirect beneficiaries and job creation effects. Performance indicators will be compared with historical values, related initiatives, and expected targets. This level will include relevant second level RIMS indicators. 11. Fishers communities, mobilisation teams and supply chain managers will be responsible for data collection and participatory data analysis. In collaboration with staff and beneficiaries, the M&E officer will develop templates and methods for data collection and analysis. Benchmark data will also be derived from value chain analyses, infrastructure investments and venture capital feasibility studies. Data collection will be periodic while participatory analysis and reporting will be annual through workshops, with the results fed into AWPBs and progress reports. Annual workshops will be undertaken with stakeholders to draw lessons, allow participatory evaluation, and formulate recommendations for improvement. This will allow assessment of project progress towards the achievement of objectives, enabling EOF management, beneficiaries and stakeholders to take corrective measures as appropriate. All data collected will also be cross-checked with statistics collected by FA Inspectors. These statistics transmitted by each FA to MFW will be collected by the Project Liaison Unit and communicated to the M&E manager. 12. The third level impact assessment - will assess project impact for the target group in comparison with objectives. It will focus on higher level impact indicators such as household incomes, employment conditions, gender equality and opportunity, fishers community poverty status, and changes in resource management. It will be based on a sampling universe consisting of selected zones in the maritime nine governorates that will remain constant during the life of the project. Economic multiplier analysis will be applied to assess the wider impact on the rural economy generated by the project. Impact assessment will also assess the institutional, policy, and industry changes arising from the project with respect to the increased competitiveness of fisheries value chains (both wild caught and aquaculture) and their impact for the rural poor. The EOF will conduct a formal impact assessment in the projects final stages, which will include an assessment of achievements, capturing of lessons and best practices, and analysis of prospects for sustainability. This will be undertaken jointly with stakeholders and beneficiary organizations. 13. Performance Questions and Indicators. Performance indicators and means of verification are included in the design document and logical framework. The MEOs will have the opportunity (jointly with stakeholders) to examine them during the start-up workshop and modify them, if necessary, by framing performance questions and identifying the response indicators required. Each component/sub-component should be monitored at the progress and effect/impact levels. 14. Rural Enterprise & Microfinance Development. PFIs will be responsible for monitoring of the portfolio financed through funds on-lent by the EOF either under the form of equity participation and shareholders current account or in the form of credit lines, using their own systems. PFIs will report to the EOF and the Micro Finance Information (MiX) market. Attention will be paid to reporting on the percentage of target clients (by gender) able to access credit, the number and volume of loans (by gender) and the portfolio at risk. Specific focus will be placed on new products and services and the number of target beneficiaries having access to them. 15. RIMS. Since 2004, IFAD has promoted RIMS as a standardised system of reporting results and impact which all IFAD-funded operations must adhere to. RIMS is intended to measure project results at the three levels of the logical framework concerned with outputs, effects and impact. It relies on specific indicators as instruments to measure results at each level. The projects M&E system is designed to include appropriate RIMS indicators. IFAD requires each project to report on RIMS indicators annually each March; there is a specific reporting format, and reports should be compiled from data contained in the M&E reports and sent to IFAD. All indicators utilised will be socially and gender sensitive and disaggregated by gender and socio-economic category to ensure that the project is reaching its intended target beneficiaries.
50
16. The project will also utilize locally adapted RIMS impact surveys at baseline, mid-term, and completion as the main quantitative survey tools; these surveys will be carried out in locations where landing complexes and aquaculture farms have been implemented and developed. This will allow simple, cost-effective and relevant process of data collection, evaluation, and impact assessment. Under the guidance of the M&E officer, EOF mobilisation teams and supply chain managers will be responsible for undertaking these surveys. 17. Participatory Monitoring. The project will seek feed-back from its intended beneficiaries to ascertain whether it is reaching them and delivering support which is effective, sustainable and effective. Participatory community based monitoring will be an important part of the overall M&E approach in generating learning. Involving community members (at settlement, landing site or PA level) in identifying how they view and judge the activities and impact will be a valuable learning exercise for EOF and partners such as exporters/processors. It will help coastal communities to better understand the project, and will help the project to better appreciate their expectations. It will also help other stakeholders to fine-tune services and products to these expectations, and will provide a foundation for a participatory approach to reviewing performance. Participatory monitoring will be organised by the EOF through: (i) on-going exchange of experiences among the population, EOF staff and service providers; (ii) specific meetings to assess priorities, successes, failures and underlying reasons; (iii) annual assessment or annual reviews of activities and plans. 18. Annual Participatory Assessments. An annual meeting will be held at several landing sites in each governorate as an opportunity for participatory M&E. This will commence about one year after effectiveness in the selected areas, as an occasion in which to evaluate the past years activities and to make necessary adjustments for the future. These meetings will be organized appropriately to promote maximum participation of beneficiaries, EOF staff, and service providers. The agenda for such meeting may include: (i) analysis of the successes, failures and problems of implementation of the previous year; (ii) discussion of the relevance of activities of the previous year, and recommendation on continuation, modification or abandonment; (iii) assessment by EOF and selected communities of their own and EOF staff performance, and recommendations for improvement; (iv) assessment of quality and quantity of work executed by each service provider, and recommendations for improvement; (v) proposal for new activities, and preliminary assessment of their relevance and their technical and financial feasibility; and, (vi) assessment of targeting of previous year activities and recommendations for improvement. B. Establishment of the M&E System 19. Start-up Workshop. The project will conduct, at its outset, a Start-up Workshop, with the aim of sensitizing EOF staff, service providers and beneficiary organizations regarding programme objectives and scope. At this workshop, the logical framework will be reviewed and M&E indicators defined. The workshops timing and agenda will be agreed between Government and cofinanciers. 20. Baseline Survey (BLS). As M&E is concerned with changes in the beneficiary situation over time, it involves making comparisons to assess changes taking place during the programme life. To facilitate this comparison, a BLS will be conducted by the EOF in selected locations to assess the physical and socio-economic status of the settlements and their households and to define their bench status before the project execution. The BLS will focus on collecting data related to indicators identified in design (as modified at the Start-up workshop). This survey will be undertaken in collaboration with an appropriate institution or consultant. 21. Mid-Term Review. An MTR will be conducted during the third year of implementation. Its coverage will include: (i) physical and financial progress in comparison with AWPBs; (ii) the performance of service providers; (iii) an assessment of the results of technical assistance and training activities. It will also look at emerging institutional and policy changes with respect to national policy on stock assessment and fisheries management plans; law enforcement, and participation of fishers organizations in infrastructure ownership and management. 22. Special Studies. Ad hoc surveys, qualitative case studies and thematic reviews may also be carried out to capture lessons from experiences on themes such as market access. They will be outsourced by the EOF. The project will closely monitor with the FRA and MFW the results and achievements of fisheries management plans and their impact on fish stocks and fishers incomes.
51
23. Project Completion Report. At the end of the project a PCR will be undertaken through a formal survey by an agency without previous involvement in implementation. It will examine the overall performance of the project taking into account a broader and longer term perspective. 24. Knowledge Management. The IFAD Yemen team will organise annual national project implementation workshops allowing project staff, cofinanciers, partners and service providers to communicate and share lessons learned. The project will also make use of the on-going IFADsupported regional network Karianet to share experiences with IFADs NENA operations. 25. Supervision Arrangements. The project is directly supervised by IFAD; the IFAD Yemen country team will be responsible for supervising the project. There will be one full supervision mission complemented by one follow up mission per year. 26. Project Reporting System. Reporting is the backbone of the M&E system. EOF will be responsible for operating a reporting system to track physical/financial performance and emerging impact. Three reports will be produced: a monthly progress report by each service provider and executing partner; a semi-annual progress report; an annual progress report. C. M&E Indicators 27. The M&E indicators that will be used to monitor and evaluate the project are outlined below.
Activity Policy Dialogue and Enforcement Inspectors in each FA (#); Annual inspections (#); Fines extended (# and volume); Boats licensed (# by type of licenses); Other fisheries stakeholders licensed (#by type); Annual license fees amount; % of license fees allocated to MFW and MoF; Cost of license (by type of boat and gear); Safety-at-sea Officer (#); Boats equipped with safety equipment (#); Reported accidents (# and casualties); Boats insured (#); Life insurance (#); Insurance claim payout (# and amount).
Resource Assessment and Management % of FRA budget covered by external funds; Research mandated by FAs (#); Stocks with updated biological status (#); Publications by FRA (#); Value Chain Diversification and Upgrading Boats equipped with ice box (#); Incr. revenue generated by ice box for the boat; Integrated landing complex rehabilitated (#); Global profitability of landing complex; Mother ships constructed (#); Profit generated by mother ships; Transport boats constructed (#); Profit generated by transport boats; FRA participations to fora (#); Meetings of the Fisheries Stakeholders Liaison Group (#);
Global profit earned by cooperatives and bonuses earned by each member; Yield for aquaculture (per type of fish); Global profit generated by MSEs and incremental revenue earned by each member of the cooperative or investment group; Global added value per selected sites; Incremental tax revenue generated by projectsupported activities. Fishers community-based organizations strengthening Global incremental revenue for each member of organizations.
Community-based organizations as shareholders of venture capital financed companies (#); Global incremental revenue for project-supported organizations; Financial services diversification Venture capital investment (#); ROI (by type of investment); Average duration of equity interest holding (yrs); Incremental credit financed (# and volume); Credit financed by PFIs own resources (#, vol.).
Post Office branches channelling funds for PFIs (# and volume); Yemeni Post Office branches equipped (#); New products and services offered (# by PFI).
52
D. RIMS indicators 28. The M&E system for IFAD-financed projects is required to include among its M&E indicators the appropriate first, second and third level RIMS indicators (taken from the standard list compiled by IFAD) depending on the nature and scope of the programme. The inclusion of RIMS indicators in the M&E system will facilitate the computation and reporting on RIMS at the end of each year. 29. First-Level Results. First-level indicators measure quantitative financial and physical progress. First level results are reported annually starting from the end of PY1. They include: Total project outreach Individuals, households, groups and communities receiving project services (disaggregated by gender and poverty level) Households with increased income and improved food security Fisheries Authorities inspectors trained Fisheries Authorities safety-at-sea officers trained Licensing department staff trained MFW staff trained MFW (including FAs and FRAs) staff trained Fishers trained in fish production practices and technologies People trained in infrastructure management Fishers organisations managing infrastructure formed and/or strengthened Fisher organisation managing infrastructure with women in leadership positions Environmental management plans for landing sites formulated Access roads constructed Storage, processing facilities constructed or rehabilitated Aquaculture operations established People trained in income generating activities People receiving vocational training People trained in post-production processing People trained in business and entrepreneurship Enterprises accessing facilitated non-financial services Enterprises accessing facilitated financial services Community organisations formed/strengthened People in community organisations formed/strengthened Community organisations with women in leadership positions Financial institutions participating in the programme Staff of financial institutions trained Voluntary savers Value of voluntary savings Active borrowers Value of gross loan portfolio Value of gross equity participation
Regulatory Compliance and Risk Management -
Resources Assessment and Management Value Chain Diversification and Upgrading -
Fishers Community-Based Organisations Strengthened -
Financial Services Diversified -
30. Second-level results. Second-level indicators measure improved functionality or behavioural change, namely the effectiveness of interventions in terms of delivering the expected benefits and the likely sustainability of these benefits in the longer term. Second-level results are
53
more qualitative and take longer to realize. They are reported starting from mid-term. The actual ratings are reported in terms of effectiveness or sustainability; the rating for effectiveness and sustainability is arrived at by analyzing a number of supporting indicators shown below, of which some are first-level RIMS indicators, some are part of the M&E system, and some are second-level indicators that can be reported when data is available. Effectiveness and sustainability ratings may also require data from special studies, surveys or existing secondary sources. Total project outreach Economically sustainable fully integrated landing complexes in production Economically sustainable mother ships and transport boats in operation Economically sustainable aquaculture package in production Viable micro-businesses after 3 years Full-time jobs created; share of jobs for women and those in the lowest income groups Fisheries Management Plans implemented Licensing policy promulgated Allocation of licensing fees decree promulgated Creation of safety-at-sea officer decree promulgated Inspector final exam validated Number of policies promulgated Fishers with secure access to resource base Fishers adopting recommended technologies Fishers organisations operational/functional Storage, processing facilities functioning Aquaculture operations operational after three years Jobs generated by MSEs Investment groups functional Fishers organisations functional/operational Improved access of fishers to financial services PAR
Regulatory Compliance and Risk Management -
Resources Assessment and Management -
Value Chain Diversification and Upgrading -
Fishers Organisations Strengthened Financial Services Diversified -
31. Third-level results. Third-level indicators measure project results or impact on the target beneficiaries (impact is the combined effects of first- and second-level results). Third-level results are quantitative and measured at specific points during the programme life (e.g. at baseline, midterm, completion). These results will be reported at mid-term and at completion by comparing data gathered from the baseline survey with data from repeat surveys at mid-tem and completion. The main indicators are: households with improvement in assets ownership index; households receiving project services; households with increased income and improved food security; and, reduction in malnutrition for children (weight for age, height for age and weight for height). E. Economic Infrastructure Specific Considerations 32. National regulations. Infrastructure investments will be subject to the legal framework for design approval, issuance of construction permits and environmental impact assessment. The latest updates of Environment Protection Law No. 26 of 1995 (EPL) define the thresholds and steps of the formal EIA, including public consultation and information disclosure. The EOFs PDE and LCE will be responsible for compliance with all relevant environmental and construction regulations. 33. Project requirements. An environmental study (even if not specifically required by national laws) will be carried out as part of the technical feasibility study for: (i) all proposed aquaculture
54
operations; and (ii) all integrated landing sites. For aquaculture operations the study will assess: (i) the impact on vulnerable and important coastal ecosystems such as mangroves, seagrass beds or coral reefs; (ii) proximity to important turtle nesting locations of other locations important to biodiversity; (iii) the likely impact on water quality or benthic environments. For landing sites the study will assess potential impacts on local ecology and coastal erosion, beach formation, sedimentation etc. and on the site due to access of heavy duty equipment, quarrying and disposal of debris and construction material. Where ice plants are to be constructed the assessment will also include analysis of availability of fresh water. The findings of environmental studies will constitute integral parts of the technical feasibility reports; investments showing non-negligible impacts on natural resources and whereby adequate mitigation measures are not identified will be rejected. Lower impact thresholds will be tolerated on the Socotra Archipelago given the global significance of its environment and its current high levels of integrity. 34. Mitigation measures. The LDE will ensure that investments have in-built environmental enhancement features and that the technological mitigation measures identified in the environmental studies are included in the detailed design. The implementation of mitigation measures related to water management, and the environmental impact of aquaculture operations will be carried out by mobilization teams and supply chain managers in the context of the respective social mobilization and value chain strengthening activities. 35. Monitoring. Aquaculture operations will be visited regularly by environmental officers of the EOF who will monitor changes in water quality and the benthic environment around fish cages and shrimp ponds as well as use of chemicals and supplementary feeds and ensure standards (to be established in the legislation to be developed by the project) are being met. Likewise the impact of landing site construction will be monitored over time and mitigating measures developed should unforeseen negative impacts result.
55
ANNEX 4 APPENDIX 12: PROJECT SUPERVISION 1. The project will be directly supervised by IFAD. Direct supervision will encompass three discrete processes: loan administration; project supervision; (iii) implementation support. Direct supervision will be perceived and applied as a continuous process which requires ongoing communication and engagement with Government and project management. 2. Project design will invariably be superseded by reality over time as a result of changing conditions, emerging operational experiences, political and macro-economic changes, exogenous developments and force majeure. The process of supervision will guide the project towards the achievement of strategic objectives and broader poverty reduction outcomes, while ensuring fiduciary compliance and responsiveness to the accountability framework. Several instruments will be applied to influence the direction of implementation: ongoing policy dialogue with Government; adjustment of annual work plans and budgets; revision of implementation manuals; undertaking of supervision and mid-term review missions; and, legal amendments as appropriate. 3. The key supervision processes which will be applied are outlined below: Loan administration: ensuring fiduciary compliance, with focus on: legal conditions; financial management; procurement and contracting. overall implementation performance and progress towards objectives; project investments, activities and outputs; statutory requirements (AWPB, monitoring, reporting); steering, management, implementing institutions; targeting and gender mainstreaming. providing guidance towards achievement of objectives; supporting adaptation in response to evolving conditions; creating systems for sustainable flow of benefits; resolving operational issues and problems; generating lessons and articulating best practices. introducing a broad programmatic view of development investments; influencing policy on the basis of operational experiences; developing systems and institutions for poverty reduction; facilitating financial and operational partnerships. generating knowledge and lessons; feeding operational lessons into new project design; creating innovative instruments, investments, pilot activities; enable portfolio restructuring to improve outcomes and results.
Project supervision: assessing implementation performance, with focus on: -
Supporting implementation, programme level: with focus on: -
Supporting implementation, country level: with focus on: -
Supporting implementation, IFAD level: with focus on: -
4. Supervision missions will be undertaken annually and complemented by short and focused follow-up missions as appropriate. Supervision will be based on operational modalities and best practices developed by IFADs former Cooperating Institutions, in which the Yemen country team has substantial experience.
56
ANNEX 5: KEY FILES Table 1: Rural Poverty and Fisheries Sector Issues Priority Areas
Natural Resource Management
Affected Group
All fisheries value chain actors and their dependents
Major Issues
Decline in fish catches due to overfishing as a result of poor management Limited enforcement of regulations, non-compliance No restrictions on increasing fishing effort Lack of knowledge of biological status of stocks Lack of awareness of decision makers of resource depletion yet strong awareness amongst fishers, processors of urgent need for resource management Declining catches Declining CPUE forcing fishers to travel long distances and spend long periods at sea increasing risk to life and reducing quality of landed fish Lack of knowledge or finance to install improved on board storage/processing equipment Absence of quality control High seasonality of fishing activities Limited local demand for processed fish products; limited availability of sufficient quantities of raw materials due to overfishing limited availability of high quality raw materials Lack of transparency in fish auction regarding pricing Collusion between buyers and auctioneers Fish not weighed at auction, lack of quality control No licensing of fish traders Limited direct market linkages for fishers Processors perceive fishers to be unreliable Intermediaries to access markets (Socotra) Limited access to high value markets due to low quality of raw material Complete lack of development of aquaculture sector Limited domestic technical expertise Weak legal framework for aquaculture development Disputes over land tenure in coastal areas
Actions Needed
Support MFW to improve fisheries management through licensing and enforcement and research Assist fishers and others in fisheries value chain to maximise income and value-added and reduce wastage Support adoption of mother boat system through provision of credit and training Assist participants to identify alternative sources of income and reduce dependence on fisheries Development of other income generating activities Establish new extension mechanisms focusing on technology, improving quality of produce Provision of credit to allow fishers to improve on-board cold storage facilities Support producers to form new or improved cooperatives to provide support services to members and represent them on decision making bodies and in regional and national fora Provide extension to fishers through processors/traders to improve quality of raw material; Training processors in improved handling, storage, processing; Develop improved market linkages; Develop certification systems and improve reputation of Yemeni fish in regional markets.
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 5: KEY FILES
Fish Production
Fish Processing 57 Fish Marketing Aquaculture
Coastal population, potential fish farmers and investors
Development of legal frameworks and clarification of coastal land tenure and licensing of off-shore fish farms Development of a national strategy including identification of potential locations for aquaculture development Provision of technical and financial support to kick-start sector Test different species
Priority Areas
Development of micro and small enterprises in coastal communities
Affected Group
Non-fishers, and the families of fishers based in coastal areas incl. low-income landless or smallholder families
Major Issues
Lack of ability to identify MSEs in their areas; Lack of capital to start or develop micro-enterprises; Lack of technical and management skills to operate successful micro-enterprises; Lack of access to credit to purchase equipment and finance operating costs.
Actions Needed
Develop technical and managerial skills to run MSEs; Support preparation of feasibility studies for local MSEs; Identify and organise technical, managerial and financial training for potential and existing micro entrepreneurs; Access differentiated types of credit needed for such enterprises; Develop venture capital to avoid lack of financial resources and guarantees from entrepreneurs; Develop market linkages for these micro enterprises; Provide business services to MSEs to improve market position. REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 5: KEY FILES Focused investment in access roads, landing sites and other critical infrastructure based on a growth pole strategy; Involvement of fishers organisations and coastal communities in identification, planning, execution and management of rural infrastructure facilities; Advise and assist communities to access financial and other services to finance improvements to power supply etc. Support Al Amal Bank and other MFIs to expand rural activities; assist them to develop mobile or part time facilities; Develop microfinance for men as well as women; Support new MFIs to develop savings windows; Improve understanding of MFIs and banks among the rural poor; Assist to access financial services more effectively; Develop target groups confidence in financial institutions; Offer new loan products (e.g. leasing) as alternative to credit; Develop insurance products; Analyse possibility to apply temporary risk-sharing instrument; Provide adequate training, capacity building, better MIS; Increase MFIs financial resources; Offer new financing mechanisms e.g. venture capital financing. Empower women in the rural economy Increase womens skilled work in fish processing and micro enterprises Provide technical, financial, managerial training for women Improve womens access to financial and business services to increase likelihood of success of their enterprises Ensure women have access to savings and credit from MFIs Involve women in management bodies of community-based organizations, to allow them to learn and participate.
Fisheries and Coastal Area Infrastructure
Inhabitants of coastal area, fishers and those living in isolated areas in particular
Inadequate water supply, sanitation, road access, power supply; Lack of landing sites with suitable protection from wind and waves Lack of modern landing site infrastructure (enclosed, air conditioned auction sheds, cold storage facilities)
Rural Finance
The rural poor
CAC Bank increasingly operates as commercial bank Lack of access to formal credit for women, landless, and landholders without titles incl. landless fishers Reluctance of insurers to insure fishers or fishing boats due to lack of safety equipment and standards Extensive informal credit system in which borrowers are open to exploitation by wakeels Low banking culture of fishers; mistrust of banks Unsuited financial products for seasonality of fishing and absence of diversified adapted products Rural microfinance institutions recently created Insufficient rural outreach of commercial banks Microfinance/commercial banks staff poorly trained Microfinance banks have limited financial resources High degree of gender inequality; severe cultural restrictions on womens participation in public life Very low level of female literacy Generally very limited role played by women in the fishing industry, especially in the harvest sector Limited control over fishing assets except occasionally when inherited from husband Micro-finance institutions do not manage savings, while credit available only in small amounts Lack of skills in marketing and marketable products Lack of knowledge of MSEs with marketing potential
58 Gender Rural women
Table 2: Organisation Capabilities Matrix Organisation

