Africa Growing Together Fund provides EUR 8.258 million loan for Project to Develop Irrigation areas through Development of Value Chains (PVPI-DCV) (Linked to Umbrella Project ID#36104)

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Project ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on November 9, 2017, AGTF signed an EUR 8,258,000 loan agreement (ID#5050200000101) with the Government of Tunisia for the Project to Develop Irrigation areas through Development of Value Chains (PVPI-DCV). On the same day, the African Development Fund (ADB) of the African Development Bank (AfDB) issued an EUR 22,327,000 million loan (ID#2000200001751) to the Government of Tunisia for the same project. The ADF and AGTF loan agreements were ratified by the Tunisian Parliament on April 23, 2018 (i.e. more than 5 months later). The borrowing terms of the AGTF, which entered into force on May 25, 2018, are as follows: an 25-year maturity, an 8-year grace period, an interest rate of 6-month EURIBOR plus a 0.8% margin, a 0.25% commitment fee, and a 0.25% upfront (management) fee. The first ADF and AGTF loan disbursements took place on July 12, 2018 and November 15, 2018, respectively. As of February 2022, the AGTF loan had achieved a 4.8% loan disbursement rate. The purpose of the project is contribute to improving the incomes of people of the Kairouan, Kasserine and Sidi Bouzid Governorates through agricultural value chain development. The main expected achievements of the project are as follows: (i) improvement of cropping techniques and increase in yields by 20 to 30% and produce quality; (ii) access to financing through existing mechanisms for the 15 Mutual Agricultural Services Societies (SMSA) set up; (iii) capacity building for 23 Agricultural Development Cooperatives (GDA) for the efficient management of water and irrigation infrastructure and rehabilitation of irrigation areas over a total of 9,000 ha; (iv) support for the establishment and building of the capacity of 15 Mutual Agricultural Services Societies (SMSA); (v) financial support for these SMSAs by contributing to the financing of sub-projects in value chain development (input sales points, soil work equipment, harvesting equipment, cold stores, agricultural produce processing); women’s SMSAs will be the first beneficiaries of this support; (vi) support for SMSAs in produce labelling for 1,000 farmers; (vii) development of 32 km of rural roads to facilitate access to production areas and markets. The project will pursue its objective by implementing three project components: the Rehabilitation of Infrastructure and Improvement of Agricultural Productivity Component, the Produce Development and Marketing Component, and the Project Coordination and Management Component. The Rehabilitation of Infrastructure and Improvement of Agricultural Productivity Component involves (i) rehabilitation of 20 irrigation areas on 9,000 ha; (ii) provision of water-saving equipment for all irrigation areas on 9,000 ha; (iii) improvement of cropping techniques and increase in yields of about 30% and produce quality through advice; (iv) dissemination of improved technologies and best practices on demonstration plots in the irrigation areas; (v) preparation of a catalogue of resilient technologies and agricultural practices; (vi) preparation, publication and distribution of an environmental management best practices guide for irrigation areas and training of actors on this guide ; (vii) Access to financing, especially through tripartite contracts (SMSA-BTS-private operator) and/or microfinance for at least 10 SMSAs out of the 20 that will be established under the project; (viii) access of 15 SMSAs to FOSDA financial incentives; and (ix) capacity building for 23 GDAs in efficient water and irrigation infrastructure management. The Produce Development and Marketing Component comprises: (i) support for Mutual Agricultural Services Societies (SMSA) through technical assistance. This support will assist farmers in the establishment and building of the institutional capacity of 15 SMSAs, the preparation of a business plan for each SMSA, with specific support in this area for 5 women’s SMSAs, support for the appraisal of a specific priority sub-project to be financed by the project for each SMSA established and, lastly, support through advisory services in business plan and sub-project implementation. At the end of this support, SMSAs should be able to organize their supply of inputs and the collective marketing of their crops (especially apples, tomatoes and olives) instead of passing through intermediaries as is the case now, thus achieving economies of scale and improving their bargaining capacity. Lastly, they should have a business plan and priority sub-projects in the networks of value chains of their interest, and be able to seek and obtain financing through investment law incentives and from banks directly, or under tripartite contracts (SMSAs-private operators-banks); (ii) logistical support through the construction of premises for 15 SMSAs; (iii) financial support through contribution to the financing of sub-projects in value chain development (input sales points, soil work equipment, harvesting/threshing equipment, cold stores, agricultural produce processing) for 15 SMSAs; women’s SMSAs already active in processing will be the first beneficiaries of this support; (iv) support for SMSAs in the labelling of their produce and, in particular, the promotion of the status of indication of origin (SI) of Sbiba apple for the benefit of 1,000 farmers in this irrigation area;; support for SMSAs will only concern organisations with a significant number of members (v) the development of 32 km of agricultural roads to facilitate access to production areas. The Project Coordination and Management Component involves (i) preparation of work plans, annual budgets and progress reports; (ii) project and ESMP implementation monitoring; (iii) monitoring of project outcomes and impact, including gender mainstreaming (activities, results, impacts); (iv) project administrative, accounting and financial management; (v) procurement of project goods, works and services; and (vi) annual audits. The project seeks to directly benefit 3,558 households or about 20,000 persons, more than 50% of whom are women. Project implementation commenced in June 2018. The project’s originally scheduled completion date was June 30, 2023. However, according to the AFDB, the project has encountered various implementation problems, including policy coordination problems, an inability of the project coordination unit to manage complex problems involving a multiplicity of stakeholders, delays in the procurement process linked to the capacities of the members of the project coordination unit, and the slow pace of loan disbursements.

Additional details

1. The AfDB project identification number is P-TN-AAB-001. 2. The project’s economic rate of return is estimated at 14.9%. 3. The all-in interest rate (0.526%) was calculated by adding an 0.8% margin to the average 6-month EURIBOR rate in November 2017 (-0.274%). 4. The margin of 0.8% is calculated by adding the Funding Cost Margin (unknown) to the Lending Margin (0.8%).

Number of official sources

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Number of total sources

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