Fondo Internacional de Desarrollo Agrícola. República de Colombia

Informe Nº Xxxxxx Fecha: xxxxxxxxxxxxx Fondo Internacional de Desarrollo Agrícola República de Colombia Proyecto de Construcción de Capacidades Empresariales Rurales: Confianza y Oportunidad (TOP) Informe de Diseño del Proyecto Texto Principal y Anexos División de América Latina y el Caribe Departamento de Administración de Programas

TEXTO PRINCIPAL DEL INFORME DE DISEÑO PROYECTO DE CONSTRUCCIÓN DE CAPACIDADES EMPRESARIALES RURALES: CONFIANZA Y OPORTUNIDAD (TOP) INFORME DE DISEÑO DEL PROYECTO TEXTO PRINCIPAL Índice Página Equivalencias monetarias... IV Pesos y medidas... IV Abreviaturas y Siglas... V Mapa... VI Executive Summary... VII Marco Lógico... XVII I. ANTECEDENTES...1 II. CONTEXTO ESTRATÉGICO Y RACIONALIDAD...3 A. El país y el contexto del desarrollo rural y la pobreza...3 B. Racionalidad...8 III. DESCRIPCIÓN DEL PROYECTO...12 A. Área del proyecto y grupos objetivos... 12 B. Objetivo de desarrollo... 19 C. Componentes/resultados... 20 D. Lecciones aprendidas y sujeción a las políticas del FIDA... 26 IV. IMPLEMENTACIÓN DEL PROYECTO...30 A. Enfoque... 30 B. Marco organizacional... 30 C. Planificación, seguimiento y evaluación y gestión del aprendizaje y el conocimiento... 32 D. Gestión financiera, adquisiciones y gobernanza... 33 E. Supervisión... 34 F. Identificación de riesgos y mitigación... 36 V. COSTOS, FINANCIAMIENTO Y BENEFICIOS DEL PROYECTO...38 A. Costos del proyecto... 38 B. Financiamiento del proyecto... 38 C. Resumen de los beneficios y análisis económico... 39 D. Sostenibilidad... 40 II

TEXTO PRINCIPAL DEL INFORME DE DISEÑO CUADROS Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro Cuadro 1. Pronósticos de algunos indicadores económicos...5 2. Evolución de la pobreza y pobreza extrema por ingresos...6 3. Área del proyecto y población... 15 4. Población en situación de pobreza extrema... 16 5. Pueblos Indígenas y Afro Colombianos en el área del proyecto... 18 6. Población desplazada... 19 7. Sujeción a las políticas del FIDA... 29 8. Plan de Supervisión... 35 9. Riesgos y medidas de mitigación... 37 10. Costos del proyecto por componentes... 38 11. Financiamiento por componentes... 39 12. Análisis financiero de los modelos... 39 13. Análisis económico... 40 14. Análisis de sensibilidad... 40 ANEXOS Anexo Anexo Anexo Anexo Anexo Anexo 1 2 3 4 5 6 Anexo Anexo Anexo Anexo Anexo Anexo Anexo 7 8 9 10 11. 12 13 Contexto del país y el desarrollo rural Pobreza, Focalización y Género Desempeño de las operaciones en el país y lecciones aprendidas Descripción Detallada del Proyecto Aspectos institucionales y arreglos para la implementación Planificación, seguimiento y evaluación, aprendizaje y manejo del conocimiento Gestión Financiera, Desembolsos, Cuentas y Auditoria Adquisiciones Costos y Financiamiento Análisis Económico y Financiero Manual de Operaciones Sujeción a las Políticas del FIDA Contenido del archivo de vida del Proyecto DOCUMENTOS DE TRABAJO DT DT DT DT DT DT DT DT DT 1 2 3 4 5 6 7 8 9 Área del Proyecto y Situación Ambiental Pobreza, Grupo objetivo y Género Tierra y Territorios Servicios de Asistencia Técnica Servicios Financieros Rurales Aspectos Institucionales y Arreglos para la Implementación del Proyecto Planificación, Monitoreo, Evaluación y Gestión de Conocimiento Costos y Financiamiento Evaluación Económica y Financiera III

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Equivalencias monetarias Unidad monetaria 1 US$ = = COP (peso colombiano) 1 = US$ Pesos y medidas 1 1 1 1 1 1 1 1 1 1 kilogramo (kg) 000 kg libra (lb) kilómetro (km) metro (m) metro cuadrado (m2) acre (ac) ha arroba (@) quintal (qq) = = = = = = = = = = 2,204 libras 1 ton métrica (t) 450 gramos (gr) 0,62 millas 1,09 yardas 10,76 pies cuadrados 0,405 hectáreas (ha) 2,47 acres 11,5 kilogramos 45,3 kilogramos GOBIERNO DE COLOMBIA Año Fiscal 31 diciembre-1 de enero IV