Enablers Fishers Cooperatives
Strengths
Some very well organised High membership rates on Gulf of Aden and Socotra where long tradition exists Provide numerous services to fishers and communities including electricity and social welfare support Collect detailed catch data Some operate profitably Head office in Sanaa Composed of representatives elected by fishers organisations Produce detailed data and statistics on fisheries production and operations of cooperatives
Weaknesses
Poor relationship with the MFW, limited involvement in decision making or influence over fisheries policy Some non-functional or lack management skills and provide few benefits to members Large numbers of small, weak and ineffective cooperatives, some just paper cooperatives Political division and infighting of members Limited coverage on Red Sea coast where no established tradition of fishers cooperatives Lacks efficient administration and organisational management Lacks operating costs to provide extension to cooperatives or fulfil mandate of auditing cooperative accounts and performance Relies on contribution of 5% of cooperative profits for operating costs Limited involvement in decision making in relation to fisheries management Little/no relationship with fishers and fishers organizations
Opportunities/Threats
After thorough assessment of cooperatives, some can be supported by the project With some assistance cooperatives would be best placed to manage landing sites and collect catch data on behalf of MFW Cooperatives are the most effective channel through which to support fishers Threat from MFW that all cooperatives may be closed due to supposed withholding of payments to government Could act as the main representation of fishers cooperatives and give fishers a voice at national level Political interference from MFW might hamper any attempt to develop this APEX institution More services to be developed and to be provided to members MFW willingness to close all cooperatives
Yemeni Fishers Cooperatives Union
59 Yemeni Seafood Exporters Association Ministry of Fish Wealth (MFW) Represent major fish exporters in Yemen Clear vision and mission 21 members out of 42 have an EU export number Good management Ministry mandated to manage the fisheries sector in Yemen
Political interference Develop its own fleet of boats without support to existing cooperatives; Align with the MFW position on cooperatives
Limited grasp of fisheries management Limited comprehension of gravity of threat faced by fishing sector Poor relationship with cooperatives Focus on collection of fees rather than management of resources Highly centralised operations Staff have limited technical knowledge Branches lack operating funds, trained staff Lack of understanding of the role of fishers communities in management of infrastructure Desire to manage all infrastructure Not the only governmental unit to issue licenses (especially international trawlers)
Currently undergoing a major restructuring which should streamline and improve operations MFW branches will be replaced by 4 Fisheries Authorities with significantly greater responsibility for the day-to-day implementation, administration and monitoring of fisheries management policies
Organisation
Fisheries Authorities (FAs)
Strengths
Will replace the MFW branches following restructuring Clearly defined role and responsibility Considerable autonomy in operation Qualified research staff with some relevant experience Strong history of fisheries research in Gulf of Aden in particular Qualified research staff with some relevant experience Well equipped though aging research facility Receiving significant support to build capacity to combat piracy Deliberate policy of recruiting officers from fishing communities Existing role in fisheries licensing In charge of regulating and supervising cooperatives Cooperative Laws and regulations well defined
Weaknesses
These do not yet exist and there is a risk of delays in their formation Arrangements for funding the activities of the FAs have not yet been finalised and there is a risk they could face the same financial obstacles to their operation as the MFW branches Lack of operating funds No active research programme Staff skills require updating
Restructuring is a major opportunity to establish culture of more proactive fisheries management at the FA level Potential problems of funding allocations and tax resources Enabling closer relationship with fishers communities and sharing management and ownership on fisheries infrastructure Limited appreciation in MFW of importance of a sustained programme of fisheries research to support to fisheries management Under restructuring MSRRC will become FRA and conduct research on behalf of MFW, FAs and private sector also on contract basis Support to development of private sector aquaculture should create demand for aquaculture research services and technical support
Marine Science Resources Research Centre (FRA)
Aquaculture Research Authority (Aden)
Lack of operating funds No ongoing research programme Equipment requires updating Limited relationship with private sector Limited staff and skills require updating Limited skills in enforcing fisheries regulations Limited specific training in enforcement of fisheries regulations Political focus and bulk of funding for combating piracy
Yemen Coast Guard (YCG)
Weak relationship with fishers organisations Presence in 10 branches in coastal governorates Interested to expand capacities in relation to enforcement of fisheries regulations
60
Ministry of Social Affairs
Limited interaction with MFW Limited control on cooperative performance and account auditing Limited control and supervision capacities
Could play an important role in improving the relationship between fishers cooperatives and the Ministry of Fish Wealth
Organisation
Service Providers Agriculture and Fisheries Production Promotion Fund (AFPPF) Coastal Fisheries Corp. (CFC) National Corp. for Fisheries Services and Marketing (NCFSM) National Fish Quality Control Laboratory
Strengths
Weaknesses
Well funded.
Transparency limited; No field presence; Weak community involvement; Political interference.
Co-financing of programme activities especially with regards to safety aspects (public domain)
Legal monopoly on marketing of rock lobster no longer enforced Rock lobster fishery has now collapsed Poor management and organisation Limited human and financial resources
Will be dissolved under planned restructuring and assets handed over to FAs to be leased to private sector Will be dissolved under planned restructuring and assets handed over to FAs to be leased to private sector
Parastatal organisation which manages a number of landing sites, processing and cold storage facilities
Relatively well equipped modern facilities Relatively well trained staff Large proportion of staff are female Qualified core staff; Well equipped labs; Solid experience.
Lack of operating costs or funds for expansion Fees for testing are fixed by the MFW at levels which barely cover costs Limited capacity in terms of volume of samples which can be processed Low pay of qualified staff; Over several hundred non qualified staff draining resources and management effort; Lack ISO 17025 accreditation for certification of residues of pesticides and ;
Numerous donors are financing improvements to quality control laboratories and training of laboratory staff
61
YSMO
Licensed Microfinance Institutions Women focus; Mobilization of savings/deposits authorized Supervised by Central Bank; Specific Microfinance Bank Law. Most MFIs are not financially sustainable; Most MFIs are urban based; Lack of resources to finance MFI growth and network expansion; Little diversification of loan products; Socially-oriented when implemented by SFD; SFD MFIs not always following microfinance best practices; New linkage with commercial banking sector; New products and services to be developed (especially adapted savings and deposits)
With the present human capital and infrastructure it is relatively inexpensive to upgrade YSMO and enable it to issue certification for: HACCP; ISO standards related to fisheries products Will be supported within the IFAD-funded Economic Opportunities Programme Can increase rural outreach if additional resources provided; Promising newcomers in microfinance sector (Al-Amal Bank; Tadhamon Microfinance Institution); IFAD-funded EOF to take equity participation in pro-poor gender oriented MFI with membership at the Board to influence decisions and policies; MoU signed between Al-Amal, KfW, GTZ, AFD, and IFC for capacity building Favourable legal environment (supervision by Central Bank, microfinance bank law).
Table 3: Complementary Financier Initiative/Partnership Potential Donor/Agency Nature of Project/Programme

