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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: TJ Public Disclosure Authorized Public Disclosure Authorized PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 6.6 MILLION (US$10 MILLION EQUIVALENT) TO REPUBLIC OF TAJIKISTAN FOR A LAND REGISTRATION AND CADASTRE SYSTEM FOR SUSTAINABLE AGRICULTURE PROJECT Public Disclosure Authorized Sustainable Development Department Central Asia Country Unit Europe and Central Asia Region January 24, 2012 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
2 CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2011) Currency Unit = Somani Somani 4.76 = US$1 US$ = SDR 1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AF EMF FAZO FPSP IDA IBTI ISR LRCSP MCC ORAF PDO PMU RLCC SCLG SDR SUE USAID WUA Additional Financing Environmental Management Framework Institute for Geodesy and Mapping Farm Privatization Support Project International Development Association Inter-raion Bureau of Technical Inventory Implementation Status Report Land Registration and Cadastre System for Sustainable Agriculture Project Municipal (Gorodskoi) Cadastre Center Operational Risk Assessment Framework Project Development Objective Project Management Unit Regional Land Cadastre Center State Committee on Land and Geodesy Special Drawing Rights Hojagi Manziliyu Kommunali (IBTI Central Office) United States Agency for International Development Water User Association Vice President: Country Director: Country Manager Acting Sector Manager: Task Team Leader: Philippe Le Houérou Motoo Konishi Marsha Olive Benoit Blarel Jessica Mott
3 TAJIKISTAN ADDITIONAL FINANCING FOR LAND REGISTRATION AND CADASTRE SYSTEM FOR SUSTAINABLE AGRICULTURE PROJECT CONTENTS PROJECT PAPER DATA SHEET...2 PROJECT PAPER I. Introduction...5 II. Background and Rationale for Additional Financing...6 III. Proposed Changes...13 IV. Appraisal Summary...16 Annexes Annex 1: Revised Results Framework and Monitoring...19 Annex 2: Operational Risk Assessment Framework (ORAF)...23 Annex 3: Detailed Description of Modified and New Project Activities...29 Annex 4: Revised Implementation Arrangements and Support...38 Map: IBRD 39025
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5 TAJIKISTAN ADDITIONAL FINANCING FOR LAND REGISTRATION AND CADASTRE SYSTEM FOR SUSTAINABLE AGRICULTURE PROJECT PROJECT PAPER DATA SHEET Country Director: Motoo Konishi Sector Manager/Director: Benoit Blarel/Laszlo Lovei Team Leader: Jessica Mott Project ID: P Expected Effectiveness Date: March 31, 2012 Lending Instrument: Grant Additional Financing Type: (b) Expanded Activities Project ID: P Project Name: Land Registration and Cadastre System For Sustainable Agriculture Project (LRCSP) Lending Instrument: SIL Basic Information - Additional Financing (AF) Sectors: Sub-national government administration (30%); Agricultural extension and research (20%); Central government administration (20%); General agriculture, fishing and forestry sector (15%); Crops (15%) Themes: Land administration and management (29%); Rural markets (29%); Personal and property rights (14%); Rural policies and institutions (14%); Rural services and infrastructure (14%) Environmental category: B Expected Closing Date: March 31, 2015 Joint IFC: No Joint Level: No Basic Information - Original Project Environmental category: B Joint IFC: Joint Level: AF Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: Proposed terms: Standard IDA grant terms AF Financing Plan (US$m) Source Total Project Cost: Cofinancing: Borrower: Total Bank Financing: IBRD IDA New Recommitted Expected Closing Date: March 31, 2012 Total Amount (US $m) US$10.07 million US$0.07 million US$10 million 2
6 Client Information Recipient: Government of Tajikistan Responsible Agency: Ministry of Finance Contact Person: Mr. Makhmudjon Khabirov, Project Director LRCSP PMU, Dushanbe, 15 Giprozem Str. Telephone No.: (992-37) , , Fax No.: (992-37) AF Estimated Disbursements (Bank FY/US$m) FY FY12 FY13 FY14 FY15 Annual Cumulative Project Development Objective and Description Original project development objective: To expand farmland restructuring activities under the Farm Privatization Support Project, and to enable more rural people to become independent farmers and take management decisions in response to market forces. Revised project development objective: To expand farmland restructuring, to increase the number of immovable properties with secure tenure rights, and to propose a plan for the improvement of the immovable property registration system. Project description: Project activities comprise the following. Component A: Farmland Restructuring and Registration of Immovable Property Rights to (i) enhance and expand farmland restructuring activities, regularize use rights certificates, and improve records needed for immovable property registration in a systematic, fair and transparent way; (ii) build capacity for farmland restructuring and registration of immovable property rights; (iii) develop the national cadastre and establish survey and mapping capacity and spatial databases; and (iv) conduct policy analysis supporting farmland restructuring and immovable property registration. Component B: Information for Immovable Property Users and Irrigation Support to (i) provide information for farmers and other holders of immovable property use rights; (ii) provide grants to water user associations for on-farm irrigation rehabilitation and water management; and (iii) build capacity in environmental land management. Component C: Project Management. 3
7 Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) Does the Project require any waivers of Bank policies? Have these been endorsed or approved by Bank management? [ x ]Yes [ ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ x ]Yes [ ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ ] No Financing Agreement Reference Section 5.02 (j) Section 5.02 (a) (j) Conditions and Legal Covenants: Description of Condition/Covenant The local authorities in the Ongoing Project raions ensure that the pilot activities under Schedule 2 Part A (ii) of the Project are conducted with the full support and collaboration of the raion land offices, the IBTIs, and notaries, and under arrangements acceptable to the Association. Same as the original Project, as amended in 2009 and Date Due 4