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Abreviaturas y Siglas AVP BIRF CCI CDP CONPES CORPOICA ACUA CSDI DANE DMC DNP ECV EGGP ENH FARC FIDA FINAGRO GEIH ICBF ICETEX INCODER LAC LPI LPN MADR MERPD ODM OSC PBAS PIB PRORET PROCASUR RIMS SENA SIMCI SIPOD SISBEN UNC UNODC USAID Archivo de Vida del Proyecto Banco Internacional para la Reconstrucción y Corporación Colombiana Internacional Comité Directivo del Proyecto Consejo de Política Económica y Social Corporación Colombiana para la Investigación Agropecuaria Fundación Activos Culturales Afro Colombia Strategic Development Initiative Departamento Administrativo Nacional de Estadísticas Dispositivos Móviles de Captura Departamento Nacional de Planeación Encuesta de Calidad de Vida Equipo de Gestión del Programa País Encuesta Nacional de Hogares Fuerzas Armadas Revolucionarias de Colombia Fondo Internacional para el Desarrollo Agrícola Fondo para el Financiamiento del Sector Agrario Gran Encuesta Integrada de Hogares Instituto Colombiano de Bienestar Familiar Instituto Colombiano de Crédito Educativo y Estudios Técnicos en el Exterior Instituto Colombiano de Desarrollo Rural Latin America and the Caribbean Licitación Pública Internacional Licitación Pública Nacional Ministerio de Agricultura y Desarrollo Rural Misión para la Reducción de la Pobreza y la Desigualdad Objetivos de Desarrollo del Milenio Operational Strategy Committee Performance Based Allocation System Producto Interno Bruto Proyecto de Recuperación de Tierras Programa de capacitación SUR Results and Impact Measurement System Servicio Nacional de Aprendizaje Sistema Integrado de Monitoreo de Cultivos Ilícitos Sistema de Información para la Población Desplazada Sistema de Identificación y Clasificación de Potenciales Beneficiarios de Programas Sociales Unidad Nacional de Coordinación Oficina de las Naciones Unidas contra la Droga y el Delito United States Agency for International Development V

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Mapa VI

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Executive Summary A. Summary and Objectives 1. The project involves improving living conditions, income and employment in poor rural post conflict areas of Colombia. Specific objectives include: (i) increasing food security of families and communities in rural poverty, (ii) building and improving human and social capital facilitating beneficiary access to services for rural development, (iii) strengthening livelihoods strategies of poor rural households to increase their physical and financial assets, improving their income and employment opportunities, (iv) designing, implementing and validating appropriate solutions and tools for rural youths, and, (v) promoting learning processes, knowledge management and scaling up of innovations and good management practices for rural development from territorial entities that invest in favour of poor rural families. An estimated 50 000 rural families living in extreme poverty will benefit. B. Components 2. Component 1 Associative Social Capital Formation and Business Development. The main objective of this component is to contribute to the formation of social capital of families and groups in selected areas aimed at building capacity to manage functional partnerships for improving the livelihoods of the rural population in extreme poverty and in areas of post conflict. The initiatives are focused on improving food security, production environment, reducing negative environmental impacts, land management and access and participation in markets for goods and services. 3. This component includes three main sub components: (a) Improving Food Safety and Productive Capacity (b) Promotion and Enhancement of Entrepreneurship and (c) User Capacity Development. Within the first group of activities the project will finance: (i) preparation of asset maps aimed at structuring local grassroots groups organized around common interests and challenges linked to territories and the value of their assets, (ii) provision of support to family farmers to improve productive conditions and (iii) provision of support to improve environmental conditions. 4. Under the Promotion and Enhancement of Entrepreneurship activities the project will fund: (i) development of local economic initiatives, (ii) a process of business incubation1 through funding of business profiles and (iii) financing of business ventures with market potential and profitability through funding of business plans. 5. The third sub component will fund participation in workshops, in situ training, learning routes and participation in fairs and trade shows. 6. Component 2: Development and Strengthening Rural Financial Assets. The objective of this component is to make available to potential users or clients of the project the necessary tools to reduce their social and economic vulnerability and strengthen their income-generating initiatives, encourage productive household saving strategies, improve their access to the formal financial system and develop 1 The development of business incubation should not be construed as the creation of Business Incubators defined as a entity or enterprise that aims at the creation or development of small or micro enterprises supporting them in their early life. In many cases, the incubators are projects of public initiative in order to encourage the creation of new businesses in a particular geographical area. Incubators typically provide support to entrepreneurs both in business and management aspects and access to facilities and resources at very low cost and even free. VII

TEXTO PRINCIPAL DEL INFORME DE DISEÑO new services and appropriate financial products. To this end, the project will further promote co-funded access by all beneficiaries to life insurance and accident policies, encourage savings associations as part of the conditions for access technical assistance services and invest in improving the financial literacy of its customers or users. The project will make investments to encourage the design, validation and scale of new financial products and services, particularly aimed at strengthening the capacity of the project's target population and their associations to establish and manage financial solutions tailored to their needs, including the use of information communication technologies. 7. Implementation of this component includes four main sub components: (a) Financial Education and related capacities. (b) Savings Incentives, (c) Obtaining insurance policies and (d) Financial Innovations for Sustainability. Within the Financial Education and Related Capacities the project will fund: (i) initial or introductory financial education modules, (ii) advanced financial education modules for furthering understanding of the Colombian financial system and its rules and regulations, (iii) strengthening associative financial capacities. In addition the project will fund in situ training, internships and learning routes. Under the Financial Innovations for Sustainability the project will fund: (i) establishment of a fund for provision of financial incentives to young rural entrepreneurs, (ii) introduction of mobile banking in remote rural areas. 8. Component 3: Knowledge Management, Communications Skills. The main objective is to value the assets of existing knowledge and skills in the areas of intervention of the project, building the skills and competencies needed to implement and manage the implementation process and innovations, disseminate appropriate and timely content to inform beneficiaries of major project activities and their access mechanisms, including the use of information and communication technologies (ICTs). This component includes monitoring and evaluation with the understanding that these processes are essential elements for effective implementation and recording lessons learned during implementation. The project will fund the following activities: (a) Knowledge Harvesting, (b) Capacity Building, (c) Communication for Development and (d) Monitoring and Evaluation. 9. Gender strategy. The strategy for gender inclusion encompasses: (i) selecting and staffing national, territorial and municipal personnel seeking gender equity in its composition, (ii) conducting training workshops with women leaders in the project area in order to disseminate information on project activities and identify obstacles that they may face in accessing project services and alternative solutions, (iii) conducting contests exclusively for rural women, especially to reward initiatives to improve household food security, (iv) furthering the creation of groups of women entrepreneurs who will participate in internships, routes and tours organized by the project, (v) giving priority to groups of women heads of household in allocating savings group incentives, (vi) implementing cross-cutting actions to promote respect for gender equity, human rights and self-esteem, and (vii) coordinating project activities with other programs implemented by the Ministry of Agriculture and Rural Development for greater gender equity in rural development activities. C. Background and rationale 10. The rationale for the project is based on a major effort by national authorities to deal with the acute situation of inequality and rural poverty affecting the country which, involves reorienting some existing policies, seeking greater equity in access and benefit-sharing, expanding the availability of fiscal resources to increase coverage of investments in rural development, establishing effective coordination mechanisms between various sector institutions and services in rural VIII