World Bank (IDA) Fisheries Resource Management and Conservation Project
Coverage
countrywide
Status
ongoing
Complementarity / Synergy Potential

Very strong potential partner on institutional arrangements and policy dialogue FIP will be developed on new MFW structure implemented through the FRMCP FRMCP is lacking funds to implement all actions proposed (licensing, inspectors, capacity building) Strong potential partner for construction of landing site infrastructure Strong partner to finance social infrastructure in FIP selected landing sites; new phase under preparation. Strong potential partner to cooperate in funding rural infrastructure schemes. Strong potential partner for construction of rural access roads. Strong potential partner to cooperate in delivering and financing the training needs of enterprises Strong potential partner for improving capacity of fish quality control laboratories Very strong potential partner to cooperate in licensing system and improvement to MCS Moderate agriculture, microfinance, MSEs; Mainly focusing on provision of TA. Very strong potential source of co-financing for value chain development and partner on stock assessment and fisheries management Very strong close cooperation throughout design will ensure project is closely aligned to priorities and focus on new fisheries strategy Moderate potential partner for funding and implementing fisheries and water development initiatives. Very strong Advisory services and other non-financial services to MSEs Very strong Potential partner in the strengthening of microfinance sector Very strong MoU already signed with Al-Amal Bank. EOF will participate in MoU. Very strong Support to aquaculture and fish processing activities. Support to export regulations to Japan and East Asia
World Bank (IDA) World Bank (IDA) World Bank (IDA) World Bank (IDA) World Bank (IDA) UNDP UNDP 62 UNDP European Union
Sea Ports Project Social Fund for Development III and IV Third Public Works Project Second Rural Access Second Vocational Training Fishery Quality Control for Export Promotion Fisheries Project Promising Sectors Project Fisheries Project
countrywide countrywide countrywide countrywide countrywide countrywide countrywide countrywide countrywide
ongoing ongoing ongoing ongoing ongoing ongoing under design about to start under design
European Union
Development of National Fisheries Strategy
countrywide
ongoing
European Union Germany/GTZ Germany/GTZ AFD, IFC, GTZ, and KfW JICA
Grant funds for rural roads and irrigation systems through counterpart funds linked to food aid Private Sector Development Project Provision of technical assistance to the Microfinance sector and Al-Amal Bank in particular Provision of capacity building to Al Amal Bank Provision of technical assistance in microenterprises development in fisheries sector
countrywide countrywide countrywide countrywide countrywide
ongoing ongoing ongoing about to start ongoing
Table 4: Target Group Priority Needs and Project Proposals Typology

Small scale fishers
Poverty Levels And Causes

Small boats, basic fishing and fish finding technology Declining catches due to overfishing High expenditure on fuel Sale of produce to intermediaries (agents/collectors) for low prices particularly in areas isolated from main markets Where cooperatives do not exist fishers are forced into unequal and non-transparent relationships with Wakeels Increase in food prices without increase in income Savings consumed for households needs outside fishing season Substantial funds allocated to qat as proportion of household income though use in coastal areas is lower than elsewhere especially on Gulf of Aden coast and Socotra
Coping Actions
Travelling further to fish and remaining at sea for longer Joining fishers associations Making arrangements for direct sale to processors on shore or at sea using mother ship system Seasonal migration to other areas to fish or search for casual wage labour
Priority Needs
Improved management of fisheries resources to prevent stock collapse Access to means and knowledge to improve quality of fish produced Improved market linkages Better access to rural financial services Better access to non-fisheries related income opportunities and employment
Programme Response
Support introduction of improved fisheries management measures Construction/rehabilitation of fully integrated landing complexes which management will be vested with the fishers organizations Promotion of aquaculture as a supplementary source of income Promotion of alternative financing mechanisms for large productive infrastructure Promotion of microfinance and credit through MFIs and banks Promotion of SMEs and alternative employment opportunities through training and provision of credit Promotion of insurance products designed for fisheries activities Support implementation of new fishing techniques et methodologies Implementation of measures to avoid elite capture Promotion of safety-at-sea equipment
63 Non-fishers & unemployed youth Lack of opportunities for incomegenerating activities and microbusinesses; Inadequate access to financial services; Lack of guarantee/collateral to obtain credit; Limited non-fishing wage labour possibilities in coastal villages; Absence of technical training; Limited income; Substantial funds allocated to qat as proportion of household income. Migration to cities for wage labour; Subsistence fishing and seasonal employment (fishing). Income earning opportunities; Access to credit for working capital and assets to develop MSEs; Access to skills to establish new MSEs or work in existing MSEs including training in technical, financial and managerial skills.
Promotion of microfinance
through MFIs; enhanced rural outreach of PFIs Promotion of aquaculture Promotion of alternative financing mechanisms Assistance to form groups, skill and business management training, help to link with PFIs Linkage with regional and international markets with sustainable demand Link with exporters/processors in fisheries sector with marketing
Typology
Poor rural women and female headed households
Poverty Levels And Causes

Strict cultural restrictions on womens participation in public life including restricted movement Restrictions on participation in fishing operations and limited alternative employment opportunities for women Death or injury of husband leading to loss of income and assets (if boat lost at sea) Disparity with mens wages; High illiteracy rate High school drop-out rate High fertility rate Food price increase, while incomes stagnant Not involved in decision-making processes Heavy workload on top of normal housekeeping
Coping Actions
Joint-liability groups of women to access microloans from MFIs for income generating activities Reliance on extended family/community support
Priority Needs
Higher incomes to cover rises in cost of living and improve status within the household Creation of cultural acceptable employment opportunities and working conditions (i.e. separate from men) Improved working conditions and wage rates Access to MSEs (skills and ideas) Better access to rural finance and markets Empowerment
Programme Response Provision of microfinance through

MFIs, including savings facilities; schemes;
Promotion of simple aquaculture Promotion of womens groups for

microenterprises;
Promotion of individual
microenterprises including those not related to fisheries; Training and capacity building in marketable technical skills to establish MSEs or obtain skilled jobs in such enterprises; Training and capacity building in financial and other business management skills to improve success rate of MSEs; Training in value adding fish processing and marketing Provision of business development services to assist in starting MSEs Inclusion of women in fishers organizations and insurance that they will benefit all training and capacity building Inclusion of women in governing bodies of fishers organizations Mobilization teams composed of a woman at least
64
Table 5: Stakeholder Matrix/Project Actors and Roles Perennial Institutions Involved

MFW and FAs; Yemeni Coast Guards Ministry of Finance; Social Fund for Development; Agriculture and Fisheries Production promotion Fund; Fishers Cooperatives. MFW and FAs; FRA; Fishers Cooperatives.
Component
Sustainable Resource Management
Sub-Component
Policy dialogue and enforcement
Coverage
Capacity building of Inspectors to enforce laws and regulations Implementation of a new licensing system Introduction of safety-at-sea regulation and compulsory insurance Development of 6 Fisheries Management Plans Capacity building of the Fisheries Research Authority Stock Assessment and Management Wild caught fisheries activities improvement Aquaculture development Micro- and small enterprises development Export promotion
Potential Contractors/ Periodic Inputs

