Attachment_J.6_The_Environmental_Monitoring_Plan_for_the_Albertine_Graben(IEE).pdf

INITIAL ENVIRONMENTAL EXAMINATION

REQUEST FOR CATEGORICAL EXCLUSION

PROGRAM/ACTIVITY DATA:

Program/Activity Number: 617-007, SO7

Country/Region: Uganda / East Africa

Functional Objective 4: Economic Growth

Program Area 4.2: Trade and Investment

Program Element 4.2.2: Trade and Investment Capacity

Program Area 4.5: Agriculture

Program Element 4.5.2: Agriculture Sector Productivity Capacity

Program Area 4.6: Private Sector Competitiveness

Program Element: 4.6.2: Private Sector Capacity

Program Area 4.8: Environment

Program Element 4.8.1: Natural Resources and Biodiversity

Program Area 3.1: Health

Program Element 3.1.8: Water Supply and Sanitation

Program/Activity Title: ―Expanded Sustainable Economic Opportunities for Rural Sector Growth‖

Funding to Begin: FY 2009 Funding End: FY 2014 LOP Amount: $ 100 Million DA Resources

Sub-Activity Amounts:

Livelihoods and Enterprises for Agricultural Development (LEAD) $35,000,000

Sustainable Tourism in the Albertine Rift (STAR) $ 7,500,000

Wildlife, Landscapes and Development for Conservation (WILD) $ 7,500,000

Northern Uganda Water Supply Services (NUWSS) $ 3,000,000

Northern Uganda Resource Rights Project (NURRP) $1,800,000

Program for Biosafety Systems (PBS) $2,400,000

The Uganda Agricultural Biotechnology Support Program (ABSP) $ 4,600,000.

Northern Uganda Dairy Development Project $500,000

IEE Prepared By: Sudi Bamulesewa, MEO, USAID/Uganda; and the SO7 Team

Current Date: August 8, 2008

Other Relevant Environmental Compliance Documentation: This IEE builds on the following

USAID environmental compliance documentation that is already in effect for ongoing activities under

USAID/Uganda SO7:

USAID/Uganda SO7 Agriculture Pesticide Evaluation Report and Safer Use Action Plan

(PERSUAP), http://www.encapafrica.org/documents/iee/36Uganda3_SO7_PERSUAP.pdf

USAID/Uganda Pesticide Evaluation Report and Safer Use Action Plan (PERSUAP) for dairy industry development, File Names. 33Uganda1 dairy (6/10/03);

USAID/Uganda Tile II partner IEEs. ACDI/VOCA (6/1/06)) and Mercy Corps (8/13/08

This IEE broadly covers the range of activities within the Title II IEEs, but will not be used as a replacement to the existing Title IEEs. This IEE will specifically cover the DA funded SO7 activities until amended.

http://www.encapafrica.org/documents/iee/36Uganda3_SO7_PERSUAP.pdf

IEE Amendment (Y/N): ___N If "yes", Filename & date of original IEE: _

ENVIRONMENTAL ACTION (S) RECOMMENDED: (Place X where applicable)

Categorical Exclusion: X Negative Determination: __X

Positive Determination: Deferral: ___ ___

ADDITIONAL ELEMENTS: (Place X where applicable)

CONDITIONS: X PVO/NGO: X

SUMMARY OF FINDINGS

USAID/Uganda Strategic Objective 7 (SO7) is a key component of the Mission development strategy.

Its aim is to sustain and reinforce broad based growth by addressing the underlying problems of low productivity, lack of competitiveness, and environmental degradation. To achieve broad impact, SO7 supports closer integration of agriculture with sustainable natural resource management interventions and, also increases the productivity of related enterprises of all sizes. SO7 leverages key reforms in the financial sector and in trade policy to foster private sector growth and international competitiveness. The SO encourages growth investments that are environmentally sustainable and environmental investments that are economically viable.

The purpose of this IEE is to provide threshold determinations for the existing and new Development

Assistance (DA) programming activities in SO7 in accordance with the requirements of Regulation

22 CFR 216 (Reg. 216), This document will assist in ensuring environmental compliance, and also permit the implementation of the proposed DA funded program activities in accordance with USAID

Environmental Policy and Procedures (22 CFR Part 216).