TEXTO PRINCIPAL DEL INFORME DE DISEÑO areas of Colombia and improving targeting mechanisms and tools by the Unidos Network that includes various strategies, from micro-insurance and banking to early childhood care and inclusion of social security. 11. The project is aligned with national policies under the National Development Plan "Prosperity for All 2010-2014" (NDP) whose top priorities include: (a) sustained economic growth based on a more competitive, productive and innovative approach with dynamic sectors driving growth, (b) equal opportunities to level the playing field by ensuring that all Colombians can pursue their own destiny with access to essential tools regardless of their ethnicity, gender and social status, (c) consolidation of peace respecting human rights and the deepening of an efficient administration of justice and (d) reducing regional disparities and differences in opportunities between the regions, taking into account regional convergence. 12. The project is consistent with the Country Strategic Opportunities Programme (COSOP) considered by the IFAD Executive Board in December 2003 and updated in 2008 whose objectives include: (a) promoting development of nonfinancial services market for the provision of technical assistance for production, processing, marketing and business management, (b) generating income through development of rural micro enterprises thus contributing to diversification, risk reduction and fostering linkages and partnerships with the private sector and service providers to add value through transformation processes, and (c) strengthening the rural financial services market meeting the needs of the rural poor and their organizations and contributing to the generation of innovative systems, products and mechanisms in particular savings, micro insurance and transfer services based on a network of private institutions and the needs of individuals and small businesses in rural areas. 13. Strategic focus. Implementation includes the following strategic interventions which have shown acceptance and results from previous experiences in Colombia: (i) transferring financial incentives to beneficiaries that are managed by themselves thus promoting empowerment and rural associability, furthering economic development, building trust and strengthening self-esteem of the rural poor, (ii) increasing and expanding skills and competencies of beneficiaries and their associations to improve entrepreneurship and an efficient access to markets, (iii) promoting financial services, including rural savings as the focus of an initial process of accumulation of personal, family and associative assets with incentives for maintaining them and planning their use for the accumulation of assets, (iv) expanding access to insurance to reduce personal and family risks of beneficiaries, (v) providing financial education as a tool to improve the management of the household economy while promoting inclusion in the regulated banking system by the rural poor and building community financial institutions owned by the beneficiaries themselves, (vi) identifying and valuating rural land assets, their potential environmental, cultural and economic dimensions, including the knowledge and skills of the rural population to engage and invest in their own initiatives, and (vii) promoting development of rural territories, mobilizing local actors, public and private, to build a favorable environment for the initiatives of the rural poor through the provision of incentives that add public value to the territory. D. Rural context, geographic area of intervention and target groups 14. Colombia, with an area of 1.058.700 km2 and a population of 47.600.000 inhabitants in 2011, has a diverse culture that reflects the indigenous, Spanish and African origins of its people and is well endowed with abundant natural resources and making progress in reducing violence all which augurs well for advancing in the struggle against prevailing poverty conditions and insecurity. Since President Juan Manuel Santos who took office on 7 August, 2010, the political landscape has IX