8 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an additional grant in an amount of US$10 million to the Tajikistan Land Registration and Cadastre System for Sustainable Agriculture Project (P129313) (IDA-H1570). 2. The proposed additional grant would support expansion of the scope of activities under the current World Bank Project and support implementation for an additional three years. This would: (i) build understanding on how to improve the immovable property registry system by testing and demonstrating the integration of registry and cadastral information and good customer service in selected areas, and supporting analysis and planning for extension at the national level; (ii) expand farmland restructuring and issuance of certificates for family farms; (iii) expand the issuance of use rights certificates for other types of immovable property; (iv) expand the productive use of project-financed databases and mapping capacity and the further development of the cadastral system; (v) expand policy analysis; and (vi) support activities that complement farmland restructuring and certificate issuance, including information for farmers and other immovable property users, grants for on-farm irrigation rehabilitation, and environmental land management. Its support for both scaled-up farmland restructuring-related activities and new activities involving other types of immovable property would enhance the impact of a well-performing project and the implementation of priority Government reforms. The Additional Financing would form one element of the Bank s ongoing support for the land agenda, which also includes Programmatic Development Policy operations, policy dialogue, and tenure requirements in other investment projects. 3. The original IDA Grant for the Project in the amount of SDR 6.8 million (US$10 million equivalent) was approved on June 15, 2005 and became effective on September 28, Its progress toward achievement of the Project Development Objective and its implementation progress are both rated as Satisfactory. 4. The Additional Financing will support both scaling up of existing activities and restructuring to add new activities. Under the Additional Financing, the Project Development Objective (PDO would be revised to simplify the text on farmland restructuring (without affecting the substance) and to add activities related to additional types of immovable property (e.g., household plots, buildings) and increased attention to immovable property registration. The proposed revised Development Objective is: to expand farmland restructuring, to increase the number of immovable properties with secure tenure rights, and to propose a plan for the improvement of the immovable property registration system. As part of restructuring associated with the Additional Financing, the description, implementation arrangements, results framework, costs, financing, disbursement allocations, and closing date would also be revised in order to reflect the modified PDO. The revised results framework would also formally incorporate the Bank s official core results indicators and reflect recent implementation experience. The closing date would be extended by three years, from March 31, 2012 for the original Project, to March 31, The implementation arrangements would include a provision to involve raion land offices and Inter-raion Bureau of Technical Inventory (IBTI) offices in the new activities, in ways that can also accommodate ongoing adjustments in the organizational arrangements that may take place in order to implement legal reforms. In addition to changes 5
9 associated with the scaling up, the legal documents for the Project would be revised to reflect the current January 2011 Procurement and Consultant Guidelines and the October 2006 Anti- Corruption Guidelines. The specific details of the above changes (including an updated results framework, detailed cost tables, and a procurement plan) have been developed in consultation with the Government. II. Background and Rationale for Additional Financing 5. Government Reform Agenda for Land and Other Immovable Property. The Government has approved a number of legal and policy reforms and now wants to accelerate their implementation. The Project supports implementation of major aspects of the reform agenda. The Project s contribution to Tajikistan s land agenda can be divided into three basic topics: Farmland restructuring, in order to strengthen the incentive structure for agricultural production; A cadastral system, with spatial data to support the immovable property registration system (see next bullet), land use management and a variety of other functions; An immovable property registration system recording rights and transactions, to support real estate markets (i.e., market transfers of use rights to land and buildings). The main focus of the original Project has been farmland restructuring and the cadastral system. The Additional Financing will deepen interventions on those two sets of activities and also build the registry database and develop the operational experience and plans needed for a future improved registry and cadastral system. 6. Context of Farmland Restructuring and Family Use Rights to Agricultural Land. In Tajikistan, farmland restructuring, forms an essential element of the incentive framework for agricultural growth. Unlike most countries in the Europe and Central Asia (ECA) Region, Tajikistan has not completed the reform process of allocating and registering land use rights for independent farmers so that they can manage their farmland in response to market forces. The July 2, 2009 Government Resolution 406 (with an Action Plan on Reforming Agriculture) included a strong commitment to accelerating farmland restructuring and freedom to farm, and were followed by a number of regulatory reforms to support this acceleration. The projectfinanced farmland restructuring (a) divides larger collective farms into family-held parcels in order to enable more rural people to be independent farmers or (b) regularizes land use rights for families who were already farming on separate parcels but did