This IEE evaluates the current activities and future activities under SO7. The key programs are:

LEAD, STAR, NUWSS, NURRP, Dairy Development Program and Biotechnology.

The following are the five program areas (PA) that SO 7 activities contribute to:

PA 4.2: Trade and Investment. Facilitate the start up of on and off farm enterprises and increase trade capacity through public-private partnerships in selected agricultural value chains such as staple food crops, coffee, cotton, fish, livestock and dairy ; the mobilization and increased availability of rural, agricultural and trade finance to farmers and others involved in the value chains; sustainable trade linkages between producers and domestic, regional and global markets; and the leveraging of support for investments in various form of infrastructure development.

Alliances between producers, processors, and exporters will be forged and private investment will be facilitated with the sub grants, which will leverage private resources and fund private sector research and technology development. Through the sub-grants, export firms will be linked with out-grower farmer groups and other value chain participants.

PA 4.5: Agriculture. Generation and dissemination of more productive and resilient agricultural technologies, formation of partnerships between agricultural input providers, producer organizations, agro-processors, commercial framers, and government institutions for validation ,demonstration and transfer of improved agricultural, livestock, and aquaculture (pond and cage culture) technologies;

providing support for the establishment of producer organizations with ties to broader agri-business markets and input suppliers; providing assistance to improve farmers’ access to input and product markets,; supporting business partnerships between producers and others; providing business development services and technical support to producer organizations, commercial farmers and agribusinesses; and financial support for infrastructure development ( warehouse, visitor centers, access roads etc.). Also providing technical assistance to address policy constraints to increased agricultural commercialization; create a conducive Biotechnology Regulatory Environment, and to re-orient agricultural training to be demand driven.

PA 4.6: Private Sector Competitiveness. Providing loan guarantees under the Development Credit

Authority (DCA) to meet short and medium-term credit needs of producer organizations , marketing groups, agribusiness and Small and Medium Enterprises (SME’s); helping to strengthen cooperative unions and rural savings and credit cooperatives; linking agricultural producers to domestic and international markets through the establishment of a warehouse receipts system, improving market information and dissemination, increased access to market information and market intelligence, infrastructure development and cooperative development; providing technical and financial assistance to MFI’s; and, providing technical assistance on improvement of regulation for trade competitiveness and financial sector.

PA 4.8: Environment Conserved. Providing technical assistance that will enable local communities and districts to effectively manage natural resources and biodiversity, as a threat based approach to conserve biodiversity in critically important ecosystems. These inputs include training and improved technology packages to provide for strategic agriculture and natural resource planning at the district level, as well as providing technical and material support for community-based watershed management interventions and conservation of key biodiversity assets. Provide technical assistance in improving the biodiversity linked tourism sector and working with the private sector to invest in infrastructure.

PA 3.5: Health. Within the SO7 SO, this program Area with focus on the provision of water. The activities will be centered on providing technical assistance to local authorities to manage the water resources and water infrastructure. Also, the activities will include support to maintenance of existing water infrastructure, and also putting in place new infrastructure that will improve the supply.

This IEE evaluates each of these PA activities, and recommends Categorical Exclusions, Negative

Determination with Conditions threshold determinations, and mitigation measures as summarized below and elaborated in Table 1.

1. A Categorical Exclusion is recommended for some of the activities in PA 4.2, PA 4.5 PA 4.6, PA

4.8, and PA 3.5, pursuant to 22 CFR 216.2(c)(2)(i),(ii)(iii) and (v) for activities involving technical assistance, education, training workshops, meetings, information analysis, documentation and transfer, research and studies, advocacy, capacity building, resource provision and training for the following types of interventions: improved nutrition, agricultural, water supply, livestock improvement, environmental and economic monitoring; policy analysis and reform advocacy; land certification procedures; land administration capacity building; trade capacity development; increased access to market information and market intelligence, business partnership development; producer organizations and business association strengthening; livestock nutritional supplements and in;

community natural resources management and biodiversity conservation, watershed management and micro-enterprise development.

Note that Categorical Exclusions are not applicable for pesticide use activities or genetically modified organisms/products (GMOs).