TEXTO PRINCIPAL DEL INFORME DE DISEÑO continued to improve however; there are still a number of challenges. Although Colombia has traditionally enjoyed constitutional stability, long-lasting internal conflict and drug trafficking activities are sources of violence and instability. It is estimated that despite recent progress in reducing these activities, they will remain a problem in the near future. A significant step has been recently taken to address these issues. On 10 June, 2011 President Santos signed the Victims and Land Restitution Law which sees the State compensating victims of guerrillas or rightwing death squads, but also those who suffered at the hands of the State security apparatus. The law calls for monetary compensation to people victimized since 1985 with the broader ambition to deal with the root cause of political violence by returning millions of hectares of land to poor farmers forced off it by armed groups since 1991. 15. The Santos Administration s economic policy aims at attracting foreign investment, promoting macroeconomic stability and improving the business climate focused on five "engines" of growth: agriculture, housing, mining, energy, infrastructure and innovation. In March 2011 the National Bureau of Statistics (DANE) reported that the Colombian economy in 2010 grew at a faster pace since 2007, driven by a boom in oil and mining. Gross Domestic Product (GDP) grew by 4.3%. The expansion in 2010 confirmed that Colombia came out well from the slowdown that occurred in 2009 caused by the global financial crisis. According to 2009 figures, 25% of the 45 million Colombians lived in rural areas of the country. Poverty affected 45.5% of the total population and in rural society it represented 64.3% and extreme poverty 29.1% (39.6% rural and 16.4% urban). Today, in rural areas of Colombia, more than 7 million citizens are poor and 2 million live in extreme poverty. Many of the latter have been displaced from their land and lost their assets due to violence. In general, in both urban and rural areas, poverty and extreme poverty indicators remain high although, the last decade shows a downward trend. Poverty declined from 57.5% in 1999 to 45.5% in 2009 and extreme poverty fell from 25.4 in 1999 to 16.4% in 2009. 16. Project area. The project will be implemented in seventeen departments of Colombia: Nariño, Cauca, Valle del Cauca, Chocó, Antioquia, Córdoba, Bolívar, Sucre, Cesar, La Guajira, Magdalena, Norte de Santander, Arauca, Meta, Caquetá, Putumayo and Tolima, with an area of 205,662 km 2. According to an expressed request by national authorities the main area of intervention will constitute 14 Consolidation Areas: Arauca, Nudo de Parmillo, Montes de María, Buenaventura, Macarena, Sierra Nevada, eastern Antioquia, Catatumbo, Cauca, Nariño, Putumayo, Chocó, Cordillera Central and Caguas. In addition the project area includes three special projects in the municipalities of Mutata in Antioquia department, the municipality of Cumbirata in the department of Nariño and the municipality of Algarrobo in the department of Magdalena. National authorities have indicated however, that project activities could be extended to other rural areas or prioritized, depending on synergies with other initiatives to combat poverty or changes in the dynamics of the armed conflict facing the country. 17. The project intervention area covers regions with natural ecosystems, with small populations, as well as agricultural areas and more populated towns and villages. The social conflict that characterizes the intervention area is mainly located in inaccessible areas with little State presence and severe poverty although close to these areas there are important economic development zones. Many of the proposed areas, notably the Sierra Nevada de Santa Marta, Paramillo, Macarena, La Paya, Catatumbo and Tinigua Bari have a strong presence of illicit crops. 18. Target groups. The total population of the project area, according to projections for 2010 and based on the 2005 Population Census, is estimated to be 4,487,664 persons of which, 2,797,764 were considered urban and 1,689,900 rural X

TEXTO PRINCIPAL DEL INFORME DE DISEÑO representing approximately 395,761 households. The project s target group is composed of rural families in extreme poverty residing in the project area. Among which are: small farmers, indigenous groups, Afro-Colombian communities, families with female heads of household, rural youth and rural families who have been forcibly displaced. 19. In project geographically targeted municipalities there are 160,212 households in Levels I and II of the System of Identification and Classification of Potential Beneficiaries of Social Programs (SISBEN) 2. Of these 46,513 (29%) households are below the extreme poverty line and are part of the Safety Net for the Reduction of Extreme Poverty Network, representing about 92% of rural households in extreme poverty in the project area. Thus, the goal of the project will be to reach approximately 50,000 families in extreme poverty, living in rural areas of the project area. 20. Of all households in extreme poverty located in the project area, 76.2% are headed by men while 23.8% have a woman as head of household. In households in situation of displacement this ratio varies markedly, given that 52% have male heads of household and 48% female headed household. Moreover, the 2005 Census indicates 25 % of the population declared themselves to be Afro Colombians and 6% indigenous. Information regarding the displaced population indicates that in 2008, a total of 22,086 homes were expelled from the municipalities of the project area, comprised of 41,895 men and boys and 45,078 women and girls. Regarding the youth population, also considered as a project target group, 2005 Census figures estimated that the rural population between 15 and 29 years of age, represented 24.9% of the total national rural population. It is possible to estimate that young people in the project area would be approximately 420,785 individuals E. Benefits 21. Under the first component the project will support the improvement of food security and the productive capacity of some 50 000 families with knowledge transfer and micro investments. Families will participate in one or more activities of the component. Regarding preparation of assets maps the project will benefit 2000 groups representing 30 000 families. It is foreseen that the project will benefit 391 groups representing 5 865 families the maintenance of existing productive activities and 491 groups (7 365 families) in improving environmental conditions. Under the improvement and promotion of business ventures it is estimated that 2 588 groups (38 820 families) will benefit from associative business ventures, 1 992 groups (29 880 families) will benefit from business incubation activities and 1 318 groups (19 770 families) in terms of developing existing business ventures. Additionally 4 900 families will benefit from activities aimed at establishing their associative capacity. This component will also benefit 2 800 people through participatory economic development Learning Routes, 4 000 individuals will benefit from internships and in situ training, while about 400 people will participate in trade fairs. 22. The second component will benefit, through formal financial inclusion, the same 30 000 families and provide them with initial and advanced financial training 2 SISBEN is an index based on a multidimensional poverty concept that not only is related to income, but also takes into account the socio-economic characteristics of Colombian households. The methodology is supported by an instrument consisting of a questionnaire applied to each of the household members to obtain employment information, income, housing characteristics, demographic characteristics, education and public service coverage, among the most important variables. It also uses distinct software that characterizes continuously the population living in poverty conditions by assigning each individual a score between 0 and 100. Subsequently, the population is divided and sorted into six levels. XI