not have legal documents reflecting these parcels. In both cases, the final output of farmland restructuring for the beneficiaries is their receipt of a certificate of use right for the parcel(s) which is issued and legally registered by the Government s State Committee for Land and Geodesy. Most of the technical work is carried out by seven Regional Land Cadastre Centers which jointly cover the entire country. Complementary project activities (e.g., on-farm irrigation rehabilitation grants, environmental land management training), also help family farms to function better. In addition to family dehkan farms, household plots and presidential land (other parcels allocated by the president for household gardens) are also important for agriculture and food security, and not all of these are documented yet with land use rights certificates. The extent of Tajikistan s agricultural land that is legally registered in some form of family holding is not yet known, but 6
10 the scope and public demand for restructuring farmland into family units and regularizing the rights of all agricultural land parcels remains significant Project Contributions to the Farmland Restructuring and Tenure Security Agenda. The original Project has restructured land into family holdings for about 10 percent of the arable and perennial land in the 40 (of the country s 58) raions where it has operated. It has focused on areas where local authorities are supportive, and the Additional Financing would continue this type of prioritization. The proposed Additional Financing would expand farmland restructuring to cover more families and agricultural land and would also continue the complementary support. In addition, it would also increase tenure security by issuing use right certificates not only for family farms, but also for other types of properties that do not yet have registered rights, with the overall scope of certificate issuance being subject to the implementation capacity and financing. 8. Context of a Transparent Cadastral System. A transparent modern cadastral system provides a geographic description of the parcel boundaries for the land use right certificates which is spatially accurate and linked to the national coordinate system. This type of spatial data is not only useful for immovable property registration, but also useful for planning and managing infrastructure investments (e.g., transport, energy, mining, irrigation), environmental land management, private sector development, etc. Historically, Tajikistan s cadastral data was kept secret and did not reliably reflect the situation on the ground. Furthermore, data on individual parcels could not be accurately compiled together into larger databases. Since 2009, the Government has enacted a number of regulations to facilitate the establishment of an accessible geodetic coordinate system. 9. Project Contributions to a New Cadastral System. With the support of the original Project, Tajikistan has begun to build a transparent cadastral system. With this support the Government has established a new geodetic coordinate and network system, obtained recent satellite imagery for the flatter areas of the country and processed most of these to form base maps, built the survey capacity, carried out surveys (using the rectified imagery base maps where available) and developed spatial information for each land parcel that is on the certificates issued under the Project. This provides reliable spatial data for certificate holders, and also begins to provide the data for a national cadastral plan. Ultimately, a national cadastral plan (i.e., map) would provide the boundaries and locations for all the land parcels and the locations of all buildings within those parcels in the country. The spatial data developed under the original Project represents only a small portion of the total number of records that should eventually be included in the national cadastral database. The Additional Financing would contribute to further development of the cadastral system by adding spatial records both for more family farms (resulting from the farmland restructuring), and for household plots and other types of immovable property. It would also expand survey capacity through additional training as well as the acquisition of Continuous Operating Systems. The Additional Financing activities for pilot 1 The family farmland restructuring undertaken by the original Project significantly exceeds the amount of comparable restructuring undertaken outside the Project. Some of the agricultural land held by families is not held in the form of dehkan farms, but rather as household plots and presidential lands, but the average size of those parcels is extremely small. A large portion of the agricultural land used for annual crops or perennials remains in collective dehkan farms with more than 25 shareholders, or other large farm holdings. The scope for further farmland restructuring is significant, even if a portion of the agricultural land remains in larger collective farm holdings. 7
11 areas may also include the acquisition, processing, and use of additional higher resolution satellite imagery. The policy and investment planning activities under the Additional Financing would include analysis to estimate the total potential number of properties of various types that would eventually need to be incorporated into the national cadastral plan as well as the immovable property registry system. 