2. Negative Determination with Conditions

A Negative Determination with Conditions is recommended pursuant to 22 CFR 216.3(a) (2) (iii) for some of the activities in PA 4.2, PA 4.5, and PA 4.6 ,PA 4.8 and PA 3.5 as follows:

a. General dissemination of improved technologies: These technologies include supply of improved seeds, use of fertilizers, community natural resource conservation (including biodiversity conservation) and watershed management interventions activities (e.g. soil conservation with bench terracing, crop rotation, IPM, use of farmyard manure, minimum tillage, etc.), farmer seed production activities, improved aquaculture practices, improved livestock practices, value added product processing, improved product storage and environmental management. The conditions are that seed suppliers shall use certified seed sources with reputable suppliers, and that ―good practices are well addressed for community natural resource conservation and environmental management activities to minimize or prevent the occurrence of adverse environmental impacts. For the supply of livestock, seeds and natural resource management activities there is a need to ensure that:

The agro-climatic zones where various seeds varieties are being introduced are appropriate so as to utilize the maximum seed production potential fully;

All necessary clearance from local authorities has been received and appropriate measures taken to confirm that seeds that are introduced will not produce invasive plant problems;

The risk of introduction of pests, diseases and weed organisms is minimized;

That promotion of genetically modified organisms (GMOs) is avoided, and that any activities involving promotion of GMO’s must be subjected to USAID biosafety review and approval, as well as host country review and approval before being introduced to the farmers; and

That the communities are well sensitized and trained on the application of recommended practices for natural resources management, bio-diversity conservation and environmental protection at the farm level.

That the benefiting communities are involved in making the decisions on the kind of livestock to be introduced and the proposed technologies associated with livestock that the communities are expected to benefit from.

b. Product Storage: These activities involve proper handling of produce during harvest and storage

(e.g. , produce drying, dressing against storage pest infestation, etc.) to minimize produce losses and to maintain produce quality. The specified conditions include:

These activities need to closely address ―good practices‖ for meeting the recommended agricultural produce quality for ensuring human health and safety requirements.

The communities are well trained on safe handling of any livestock chemicals and agricultural chemicals that are used in product dressing against storage pests’ infestation for ensuring that recommended human health and safety measures are in place. The action plan recommendations and provisions of the SO7 PERSUAP http://www.encapafrica.org/documents/iee/36Uganda3_SO7_PERSUAP.pdf and Dairy

PERSUAP apply.

c. Infrastructure Development: These activities involve providing material support for the construction of water supply systems, protected area visitor centers, agricultural produce storage facilities and agricultural roads, and cow pens. The specified conditions for these activities include:

Following best engineering practices for building structure and infrastructure development for agricultural roads with qualified professional expertise, including opportunities for energy conservation.

Identifying and mitigating any direct adverse impacts on the existing or surrounding physical environment arising from structure construction and agricultural road rehabilitation activities;

Identifying and mitigating any problems that might arise due to the sourcing and use of construction materials for storage facilities and agricultural roads rehabilitation, storage structure design, road construction activities, and management of the storage facilities (e.g. control of storage pests, etc.).

Following best water engineering practices for building water infrastructure and taking care of contamination of the water sources.

The Implementing Partner should ensure that all construction activities will be conducted following principles for environmentally sound construction, as provided in Chapter 3: Small Scale Construction of the USAID Environmental Guidelines for Small-scale Activities in Africa (EGSSAA), which can be found at http://www.encapafrica.org/SmallScaleGuidelines.htm.

For the rehabilitation of existing facilities, and for construction of facilities in which the total surface area disturbed is less than 10,000 square feet, the condition is that these activities will be conducted following principles for environmentally sound construction, as provided in the http://www.encapafrica.org/EGSSAA/Construction.pdf

Small Scale Construction chapter of the EGSSAA.

