Programme area: All rural districts of Moldova will be eligible for support, with special preferences given to the most deprived areas. Given the size of Moldova and the relatively small regional differences in rural poverty rates, IRECR will effectively cover all rural areas of Moldova, with the exception of the climate change resilience interventions, which will focus on more vulnerable areas, predominantly in the central and southern districts.

Target group: It is possible to discern four main target sub-groups for the IRECR: the commercially active poor; the economically active poor; the very poor; and young entrepreneurs. Quantitatively, the IRECR will increase the climate-resilience of the agricultural production of 6,250 farmers by improving the soil conditions of their lands through introduction of conservation agriculture and land restoration practices and innovative solutions. It is also expected that more than 6,000 people will benefit from the rural enterprises supported by enhanced rural finance services; and about 60,000 people will benefit from improved rural roads, water supply and market infrastructure. In total, programme beneficiaries are estimated at around 76,000 rural people, including about 30,000 women.

Programme objectives: The overall goal of the IRECR is to increase the income and climate resilience of the rural poor. The programme’s development objective aims at increasing investments in the rural economy and strengthening climate adaptive capacity for the poorer sections of the society, leveraging the experiences of past interventions and introducing innovations where appropriate.

Programme description: Programme management will remain with the existing Consolidation Programme Implementation Unit, which has established a robust and well-recognised track record of competent and diligent programme management. However, in light of the increased emphasis on climate adaptation and resilience, the Unit will be strengthened with the necessary human resources. Programme components are:

• Climate Change resilience. The overall purpose of this component is to enhance the adaptive capacity of rural farmers through the introduction of climate-resilient agriculture practices and technologies. It intends to address the adaptation priorities identified by the Moldovan government in the agriculture sector; hence, it will focus on demonstrating climate change adaptation potential, supporting knowledge generation and inclusive farmers’ investments around conservation agriculture systems and techniques leading to a more resilient agricultural production. It is expected that this will provide both higher and more stable incomes to particularly poorer segments of the rural population.
• Inclusive rural enterprise development. The objective of this component is to enhance access to enterprise capacity development and financial services for the target groups. The component will focus on microfinance, rural small and medium enterprises (SMEs), youth enterprise term finance, and value chain development. These interventions have been selected on the basis of their potential impact on the target groups of the IRECR and on the wider economy, and will strengthen financial intermediation and enterprise capacity.
• Infrastructure for rural resilience and growth. The objective of the infrastructure resilience component is to increase rural economic growth through infrastructure development using a twofold approach: Firstly, to strengthen the rural sector’s resilience against the increased frequency and depth of climatic and economic shocks. This will provide a ‘floor’ for rural producers who will increase their ability to reliably deliver products at agreed quantities and qualities, as the infrastructure provided will increase their adaptive capacity. Secondly, on this “platform”, rural producers will be able to increase production, shorten transportation time from farm to market, lower transaction costs, diversify production and engage in higher value chains that demand predictability of delivery. This in turn will increase economic growth, incomes and employment. The focus will be on improving water supply for productive purposes (e.g. irrigation), rural roads and rural market places.

Important features: The programme goal is fully aligned with both IFAD’s overall mandate of rural poverty reduction as well as the Government’s focus on poverty reduction through investment-led growth. Moreover, the programme will launch the most ambitious attempt to date to deliver IFAD’s Country Strategic Opportunities Programme for Moldova, which proposed innovation around climate change, with a dedicated component aimed at promoting climate smart agriculture that will enhance adaptive capacity of especially small-scale farmers in locations that are increasingly susceptible to climate shocks.

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Potential cofinanciers and domestic contribution: The total investment and incremental recurrent programme costs, including physical and price contingencies, are estimated at about US$38.9 million. IFAD will provide a loan of US$16.1 million at concessional terms and a grant of US$ 0.5 million. The Government contribution is estimated at US$4.2 million; participating Financial Institutions (PFIs) will provide around US$2.0 million. Approximately US$4.4 million will be provided by the beneficiaries and final loan borrowers as contributions to the financing. A Global Environment Facility (GEF) grant in amount of US$4.0 million will finance the investments and activities envisaged under the Climate Change Resilience component. Co-financing is being actively sought to plug a financing gap of approximately US$7.0 million.