10. Context of Immovable Property Registration. In order to support the real estate market, an improved immovable property registry system should ultimately include registered use rights for all land parcels and buildings in the country, and have capacity to carry out transactions for customers efficiently and transparently. The information on the registered properties and transactions should be accurate and include spatial data in accordance with the new cadastral system described above. Tajikistan needs major improvements to its immovable property registry system, along the lines of reforms already achieved by most other ECA countries, in order for its registry system to function effectively and contribute to the enabling environment for economic growth. Tajikistan needs to increase collaboration among the various government agencies that handle immovable property records, build customer service, and better integrate data on immovable property rights, transactions, and mortgages. Although there is a 2007 law on the registration of immovable property, it has not been operational and some of the agencies involved in immovable property records have raised objections. The Government has recently reiterated its commitment to implementing a unified registry system in accordance with the law. Currently, however, the existing registry in Tajikistan in practice only records rights to land parcels (not buildings) and does not facilitate the land market. The registration of land use rights is not complete, generally not reliable (except for certificates issued under Bank-financed projects), and not easily used for inheritance transactions. The sale and lease transactions of rural land use rights have been generally prohibited, although this may change if proposed amendments to the Land Code are adopted. Also, worldwide, immovable property markets are more active (even in the absence of restrictions on rural land markets), and the use of corresponding mortgage collateral is more common, in urban areas. The Inter-raion Bureau of Technical Inventory (IBTI) has handled de facto building transactions (based on tax valuation records rather than registered use rights) and local notaries handle the mortgages in coordination with the Ministry of Justice. Efforts to establish a new, improved immovable property registration and cadastral system need to involve the functions and records that have been handled by IBTI and notaries, and also need to prioritize urban areas. Lessons learned from Bank-financed immovable property registration in the Europe and Central Asia Region show that countries need to undertake operational testing and demonstrations in selected areas in order to learn how to integrate functions and data that in the past have been handled by independent agencies, and use these findings to develop a strategy and corresponding investment plan for future rolling-out of a sustainable registry and cadastral system. Premature large-scale investments that do not take into account careful piloting involve unacceptable delays and risks of wasteful expenditures that do not result in sustainable improvements. 11. Project Contributions to an Improved Immovable Property Registration System. As noted already, project-financed farmland restructuring includes the issuance of use right certificates which are legally registered and reflect accurate information, including digitized spatial data in line with the new cadastral system. As such it provides a portion of the use right certificates which are required for an improved immovable property registration and cadastral 8
12 system, albeit only for rural land. In addition, in accordance with good practice, the proposed Additional Financing includes support for the testing and demonstration of data integration and customer service in four pilot areas (which would include urban properties) in order to increase the knowledge and understanding of the institutional reform and pragmatic operational and technical requirements. It also includes support to build understanding of internationally recognized good practice. In combination, this will enable Government officials to develop a well-informed and realistic vision and consensus on how to achieve a sustainable, wellfunctioning registry system as well as a corresponding investment plan, as a prelude to developing a new well-functioning immovable property registry and cadastral system. Such a system would form an essential part of the enabling environment for economic growth and finance, as well as for good governance Consistency with Bank Strategy. The proposed activities would improve conditions for a sustainable increase in agricultural productivity and enhance the enabling environment for economic growth, and therefore are fully consistent with the current Country Partnership Strategy (FY10-13). Poverty reduction is being addressed through the improved prospects for growth and food security, and through the Project s attention to the interests of vulnerable people, including rural women. The Additional Financing would form one element of the Bank s ongoing support for the land agenda, which also includes the Programmatic Development Policy Operations, the policy dialogue, and tenure requirements in other Bank-financed investment projects. 13. Grant. A Grant from the World Bank s International Development Association (IDA) for the Project in the amount of SDR 6.8 million (US$10 million equivalent at approval, with a current value of about US$10.9 million) was approved on June 15, 2005 and became effective on September 28, The current closing date of the original Project is March 31, Project Development Objective and Components. The Project Development Objective of the original Project is to expand farmland restructuring activities to enable more rural people to become independent farmers and take management decisions in response to market forces. Achievement of these objectives is being pursued through (a) issuing land use certificates for family farms in accordance with agreed standards, building capacity for farmland restructuring and registration of land use rights, and establishing survey and mapping capacity; (b) informing rural people about land use rights, farm management, and environmental land management, and providing grants for on-farm irrigation rehabilitation; and (iii) policy development. 15. Past Project Restructuring. A Level One (i.e., Board approved) restructuring took place in July 2009 to update project activity terminology, project areas, implementation and procurement arrangements; modify the results monitoring framework to reflect political and technical constraints and refine the environmental management provisions; and simplify the financing and disbursement arrangements. This also included a six-month extension of the 2 In the longer term, an effective immovable property registration system would help generate many economic benefits, supporting (a) tenure security, (b) property taxation, (c) security for credit, (d) judicial procedures relating to immovable property rights, (e) dispute management, (f) real property markets development and monitoring, (g) protection of State lands, and (h) land reform. Improvements to immovable property registry systems are also strongly associated with improved rankings for Doing Business and Governance. 9