Insurance companies
Other Possible Partners in Execution

UNDP, WB and EU REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 5: KEY FILES
Stock assessment and management
Specialized international companies for stock assessment
EU
Value Chain Improvement 65
Value Chain Upgrading
MFW and FAs; National Quality Laboratories; YSMO; Participating financial institutions (licensed microfinance institutions); Fishers Cooperatives; SFD branches specialized in business training
Fishers Organization and Financial Services
Strengthening of fishers community-based organizations Increased outreach of PFIs
Ministry of Social Affairs; MFW; Licensed microfinance institutions; Yemeni Post Office; Fishers Cooperatives.
Exporters/processors; Supply chain managers recruited by exporters/processors to provide advisory services to fishers organizations and to entrepreneurs; Engineering design firms; Construction firms; Forward contracts between processors/exporters and fishers communities Business Advisors recruited by EOF to provide assistance to entrepreneurs and fishers communities; Third-party investors Independent audit firms to assess existing cooperatives; Mobilization Teams recruited by EOF to provide training and technical assistance to fishers organizations
EU, JICA
AFD, KfW, GTZ, and IFC
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 6: ENVIRONMENTAL AND SOCIAL REVIEW NOTE
ANNEX 6: ENVIRONMENTAL AND SOCIAL REVIEW NOTE A. Introduction 1. The Environmental and Social Review Note (ESRN) for the Fisheries Investment Project has been prepared in line with IFADs Environmental and Social Assessment (ESA) Procedures (2009) on the basis of information gathered by the project inception and design missions. 2. The overall environmental impact of the project, against a without project scenario is expected to be positive, mainly due to current trends towards severe overfishing and the projects strong focus on initiatives to improve fisheries management and protect against over-exploitation of resources. These include the introduction of licensing, improvement of regulatory enforcement and strengthening of research capacity. Support for fisheries infrastructure and aquaculture development will be subject to thorough environmental impact assessment and ongoing monitoring in accordance with national legislation. The project will also support the development of national legislation which ensures the sustainable development of the aquaculture sector. 3. The project has been classified as Category A as a result of investments in infrastructure in coastal areas. However as the precise locations have not yet been identified it is not possible to undertake a detailed ESIA as normally required for Category A projects. Instead a broad preliminary investigation has been undertaken to identify locations around the Yemeni coastline where particularly sensitive ecosystems are located in order to pre-disqualify certain locations from consideration for investments in infrastructure. The study also provides guidelines for the early stages of landing site design and includes a draft environmental management plan for the proposed integrated landing complexes. Detailed EIAs will be undertaken in advance of the construction of all infrastructure and specific budgets have been included in the project design for both the EIAs and subsequent monitoring activities. Where other project activities create risks of negative environmental impacts specific mitigation measures have been incorporated into the design of the project to minimize that risk. B. Description of Project and Components 4. The project goal is to improve the economic status of small-scale fisher households and others living in Yemens coastal areas. Its objectives are to create sustainable economic opportunities for poor women and men in Yemens coastal areas and to improve the sustainability of fisheries resource management. The project area comprises Yemens entire coastal area including the Socotra Archipelago. 5. Project interventions are organized into two components: (i) Sustainable Resource Management and (ii) Value Chain Development. 6. Component 1 Sustainable Resource Management: The objective of the component is to enable the MFW to develop, implement and enforce sustainable fisheries management measures in order to ensure the long-term viability of the fisheries sector in Yemen. This component should have a strong positive environmental impact and will enable existing fishers to gain greater ownership and control over the resources on which they depend. 7. The activities will focus on two strategically selected sub-components. The first, Regulatory Compliance and Risk Management will create the legal, institutional and human resource capacity to implement and enforce sustainable fisheries management measures. This will include developing a thorough licensing system covering all actors in the fisheries value chain (fishers, transporters, traders, processors, and exporters) and establishing well trained and equipped teams of inspectors empowered to impose administrative fines in order to enforce compliance with fisheries regulations. In addition the project will support improvements to safety-at-sea based on clear, up-to-date regulations regarding compulsory safety equipment and vessel construction. 8. The second, Fisheries Research and Management, will support the development of the fisheries research capacity necessary to improve and continuously update the available knowledge on which informed fisheries management decisions can be taken. In order to achieve this, the Fisheries Research Authority will be strengthened through provision of equipment and technical advice and a regular programme of fisheries research will be established. Six fisheries
67
management plans, targeting: (i) the Socotra Archipelago; (ii) shrimp in the Red Sea; (iii) lobster in the Gulf of Aden; (iv) cuttlefish; (v) shark; and (vi) sea cucumber will be implemented, informed by up-to-date information on stock status and potential yields and developed in collaboration with stakeholders including fishers organisations and the private sector. Within the framework of collaboration established with the EU-funded Fisheries Development Project, fisheries data collection and knowledge of stock status will be improved by supporting a thorough stock assessment and strengthening national fisheries information systems. 9. Component 2 Value Chain Development: The objective of this component is to stimulate sustainable increases in the incomes of small-scale fishers households in the project area. This will be achieved by promoting profitable linkages among fishers and other value chain actors, improving landing site infrastructure, increasing compliance with international quality and hygiene standards, supporting the creation of economic opportunities including aquaculture and MSEs and increasing access to financial services. 10. The first subcomponent, Value Chain Upgrading will support fisheries value chain upgrading through improved handling and use of ice and supporting investment in mother ships and transport boats to reduce transport costs and improve the quality of landed catch. A total of 7 integrated landing sites will be constructed in locations chosen in accordance with selection criteria detailed in the Working Paper 1. They will consist of a jetty and landing area, a breakwater and sand barrier to protect the site, an access road connecting the site to the main road and a refrigerated auction hall with integrated cold storage and ice plant. Fish exports will also be encouraged by upgrading public/private export certification laboratories, supporting participation in trade fairs, and developing a market information system. In order to encourage economic diversification small businesses in fisheries-dependent coastal communities will be assisted in identifying sustainable markets with growth potential across the fisheries value chain, provided with TA, marketing and advisory services, training, credit and venture capital. The development of marine aquaculture will also be supported by assisting Government to prepare necessary strategies and legislation, but focus will initially be on species which have a neutral or even positive environmental impact (mussels, seaweed, sea cucumbers) and detailed import risk assessments will be undertaken before the introduction of non-native species. 11. The second sub-component, Strengthening Fishers Organizations and Increasing Financial Services Outreach, will aim to develop strong fishers organizations and to support the provision of adapted and diversified financial services for coastal communities. The project will carry out a due diligence assessment of all fishers organizations and provide capacity building (or support the creation of new fishers organizations) based on the outcomes of this exercise. The Union of Fisheries Cooperatives will also receive support. Through an agreement between Al-Amal Bank and the Post Office, supported by the project, financial services will be extended to coastal communities. This component will have minimal environmental implications but could have strong, positive social outcome and capacity building to financial institutions will include a component on environmentally and socially responsible lending policies and CSR. 12. Management: The Economic Opportunities Fund, created under the Economic Opportunities Programme (an IFAD project in Yemen) will be responsible and accountable for the management of the Fisheries Investment Project. A small Project Liaison Unit will be temporarily implemented at the MFW to facilitate the implementation and supervision of all activities related to policy dialogue, law enforcement and resource management in the fisheries sector. C. Major Site Characteristics 13. The project area comprise the entirety of Yemens 2,520km long coast, including the Red Sea, Gulf of Aden and the Socotra Archipelago, a group of islands east of the Horn of Africa and around 380km southeast of Mukalla. The population of the Yemeni coastal zone is estimated to be around 3 million, of a total national population of 22.9 million. In many parts of the coast including Socotra, the population is highly dependent on fisheries with some agriculture and livestock where water resources and soil fertility allow. Since 1995 the number of fishers has increased from 30,000 to around 83,375, a further 9,000 full time equivalent jobs exist onshore in the fisheries sector; including their households this amounts to some 739,000 people to some extent dependent on fisheries.
68
14. Social Context: Modern day Yemen was established in 1990 when the Yemen Arab Republic (North Yemen) was joined with the Peoples Democratic Republic of Yemen (South Yemen). The YAR had been closely allied to other Arab countries but the PDRY, a socialist state formed following the end of British colonialism, was closely allied to the Soviet Union. Today there are significant social and cultural differences between those coastal areas formerly part of YAR (the Red Sea coast) and those formerly part of PDRY (the Gulf of Aden coast and Socotra). 15. On the Red Sea coast a more conservative Islam dominates, with greater gender inequality and weak fishers organizations allowing traditional sheikhs and wakeels (often translated as agents) to control the fisheries sector. Wakeels act as auctioneers, taking c.5% of the value of the catch, and also providing credit to fishers. As no records are kept or receipts provided fishers are mostly unsure of how much debt they are in or the level of repayments, allowing the wakeels to exploit the fishers. 16. By contrast, on the Gulf of Aden coast, where the British colonizers and subsequent socialist government of the PDRY both reduced the power of tribal allegiances, strong fishers organizations exist. These were introduced and supported by the socialist government of the PDRY. The largest today have in excess of 1,000 members and provide healthcare, social insurance, water, electricity and other amenities to the communities in which they operate. In addition women historically enjoy greater freedom and higher status in society. However, as the influence of conservative Islam increases some families are refusing to send girls to schools without female teachers and increasing numbers of women are wearing the veil, something which was comparatively rare in the past. 17. Socotra (pop. c.43,000) has been an important stop on trade routes in the region for thousands of years and was been variously inhabited and colonized by Arabs, Indians, Greeks, Portuguese and British at different points in its history. Fishing is the main source of livelihood for those living on the coast though there is some date cultivation and tourism has become increasingly significant since the opening of the airport in 1999. Fishers organizations were introduced relatively recently but have grown significantly and most fishers are now members. Traditional fisheries management measures once strictly enforced are now weakening due to difficulties in enforcement and the increasing numbers of fishers travelling to Socotra from the mainland who do not respect traditional rules. 18. According to the World Bank poverty assessment (2002) the coastal governorates have the highest incidence of poverty, ranging from 30-55% with the highest in Lahej, Taiz and Shabwah (42-55%). The mission has estimated that poverty rates amongst those working in the fisheries sector are higher still (See WP 1). Yemen is considered very likely to meet MDGs on universal primary education and reductions in child mortality with the possibility of meeting targets on maternal health, HIV/AIDS, malaria and developing a global partnership for development. It is not on target to meet MDGs on the eradication of extreme poverty and hunger, promoting gender equality and empowering women or ensuring environmental sustainability. 19. Yemen has very low levels of gender equality and is ranked at 122nd of 159 countries on the Gender Development Index and 109th of 109 by the Gender Empowerment Measure (HDR 2009). As mentioned above the influence of conservative forms of Islam and even certain legislation supports discrimination against women; for example there is no legal minimum age for marriage, womens participation in public life is limited and numerous restrictions on their movement exist, women who appear in public unveiled risk harassment. Though there are no legal restrictions on womens access to financial services or credit it is commonly felt that financial matters should be handled by men. Between 2002 and 2004 male borrowers from CAC Bank outnumbered female borrowers by ten to one. Obstacles to womens engagement in economic activities include high levels of illiteracy (69% in 2006) which are twice those of men - only 33% of rural girls are enrolled in school (2006). Young (15-29 years old), relatively educated women have a higher rate of unemployment (56%) than male counterparts (47%) and women who are generally paid about 50% of the male wage for work as laborers. 20. Environmental Context: Yemens coastal area is primarily an arid/semi-arid coastal plain. Rainfall in parts of the coast is less than 50mm per year and average temperatures are around 30C. The marine environment, mainly in the Gulf of Aden is strongly affected by the southwesterly monsoon which creates a strong upwelling mixing cold, nutrient rich deep waters with warmer, surface water creating some of the highest levels of marine primary productivity on
69
the planet. The unproductive coastal land and the highly productive seas largely explain the historical significance of fishing to the coastal communities in Yemen. 21. The Red Sea is generally very warm (25-32C, peaking in May-October), highly saline and nutrient poor due to limited water exchange, lack of freshwater inflows (no permanent rivers drain into the sea on the Yemeni Red Sea coast) and lack of strong winds. The high temperatures also account for low levels of dissolved oxygen which combined with low levels of nutrients result in limited productivity. The most southerly parts are the most productive due to nutrient exchange with the Gulf of Aden through the Bab-al-Mandab. Fringing coral reefs, seagrass beds, mangroves and salt marshes are all found in the Red Sea and provide critical spawning, nursery and feeding grounds for the majority of the commercial species in the Red Sea as well as turtles, dugong and birds. The corals are amongst the most tolerant of high temperatures in the world, an important characteristic given the threat posed to coral reefs by climate change induced temperature increases. Mangroves cover around 122km of Yemens Red Sea coast but are most prevalent in the north, near the Saudi Arabian border; in many places they are heavily overgrazed by camels. 22. The Gulf of Aden extends east from the mouth of the Red Sea to Yemens border with Oman and south to Somalias northeastern coast and the Socotra Archipelago. It contains Yemens most productive fishing grounds as a result of the upwelling generated by the southwesterly monsoon (May to September). Coral reefs, seagrass beds and mangroves are found towards the less exposed western end of the Gulf. Coral reef development is limited by the 7-10C drop in temperature which results from the upwelling in the summer months. The seagrass beds provide a habitat for sea cucumbers and are important feeding grounds for marine turtles (Chelonia mydas), which also nest on the sandy beaches along the coast. The seabed slopes steeply down from the coast and the continental shelf is relatively narrow, the only extensive shallow water areas are to the east of Aden, extending to around 30km offshore. 23. The Socotra Archipelago is a group of four islands (Socotra, Samha, Darsa and Abd Al Kuri) located at the meeting point of the Gulf of Aden, Arabian Sea and Northwest Indian Ocean. They lie off the Horn of Africa about 380km southeast of Mukalla on the Yemen mainland. As a result of its remote and isolated location, it is said to be one of the best preserved and ecologically significant island habitats in the world. Levels of endemism on Socotra are amongst the highest on the planet; 37% of its species are unique to the island. By comparison endemism on the Galapagos Islands is 42%. There are also large populations of land and sea birds including a number of threatened species. Since 1990 a number of environmental projects (the Socotra Biodiversity Project (funded by GEF) which strengthened the local branch of the Environmental Protection Authority (EPA) and drafted the Conservation Zoning Plan, and the Socotra Conservation and Development Programme (funded by UNDP/Government of Italy)) have been implemented on the island. In 1996 the Archipelago became the first Protected Area in Yemen, in 2000 a Conservation Zoning Plan was legally defined in Presidential Decree 275 of 2000, and in 2003 the Archipelago was designated by UNESCO as a Man and the Biosphere Reserve in recognition of the unique ecology. Finally, in 2008, the Archipelago was added to the UNESCO-list of World Heritage Sites in recognition of the global importance of its biodiversity and the integrity of its ecosystems. Also in 2008 Cabinet Decrees No.45 and 49 were passed increasing protection and restricting development. 24. The marine environment of the Socotra Archipelago also supports high levels of biodiversity including 253 species of reef-building corals, 730 species of coastal fish and 300 species of crab, lobster and shrimp. Other marine fauna include sharks (Hammerhead, Tiger and others), rays, sailfish, around thirty species of cetacean including six species of dolphin, Sperm whales, Humpback whales and others) as well as four species of endangered turtles (Loggerhead, Green, Hawksbill and Olive Ridley). The high levels of diversity and unique species composition result from: (i) its location in a transitional bio-geographic zone at the meeting point of the Gulf of Aden, Arabian Sea and Indian Ocean; (ii) the variety of habitats available; and (iii) the strong seasonal upwelling. The coastline includes sand and pebble beaches, exposed reef platforms, mudflats and lagoons, including the Detwah lagoon, recognized in 2007 as a Wetland of International Importance under the Ramsar Convention. Other coastal and marine habitats include mangroves, seagrass beds and coral reefs though coral development is limited by the annual cooling of the waters as a result of the upwelling. 25. From October-April the northwest monsoon creates low winds, calm seas and temperatures from 18-27C. From June to September the southwest monsoon brings higher temperatures (30-
70
45C), and high winds (70-110km per hour). During this period seas are too rough to fish and the upwelling reduces sea temperatures by 2-4C. Average annual rainfall is 150mm at sea-level rising to 300mm in the central mountains and up to 1000mm on the mountain peaks. The main rainy season occurs in November and December. D. Government Policies and Institutions 26. The most significant piece of environmental legislation in Yemen is the Environmental Protection Law No. 26 of 199510. The objectives of the law include: protection of the environment and natural resources, the maintenance of its natural ecosystems, combating pollution and conservation of biodiversity. The law also provides the legal framework for the establishment of protected areas and their administration. It also establishes the legal framework for Environmental Impact Assessment (EIA) and its draft update of 2007 defines the steps of the EIA process, including public consultation and information disclosure. It establishes the Environmental Protection Authority (EPA) of the Ministry of Water and Environment as the main implementing agency, to enforce the Environmental Protection Law and review the EIA on projects which may have adverse/irreversible impact on the environment. 27. The EPA also has responsibility for a wide range of tasks related to environmental protection. These include proposing policies, laws and regulations, establishing standards, and providing technical advice to and coordinating other government agencies with regard to environmental protection. However despite the fact that the EPA is empowered to enforce environmental legislation, other than on Socotra, its capacity to do so is limited and EIA requirements are often overlooked. The World Bank and other donors have been supporting the strengthening of EIA in Yemen in order to facilitate sustainable infrastructure development. 28. Other Government institutions involved in issues related to the coastal and marine environment include: the Tourism Development Authority (TDA); the Maritime Affairs Authority (MAA); the Maritime Training Centre (MTC); the General Corporation for Development and Promotion of Yemeni Islands (GCDPI); the Marine Science and Resources Research Centre (MSRRC, soon to be the Fisheries Research Authority); the Yemen Coast Guard (YCG); the High Council for Urban Planning (HCUP); the Faculty of Oceanography and Environment at Al-Hudyadah University; the Faculty of Environment and Marine Biology at Hadramout University; the Department of Earth and Environmental Science at the University of Sanaa; and the Environmental Research and Studies Division at the University of Aden. 29. Yemen is signatory to numerous international agreements and conventions including: the United Nations Convention on the Law of the Sea (UNCLOS); the United Nations Framework Convention on Climate Change (UNFCCC); the United Nations Convention Combating Desertification (UNCCD); the United Nations Convention on Biological Diversity (UNCBD); the Basel Convention on Control of Transboundary Movements of Hazardous Wastes and their Disposal; the MARPOL Convention (International Convention for Prevention of Pollution from Ships); the RAMSAR Convention for the Conservation of Wetlands; the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); the Convention to Combat Persistent Organic Pollutions (POPs); the Bonn Convention for Migratory Species. 30. Yemen is not party to the UN Fish Stocks Agreement and though it has obligations regarding the protection of certain migratory species including sharks under the Bonn Convention, and despite the commercial importance of many shared stocks in the region there is effectively no regional fisheries management in the Red Sea or Gulf of Aden. The EU Fisheries Development
10
ANNEX 1 provides a more complete list of Yemeni environmental legislation
71
Project under design will support Yemens participation in the Indian Ocean Tuna Commission which is the Regional Fisheries Management Organization responsible for the management of tuna and tuna-like species in the Indian Ocean and adjacent seas (including the Red Sea and Gulf of Aden). 31. Yemen is a member of PERSGA, the Regional Convention for the Conservation of the Red Sea and the Gulf of Aden Environment, created by the Jeddah Convention with the aim of protecting the Red Sea, Gulf of Aden and Gulf of Aqaba environments. However PERSGA is explicitly not involved in fisheries management, only in conservation. Yemen also cooperates with Djibouti and Somalia in combating oils spills. 32. Issues relating to fisheries management and legislation are discussed extensively in Working Paper 2. 33. Socotra Conservation Zoning Plan: The legal basis for the conservation and management of the Socotra Archipelago is the Conservation Zoning Plan (Presidential Decree 275 of 2000). The implementing authority is the EPA, in collaboration with other relevant Government stakeholders. This gives the EPA the legal authority to administer environmental issues on the Archipelago and requires that it be consulted for an EIA with regard to any planned construction within the Archipelago. A branch of the EPA was established on Socotra in 1996 and has received considerable support since to build local capacity with positive results. Today the EPA is the bestequipped and staffed government agency on the island with a large, mainly local staff and a dedicated building equipped with laboratories, research equipment, computers etc. 34. The Zoning Plan covers marine and terrestrial areas separately, dividing the territory of the Archipelago and the surrounding waters into four categories: (i) Resource Use Reserve (RUR): Encompassing the entire area of the islands and adjacent marine areas within the 12nm zone (16,498km2); (ii) General use Zone: Areas within the RUR where habitat modification and/or resource exploitation already occurs or is required. Approximate area is 1km2, mainly limited to the area around the main towns; (iii) National Park: Natural areas of land and sea where exploitation of natural resources may be excluded in the interest of conservation and biodiversity (1514km2); (iv) Nature Sanctuary: Areas that are basically pristine, to be managed in order to maintain this pristine state. They are located strategically for recruitment of land and marine species of plants, animals and fish. No form of fishing is permitted in these areas (154km2). Sea port and road construction are permitted within RUR and General Use zones. Road construction is also permitted within National Parks but not with Nature Sanctuaries. The tables below detail the specific activities permitted within each zone. 35. The Marine Zoning Plan encompasses the entire Archipelago and creates a Resource Use Reserve extending to 12nm offshore. In addition a coastal area extending 500m inshore is designated as a National Park unless this coincides with a terrestrial General Use Zone or Nature Sanctuary, in which case the stricter zoning takes precedence. In total there are 12 terrestrial and 25 marine Nature Sanctuaries.
72
Figure 1: Marine Conservation Zoning Plan for the Socotra Archipelago
Table 1: Activities Permitted by Marine Conservation Zone Socotra Archipelago Activity Areas Permitted General Resource Use Zone Reserve Use National Park Nature Sanctuary
Sea Port Construction Ballast Disposal Trawling Shark Fishing by Net Hook and Line Turtle Exploitation Managed Ecotourism Research and Education Figure 2: Terrestrial Conservation Zoning Plan for Socotra Archipelago
73
Table 2: Permitted Activities by Terrestrial Conservation Zone Socotra Archipelago Activity Areas Permitted General Resource Use Zone Use Reserve National Park Nature Sanctuary
Industrial Development Airport Hospital Road Construction Intensive Agriculture Controlled Grazing Traditional Plant Use Ecotourism Infrastructure Research and Education 36. Project Alignment with National Environmental Priorities: The design of the project is in line with national strategy and priorities. In relation to climate change the vision outlined in Yemens NAPA for supporting adaptation in the coastal zones is conservation and sustainable use of marine and fishery resources through the development and strict implementation of policy, legislative and management tools that ensure harvest level of biological resources are maintained within the biological limits, taking climate variability and change into consideration. Key adaptation activities identified are introducing the sustainable management of fisheries and developing and implementing Integrated Coastal Zone Management. While this project focuses on sustainable management of fisheries, the World Bank and GEF are currently designing a project for implementation later in 2010 to improve Integrated Coastal Zone Management integrating climate change adaptation. Coastal zone management and biodiversity conservation were also amongst the priority environmental activities identified in the Governments Strategic Vision 2025. E. Issues in Natural Resource Management 37. Fisheries Management: The major issues in natural resource management in relation to fisheries are described in Working Paper 2 Sustainable Resource Management. They include lack of capacity to enforce environmental and fisheries regulations and widespread illegal and destructive fishing. In addition lack of knowledge of fish stocks combined with uncontrolled increases in fishing effort mean there is great uncertainty about current stock status and sustainable levels of exploitation. A number of stocks are known to have collapsed (rock lobster and sea cucumber) whilst numerous others are thought to be heavily over-exploited, including shark, cuttlefish, shrimp. 38. Coastal Development: Increasing coastal populations and urban and infrastructure development pose a threat to marine and coastal ecosystems such as coral reefs, seagrass beds and mangroves through clearance for development, waste and sewage disposal, industrial and agricultural run-off and increased sedimentation. The Governments planned encouragement of migration from the Central Highlands to the coastal areas could exacerbate these problems and raise further issues regarding waste management and protection of vulnerable and important coastal and marine ecosystems; the features which give the Red Sea a unique ecosystem (high temperature, high salinity, low nutrient and oxygen levels, semi-enclosure) also render it particularly vulnerable to pollution. On Socotra, recent developments on the islands include the opening of the airport in 1999 and the construction of the first paved roads in 2001. These have allowed increased numbers of tourists to visit the island. However there are no sewage facilities and there is limited solid waste management (as evident from the large quantities of rubbish to be found on the streets of the capital Hadiboh); construction of the roads has caused controversy due to failure to complete proper planning or EIA procedures. The Government has recently approved Resolution of Prime Minister (No. 72 of 2010) Regarding the National Plan for Integrated Management of Coastal Areas of the Republic of Yemen which seeks to improve ICZM through greater coordination between government agencies and improved planning. 39. Climate Change: Yemen is frequently highlighted as a country likely to suffer severely from the impacts of climate change due to high levels of poverty, rapidly increasing population, severe water shortages and low adaptive capacity. The World Fish Centre has identified Yemen as one of four countries in Asia (alongside Bangladesh, Cambodia and Pakistan) which are particularly vulnerable to the impact of climate change on fisheries, based on effects of predicted warming, the
74
relative importance of fisheries to national economies and diet and capacity to adapt to potential impacts and opportunities. However the impacts of climate change on fisheries are highly localised, dependent on a complex range of ecosystem interactions and thus hard to predict. There are a number of impacts which are likely to be felt in Yemen (and in some cases already are being felt). These include: Increased frequency of extreme weather events: In Yemen there are few purpose built landing sites, breakwaters or jetties so most fishers must land directly on beaches which are highly exposed to waves, particularly during the summer monsoon season. In 2008 a level three tropical storm caused an estimated $1.7billion of damage to Yemens Gulf of Aden coast. In addition beach launching vessels is physically hard and dangerous and cannot be done when seas are rough; Temperature induced shifts in stock distribution: As with fisheries in many parts of the world, the Yemeni fisheries sector is vulnerable to shifts in spatial distribution of stocks as a result of changing temperatures; the Yemeni Red Sea waters are semi-enclosed and likely to warm faster than other areas. All marine and aquatic invertebrates, as well as fish, are poikilotherms, which means their internal temperature varies directly with their environment. When temperatures rise this forces them to shift to cooler waters to regain their optimal internal temperatures, so-called behavioural thermoregulation. Already there has been a shift in the migratory pattern of Yellowfin tuna into deeper waters forcing fishers to travel further to obtain the same or, at times, any catch. This increases costs, increases the use of fuel, increases ice requirements, and where ice is not used reduces the quality of fish landed due to longer travelling times. It also increases the risk to fishers in the event of a breakdown or other accident at sea; Changes in primary productivity and catch potential: Some of the impact of warming waters may be mitigated by the strengthening of the seasonal upwelling which causes cooling of waters in the Gulf of Aden and Arabian Sea if the south-western monsoon strengthens. However, the increased average temperatures and strengthened monsoon winds may also increase primary productivity and potentially catch potentials. There have already been increases in average net primary productivity (NPP) between the periods 1976-1986 and 1997-2002 of up to 250g per sq. metre per year which are visible through satellite monitoring of chlorophyll levels; these allow estimation of levels of phytoplankton in the ocean. Phytoplankton form the base of the marine food-web. Cheung (2009), based on changes in temperature alone, predicts that maximum catch potential in the Gulf of Aden could increase by 50-100% for the main commercial species. However in areas very close to the shore the change will be minimal and in the Yemeni Red Sea he predicts declines of around 30%; Damage to coral reefs: Reef dependent fisheries, such as those targeting shallow demersal species (grouper, snapper, emperor) in Yemen are threatened by the damage that even minor temperature changes cause to reefs through bleaching. Bleaching occurs when coral reject the colourful algae with which they normally have a symbiotic relationship. This is the response to the shock suffered when temperatures exceed the long term summer average by just 1C for a period of four weeks. Bleached coral appear white as they are no longer covered in algae and though coral can recover, bleaching makes corals vulnerable to disease, substantially increasing the risk of mortality. Though generally, Red Sea reefs are amongst the most resistant to bleaching in the world (having adapted to the high average temperatures) many reefs in Yemeni waters were damaged by the mass bleaching event of 1998 which killed 16% of the worlds coral. Heavy exploitation of reef fish communities and physical damage to reefs by trawling and use of poisons and explosives all reduce their resilience to temperature shocks; Fisheries as a livelihood of last resort: Other predicted impacts of climate change include increased temperatures and reduced rainfall which will affect the productivity of agriculture and availability of water (currently 176m3 per person per year11). This, combined with increasing populations, limited agricultural land (just 3% of total land area) and government strategy of encouraging migration from the densely populated Central
11 Annual water share is 176m3/capita, below the water poverty line of 1000m3/capita (FAO-AQUASTAT). In the Sanaa basin, recent detailed studies have reported that current water extraction rates will lead to the total depletion of the mined fossil water by 2015 (Earth System Science Co and Japan Techno. 2009. The study for the water resources management and rural water supply improvement in the republic of Yemen, water resources management action plan for Sana'a basin).
75
Highlands to the coastal areas, could result in increasing internal migration and increasing numbers of people turning to fishing as a livelihood of last resort. Already the numbers of fishers are growing at more than 7% per year putting fisheries resources under unsustainable pressure. 40. Land Tenure: Coastal land in Yemen is owned by the Government but used communally by coastal communities; fishers in particular. Their rights to this land are customary and not documented, exposing them to risk of land-grabbing by investors and developers. F. Potential Social and Environmental Impacts and Risks Potential Positive Social and Environmental Impacts 41. The project has the potential to create numerous positive social and environmental impacts and will address many of the current natural resource management issues highlighted above. 42. Fisheries Management: The project dedicates an entire component to improving fisheries management focusing on key issues of controlling effort through licensing, increasing enforcement of regulations by training and equipping fisheries inspectors, improving knowledge of stocks by increasing research capacity and introducing improved management measures. These activities will significantly improve fisheries management, reducing both over-fishing and illegal and destructive fishing and positively impacting the coastal and marine ecosystems within the Yemeni EEZ and in the EEZs of neighboring countries. The increased research capacity and plans to develop FMPs create opportunities to identify and implement measures such as Marine Protected Areas, which are currently absent in most areas, or other temporal and spatial closures. It is planned that the EU will support Yemeni membership of the Indian Ocean Tuna Commission, the Regional Fisheries Management Organization responsible for the management of tuna and tunalike species in the Indian Ocean and its adjacent seas. 43. In addition support provided to small business development and increases in the rural outreach of financial institutions will facilitate economic diversification in fisheries dependent coastal communities. This is itself is a conservation measure, reducing reliance on overexploited stocks and facilitating reductions in fishing effort. 44. Vessel licenses to be provided under the new licensing system will specify the areas in which the vessel is allowed to fish, this will reduce the problem of the wafedeen in Al Mahara and Socotra. These are the migratory fishers from the Red Sea and Bab al Mandab area who travel to the eastern Gulf of Aden to fish at certain times of year. They are accused of using illegal and destructive fishing practices, not respecting traditional local resource management measures and of damaging the boats and gear of local fishers. 45. Coastal Development and Land Tenure: While it is not yet a major concern in Yemen due to limited development of the aquaculture sector, poorly planned aquaculture development has caused major social and environmental damage in numerous countries around the world. This project will prevent a repeat of this in Yemen by supporting the introduction of necessary legislation which currently does not exist, and by developing a national aquaculture strategy to ensure development takes place in a planned manner. Particular attention will be given to ensuring aquaculture development does not: (i) negatively impact vulnerable and important coastal ecosystems such as mangroves, seagrass beds or coral reefs; (ii) does not damage or disturb important turtle nesting locations of otherwise harm biodiversity; (iii) does not result in the introduction of foreign species; and (iv) does not negatively affect water quality or benthic environments. This will provide the foundation for the sustainable development of the aquaculture sector in Yemen and will complement the recently approved Resolution of Prime Minister (No. 72 of 2010) Regarding the National Plan for Integrated Management of Coastal Areas of the Republic of Yemen and the upcoming World Bank project on Integrated Coastal Zone Management. 46. The project will also assist in clarifying coastal land tenure arrangements in order to prevent land-grabbing, protecting the customary rights of coastal communities and at the same time creating an environment conducive to investment in aquaculture by removing legal uncertainties.
76
47. Climate Change: Activities included in the project will support both direct adaptation and building of adaptive capacity - of the fishers themselves and of the fisheries resources. Improved fisheries management: This will reduce overexploitation and damage to the marine environment caused by destructive fishing practices; this will increase the resilience of marine ecosystems and their ability to adapt to environmental changes; Construction of integrated landing sites: This will create protected locations where boats can be kept safely during the monsoon season and where they can land easily, no longer constrained by the difficulties of launching boats from the beach into breaking waves. Difficulties arising from the lack of protection for vessels from wind and waves during the monsoon season were repeatedly raised during field visits and with the predicted increase in extreme weather events as a result of climate change these problems are likely to worsen; The mother ship system: This will enable fishers to remain at sea for longer and to travel further in greater safety and with the use of less fuel, reducing emissions of GHG emissions. This supports adaptation by enabling small scale fishers to continue to catch species such as Yellowfin tuna even if the migratory path shifts further out to sea; Protecting fishers natural resource access rights: The introduction of licensing for all actors in the fisheries value chain will mean that fisheries resources are no longer openaccess. Future increases in effort will be strictly controlled and efforts will be made to balance fishing effort with the size of the resource ensuring the long term sustainability of the sector. This will prevent unsustainable increases in the number of non-fishers turning to fisheries as a livelihood of last resort as a result of drought etc., which in the longer term threatens the livelihoods of all those involved in the industry. However it will also allow effort to be increased if, as predicted, catch potential in some areas increases; Increased incomes and access to financial services: Activities which focus on value addition and upgrading of the value chain will enable fishers to achieve higher earnings from the same or even lower catches, reducing vulnerability to shifts in fish stocks and reductions in catch potential. In addition increases in incomes and access to financial services such as savings and insurance will increase the target populations resilience to shocks - including environmental shocks. 48. The project will also result in numerous positive social impacts including: Increased capacity of fishers organizations to provide valuable services and benefits to their members; Reduced exploitative power of the wakeels in the Red Sea coastal area and economic empowerment of the fishers and others in coastal communities; A greater sense of ownership of the fisheries resources for licensed fishers; Increased safety-at-sea and introduction of insurance will resulting in reductions in the numbers of deaths and injuries amongst fishers and greater protection for them and their families against risk; Increased opportunities for women to find employment of start MSEs as a result of support for development of rural businesses and project gender targeting; Reduced health risks for consumers of fisheries products as a result of improved handling and storage of fisheries products. Potential Negative Social and Environmental Risks and Mitigants 49. Much of the support being provided is composed of technical assistance, training and credit and is not expected to have any significant direct negative environmental impact. Component 1 does not include any activities with potential negative environmental effects. However a number of project activities such as infrastructure development do have potential to result in negative environmental impacts. There is also a responsibility to ensure that potential cumulative negative environmental impacts are identified and mitigating measures implemented. Risks and mitigants are presented below.
77
Table 3: Environmental and Social Risks and Mitigants

