NICARAGUA Rural Development Project in the North Atlantic Coast of Nicaragua Minutes of the Quality Assurance Meeting 1. A Quality Assurance meeting to review the above project was held on 7 October 2010. The meeting was chaired by Yukiko Omura, IFAD s Vice-President, and attended by: Ladislao Rubio (CPM), Richard Anson (Reviewer, participating via teleconference), Amnon Golan (Lead Reviewer), Rodney Cooke (OiC, PMD), Willem Bettink, Francisco David e Silva (OiC, LAC) and Kristofer Hamel. 2. A list of recommended actions was sent to the Vice-President, together with comments from the CPM and served as the agenda for the QA meeting (Annex A). These recommendations were distilled from a longer list of questions prepared by the reviewer to which the CPM responded (Annex B). Finally, the reviewer s rating matrix against RMF project results indicators is in Annex C. 3. The objectives of this project are: to improve the income levels of 10,580 families in indigenous and afro-descendents territories of Caribbean Coast selected for the intervention of the program, promoting production increased and sustainable management and use of natural resources. Project activities comprise three main components as detailed in the project summary. 4. During the Vice-President s meeting with the project staff and managers, agreement was reached on the following specific recommendations: a) Role and Ownership of the Regional Autonomous Governments - It is agreed that the Regional Autonomous Governments have weak institutional capacities and that there is a justified need for the Project to be implemented through a Project Task Force for each of the two Autonomous Government regions. Given the lack of adequate clarity on the process and arrangements between the Project Task Force (for each region) and each Regional Government, the meeting agreed that: (a) the CPM would seek to discuss and work out (by the end of 2011) with Government (national and regional levels) a more precise and appropriate arrangement and relationship and linkage with each Regional Government (from the outset), in line with the spirit underlying Law 28; (b) an action plan would be developed and agreed by the MTR to help ensure the Project is fully integrated into the structure of each Regional Government by the end of the Project implementation period. These actions will help ensure: consistent strategy of productive models across the participating territories; effective strengthening of Regional Government ownership and capacities (through learning-by-doing); and facilitate scaling-up and sustainability of relevant innovations and objectives in each Region. b) Capitalization Fund - The meeting agreed on the importance of completing the operational guidelines for the capitalization fund component (representing 67% of project funds); satisfactory completion and agreement on the guideline would be a condition of disbursement c) Institutional Action Plan - The meeting agreed that the draft institutional action plan to strengthen institutional capacities at various levels (especially Regional and territorial levels) would: (i) give adequate attention to the planning and budgetary aspects, and not be limited just to the important fiduciary aspects, and thereby help reinforce item 1

(a) above; and (ii) would be completed and agreed not later than end of 2011, to enable adequate harmonization with other donor-supported initiatives and time for the project to support its effective implementation. d) Co-financing Arrangements The meeting affirmed the CPM s on-going efforts to coordinate with BCIE and Government to secure the required co-financing arrangements (proposal for BCIE to finance 27% of Project costs) on a timely basis (estimated approval by March 2011). e) Fiscal Space and Budgetary Allocations Given the severe fiscal constraints facing all Government/donor supported programs in Nicaragua, it was agreed that the CPM would seek specific confirmation from Government (prior to negotiations) on the level and adequacy of current budgetary allocations in the proposed 2011 budget and 2011-2014 medium term budget allocations. 5. Two final comments were provided during the meeting: - The Project will be operating in a challenging environment, at the country and regional government levels; - The Project is very responsive to supporting the implementation of relevant experiences with indigenous peoples and the recommendations of IFAD s Policy, Engagement with Indigenous People, 2008. 6. The meeting also agreed that the progress towards achieving the recommendations above will be carried out one year from the date of effectiveness and the CPM will share the findings in a memo to the Vice President. Next Steps: _X Proceed as is with minor changes Proceed subject to addressing the recommendations above during negotiations or during implementation. Board presentation delayed to permit addressing outstanding issues Outstanding issues are so severe as to justify dropping the project. Signed: Yukiko Omura, Vice President CPM: Ladislao Rubio QA Reviewer: Richard Anson Cleared by: Kristofer Hamel, Programme Officer Prepared by: Richard Anson and Amnon Golan, QA reviewers 2