13 closing date. A Level Two project restructuring took place in July 2010 to update procurement methods, include a provision for potential future organizational reform of key implementing units, and further increase the project area. 16. Results Performance. The original Project s achievement of results targets and other expectations are consistent with, and in some cases exceed, those agreed during the 2009 Project Restructuring. The Government recognizes the importance of farmland restructuring and as a result, the pace of restructuring has accelerated significantly as of October 15, 2011, a cumulative total of over 34,000 land use certificates have been issued with Project support. Other results are specified in Annex 1. Core indicators are already being informally monitored and will be formally incorporated into the results framework as part of the Additional Financing approval. There are no unresolved safeguard issues. Except for the delay in the project audit for fiscal year 2010 (which was due by June 30, 2011 and was received on December 12, 2011), the Project s implementation, including compliance with legal covenants, has been Satisfactory since May 2010, and Moderately Satisfactory since the 2009 Project Restructuring. The delay in the audit was due to a delay in the government s overall umbrella contract with an audit firm for all World Bank-financed projects. In the October 2011 Implementation Status and Results Report, all ratings were Satisfactory, except for financial management, which was Moderately Unsatisfactory due solely to the delay in the audit. 17. Additional Financing Rationale. The proposed Additional Financing would support additional and expanded activities that scale up the Project s impact and development effectiveness. It includes restructuring of certain project design elements, including a modification of the project development objective, a revision of the results framework, and updated costs and financing estimates in order to accommodate the additional activities and fully take into account implementation experience to date. The proposed Additional Financing is considered the most efficient mechanism for building upon and scaling up the successful results of the ongoing Project and for helping the Government to further implement key policy reforms. As mentioned above in paragraphs 4 and 5, the scope for further farmland restructuring is significant, the development of a new cadastral system has only begun, and measures are also needed to build the operational experience needed for future large-scale improvements in immovable property registration. As a donor, the Bank has a strong comparative advantage in sharing international experience and good practice given its extensive development experience with the land agenda throughout the world. Prospects for other sources of donor or government financing have been explored, but no other financing is available. Alignment with Country Strategies 18. The Project, including the Additional Financing, supports Government and donor strategies. The National Development Strategy (2015) and Poverty Reduction Strategy III (2012) both emphasize the need to promote economic growth, especially in rural areas, and recognize the importance of land tenure security and independent farm management for the country s development and poverty reduction goals. The Government has demonstrated the high priority it accords to farmland restructuring through its significant acceleration of farmland restructuring and the associated high profile reform initiatives that have taken place since The Government has also sought support for improving immovable property registration, and 10
14 recently reiterated the importance that the Government attaches to accelerating this agenda, including proceeding with the implementation of the Immovable Property Registration Law and amendments to the Land Code that would make land use rights marketable. Status and Government Ownership of Additional Financing Design 19. The Government first sought Additional Financing from IDA early in calendar 2011, and the Bank and Government elaborated the basic concept in February and March In September 2011, the Government re-confirmed its strong interest in obtaining this Additional Financing and the concept was further elaborated and updated. As a result of these efforts, a full design, including detailed cost estimates and a procurement plan, has been prepared. The proposed design, including the capacity building for immovable property registration, takes into account the views of high level Government officials (e.g., President s Administration, Deputy Prime Minister, Ministry of Finance, State Committee for Land Management and Geodesy, and the Inter-raion Bureau of Technical Inventory), and has their strong support. Benefits and Risks 20. Agricultural Benefits. The continuation of farmland restructuring and other activities, as well as the new activities to regularize household plot use rights would have significant benefits for agriculture by strengthening the incentives for agricultural growth. The Additional Financing would enable the number of use rights certificates issued to families to triple the current target of 37,500 to 112,000, and many of these would be for family farms. It is now widely recognized (including by many government officials) that on average, family farms tend to be significantly more financially viable than larger farms, as demonstrated by their greater ability, on the whole, to cover business expenses such as utility fees, taxes, debts, etc. The preliminary findings from the 2011 Rural Vulnerability and Resilience Study provide further evidence on this for both family farms and household plots (i.e., the small garden plots around domiciles). It also indicates that rural people's understanding of and support for farmland restructuring has grown significantly since 2007, and that