Category Direct (E)
12
Details of Risk Potential negative environmental impacts of infrastructure development (landing sites, access roads) including damage to local ecology or vulnerable marine and coastal environments. Impacts of landing site construction can include impacts on sedimentation, coastal erosion and beach formation, and can also result from management and disposal of construction material, off-cuts, debris and any excavated materials.
Cumulative (E/S)
Cumulative (S)
Direct/Cumul ative (S)
Project could result in increased fishing capacity and incentives to increase fishing effort as a result of increased incomes, increased access to credit, improved landing site facilities etc., potentially resulting in further overexploitation. Introducing licensing requirements for fishers which will be used to limit effort will mean that fisheries resources are no longer open-access. There is a risk of licenses being accumulated by wealthy individuals (not necessarily fishers) who could then become landlords of the fisheries resources and capture economic rent reducing fishers incomes and disempowering them. Licensing could prevent the poorest of the poor turning to fishing as a last resort. Elite capture of project benefits.
Mitigants Procedures put in place for the assessment and selection of infrastructure investments provide early opportunity for any environmental concerns to be taken into consideration. Particular focus will be placed on minimizing environmental impacts of infrastructure development on Socotra, taking into account the Socotra Zoning Plan and collaborating closely with the Environmental Protection Authority with whom planned activities were discussed during design. No integrated landing complexes will be constructed on Socotra though smaller investments may be made in public and social infrastructure. The EOF will be responsible for: (i) overall compliance with requirements of the environmental legislation of Yemen; (ii) ensuring that all necessary environmental mitigation measures are built into infrastructure designs; and (iii) supervising the implementation of mitigation measures through their in-house specialist or consultants as required. Component 1 is entirely focused on improving fisheries management and ensuring that the project does not result in further overexploitation.
Avoidance of potential negative social consequences has been taken into account in the licensing system described in WP2. Limits will be set on the number of vessel and gear licenses which an individual can hold and vessel licenses will only be available to owners eligible to hold a fishing license (i.e. with a historical involvement in fishing).
Cumulative (S)
Direct/Cumul ative (S)
Fishers livelihoods may suffer as a result of the introduction of effort limits and other conservation measures.
It is not feasible to allow unlimited numbers of fishers to enter the sector on a commercial basis but no license will be required for subsistence fishing activities. The project seeks to promote direct linkages between fishers and promoters and will engage Government in dialogue to remove current requirement to sell all fish through auction which result in the imposition of exploitative charges on fishers by licensed auctioneers. In addition the project will seek to strengthen fishers organizations to enable them to control and manage fisheries infrastructure and provide essential services to members. Increasing access to credit will also reduce the power of wakeels in fishing communities. Social and economic impacts of conservation measures will be taken into account during their development by ensuring that stakeholders are consulted and closely involved in fisheries management decisions. The project will collaborate with development partners to support fishers in this respect.
12
Environmental=E, Social=S
78
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 6: ENVIRONMENTAL AND SOCIAL REVIEW NOTE Category12 Cumulative (E) Details of Risk Increased levels of fish waste may result from expansion or establishment of processing operations or increases in enforcement of quality standards. Currently processing waste is disposed of by local councils and limited waste is found at landing sites. Mitigants Fish processing operations supported by the project will be required to develop plans for the management of waste and the project will support efforts to make productive use of fish waste such as conversion into fishmeal is sufficient quantities are available to make such operations economically feasible. Waste management plans and facilities will be developed for all landing sites constructed by the project. Before supporting the establishment of fish farms the project will support introduction of aquaculture legislation containing measures to ensure it is environmental sustainability. A national aquaculture strategy will identify locations suitable for aquaculture operations, taking environmental concerns into account. EIAs performed in advance of licensing and establishment of aquaculture operations will specify environmental monitoring requirements (water quality, impacts on benthic environment) and specific mitigants to be included in the design of the operation and its daily operations. Aquaculture activities in the project will follow Article 9 of the FAOs Code of Conduct on Responsible Fisheries which relates to sustainable aquaculture development. However the species selected to not require feeding or treatment with any chemicals or fertilisers or construction of any permanent physical infrastructure so the potential for environmental damage is limited to non-existent. Indeed sea cucumber, mussels and seaweed as live of excess nutrients in the environment and can have a positive environmental impact. An assessment of fresh water availability will be made in advance of construction and salt water used for ice production where necessary/feasible
Direct/Cumul ative (E)
Aquaculture development has potential negative environmental impacts.
Cumulative
Construction of ice plants as part of integrated infrastructure development will place further demands on limited water resources in coastal areas
G. Environmental Category 50. The programme has been classified as Category A as a result of plans to develop infrastructure in coastal areas. However as the precise locations of investments will be identified in a demand driven process as part of implementation it is not possible to undertake the normally required ESIA and this requirement has been waived. Sufficient budget has been included in the project to undertake EIAs and environmental monitoring activities and environmental criteria will inform the selection of landing sites. This will ensure that budget is available to enable all infrastructure development undergo stringent environmental impact assessment in accordance with national legislation and to allow necessary environmental analysis to form part of the project M&E; H. Further Information Required 51. A more detailed environmental study has been undertaken in order to identify areas of particularly vulnerable ecosystems around the coast, to provide some guidelines for minimising environmental impact from the earliest stages of design and to draft environmental and waste management guidelines for the proposed landing sites. This is attached as Annex. 52. Monitoring and investigation of the impacts of infrastructure and aquaculture development, and discussions with stakeholders including local communities and members of the target group, will continue during appraisal and implementation.
79
I. Recommended Features of Programme Design and Implementation 53. Numerous attempts to mitigate negative environmental impacts (direct and cumulative) of the project have already been included in the design, these include: Balancing measures aimed at improving the livelihoods of fishers with measures aimed at enhancing the capacity of the MFW to manage the fishery sustainable and phasing implementation to ensure implementation of safeguards against over-fishing are prioritised. Taking the decision not to construct any integrated landing complexes on Socotra. Selecting species with the lowest environmental impact for aquaculture development. Coordination with other projects in the fisheries sector important for coherent and controlled development of the fisheries sector. Addressing some major impacts of climate change on fishers, fish stocks and the marine environment. Training extended both to participating financial institutions will specifically address issues of social and environmental relevance in lending operations (social responsibility, environmental and gender-specific lending policies). 54. A number of environmental issues which affect or are related to the fisheries sector have not been addressed by this project as they are being addressed by other ongoing or planned projects. These include: Improvements to Integrated Coastal Zone Management which is the focus of a World Bank project which will be implemented later in 2010, this project includes integration of climate change concerns and activities such as rehabilitation and improved protection of mangroves. However the Fisheries Investment Project will take the recently approved Resolution of Prime Minister (No. 72 of 2010) Regarding the National Plan for Integrated Management of Coastal Areas of the Republic of Yemen into account; Support for engagement in regional fisheries management organisations (RFMOs) which will be provided by the EC; Direct, focused support for the involvement of fishers organisations in fisheries comanagement this will also be provided by the EC. J. Monitoring aspects 55. Monitoring of relevant environmental and social indicators, particularly in relation to gender, will be integrated in the programmes M&E system. 56. Evaluation of the improvements in the biological status of the stocks resulting from improved management will based on data generated by the FRA research programme incl. the stock assessment to be financed jointly by IFAD and the EC. Fisheries Management Plans to be introduced will include specific requirements in relation to data collection and impact monitoring. 57. Social impacts of the fisheries management initiatives, licensing in particular will be monitored throughout the project with particular attention focuses on these issues during the MTR. 58. As part of the extension services provided to aquaculture operations, and as a condition of their license, fish farms will be visited regularly by environmental officers of the EOF who will monitor changes in water quality and the benthic environment around fish cages and shrimp ponds as well as use of chemicals and supplementary feeds and ensure standards (to be established in the legislation to be developed by the project) are being met.
80
59. Besides the relevant result and impact management system (RIMS) indicators, some additional indicators that may be used to assess, on a yearly basis, the progress and the impacts (social and environmental) of project activities. These may take the form of short surveys, focus groups, or structured interviews, complemented by EOF M&E data. Examples of additional indicators are: changes in catch-per-unit effort; changes in average size of fish/lobster etc. landed; progress in development of legislation and regulations concerning land tenure and aquaculture development; number of EIAs completed for infrastructure and aquaculture operations and their findings and recommendations; results of ongoing environmental monitoring of aquaculture operations; members of the target group benefiting from financial services (gender-disaggregated); number of accidents-at-sea (including causes and consequences); reductions in fuel use as a result of motherboat system; number of non-fisheries related employment opportunities created. K. Components requiring ESA 60. The requirement to conduct an ESA has been waived due to the fact that the precise locations of investments will be decided as part of a demand driven landing site selection process. An additional environmental study has nevertheless been completed and is attached as Annex X. National EIAs will be conducted as required. Table 4: Major Laws and Regulations Relating to the Environment
Year 2010 2006 2005 2005 2005 2004 2004 2004 2004 2003 2003 2003 2000 2000 1996 1995 1995 1993 1991 Title Resolution of the Prime Minister No. 72 Regarding the National Plan for Integrated Management of Coastal Areas of the Republic of Yemen Decree No. () Regarding the International Wetlands Convention (RAMSAR) Law of Environment Protection No. 101 Cabinet Decree No. 99 Regarding the Integrated Management Plan for the Coastal Area in Aden Governorate Approval of draft law for Socio-Economic Development Plan Law No. 4 Regarding Local Authority Decree No. 218 Regarding the Organizational Structure of the Ministry of Water and Environment Decree No. 135 Declaring Damth a Tourist Area Law No. 16 to Protect Marine Environment from Pollution Water Law Cabinet Decree No. 95 Regarding Organizing Water Management Decree No. 102 Regarding Supporting Decentralization and Coordination of Local Authority Development Programme Decree No. 275 to Divide Socotra Archipelago into Protected and Development Areas Law No. 4 Duties of Local Government Prime Ministerial Decree No. 4 on Establishment of Protected Areas in Socotra Law No. 26 Environment Protection Law No. 21 Land and Real Estate Law No. 11 Protection of the Marine Environment from Pollution Law No. 37 Territorial Waters and the Exclusive Economic Zone
81
REPUBLIC OF YEMEN: FISHERIES INVESTMENT PROJECT (FIP) PROJECT FINAL DESIGN REPORT ANNEXES ANNEX 7: PROJECT ALIGNMENT WITH IFAD STRATEGY, PROCEDURE AND POLICY
ANNEX 7: PROJECT ALIGNMENT WITH IFAD STRATEGY, PROCEDURE AND POLICY A. Introduction 1. The design of the Fisheries Investment Project is closely aligned to all relevant IFAD strategies, procedures and policies in particular: Project Design, Targeting and Sustainability Policies Environmental and Social Assessment Procedures Gender Policy Targeting Policy Private Sector Development and Partnership Strategy Rural Enterprise Strategy Rural Finance Policy Preventing Fraud and Corruption Procurement Guidelines Supervision and Implementation Support Policy Innovation Knowledge Management
Project Activity Related Policies -
Operational Policies -
Innovation and Knowledge Management -
2. A brief description of how the project conforms to each strategy/procedure/policy is provided below, along with references to particular sections with the text of the PDR and WPs. B. Description of Alignment (i) IFAD Strategic Objectives
IFADs Strategic Framework 2007-2010 3. The goal of IFADs Strategic Framework 2007-2010 is that poor women and men in developing countries are empowered to achieve higher incomes and improved food security .Its objectives are that poor rural people have better access to, and the skills and organisations they need to take advantage of: Natural resources, especially secure access to land and water, and improved natural resource management and conservation practices. The FIP focuses heavily on improving the management of fisheries resources, including implementing a licensing scheme to ensure those fishermen who traditionally depend upon these natural resources continue to benefit from them and have secure access to them. Through the FIP, IFAD and co-financiers including the EU will provide significant support to the Ministry of Fish Wealth to improve knowledge of fish stocks and build capacity to protect them. Consideration has been given to ensuring other project activities do not result in environmental damage which jeopardise poor rural peoples access to natural resources. Details are provided in WP 2 and in the Main Report. Improved agricultural technologies and effective production services. The FIP will introduce modern fish storage and cooling facilities on board small scale fishing boats, construct integrated landing sites equipped with modern facilities including ice plants, cold storage, air conditioned auction halls, and processing units. Contractual relationships developed between fishers organisation and private sector processors will include provision of technical advisory services to support fishers in increasing the quality of fish produced and maintaining the integrity of the cold chain. Poor members of coastal communities will also be supported to develop aquaculture and MSEs in fisheries and non-fisheries related activities. Full details are provided in WP 3 and in the Main Report.
83
A broad range of financial services. Improved rural outreach of financial services institutions and provision of a range of adapted financial products, including credit and insurance, will be supported by the FIP. A range of credit options including loans, leasing, venture capital and equity financing will be used, enabling beneficiaries to develop economic opportunities which require large investments but which offer strong returns. The EOF will purchase equity participation in Al Amal Microfinance Bank to enable it to influence lending policies and will provide AMB with technical assistance to expand and improve the quality and range of services provided to the rural poor. Full details are provided in WPs 4 and 5 and the Main Report. Transparent and competitive markets for agricultural inputs and produce The FIP will strengthen fishers cooperatives to improve their ability to represent their members and to empower them as value chain actors. Through a venture capital mechanism, fishers organisations will be encouraged to invest together with the EOF in integrated landing sites at which they will control productive infrastructure such as the ice plant, an essential input, and the auction shed and auctioneer giving them greater control over the marketing of their produce than they currently have in many areas, particularly the Red Sea. The FIP will also facilitate the establishment of contractual relationships between fishers cooperatives and fish processors/exporters. These activities will reduce the power of the Wakeels and other powerful elites who are involved in the fisheries value chain, and reduce potential for collusion between buyers and auctioneers. Opportunities for rural off-farm employment and enterprise development. The coastal communities living in the target area are highly dependent on fishing. This project will support members of the target group to access alternative economic opportunities in aquaculture and other fisheries and non-fisheries related activities. They will be supported to form groups, access credit from partner microfinance institutions, receive technical and business management training and be supported in developing their businesses with marketing and other advice. The enterprise models developed show high potential for establishing profitable fisheries-related MSEs (fish processing, services to fishers) in rural coastal areas which would provide significant income and employment. No models have been developed for non-fisheries activities as these will be created once secured market access has been identified. Local and national policy and planning processes. As mentioned above, the FIP will strengthen fishers organisations (only those which can demonstrate good governance, compliance with rules and regulations, sound financial statements and diversified services to their members and the membership of which reflects the diversity of fishers status) and assist fishers communities in locations where current cooperatives are too weak or non-existing to organise themselves into groups in order to ensure they have a voice in local, regional and national decision making processes. The national FCU will be supported to ensure fishers cooperatives are able to cooperate at a national level and influence policy making at Government level. Stakeholders in the fisheries sector are be fully consulted in activities related to fisheries management (development of the licensing system, management plans etc.) directly and through their participation in stakeholder liaison committees of Fisheries Authorities. (ii) Project Design, Targeting and Sustainability Polices
Environmental and Social Assessment Procedures 4. Following the recommendation from the QE panel and the revision of the Environmental Category rating from B to A, an Environmental Impact Assessment has been carried out by a local consulting firm, the report of which is attached to the Main Report as an Annex. Based on information collected during the mission, discussions with stakeholders, members of the target group and the national Environmental Protection Authority, it provides an overview of social and environmental aspects of the project area, the type and magnitude of likely project impacts (positive and negative) and identifies mitigation measures and actions to be taken in implementation to minimise or eliminate any possible negative impacts. In addition, full Environmental Impact Assessments for each proposed integrated landing sites and aquaculture development will be conducted as part of the technical feasibility studies to ensure that all necessary mitigation measures are built into infrastructure designs. These assessments will be
84
carried out in compliance with the regulations and procedures issued by the Environmental Protection Authority and will also comply with IFADs ESA Procedures. Gender 5. The IFAD strategy for gender mainstreaming and womens empowerment focuses on a three-pronged strategy: Expand womens economic empowerment through access to and control over key assets; Strengthen womens decision-making role in community affairs and representation in local institutions; and Improve the knowledge and well-being of women and ease womens workloads by facilitating womens access to basic rural services and infrastructures. 6. This strategy is to be operationalized by ensuring that certain key features are reflected in project design and implementation: the understanding of gender differences in the activities or sectors concerned; actions to empower women, economically and in decision-making; operational measures to ensure gender-equitable participation and benefits; provisions for monitoring and evaluation of gender-differentiated impact and participation. 7. The IFAD Prerequisites of Gender Sensitive Design and a brief description of how they have been taken into account in project design are provided below:
85
Table 1: Gender Checklist Questions

