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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