they perceive that with family farms they can receive higher incomes. The Project s complementary activities involving irrigation and training further strengthen the agricultural benefits. For example, the irrigation rehabilitation support increases productivity, and the environmental land management support helps build skills in sustaining productive land. 21. Benefits of Improved Information. The further development and increased use of project-generated databases and maps with the support of Additional Financing are essential for a well functioning immovable property registry and cadastral system and would benefit private sector development, public sector management, infrastructure development, and environmental management. These databases and maps represent an important, albeit initial step in building the spatial data infrastructure and the overall immovable property administration system that Tajikistan needs to develop over the longer term. The land use certificate issuance, which assigns unique numbers to parcels that are spatially referenced in a transparent and accurate geodetic coordinate reference system, is helping the country to acquire a national cadastre that could eventually include all land parcels. The registry-related efforts in selected pilot areas would use project-financed information technology and databases to upgrade records on parcels, 11
15 household plots and buildings, and in turn would further develop and digitize the databases for those areas and increase their transparency. They would also further develop methodologies to replicate this work more efficiently in the future. The policy analysis and investment planning activities would obtain current data on the status of property records for the entire country in order to assess the gaps in coverage and the potential magnitude of future work on farmland restructuring, household plot regularization, and immovable property registration. This would help decision makers develop a more informed long-term vision for the land agenda, and plan investments. 22. Benefits of Learning about How to Improve the Registry and Cadastral System. The operational testing in selected areas, policy analysis, and project activities related to all types of immovable property should provide the knowledge required for developing a sound strategy and action plan on how to establish an improved registry and cadastral system at the national level. Such a system is an essential part of the enabling environment for economic growth and finance, as well as for good governance. The Additional Financing would help increase collaboration among experienced agencies that have operated independently in the past, and would integrate data on land cadastre, immovable property rights, records, transactions, and mortgages. It would also help test and model measures to improve customer service, quality control, efficiency, governance, and professional capacity in ways that take into account international good practice. In combination, project activities would help the Government develop strategies and make decisions on the institutional reforms and associated investments (including information technology systems) required to achieve sustainable improvements to the entire registry system. 23. Risks. Key risks are largely institutional. One risk is opposition by vested interest groups (such as former farm managers of State and Collective Farms, cotton gin operators as investors, and government agency personnel) to increasing the autonomy of rural families through farmland restructuring and to integrating functions previously handled by three separate agencies (State Committee for Land Management and Geodesy, Inter-raion Bureau of Technical Inventory, and Ministry of Justice). Some of them still need to be convinced that the new family farms are more productive and profitable than the former State and Collective Farms and larger collective dekhan farms. Also, the increased transparency and efficiency of family farms reduce opportunities for officials to intervene in the allocation of immovable property use rights or demand informal payments for public services like farmland restructuring, provision of data, and registration of immovable property. These factors could interfere with important policy and procedural reforms as well as their field-level interpretation and implementation. While the Project s significant progress since 2009 has successfully mitigated these types of opposition, and the Additional Financing activities on immovable property registration are designed to reduce inter-agency rivalry and resistance, some level of risk remains. 24. Other Constraints. The social tax policy, which charges a fixed monthly fee per farm shareholder, constrains the rate of farmland restructuring as well as the inclusion of women and other eligible shareholders. Some farmers list only one shareholder (the farm head) on the certificate, leaving out women and other adult family members, while others either reject the newly issued certificates or simply refuse to apply for them. This issue could limit the overall impact of the project investments, and is likely to be addressed as part of the upcoming 12
16 comprehensive tax reform in 2014; however, the Bank is urging a more rapid resolution. In the meantime, the Additional Financing design, including results targets, take this constraint into account. III. Proposed Changes 25. Changes in Development Objective and Activities. Under the Additional Financing, the Project Development Objective (PDO), project description and implementation arrangements would be revised to simplify the text on farmland restructuring (without affecting the substance) and to include a to include appropriate support for improving the immovable property registration system. The revised PDO is to expand farmland restructuring, to increase the number of immovable properties with secure tenure rights, and to propose a plan for the improvement of the immovable property registration system. Secure tenure refers to tenure over properties documented by use rights certificates that are legally recognized, and issued through a process that is socially inclusive, transparent, regarded as fair by local inhabitants and reflects good conflict management. The proposed financing would enable a further increase in farmland restructuring, further upgrading of the databases and mapping capacity, and initial measures in both rural and urban areas to help establish a base for improvements in the immovable property registration system. The financing would also continue to support policy analysis, information dissemination and training in property rights, environmental land and farm management for farmers and other stakeholders, and additional grants to Water Users Associations for on-farm irrigation rehabilitation. Annex 3 includes a more complete description, including further details about the design of the new activities related to household plots and buildings, and improvements to the registration system. 