1. Does the design document contain a context-specific gender strategy that aims to: Expand womens access to and control over fundamental assets capital, land, knowledge and technologies: The project design process included extensive consultations with members of the target group including women and womens groups which enabled a clear picture of constraints facing women in fishing communities in the project area to be developed. Strengthen their agency thus their decision-making role in community affairs and representation in local institutions: Womens participation in fishers cooperatives and the fisher liaison groups in Fisheries Authorities will also be promoted. Improve well-being and ease workload: Declining resources are forcing fishers to spend longer at sea and travel further increasing time spent away from home and risks to their lives and boats. Both of these phenomena increase the burden placed on women, leaving many alone to care for children, undertake agricultural activities and do other household tasks much of the time and when fishers drown at sea their households generally fall far deeper into poverty and have to rely on charity and support for extended families. Project activities would reduce declines in fish stocks and enable fishers to undertake shorter fishing trips. Support to safety-at-sea measures should decrease the number of households left without their main source of income. In addition, the project will also promote additional and alternative source of income for poor households mainly through fish processing activities. Beneficiaries would be supported through training and advisory services on top of accessing to adequate source of financing. 2. The project identifies operational measures to ensure gender-equitable participation in, and benefit from, planned activities, and in particular: Sets indicative and realistic targets in terms of proportion of women participants in different project activities and components: In WP1 targets for womens participation in project activities have been established as part of the gender mainstreaming strategy. However, due to cultural constraints, the role of women in the fisheries sector will be voluntarily limited to: a/ fish processing activities; b/ management of fishers cooperatives or organizations, and c/ work as casual labour in constructed or rehabilitated integrated landing sites. Establishes womens participation in project-related decision-making bodies (such as Water User Associations; committees taking decisions on micro-projects; etc): Support to Fisheries Authorities in relation to the development of fisheries management plans will encourage the participation of women in fisheries stakeholder liaison groups which will be involved in developing them. Womens involvement in cooperative management will also be encouraged. Reflects attention to gender equality/ womens empowerment in project/ programme management arrangements (e.g. including in Terms of Reference of project coordinating unit or project management unit (PMU) responsibilities for gender mainstreaming; inclusion of gender focal point in PCU, etc).: The project includes numerous measures to ensure gender equality/womens empowerment in project management arrangements (see WP1 in particular). All project staff will be given training in targeting and gender issues and Field Mobilisation Teams will be gender balanced. Terms of Reference of the Executive Director and Capacity Building Manager will include gender mainstreaming aspects. Indicators in the log-frame are gender-disaggregated where possible. Explicitly addresses the issue of outreach to women (e.g. through female field staff; NGO group promoters, etc) especially where womens mobility is limited: Field Mobilisation Teams will be gender-balanced and will travel throughout the project area to ensure women are aware of the project opportunities and have the opportunity to take advantage of them. Specific credit line will be made available at the level of partner microfinance institution for women to finance their income generating activities. 3. The project logframe and suggested monitoring system specify sex-disaggregated performance and impact indicators. Performance and impact indicators are gender disaggregated where relevant.
Targeting Policy 8. In order to ensure project benefits reach IFADs target group rural people living in poverty and food insecurity target groups have been defined, a targeting strategy developed and means of operationalizing that strategy integrated into project implementation modalities. Target groups have been identified through gender-sensitive livelihoods analysis making use of available data and data collected during project design in particular Participatory Rural Appraisal techniques described in the Poverty and Targeting Working Paper. These efforts have made use of the techniques and lessons learned described in the IFAD Targeting Policy.
86
9.
Forms of targeting undertaken include: Geographic targeting: All coastal regions are within the project area but criteria for location of particular project activities such as construction of landing sites, ice plants and selection of cooperatives for strengthening or accessing economic opportunities include targeting mechanisms such as poverty of fishers and fishers communities who will benefit. Enabling measures: Strengthening of fishers organisations will enable them to provide greater benefits to their members and represent their interests in national fora. Empowerment and Capacity: Strengthening of fishers organisations and establishment of contractual relationships with processors/exporters will empower them as actors in the fisheries value chain. As primary producers, fishers are often at the mercy of traders but services and facilities provided by cooperatives can enable them to retain a greater part of the value of their produce. Various business and technical trainings will also develop the capabilities of the target group. Self-Targeting: By increasing access to services and opportunities that members of the target groups themselves have identified during interviews conducted during missions, members of the target group will be able to self-target and proactively take advantage of the opportunities they identified when they are provided or supported by the project. Direct Targeting: This will be employed particularly in relation to SMEs development, with Field Mobilisation Teams making use of participatory community based exercises to identify potential micro-entrepreneurs for provision of training and assistance. The most vulnerable members of the target groups women and youths will be prioritised in these exercises.
10. In order to ensure uptake of project opportunities by members of the target group, particular focus will be on identifying and including those willing and able to take advantage of the opportunities offered. The establishment of Field Mobilisation Teams (including both male and female members) will aid implementation of the targeting strategy and enable proactive outreach to those with fewest assets/opportunities, living in fisheries dependent communities. Further capacity building and empowerment measures include support for fishers organisations to enable them to provide greater services to their members, and extensive programme of business and technical skills training to enable members of target groups to take advantage of economic opportunities including employment and increased availability of credit due to project activities. 11. Due to fisheries resource limitations the project cannot support fishers working as crew, the very poor, to purchase their own vessels. Therefore to improve their incomes and reduce livelihood vulnerability it will be necessary to include non-poor including multiple boat owners in project activities. By increasing the revenue of their fishing operations the share they pay their crew will increase (activities supported by the project will aim at preserving the integrity of the cold chain from fishing boats to markets; thus enabling each value chain stakeholder to benefit from a higher price and an higher income). Furthermore due to the highly risky nature of fishing even those considered marginal poor and non-poor are vulnerable to shocks such as sinking of a boat or bad weather preventing fishing which could have dramatic and sudden impacts on their livelihoods. Project activities such as improvements to safety at sea and improvement of access to insurance will reduce this vulnerability. 12. Measures to reduce risk of elite capture have been incorporated in design and poorer boat owners will be prioritised; regular monitoring of project benefits will allow identification and mitigation of excessive elite capture should it occur. The very poor, in particular women and youths but including crew on fishing boats will also be targeted for development of alternative economic opportunities onshore including in aquaculture and in fisheries and non-fisheries related MSEs. Elite capture will also be avoided in venture capital investments. Third-party investors will not be allowed to own more than 20% of each limited liability company implemented by the EOF together with fishers organizations. In addition, a shareholders agreement will specify that: a/ EOF shares in each limited liability company can only be bought back by fishers organizations unless irrevocable accepted by the latter, and b/ fishers organizations will hold the majority in the share capital of each limited liability company created within the project at least during five years after all EOF shares have been bought back by fishers organizations.
87
Table 2: Targeting Checklist Questions