TEXTO PRINCIPAL DEL INFORME DE DISEÑO modules. Additionally 2000 people will benefit from further training or internships in finance, 2 000 individuals will be part of family financial Learning Routes and 2400 on financial capacity associative Learning Routes. Approximately 30 000 households will receive incentives for household savings, 30 000 families for group savings and business purposes and insurance policies. Finally a total of 7 056 rural youth would benefit from a special capitalization fund. 23. Under component 3 an estimated 2940 individuals will benefit through their participation in workshops for development and recognition of local talent and 2450 individuals through participation in activities aimed at valuing local knowledge. This component will also include activities aimed at capacity building of project staff and youth promoters at the municipal level that will remain as change agents in the territories beyond the project life. The project will provide 50 scholarships, and fund 32 specialization courses. It is estimated that 98 young promoters at the municipal level will participate in training workshops and specialized courses. It is also estimated that 500 families will benefit from support in the use of information technologies. F. Implementation arrangements 24. Implementing agency. The Ministry of Agriculture and Rural Development (MARD) will be the agency responsible for implementation of the project. A National Coordination Unit (NCU).will be established within the Rural Development Department of MARD. The UNC will consist of: (i) a Coordinator, (ii) an Administrator, (iii) an accountant, (iv) a Financial Assistance Services Specialist, (v) a Business Services Specialist, (vi) a Knowledge Management Specialist and administrative support staff. In the geographical areas of project implementation Territorial Units will be established under the responsibility of Regional Coordinators, sixteen in all, supported by Promoters at the Municipal Level, one for each of the ninety-eight municipalities in which the project will be implemented. 25. Project implementation guidance. In order to provide guidance during implementation a Project Steering Committee (PSC) will be established comprising representatives of the institutions directly related to the execution of the project, selected for their roles in the management and implementation of public policies to combat rural poverty and national development. The PSC will be composed of: (i) a representative of MARD, appointed by the Minister, (ii) a representative of the Ministry of Finance, Directorate of Public Credit, (iii) a representative of the National Planning Department, Directorate of Rural Development, (iv) a representative of the Presidential Agency for Social Action and International Cooperation (Acción Social), Red Unidos, and four representatives of project beneficiaries. 26. Implementation planning and reporting. Planning of project activities will be carried out by using Annual Work Plans and Budgets (AWPB). The NCU will prepare the initial AWP/B to be submitted for consideration by IFAD for its no objection. The preparation of this Plan should include all stakeholders and be based on consultations with potential users or customers of the project and in particular with groups of women, youth, indigenous peoples and Afro-Colombians. This first AWPB should be based on the Design Report and its annexes and submitted to IFAD for approval. Subsequent plans should include a brief description of the implementation of the project during the period and possible challenges and opportunities during the year, including strategic analysis and project approaches. The report should also include: (i) the results obtained by component and the proposed plan for the next year including execution times and targets, (ii) the estimated budget by category of expenditure and sources of financing, (iii) procurement undertaken, and (iv) the monitoring and evaluation plan for the year. XII

TEXTO PRINCIPAL DEL INFORME DE DISEÑO 27. To report progress on implementation, the NCU will prepare semi-annual progress reports which should contain information regarding the performance of the overall project and report on whether changes had occurred during the study period with respect to the objectives, approaches and strategies of the project. These reports should contain information about the use of resources during the period in the form of tables accompanied by explanatory notes indicating use of funds by category of expenditure, reconciliation of funds from the Designated Account, an explanatory table for tracking and monitoring activities undertaken and a report on procurement undertaken. 28. Financial management. The financial management of the project will be subject to national control systems before and after including: i) the project s Monthly Annual Cash Budget (MACB) for submission to the MADR Budget Control and Monitoring Group where it is consolidated with MARD s general MACB to be approved by the Ministry of Finance and Public Credit (MHCP), ii) the payment process will be conducted through the Integrated Financial Information System (SIIF) managed by the Public Credit and National Treasury Directorate of MHCP which includes procedures for authorization by keys, which are issued by the MADR Treasury Budget Group iii) project accounting will be included in the General Accounting of MARD. However, in order to follow IFAD's accounting policies, separate records will be kept. 29. Disbursements and accounts. IFAD will open a Loan Account on behalf of the Borrower and credit an initial amount of US$ 4 million. Bearing in mind that the total amount of the Loan includes contributions from IFAD and the Spanish Trust Fund the source of this initial amount will be agreed upon during Loan negotiations. The Ministry of Finance and Public Credit will open and maintain a Special Account in United States Dollars for the exclusive use of the proceeds of the Loan in the Banco de la República (Central Bank of Colombia). The Special Account will operate as a revolving fund to cover the eligible expenditures of the loan that will be made, according to Colombian law, through a Financial Operator (trusteeship) of the project and will be replenished by IFAD after approval of the justifications of eligible expenditures made by the NCU. The Project Account will be established by a Financial Operator (Commissioned Trust), where loan funds and national government contributions for payment of taxes to be incurred will be deposited. 30. Auditing. Colombian law prescribes that it is the Comptroller General's Office which is responsible for monitoring and controlling fiscal management as well as the control and administrative performance of individuals or entities that manage public funds or assets. Such control is exercised ex post in a selective manner and in accordance with the procedures, systems and principles laid down by law. The Comptroller may, however, authorize in special cases, auditing to be conducted by private companies chosen by public tender and contracted on merit and agreement of the State Council. If this were the case the selected private company would have to be acceptable to IFAD. Notwithstanding, all auditing procedures adopted by IFAD would need to be respected. 31. Procurement. Based on Colombian law, procurement of goods and services and human resources will be carried out in accordance with IFAD guidelines for the procurement of goods and services adopted by the Executive Board at its 100th session in September 2010. 32. Supervision. The project will be supervised directly by IFAD under the direct supervision guidelines in force. Monitoring for the first two years includes an initial mission to coincide with the Launching Workshop of the project At 6 months of the Launching Workshop IFAD will send a second supervision mission with the objectives of: (a) identifying potential problems or difficulties in the initial XIII