26. Changes in Results Framework, Timeframe, and Guidelines. As part of the Additional Financing, the results targets, costs, financing, disbursement allocations, and closing date would be revised to reflect the modified PDO, scaling-up activities, and the new registration-related activities. The revised results framework would also formally incorporate the Bank s core results indicators and reflect recent implementation experience. The revised results framework, including targets is presented in Annex 1. Annex 3 includes a further explanation of the relationship between the indicators and the PDO, as well as an explanation of changes in the indicators from the original Project. The closing date would be extended by three years, from March 31, 2012 to March 31, The implementation arrangements would include a provision to involve selected IBTI offices. In addition to changes associated with the scaling up, the legal documents would be revised to reflect the January 2011 Procurement Guidelines and the October 2006 Anti-Corruption Guidelines. 27. Disbursements. The disbursement allocations of the original Project would be revised to take into account actual and expected remaining expenditures and disbursements for that original Grant. The disbursement categories for the Additional Financing would be directly comparable to the two categories that are currently active under the original Project. There is also a provision for retroactive financing of project expenditures after December 1, 2011, of no more than 10% of the Additional Grant amount. (See Annex 4.) 28. Procurement and Incremental Operating Expenditures. A detailed procurement plan for the Additional Financing implementation period has been developed. And as stated above, 13
17 the legal documents will include the 2011 Procurement and Consultant Guidelines and the 2006 Anti-Corruption Guidelines. In other respects, the methods used during the original Project will continue and expected to be adequate. Arrangements for the project to finance services provided by the SCLG, oblast and raion land office, the PMU, the RLCCs, and the Government s National Committee for Television and Radio Broadcasting, would be handled as part of incremental operating costs. In addition, definition of incremental operating costs is expanded to include services provided by the IBTIs. (See Annex 4 for further details.) 29. Implementation Arrangements. The Additional Financing would continue to use the provisions for implementation under the original Project (e.g., definitions, implementation covenants, and descriptive text on the original activities) as reflected in the legal agreement of the original Project. These provisions were already relatively broad and are therefore sufficient to encompass the proposed new activities related to issuance of other types of land use certificates (e.g., for household plots and buildings) and to reflect the role of raion land offices (which handle land use records for all types of land parcels). The raion land offices are under the technical direction of the State Committee for Land Management and Geodesy (SCLG) and the administrative management of the raion. In addition to retaining these provisions, the legal agreement definitions, covenants, and description are being expanded to include provisions on the other parties involved in the pilot registration capacity building activities. These parties include the Inter-raion Bureau of Technical Inventory (IBTI), which handles records related to buildings in local self-financed offices, the local notaries who handle the mortgage records on behalf of the Ministry of Justice, and a new Municipal (Gorodskoi) Cadastre Center (a special type of Regional Land Cadastre Center with comparable legal status), which would implement many of the project activities in the urban pilot area. The provisions would also include a reference to a possible successor to the IBTI in order to address potential organizational reforms that may arise from implementation of the Immovable Property Registration Law. The existing project-specific implementation covenants would continue and a new covenant would be added. This covenant would specify that the local authorities in the Project raions would ensure that the pilot activities under Schedule 2 Part A (ii) of the Project are conducted with the full support and collaboration of the raion land offices, the IBTIs, and notaries, and under arrangements acceptable to the Association. 30. Partnerships. Although the Additional Financing does not currently envisage formal cofinancing, partnerships that have been fostered with Government agencies, rural beneficiaries, and a range of donors would continue during the Additional Financing implementation period. This would include especially close cooperation with at least three other donor-financed projects. The United States Agency for International Development (USAID) Land Reform Project is collaborating on the impact evaluation surveys, legal reform, awareness building, and provision of complementary legal aid. Helvetas with Swiss funding is supporting awareness building, legal training, and legal aid. The USAID Family Farming Program is also collaborating on the most recent evaluation survey, and is expected to provide complementary technical training for farmers in the future. In addition, other World Bank investment projects involving on-farm irrigation activities include requirements that at least 70 percent of the command areas are held by family farmers with their own land use certificates. The project activities related to improvements in the registration system are building on earlier work by other donors, including the now-completed project funded by the Swedish International Development Agency. Also, the 14