1. Does the main target group those expected to benefit most correspond to IFADs target group as defined by the Targeting Policy (the extremely poor and food insecure): Target groups are clearly defined on the basis of poverty level and household typologies developed to aid targeting. Incomes and living standards of the marginally poor, poor and very poor groups place them within IFADs main target group. In order to access the most poor in society planned interventions may also benefit non-poor members of fishing communities but these account for no more than 1-5% of fishers and measures to prevent elite capture have been developed. 2. Have target sub-groups been identified and described according to their different socioeconomic characteristics, assets and livelihoods with due attention to gender differences: See above 3. Is evidence provided by interest in and likely uptake of the proposed activities by the identified target sub-groups? The missions included extensive consultations with target sub-groups (male and female and a range of ages) and potential project activities were discussed. Significant interest was expressed in the activities proposed and significant flexibility is built into support for MSEs development which will allow members of the target group the freedom to use project support to develop different kinds of MSEs. Furthermore the project is anticipated to generate significant numbers of jobs which members of the target group who do not wish to start their own business will be supported through training to access. Existing cooperatives have also expressed their interest in participating in venture capital operations together with the EOF using the Musharaka mode of financing (Islamic financial instrument that is of use by most financial institutions in Yemen). Contribution from existing cooperatives has been adapted according to their financial statements and their current cash position. This will ultimately impact on the exit strategy of the EOF in each proposed investment (increasing the time during which the EOF will hold equity) and on the full ownership status of each investment by the fishers organizations. 4. Does the design document describe a feasible and operational targeting strategy in line with the Targeting Policy. The targeting strategy will involve either all or some of the following measures and methods: (i) Geographic targeting; (ii) Enabling measures; (iii) Empowerment and capacity building measures; (iv) Direct targeting; and (v) Attention to procedural mechanisms. See above 5. Monitoring targeting performance. Does the design document specify that targeting performance will be monitored using participatory M&E, and also be assessed at Mid-Term review A section on monitoring of targeting effectiveness is included in Working Paper 1. Participatory M&E and assessment at mid-term review are both featured.
(iii) Project Activity Related Policies Private-Sector Development and Partnership (PSDP) Strategy 13. Planned private sector partnerships in the Fisheries Investment Project are in line with the IFAD PSDP strategy in that they: Provide benefits to the target group; Contributes to the objectives of the IFAD 2007-2010 Strategic Framework; Builds on IFADs experience and catalytic role Operates within IFADs resource capacity Learns from the experiences of other development organisations Draws on the Initiative for Mainstreaming Innovation at in particular from the experience in private sector partnerships and smallholder commercialisation which exists within the Near East and North African and other regional divisions. 14. In terms of the three broad lines of action proposed in the PSDP the project contributes to them all: Policy Dialogue. In relation to aquaculture where IFAD will support the development of an enabling policy framework and national strategy for aquaculture development and private sector partners will fund hatcheries, and technical support for aquaculture startups, as well as entering into mutually beneficial contractual arrangements for purchase of fish produced. Policy dialogue will also take place within the traditional fisheries sector and more specifically with measures to strengthen the existing licensing system, to enforce rules and regulations and to develop safety-at-sea and insurance products.
88
Supporting Local Private-Sector Development in Rural Areas. The project will strengthen the business capacity of the rural poor in coastal areas, and their organisations fishers cooperatives in particular - and will improve access to a diversified range of financial products (including credit, leasing, venture capital and equity financing as well as adapted savings products), and training and advisory services to enable them to take advantage of economic opportunities in coastal areas and establish MSEs such as fish processing or aquaculture. Partner With the Private Sector to Leverage Additional Investment and Knowledge in Rural Areas. As part of the value chain approach of the project and in pursuit of the goal of IFADs PSDP strategy to engage the private sector to bring more benefits and resources to IFADs target group, the design mission met with numerous private sector fish processors and exporters. As the majority of fish in Yemen is caught by the small-scale fishing sector participants which form the core of the projects target group, the private sector processors and exporters are highly reliant on small scale fishers for supplies of raw materials. They therefore have a strong commercial interest in ensuring that the quality of fish they receive is as high as possible and were thus more than willing to engage with the projects planned support to value chain upgrading. Private sector stakeholders are also concerned about declining fish stocks and are very interested in the potential offered by aquaculture to create an alternative source of raw materials for processing and export. Rural Enterprise Strategy 15. Given the high levels of dependency on over-exploited fisheries resources in many of Yemens coastal communities, support for livelihood diversification was considered essential both for reduction of pressure on the resources and to reduce the vulnerability of the communities to declining catches and potential collapses of certain fish stocks. 16. The project activities include key aspects of IFADs Rural Enterprise Strategy. The project will increase access to financial services by directly engaging with pro-poor financial institutions and assisting them in developing adapted financial products and services which meet the needs of fishers and other members of poor, rural coastal communities. Non-financial services such as business, marketing, management and technical skills training for potential micro-entrepreneurs identified through participatory exercises will also be provided. Rural agribusiness MSEs and other enterprises in the fisheries and aquaculture value chains will receive support to obtain quality standards certification to improve market access and add value to their products. Linking with larger processors/exporters will increase market access as will project support for export promotion activities. While particular focus will be placed on post-harvest value adding activities in the fisheries sector other non-fisheries related business will also be supported. Rural Finance Policy 17. IFADs Rural Finance Policy states that developing inclusive rural financial systems and fostering innovations to increase the access of poor and marginalised women and men to a wide range of financial services is central to IFADs mandate with development of innovative products and delivery mechanisms critical to meeting the needs of IFADs target group. 18. Six guiding principles are to be followed in IFAD rural finance interventions: (i) support access to a variety of financial services; (ii) promote a wide range of financial institutions, models and delivery channels; (iii) support demand driven and innovative approaches; (iv) encourage in collaboration with private-sector partners market-based approaches that strengthen rural financial markets, avoid distortions in the financial sector and leverage IFADs resources; (v) develop and support long-term strategies focusing on sustainability and poverty outreach; and (vi) participate in policy dialogues that promote an enabling environment for rural finance. 19. The FIP rural finance activities are aligned with these six guiding principles. It will support access to a diversified range of financial products including credit, leasing, venture capital and equity financing; adapted savings products and insurance services through partnerships developed between the EOF and Yemeni financial institutions. The project will also assist these financial institutions to enter into contractual agreement with the Post Office to use its network of rural branches to enable a wider outreach vis--vis project target population. Capacity building of financial institutions staff including Post Office staff will be promoted by the project especially with
89
regards to design and implementation of adapted financial products/savings/services for fishers and fishers organizations and groups. Innovative financing products will be promoted by the project through the venture capital mechanism implemented by the EOF. Detailed description of the rural finance aspects of the project and of the venture capital mechanism is included in WP 4. (iv) Operational Policies Preventing Fraud and Corruption 20. At the country level IFADs policy on fraud and corruption is to support measures which prevent corruption as it affects the rural poor through its lending activities. This project will increase transparency and reduce corruption in the fisheries sector in Yemen by engaging in policy dialogue to remove the current opaque system of taxes and charges levied on fishers by the Government through its agents and other service providers. The following activities will contribute: (i) Government revenue from a 3% levy currently imposed on fishers will be replaced by fees from a more transparent licensing system; (ii) a due diligence exercise will be carried out on all registered cooperatives and those acting illegally will be closed and those which are weak will be strengthened to enable them to support their members and empower them in the value chain; (iii) where possible strengthened cooperatives will be encouraged and facilitated to have ownership and take control of management of landing sites to reduce collusion between buyers and between auctioneers and buyers and reduce the number of middlemen and service providers who currently exploit the fishers by imposing high charges for services offered; and (iv) improved rural outreach of financial institutions will reduce reliance of the target group on informal money lenders and wakeels (agents) who entrap fishers in debt slavery. 21. The establishment of the Economic Opportunities Fund (EOF) as a public/private sector partnership which will manage this project as well as the Economic Opportunities Project and the planned Rural Employment Project will also help combat corruption. A section on transparency and good governance is included in the Main Report which provides details on the EOF's contribution to increasing transparency and reducing the risk of fraud and corruption. Procurement Guidelines 22. Procurement procedures are detailed in the Draft Project Implementation Manual annexed to the Main Report and are in line with IFAD Procurement Guidelines. Supervision and Implementation Support Policy 23. In line with IFAD policy and criteria for selection of supervision approaches the FIP will be fully supervised by IFAD. This is based on the facts that considerable difficulties exist with regard to project implementation in Yemen (specific risks and mitigants are highlighted in a Risk Analysis in the main report) and there is moderate to low national implementation capacity and a substantial IFAD country programme. Grant supervision will be primarily Headquarters-led in close coordination with the CPO in Yemen. The establishment of the EOF and role of the EOF as the main implementing agency will build national capacity in this respect. (v) Innovation and Knowledge Management
Innovation 24. IFADs Innovation Strategy identifies three levels of intensity of processes of innovation, examples of each of which are included in this project: Adoption in a new context , or on a new scale, or practices or technologies developed by others or in other contexts: During the design mission considerable attention was paid to scouting for indigenous innovations, creative solutions developed by the fishers themselves and other stakeholders in the fisheries value chain, the mothership system to be up-scaled by the project is an example of such an innovation. Adaptation of a practice not fully appropriate to a context and requiring a certain amount of redesign: Aspects of the Growth Pole Strategy developed in the PescAqua project in Mozambique and elsewhere were adapted for use in developing the criteria for selection of locations for the construction of integrated landing sites (themselves something of an
90
innovation in the Yemeni context though one such integrated landing site, constructed by a private sector organisation the Yemeni Fish Co. near Mukalla provided the inspiration). Creation of new practices by accidental acts or by new combinations of existing ideas: Development of aquaculture in Yemen is for the moment extremely limited despite the considerably favourable environment and enormous potential for growth. The project has been inspired by the recently implemented fish farm in Hodeida, by successful experiences in neighbouring countries (Saudi Arabia), and by exponentially expanding markets. However, aquaculture remains a highly innovative activity in the Yemeni context. 25. Other innovative aspects of the project include: Institutional arrangements. The project will be administered by the Economic Opportunities Fund, a public-private partnership, which will aim to become financially sustainable in the medium-term. Sustainable management plans. The project strategy to improve fishers incomes through enhancing catch value rather than catch volume was recognised as innovative for Yemen in the OSC. In order to ensure this outcome the project will assist the government is implementing several measures aiming at sustainably protecting and managing fish resources such as fisheries management plans for high value species; regulatory enforcement; revenue collection system which does not encourage misreporting of catches; and stock assessment. In addition, the project will support economic diversification into aquaculture and other sectors both as an alternative source of income and as a conservation measure in itself, reducing dependency on fisheries resources and reducing risk of over-exploitation. Venture capital financing. The EOF will participate in venture capital operations together with strengthened community-based organizations that have currently insufficient resources or no access to loan funds to finance productive investments. These investments will be implemented through a limited liability company with the EOF and a communitybased organization as shareholders (also including third-party investors for investments in landing sites). The community-based organization will have the possibility to buy back the EOF shares and gradually become the sole owner of the company and of the related investment. Specific investments to be financed such as mother/transport boats are local innovations scouted during field visits and adopted and upscaled by the Project. Private-sector approach. The FIP will continue the pro-poor private sector approach initiated by the EOP by implementing activities in the fisheries and aquaculture value chains based on market demand and growth potential where a majority of fishers are below the poverty line (crew members and boat captains), and strengthening linkages to improve efficiency, effectiveness, and local value addition. Developing contractual linkages between fishers and processors/exporters builds on a local innovation which has struggled for a number of reasons but which has high potential. Microfinance rural outreach. The FIP will provide financial and technical assistance to licensed microfinance institutions to develop an operational linkage with the Yemeni Post Office to channel funds to and from fishers communities. Such linkage will reduce the transaction cost of microfinance institutions while increasing their outreach in coastal areas. 26. By focusing a significant part of the project on improving access to credit and financial services and providing business and technical training to potential young and women entrepreneurs the project creates space for them to engage in innovation themselves and provides the support innovators need to create their own economic opportunities. 27. Acknowledging the risks involved in the innovation process risks associated with project implementation have been identified and mitigating measures designed and mainstreamed into project design. These risks and the related mitigating measures are described in a specific section of the Main Report. Knowledge Management 28. IFADs Knowledge Management Strategy has four components: (i) strengthening knowledge sharing and learning processes; (ii) equipping IFAD with a more supportive knowledge sharing and
91
learning infrastructure; (iii) fostering partnerships for broader learning; and (iv) promoting a supportive knowledge sharing and learning culture. 29. The design of this project has been informed by: Informal in-country knowledge sharing with Government, partners and members of fishing communities on past lessons learned from past fisheries development projects; In-country discussions with consultants implementing the World Bank funded Fisheries Resource Management and Conservation Project; In country discussions with members of an EC mission undertaking the evaluation of a completed fisheries project; In-house knowledge sharing and experience generated by the design processes of other recently designed fisheries projects in the Red Sea/Gulf of Aden and wider Indian Ocean region including in Eritrea, Mozambique and Mauritius; Experience generated by IFADs past experiences in the fisheries sector in Yemen. 30. Lessons learned from these knowledge sharing exercises have been mainstreamed into the design of this project and the most significant are explicitly described in the Lessons Learned section of the Project Design Report. 31. The process of designing the project has involved extensive discussion, coordination and collaboration with development partners and potential co-financiers including sharing of knowledge and experience, activities which have contributed to the strengthening of partnerships and contributed to broader learning processes. 32. The implementation of the project will generate significant new knowledge through the pursuit of new approaches to value chain development in Yemen, innovative forms of investment financing and new institutional arrangements. This knowledge will be captured for use in-country in the ongoing implementation of the country programme, and in future projects to improve implementation processes, for the analysis and sharing of operational experiences, lessons learned and best practices on a wider scale. Such knowledge will be captured by the EOF monitoring and evaluation specialist, concerned public institutions and the IFAD country programme team. 33. The design of the project incorporates a number of measures to ensure that the knowledge generated by the project is shared in country, in-house and up the region, including: In-country: Through periodic seminars and workshops In-house: Through informal and formal discussions, seminars and presentations primarily within the regional division, the technical advisory division and PMD as relevant, or through request and the production of Learning Notes for sharing knowledge on particular topics. Regionally: Through regional knowledge networks such as KARIANET and regional research networks including those supported by IFAD grants (AOAD, IDRC, etc.). Increased engagement with Regional Fisheries Management Organisations will be supported by the EU Fisheries Development Programme and knowledge generated through IFAD funded fisheries research activities will be shared through this channel. Efforts will also be continued in developing closer partnerships with the EU, WB, IDB, Saudi Fund, JICA, UNDP and FAO networks and projects. In addition, support will be provided for the publication of the results of fisheries and aquaculture research activities supported by the project. These efforts will ensure that IFAD is able to learn systematically from the project and the experience of development partners and co-financiers. In line with the objectives of the IFAD Knowledge Management Strategy this will directly contribute to improve quality of services delivered, sharing of innovations and enable IFAD and its partners to use knowledge acquired through project operations to promote good practice, scale up innovations and influence policies.
92