TEXTO PRINCIPAL DEL INFORME DE DISEÑO implementation, (b) reviewing progress against targets, (c) reviewing the AWPB, (d) consulting with users of the project their perceptions of the project and their levels of participation, (e) reviewing the expenditures and procurement undertaken, and (f) verifying compliance with the terms of the financing agreement 33. During the second year of project implementation and in accordance with the provisions for IFAD direct supervision which required sending two missions yearly the mission in addition to fulfilling the mandate in the preceding paragraph shall focus specifically on analyzing the process of social mobilization and training groups of potential beneficiaries with special attention to women and rural youth and indigenous and Afro-Colombians 34. Monitoring and evaluation. Project monitoring and evaluation will contribute to national efforts in this area by establishing a collaborative framework with national systems such as the National Evaluation and Results Management System (SYNERGY), composed of three major subsystems: the Government Goals Monitoring System (SISMEG), the Network for Monitoring and Evaluation of Public Policy in Colombia (RED) and the National Evaluation System (SISDEVAL). Taking into account coordination to be established with the Unidos Network the project will seek synergies with the monitoring mechanisms of the Network in particular its information system (Infojuntos) that contains existing baseline data. To ensure project evaluation the project will use participatory mechanisms tested in previous projects financed by IFAD in Colombia such as Monitoring Committees within target groups, which contribute to transparency in managing funds, procurement and investments and Vamos Bien Committees that have contributed towards capacity building for social control and auditing. Monitoring Committees have become a tool for institutional strengthening and internal democracy of the organizations G. Costs and financing 35. The project will be implemented over a five-year period. Total project costs amount to approximately US$ 69.4 million. Cost estimates by component are as follows: a) Associative Social Capital Formation and Business Development US$ 39.7 million, equivalent to 59% of base cost, b) Development and Strengthening of Rural Financial Assets US$ 17.5 million 26% of base cost, c) Knowledge Management, Communication Skills Development US$ 3.3 million (5%). Project Management and Coordination will amount to US$ 6.6 million of the base cost. Price contingencies are estimated at approximately US$ 2,3 million, which represents 3% of total costs 36. The project will be financed by IFAD, the Government of Colombia and beneficiaries. The IFAD loan amount comprises a total of IFAD's regular resources of approximately US$ 30 million under the Performance Based Allocation System (PBAS) and approximately US$ 20 million from the Spanish Trust Fund administered by IFAD. It is estimated that the recipients or users of the project will contribute approximately US$ 13.6 million in joint funding of certain project activities especially those aimed at mobilizing savings, insurance and funding micro enterprises. The Government of Colombia will contribute approximately US$ 5.7 million related to taxes and the administration costs of a Fiduciary Entity. IFAD will additionally provide a grant of US$ 620 000 to support activities in favour of rural youths who will contribute to the strengthening provision of technical assistance services in the project area. H. Risks 37. Main risks include: (i) intensification of the situation of conflict and insecurity in selected intervention areas, (ii) the interest and ability of generally excluded XIV

TEXTO PRINCIPAL DEL INFORME DE DISEÑO groups to participate in project activities, (iii) the interests and commitment of regulated financial institutions to participate, (iv) the capacity of MARD to conduct decentralized execution in dialogue and effective coordination with national institutions and regional players involved in the poverty reduction strategy, (v) impact that recently signed trade agreements could have on the business ventures and farmer assets, other public policies and private investment that may not be environmentally and or socially respectful and (vi) environmental and climate change. 38. The project does include building infrastructure that could be damaged or destroyed by terrorist actions and will work in close coordination with security agencies and actions of other government programs in the areas of intervention thus mitigating the risk posed by the post-conflict situation. In order to involve minority groups, the project includes induction and training activities that emphasize the participation of excluded groups and to strengthen the participation of rural youth through incentives and specific activities. With regard to financial inclusion the project will provide training and financial education and establish cooperation with financial institutions present in the areas of intervention. With respect to the capacity to implement decentralized projects by MARD, the project foresees close collaboration with the Familias en Accion programme, thus ensuring that the struggle against poverty conditions will have a major role. The approval and implementation of free trade agreements does not pose a substantial risk because the project does not include activities in support of large-scale crop and livestock production thus, the impact of lifting import fees and taxes to foreign production would have a limited impact on potential project clients. Environmental risks will be addressed during implementation and support provided to address this issue by funding specific activities to improve environmental conditions through competitions between families that will submit proposals for improving the environment and reducing environmental risks. These proposals could include agro forestry, use of non-timber products, sustainable agriculture, eco-tourism in safety areas among others. I. Environment 39. In general, the activities proposed in the project contribute positively to the environmental situation. There is a focus on promotion of agricultural enterprises but these would be implemented in areas already deforested and less sustainable with current systems. The development of enterprises based on crop diversification, agro forestry systems, cleaner production and added value to current products, has high potential for agricultural production and is concentrated in appropriate parts of the territory, increasing productivity per unit area and incorporating environmental sustainability activities. Additionally, the project will promote purely environmental activities, such as ecotourism, sustainable extraction of non-timber products, reforestation and sustainable forest management. All of them, provided they are well executed, are activities that will produce positive environmental externalities. The project will explore ways of association of the target population to environmental activities resulting from public policies: compensation schemes for environmental services, pilot projects of REDD + and participatory management of protected areas. 40. Activities selected for implementation merit classifying the project as Category B. The business development activities could have some environmental effects. The project will include a provision in the presentation of business plans stating that no activities would be financed with negative effects on the environment and should promote activities with positive effects. As for other project activities (food security, production capacity and technical assistance) these will XV

