1. 1 SECOND PHASE ASDP BASKET FUND FORMULATION Draft CONCEPT NOTE Presentation to Contributors to the ASDP Basket Fund 5 TH MAY 2012

2. 2 Introduction The Agriculture Sector Development Programme (ASDP) has been under implementation since June 2006. The ASDP is financed through a Basket Fund supported by the government and five Development Partners namely The WB, IFAD, JICA, Irish Aid & AfDB.

3. 3 Introduction contd. Implementation of the first phase of the Basket Funded ASDP programme comes to an end in June 2013. It is envisaged that the second phase will involve several funding modalities to support the Expanded Sector Wide Programme The ASDP 2 Basket Fund will be the main public-led investment that shall build on systems and processes developed under the ASDP 1

4. 4 PROPOSED OBJECTIVES OF ASDP 2 BASKET FUND To increase adoption of technologies and enhance access to agricultural infrastructures and service delivery to smallholder farmers This will be achieved through a major shift to support strategic thematic areas critical to sector growth through implementation of priority commodity value chains which will generate quick impacts on smallholder productivity and farm incomes and opportunity driven and results-oriented interventions

5. 5 PROPOSED OBJECTIVES OF ASDP 2 BASKET FUND CONTD. Unlike the first phase, the ASDP-2 will focus on increasing technology adoption rates; increasing pay-off and sustainability of small scale irrigation investments; strengthening market efficiency, targeting higher farmer prices and link to domestic and export markets; input supply, building on current input subsidy program and institutional capacity development to strengthen planning and results monitoring

6. 6 KEY RESULT AREAS OF ASDP 2 BASKET FUND Strengthened technology generation and dissemination - to increase technology adoption rates, Improved access to agricultural infrastructure and machinery, Strengthened service delivery and markets (including agribusiness development), Improved agricultural input supply system, Strengthened institutional capacity for investment planning and results monitoring

7. 7 COMPONENTS AND SUBCOMPONENTS FOR ASDP 2 BASKET FUND Component 1: Local Level Agricultural Development Support Four sub-components are proposed under this component: 1.Sub-Component 1.1: Sustainable Agricultural Development Investments 2.Sub-Component 1.2: Small scale Irrigation Development 3.Sub-Component 1.3: Strengthening Market Efficiency 4.Sub-Component 1.4: Local Institutional Strengthening and Capacity Building

8. 8 COMPONENTS AND SUBCOMPONENTS FOR ASDP 2 BASKET FUND CONTD. Component 2: National Level Support Four sub-components are proposed under this component: The ASDP 2 Basket Fund will support activities at national level targeting Agricultural Sector Lead Ministries (ASLMs), Zonal institutions, Regional Secretariats MATI/LITIs and farmer training centers through the following sub-components: Sub-Component 2.1: Strengthen National Agricultural Research and Extension Systems Sub-component 2.2: Support Access to Agricultural Inputs Sub-Component 2.3: Sustainable Irrigation Development Sub-Component 2.4: Strengthening National Institutional Capacity for Planning and Result Monitoring

9. 9 IMPLEMENTATION ARRANGEMENT Institutionally the programme is organised in two main levels - the local and national, in accordance with the existing Government structure. The arrangement worked fairly well during the first phase of ASDP as it facilitated implementation of the programme through the D-by-D Policy environment However, in the second phase some issues related to working relationship between the ASLMs Technical Ministries, PMO-RALG and LGAs need to be sorted out to ensure effective coordination and accountability on the implementation of the programme at local level.

10. 10 IMPLEMENTATION ARRANGEMENT CONTD. In the second phase of the ASDP, the same institutional set up will be maintained. This will allow continuation of efforts to strengthen government systems at national and local level for enhanced sustainability. However, specific institutional arrangements are foreseen at the council level, whereby it is proposed to have District Coordinators to supervise implementation of DADPs as presented in the table of concept note.

11. 11 BASKET FUND STRUCTURE ASDP 2 BF is geared to provide a room for earmarking funds within the basket for specific segment(s) of the overall basket funded programme. However, there will be a need to maintain the balance between a flexible basket fund structure and the original basket fund principles, particularly those related to harmonization and use of government systems.

12. 12 BASKET FUND STRUCTURE CONTD. As described in the “Memorandum of Understanding” for ASDP Basket Fund, any Development Partner supporting ASDP through the Basket Fund will be required to observe “the principle of harmonization and strive for the highest degree of alignment with the budgetary and accountability system and registration of the Government so as to enhance effective implementation, reduce the administrative burden on the Government, and minimize transaction costs”. Aspects as described in the concept note need to be highlighted as core requirement for earmarked support.

13. 13 DISBURSEMENT AND FLOW OF FUNDS The ASDP 2 Basket Fund will continue to use the LGDG system, not only due to its alignment with the D by D policy but also to utilize financial management systems (disbursement and expenditure reporting) which have been developed during the first phase, aligned with the grant system However, experience shows that there have been substantial overlaps in utilization for the EBG and CBG grants, underutilization of these grants in some cases and confusions on access criteria/rules for the two grants.

14. 14 DISBURSEMENT AND FLOW OF FUNDS CONTD. Only two grants will be maintained: DADG – for investment related activities, mostly for component 1.1 and the A-CBG – for all capacity building related activities A supplementary grant for irrigation support DIDF will be maintained for the local investments under subcomponent 1.2, and to support high priority national irrigation investments in selected areas that would generate substantial impact under subcomponent 2.3

15. 15 Local Level Planning and Prioritization The current participatory planning process at the local government level (O&OD) be improved to generate interventions with impact on agricultural productivity, household income and food security, and at the same time ensure transformation of smallholder agriculture from subsistence to commercial agriculture. Therefore, opportunity/result oriented planning process will be promoted and supported.

16. 16 THANK YOU!