Benefits, justifications and risks
Risk and risk moderation measures included in the project design
The main risks of non-performance of the project components are indicated
below.
a) Smallholder tea development.
With respect to the Nshili sub-component the following
risk factors are important
-
delays and interferences with the distribution
of the OCIR plantation to poor smallholders, and in particular to
the women head of households and survivors of genocide living in the
area. This would have a negative impact on the main project objective,
delay the construction of the tea factory, slow down production of
green leaves, and affect the financial sustainability of the Nsili
Tea Company;
-
the yield of green leaves obtained by the smallholder
beneficiaries of the OCIR-Thé estate distribution is less than
expected, possibly due to sub-optimal application of fertilisers.
This may reduce the financial viability of the tea factory during
the first years of operation and delay the acquisition of the, shares
by the cooperatives;
-
delays in granting the personnalité
juridique to the primary societies of smallholder tea planters.
This will delay the establishment of the Nshili Tea Company and the
construction of the tea factory.
Risk moderation measures include:
-
GoR to attach top priority to the distribution
of the OCIR-Thé industrial estate to smallholders; IFAD will
withhold disbursement of funds for any other activity in tea development
(in both Nshili and Mushibi) until the land distribution is completed
and formalised, all individual beneficiary HHs identified, their qualification
as IFAD target group verified, IFAD is satisfied that the number of
women head of HHs being given user rights to tea plots is according
to project policy, the primary societies formed and granted personnalité
juridique so that they can acquire shares in the Nshili Tea Company
and primary societies;
-
The projected yields of green leaves (8 t/ha)
is perfectly possible in the area, provided adequate quantities of
fertilisers are applied. Yields obtained by the cooperative plots
that supply SORWATHE in a similar area have been significantly higher
when correct amount of fertilisers have been applied. Nevertheless,
the project includes the expansion of the area grown to tea by smallholders
in Nshili by 200 ha, which would offset up to 20% shortfall of the
projected yields.
With respect to development of smallholder tea plantations
in Mushubi, the risk is connected to delays in construction of a factory
to process the crop there.
Risk moderation measures include:
b) The coffee diversification component.
The following risk factors affect the performance of
the coffee diversification programme:
-
delays in organising suitable smallholder coffee
growers primary societies in four different areas suitable for high
value coffee production, leading to establishing the CPMCCs over a
longer period than three years, which would increase the cost of the
management contract for the enterprises, requiring an extension of
the contract with TWIN for the management of the enterprises;
-
poor performance of TWIN and or other service
providers under the coffee diversification component;
-
political interference with the management of
the CPMCCs and/or with the management of the primary societies;
-
lack of success in sufficiently improving the
quality of the coffee produced and processed; and
-
exceptionally bad climatic conditions.
Risk moderation measures include:
-
close monitoring and supervision of cooperative
formation and training activities;
-
GOR commitment to defend the autonomy of primary
societies from political interference, and close monitoring of their
performance, including the transparency and democracy of their decision
making processes; and
-
close monitoring of the agricultural research
activities required to back up coffee quality improvement.
c) The new cash and export crops component.
Risk will vary depending on the crop. Oversupply of a
specific product in the domestic market, or in a particular export market
may occur. Outbreaks of unforeseen pest or disease may severely damage
production and/or increase costs beyond profitable operations. Not enough
new opportunities may be identified to absorb all the funds allocated
to this component. Risk moderation measures will be elaborated during
project implementation on a case by case basis.
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