TEXTO PRINCIPAL DEL INFORME DE DISEÑO strengthen the sustainable environmental management by the promotion of good practices. J. Knowledge management, innovation and scaling up 41. Project design took into account the need to capture existing knowledge and widely disseminate it during execution. For capturing knowledge the project will employ the knowledge harvesting methodology recognized by IFAD as part of knowledge management processes. Additional knowledge management tools will include situational and asset maps to allow for identification of tangible and intangible assets of participants or users of the project with special emphasis on the knowledge of indigenous, Afro-Colombian populations, women and rural youth. The project will use Mobile Information Capturing Devices that allow for updating information on the situation in the areas of intervention as compared to baseline data. The project will further the use of new information technology systems accompanied by more traditional media such as publications and audiovisual materials. 42. The project will further the innovative use of Mobile Information Capturing Devices for monitoring and evaluation purposes, through grant resources it will introduce and innovative approach for strengthening provision of technical assistance services in rural areas, it will also contribute to expanding the use of mobile banking and providing insurance policies in an innovative manner. In essence the project will be a scaling up exercise of successful experiences of previous IFAD funded project in Colombia. This scaling up process is possible as there is sufficient fiscal space, and a strong political commitment. XVI

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Marco Lógico Jerarquía de Objetivos Propósito Contribuir a mejorar las condiciones de vida, ingresos y empleo en los territorios rurales más pobres de Colombia y sujetos a condiciones de inseguridad y post conflicto Indicadores verificables Contribución a la disminución de la pobreza extrema de 16.4 % en el 2010 al 9.5% en el 2016 basado en la situacional nacional señalada en el PND ) Contribución a la disminución de 5.2% en la desnutrición infantil de 13.2% en 2010 a 8.0 en 2016 basado en la situacional nacional señalada en el PND (RIMS) Objetivo de desarrollo Al finalizar el proyecto se habrá incrementado el capital social, humano, físico y financiero, y promovidos procesos de aprendizaje, manejo del conocimiento y escalamiento de innovaciones y buenas prácticas de gestión del desarrollo rural, aumentando las oportunidades de ingresos y empleo. Componente 1. Formación de Resultado 1. Grupos y familias rurales pobres mejoran su seguridad alimentaria, capacidad productiva y condiciones ambientales Al menos 60% familias rurales incrementan sus activos sociales, productivos, financieros y de conocimientos Medios de verificación Encuestas del gobierno sobre ingresos e indicadores de pobreza rural / nacional Encuesta de impacto RIMS durante el Estudio de Base, y Final Realizar un estudio de impacto con información cualitativa a medio término Información de rendición de cuentas del ODM del gobierno Sistema de seguimiento y evaluación del proyecto Información actualizada mediante el uso de Dispositivos Móviles de Captura Capital Social Asociativo y Desarrollo Empresarial 30 000 familias participan de asociaciones locales formales, competentes para gestionar los recursos del territorio y sus propias iniciativas; Un 25% de ellas son lideradas por mujeres, 6 % son indígenas y 25% afro colombianas 30 000 familias reciben apoyo para planificar la mejora de su producción familiar, 5 865 mejoran su capacidad productiva y 7 365 mejoran sus condiciones ambientales XVII Informes de progreso Informes temáticos y datos oficiales de condiciones de vida incluidos datos de nutrición Información agrícola desagregada Supuestos La situación de conflicto e inseguridad puede afectar la ejecución del proyecto Pueblos indígenas y afro colombianos, mujeres y jóvenes rurales puedan no estar interesados en participar en las actividades del proyecto

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Resultado 2. Grupos y familias fortalecen su capacidad empresarial y desarrollan emprendimientos rentables 38 820 familias reciben apoyo a iniciativas económicas asociativas, 29 880 familias reciben apoyo para incubación empresarial, 19 770 llevan a cabo emprendimientos y 4900 participan en talleres para el desarrollo de capacidades asociativas De las familias un 25% son hogares con jefatura femenina, 6% son indígenas y 25 % son afro colombianas 2800 personas participan en rutas de aprendizaje y 4000 en pasantías y capacitación in situ 400 personas participan en ferias comerciales. Componente 2. Desarrollo y Fortalecimiento de los Activos Financieros Rurales Resultado 1. Grupos y familias 30 000 familias participan en módulos de desarrollan capacidades capacitación financiera asociativas para la inclusión financiera Resultado 2. individuos, 30 000 familias reciben incentivos para el ahorro familias y grupos incrementan individual y grupal, para fines empresariales sus activos financieros mediante el ahorro Resultado 3. Participantes en el 30 000 familias reciben pólizas de seguro de proyecto cuentan con pólizas vida de seguro de vida Resultado 4. Jóvenes rurales 7 056 jóvenes reciben financiamiento para reciben recursos para el emprendimientos desarrollo de emprendimientos rentables y grupos y familias acceden a servicios de la Banca Móvil Componente 3. Gestión del Conocimiento, Capacidades y Comunicaciones Resultado 1. Autoridades 2940 personas participan en talleres de inducción locales nacionales y personal y 2450 en valorización de activos culturales del proyecto incrementan sus conocimientos y valoran el acerco de las poblaciones beneficiarias XVIII Registros de participación en actividades de capacitación Registros contables de emprendimientos establecidos La firma e implementación de nuevos tratados de libre comercio podrían afectar la producción de ciertos productos Registros de actividades de capacitación Las instituciones financieras reguladas pueden no demostrar interés en participar en la movilización de ahorros y otorgamiento de pólizas de seguro Registros bancarios de aperturas de cuentas y depósitos Pólizas emitidas e informes de las aseguradoras Registros comerciales de emprendimientos Registros de actividades de capacitación Una ejecución descentralizada podría encontrar dificultades por limitada experiencia del MADR en un