Republic of Yemen Fisheries Investment Project - Sept 2010

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Republic of Yemen Fisheries Investment Project - Sept 2010

Enviado por

Direitos autorais:

Formatos disponíveis

Document of The International Fund for Agricultural Development For Official Use Only

Volume I: Main report and Annexes

Near East and North Africa Division Project Management Department

CONFIDENTIAL REPORT No. 2306-YE September 2010

GOVERNMENT OF YEMEN Fiscal Year 1st January 31st December

Socotra (avg. 4 fishers/boat) Total

(Source: MFW / FAO Fishstat / Mission Estimates)

Table 2: Fishers and Fish Production, 2000-2010

Source: MFW, FAO Fishstat, Mission estimates)

(Source: MFW/FAO Fishstat)

(Source: FAO Fishstat)

(Source FA0 SOFA 2008)

Responsibility Outcome Step 3 Methodology

Figure 8: Fisheries Sector Indicative SWOT Analysis

SO2: promote sustainable rural financial services and pro-poor SMEs

Figure 10: EOF Strategic Framework

Figure 11: EOF Management Structure

ProjectLi a i s on Uni t(a tMFW)

Pol i cy Advi s or Interna l Audi t

InvestmentOffice Economi c Infra s tructure Uni t

Fi na nci a l Servi ces Uni t Depa rtments (i)Ruralfinance (ii)Venture capital

1 1 2 2 2 4 1 500 2 7 1 509 10 10 30 20 125 175

2 2 4 4 3 7 4 500 3 10 4 513 10 30 60 100 40 20 75 135

1 1 1 1 4 000 3 11 4 014 20 30 70 120 50 10 60

3 4 7 7 5 12 10 000 8 28 10 036 40 80 180 300 120 50 200 370

Table 7: Project Phasing Sustainable Resource Management

Table 10: Summary Project Cost

185 138 323 323 88 411 211 944 27 8 978

58% 18% 29% 8% 42% 9% 22% 15% 23% 2% 14%

5% 12% 17% 65% 3% 69% 15% 100% 2% 5% 107%

1.0 0.3 1.4 5.5 0.7 6.2 1.6 9.1 29%

0.0 0.0 0.0 11.3 0.0 11.3 0.0 11.3 37%

0.4 3.2 3.6 0.9 0.3 1.2 0.5 5.3 17%

0.0 0.0 0.0 0.0 0.0 0.0 2.8 2.8 9%

0.1 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0%

0.0 0.0 0.0 0.8 0.0 0.8 0.0 0.8 2%

0.0 0.0 0.0 1.5 0.0 1.5 0.0 1.5 5%

1.5 3.5 5.0 20.0 1.0 20.9 4.9 30.9 100%

All existing cooperatives are closed down by Government (R).

Activities Policy dialogue and law enforcement undertaken

Resource base assessed and managed

MFW including FAs and FRA staff trained (#);

Value chain diversified and upgraded

Fishers organizations functional/operational (#).

Financial services diversified

Improved access of fishers to financial services; PAR.

Key activities and target

IFAD IDB EU Government MFIs Beneficiaries EOF

29% 37% 17% 0.5% 2% 5% 9%

ANNEX 3.2: COMPONENTS BY FINANCIER (All Figures in USD Million)

% 70,1 9,0 27,0 27,6 67,8 29,4 32,2 29,5

MFIs Amount 0,76 0,76 0,76

% 3,8 3,6 2,5

IDB Amount 11,30 11,30 11,30

% 56,6 54,0 36,6

EU Amount 0,39 3,21 3,60 0,85 0,30 1,15 0,54 5,29

EOF Amount 2,75 2,75

% 3,7 0,4 1,3 0,1 1,2 0,1 1,0 0,5

% 4,8 11,5 16,3 64,6 3,1 67,7 16,0 100,0

ANNEX 3.3: EXPENDITURE ACCOUNTS PROJECT COST SUMMARY

ANNEX 3.4: EXPENDITURE ACCOUNTS BY COMPONENT BASE COSTS

Figure 1: Landing Site Selection Process

Responsibility Outcome Step 3 Methodology