For the construction of any facilities in which the total surface area disturbed exceeds 10,000 square feet (1,000 square meters), the program will conduct a supplemental environmental review according to guidance in Annex G of the Africa Bureau Environmental Procedures

Training Manual (EPTM). Construction may not begin until such a review is completed and approved by the Mission Environmental Officer.

d. Aquaculture research and development: This activity involves demonstrations and adaptive research for setting up production trials and demonstrations to address the technology, quality and production system constraints for cage culture and fish ponds. The outreach and capacity building components address environmentally sound best management practices (BMPs) associated with training on, and extension of, technologies and production system packages. BMPs as laid out in

Sect. 4.3 shall be adhered to, as well as the Fisheries and Aquaculture chapter of the USAID/AFR

Environmental Guidelines for Small-scale Activities in Africa

(http://www.encapafrica.org/SmallScaleGuidelines.htm). It is also expected that the activity implementation partners will adhere to the 2004 ―Aquaculture Nairobi Declaration,‖ which specifically addresses movement of Tilapia stocks into Africa.

e. DCA-Supported SME Loan Facility for Producers and Processors. The standard DCA loan portfolio guarantee agreements include environment-related provisions and standards consistent with

USAID’s environmental regulations and policies. USAID credit enhancement assistance encourages financial institutions to make loans to SMEs that are engaged in environmentally-friendly practices, including appropriate filters for environmental considerations in the activities to be supported or guaranteed under facilities that are put in place. (See Section 4.2 (l) for more detail).

f. Loan Funds, Micro-Finance, and Micro-, Small-and–Medium Enterprise (MSME) Support, Business Development Services (BDS). MFI and MSE credit and service providers are urged to institutionalize their own environmental reviews of credit and service projects and individual activities. MSE and environmental guidelines can be used to improve the effectiveness, on a case-by-case basis, of reviewing and mitigating the adverse environmental impacts of MSMEs. This requires that there should be a scope for factoring in some screening criteria in the loan provision process.

It is recommended that all activities relating to the expansion of Micro-Finance and, or Micro-

Enterprise should be subjected to the environmental review process. The Environmental Review

Form (ERF) provided in the Environmental Guidelines for Small-Scale Activities in Africa

(EGSSAA) can be tailored as needed, to assist in identifying potential environmental impacts that are likely to occur as a result of such Micro-Enterprise activities. The ERF helps to classify such potential impacts into low risk, medium risk and high risk categories so that appropriate mitigation and monitoring measures can be identified for all medium and high risk categories. The necessary guidelines on how this can be achieved are provided in the USAID Africa Bureau Environmental

Guidelines for Small-Scale Activities in Africa (EGSSAA) Part III, ―Guidelines for Micro and Small

Enterprises’ provides.‖ In addition, the SO7 team leader and program implementing partners shall visit all project sites during implementation and management stages to ensure that the project activities are not causing any adverse environmental impacts, with a view to correcting and or initiating additional mitigation measures.

It is also recommended that all activities within the sub grants components should be subjected to the environmental review process. The Environmental Review Form will assist in identifying potential environmental impacts that are likely to occur as a result of such sub grants that are not clear at this point in time. The ERF will help to classify such potential impacts into low risk, medium risk and high risk categories so that appropriate mitigation and monitoring measures can be identified for all medium and high risk categories. The necessary guidelines on how this can be achieved are provided in the USAID Africa Bureau Environmental Guidelines for Small-Scale Activities in Africa

(EGSSAA)

http://www.encapafrica.org/SmallScaleGuidelines.htm

An environmental management training course entitled ―Improving Micro-and Small Enterprise

Success through Cleaner Production‖ is recommended for SO7 team members and partners. (See http://www.encapafrica.org/coursepage.htm). The course provides an opportunity for skills development in leadership and innovation in environmental capacity-building for Business Service

Organizations (BSOs) that assist in Small and Medium Enterprises (SMEs) development.

It is also recommended that all activities relating to the construction of structures and construction/rehabilitation of roads should be subjected to the environmental review process before the activities begin. The Environmental Review Form (ERF) provided in the Environmental

Guidelines for Small-Scale Activities in Africa (EGSSAA) will assist in identifying potential environmental impacts that are likely to occur as a result of such infrastructure development activities. The ERF helps to classify such potential impacts into low risk, medium risk and high risk categories so that appropriate mitigation and monitoring measures can be identified for all medium and high risk categories. The necessary guidelines on how this can be achieved are provided in the

USAID Africa Bureau Environmental Guidelines for Small-Scale Activities in Africa