18 more accurate and complete tenure records being provided under the Project should facilitate the compliance of major infrastructure projects being financed by the Bank and other donors with involuntary resettlement guidelines. Other Bank and International Financing Corporation activities on private sector development also recognize the importance of improved tenure security and registration. The Project would also continue to play a major role in the ongoing land policy dialogue with the wider donor community and the Government, and would closely coordinate with land-related elements of the Bank-financed Policy Development Program Operations. Project Component A. Support for Farmland Restructuring and Registration of Immovable Property Rights, including policy analysis and investment planning Costs by Component 3 (US$ Million) B. Information for Immovable Property Users and Irrigation Support Original Project (October 2004 March 2012) Total Additional Financing (April 2012-March 2015)- Total Combined (Oct 2004 March 2015) Information for Farmers and Other Immovable Property Users (0.93) (0.93) (1.86) On farm Irrigation and Water Management 4 (1.29) (0.26) (1.55) Environmental Land Management (0.45) (0.32) (0.77) Subtotal of 3 subcomponents C. Project Management and Coordination Contingencies Total Financing Source Financing (US$ Million) Original Project (October 2004 March 2012) Total Proposed Additional Financing (April March 2015)- Total Combined (Oct 2004 March 2015) IDA Grant RT Government Beneficiary Contribution Total Assumes an SDR/US$ exchange rate of Including the beneficiary contribution, which is 25% of the Grant amount (i.e., 20% of the total for this subcomponent) at the time of the grant proposal, although these percentages are not precisely reflected in the US$ total final disbursements for grants due to exchange rate fluctuation. The actual beneficiary contributions are expected to be about US$ 270,000 for the original Project and US$65,000 for the Additional Financing. 5 Assumes an SDR/US$ exchange rate of and therefore differs from the US$10.00 million that was estimated at the approval of the Grant for the original Project. 15
19 IV. Appraisal Summary 31. Economic Justification. The original economic justification remains valid for the farmland restructuring and other supporting activities financed under the original Project. The expansion in scope to include activities related to other types of immovable property (e.g., household plots and buildings) is also well justified, due to the importance of tenure security and immovable property markets to the broader enabling environment not only for agriculture but for other types of economic growth, such as private sector development in urban areas. During the Additional Financing implementation period, the efficiency of issuing use rights certificates is expected to increase further, and an indicator on unit costs of certificate issuance is being added to the Results Framework. The attention to efficiency would improve prospects for the financial viability of comparable post-project activities. 32. Financial Management. The financial management responsibilities for the Additional Financing Grant (AF) would remain with the PMU, which currently implements the Land Registration and Cadastre System for Sustainable Agriculture Project (LRCSP). The latest FM supervision of the ongoing LRCSP was conducted in October Overall, the financial management arrangements currently being implemented by the PMU for the ongoing LRCSP are considered acceptable to the Bank. The proposed AF would introduce some additional financial management arrangements, including updating the 1C accounting program to enable the PMU to track AF activities. The audit of project financial statements for 2010 for the LRCSP was delayed due to the late selection of the auditor by the State Committee on Investment and State Property Management that procures audit services for all World Bank financed projects in Tajikistan under the Block Audit arrangement. The audit report has since been received, reviewed and found to be satisfactory. Quarterly IFRs have been submitted on time and provide reliable financial information. The PMU is adequately staffed and appropriate controls and procedures have been instituted. 33. Procurement, Expenditure, and Disbursement Capacity. Detailed cost estimates and a procurement plan for the Additional Financing have been developed and appraised. They take into account realistic phasing including procurement processing, and are consistent with one another. They are also realistic in terms of yearly disbursement levels, and prospects for full disbursement within the three years of the Additional Financing are good. Of the US$10.94 million equivalent in the original Grant, over US$2 million was spent in calendar 2010, and over US$3 million are expected to be spent in calendar Expenditures could have been higher but were constrained by the total Grant amount of the original Project. The PMU now has good procurement and financial management capacity, and processes procurement and withdrawal applications in a timely manner in accordance with Bank guidelines. However, given that the existing PMU procurement staff have limited knowledge and experience in selecting consultants under the QCBS method and procuring goods under the ICB method, and that knowledge of English is still poor, a procurement consultant with adequate experience should be hired at least for the first year of AF implementation, with a possible extension of his/her duties if needed. In addition, the Additional Financing design also includes a consultancy to assist the PMU with the technical aspects of procuring items related to information technology, in order to address their limited technical capacity for handling this highly specialized topic. 16
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