TEXTO PRINCIPAL DEL INFORME DE DISEÑO Resultado 2. Operadores de terreno están capacitados en aspectos innovativos para el desarrollo rural y relacionamiento comunitario Resultado 3. Autoridades locales y nacionales conocen ampliamente las actividades del proyecto y acceden a información sobre talentos locales Resultado 4. Personal del proyecto y autoridades locales, nacionales y financiadores conocen resultados y logros del proyecto y su evolución en el tiempo 50 individuos reciben becas de capacitación y 32 en cursos de especialización Registros de actividades de capacitación 500 familias reciben apoyo en el uso de tecnologías de información y comunicaciones Registros de actividades de capacitación 500 autoridades locales y 200 autoridades nacionales reciben información de seguimiento del proyecto Informes de progreso Línea de base Evaluación a medio termino y final XIX trabajo conjunto con otras instituciones responsables de la lucha contra la pobreza

TEXTO PRINCIPAL DEL INFORME DE DISEÑO I. ANTECEDENTES 1. El siguiente documento ha sido preparado siguiendo las directrices para la formulación de las operaciones a ser financiadas por el FIDA y es el resultado de una solicitud expresa del Gobierno de la República de Colombia. En octubre del 2010 el Departamento Nacional de Planeación (DNP) envió una comunicación al Fondo Internacional de Desarrollo Agrícola (FIDA) solicitando la consideración de una nueva operación que dio como resultado el inicio de los trabajos de formulación del proyecto en consulta con el Ministerio de Agricultura y Desarrollo Rural (MADR) en el mes de noviembre de 2010. El FIDA avanzó en la formulación durante los meses de noviembre y diciembre del 2010 teniendo como resultado una Nota Conceptual. La Nota Conceptual en versiones en inglés y español fue examinada por el Equipo de Gestión del Programa País (EGPP) en Roma el 8 de enero del 2011 formulándose sugerencias para el diseño de la operación propuesta en términos de: (a) considerar las cuestiones relativas a la tenencia de la tierra; (b) definir los grupos objetivos; (c) determinar el alcance del componente de activos financieros propuesto, y;(d) aclarar aspectos organizativos y de gestión del programa. 2. La Nota Conceptual fue sometida a consideración del Comité de Operaciones Estratégicas OSC por su sigla en inglés en Roma el 3 de febrero del 2011 recomendándose: (a) adaptar los procesos asociativos a la realidad del área geográfica propuesta; (b) definir la ruta crítica, impulsores y espacios necesarios para un proceso de escalonamiento; (c) buscar la sostenibilidad mediante un compromiso fiscal, cumplimento de políticas y una efectiva descentralización; (d) elaborar con más profundidad los temas relativos a la sostenibilidad en términos de una estrategia de salida, (e) evaluar los riesgos y proponer medidas de mitigación, y; (f) elaborar el propósito y el contenido de la donación propuesta. El OSC aprobó el inicio del proceso de diseño, una contribución del FIDA estimada en US$ 30 millones en condiciones ordinarias, un préstamo de US$ 20 millones del Fondo Fiduciario Español y una donación de US$ 0.62 millones. El proyecto será supervisado directamente por el FIDA. 3. Luego de la consideración de la Nota Conceptual por el OSC se continuó un proceso de consultas y entendimiento con las autoridades nacionales, para lo cual el Gerente de Operaciones para Colombia concluyó definiciones respecto a la focalización de la nueva operación firmándose una Ayuda Memoria el 22 de febrero de 2011 la que se encuentra en el Archivo de Vida del Proyecto (AVP). Con la venia del Comité y los acuerdos logrados con las autoridades nacionales, la División de América Latina y el Caribe (LAC) inició la formulación de la operación y un grupo de trabajo realizó consultas con los actores y se reunió con las autoridades nacionales. El Gerente de Operaciones para Colombia y la Directora de la División LAC se reunieron con las autoridades del MADR, la Agencia Presidencial para la Acción Social y el DNP en Bogotá a comienzos de abril del 2011 llegándose a acuerdos con relación a los objetivos del proyecto propuesto y sus modalidades operacionales. 4. El Documento de Diseño, incluyendo sus Anexos y Documentos de Trabajo, fue considerado por un Panel de Revisión para el Mejoramiento de la Calidad (QE) cuyas recomendaciones y sugerencias fueron analizadas en una reunión llevada a cabo en Roma el 27 de mayo de 2011. Como resultado del análisis y la discusión durante la reunión se llegó a un número de recomendaciones las cuales han sido consideradas en la preparación de este Documento de Diseño Detallado a ser sometido a la consideración de un Panel adicional para el Aseguramiento de la Calidad (QA) con vista a presentar la operación a la Junta Ejecutiva del FIDA en diciembre del 2011. 1