3. Pesticides

This IEE per se does not cover the procurement of pesticides, except as provided immediately below. Activities that entail the promotion or use of pesticides involving controlled experimentation, exclusively for the purpose of research, and field evaluation activities which are confined to small areas (e.g. < 4 ha.) and carefully monitored, shall be within the parameters of 22 CFR 216.3(b)(2)(iii) (Exceptions to Pesticide Procedures). All activities that fall outside of the category of controlled experimentation exclusively for the purpose of research and field evaluation under 22 CFR 216.2(c)(2)(ii) and entail the procurement or use, or both, of pesticides shall be guided by the SO7 PERSUAP; 36Uganda3

SO7 Crop PERSUAP and the dairy PERSUAP 33Uganda1 dairy. If some of the proposed chemicals are different from the chemicals covered in the two PERSUAP’s above, the chemicals will have to be analyzed in accordance with USAID Pesticide Procedures (22 CFR

216.3(b), after which an amendment to the existing PERSUAP(s) will be prepared. No funds shall be obligated or expended for the procurement or use of pesticides outside the existing

PERSUAP’s unless they are specifically approved through an amendment to the PERSUAP in accordance with 22 CFR 216.3(b).

4. Quality Assurance and Compliance Provisions

USAID/Uganda is responsible for assuring that implementing partners have the human capacity necessary to incorporate environmental considerations into program planning and implementation and to take on their role in the Environmental Screening Process.

Implementing partners should seek training as needed, such as through participation in the

Africa Bureau’s regional ENCAP training courses.

Among the conditions recommended in this IEE include the implementation of an environmental review process prior to undertaking certain activities that may have adverse environmental impacts. These activities are designated with a Negative Determination with

Conditions, and prescribe use of USAID Africa Bureau Environmental Review & Report

Form (ERR/F), which is attached to this document as Annex 1.

In general, SO 7 activities need to be subjected as appropriate to purpose-specific environmental screening, using the Africa Bureau ERR/F to identify activities that have a direct effect on the environment, and adhere to host country sectoral environmental guidelines for recommended measures for minimizing or preventing the occurrence of adverse environmental impacts.

Proposed interventions for which the ERR/F is recommended include:

http://www.encapafrica.org/coursepage.htm

- Infrastructure development, including cage construction, storage facility development, visitor centers and water source development, among others;

- DCA-funded activities;

- Loans from USAID assisted Micro Finance Institutions (MFI’s)

- Development of agricultural and value-added processing facilities;

- Small grants for technology transfer activities

Activities that will be subjected to the ERR are those activities, especially with a biophysical impact, that will be executed under a sub-grantee scheme. Before a sub-grant is awarded, the main implementer will have to prepare an ERR for the Mission’s review and approval.

The rationale for using the screening process (ERR) is to determine the relative scale and potential negative environmental impacts from the specifically planned activities. Depending on the scale, these could range from significant to negligible.

Environmental Management Plans (EMPs) should be introduced into implementing programs’ programs.

Other conditions, which are described in Table 1 and Section 4 below, will include use of best practices guidelines as described in the USAID Africa Bureau document, Environmental

Guidelines for Small-Scale Activities in Africa. This document may be located at:

http://www.encapafrica.org/SmallScaleGuidelines.htm.

Additionally, periodic field visits should be made to assess the performance of implemented adverse impact mitigation and monitoring measures to identify any appropriate areas of improvement.

5. Operationalizing Provisions of the IEE

USAID/Uganda SO 7 Team will make clear through RFA/Ps, APSs, contracts, contracts, cooperative agreements or grants, post-award briefings, implementation work plans, etc., as may be the case that the determinations specified in this IEE need to be heeded, and that project implementing partners must put in place appropriate systems or management tools to ensure that the recommended mitigation and monitoring actions are taken in to account as required. This applies to the

Environmental Review & Report Form (ERR/F) process in particular. Activity Managers and the

MEO shall ensure that the implementing partners are aware of and applying the EFF/R process.

Monitoring and Evaluation: As required by ADS 204.5.4, the SO 7 team and project activity implementing partners will ―actively monitor and evaluate whether the environmental features designed for the activity resulting from the 22 CFR 216 process are being implemented effectively and whether there are new or unforeseen consequences arising during implementation that were not identified and reviewed in accordance with 22 CFR 216." The SO team shall specify: who will monitor, how they will monitor, and how they will determine if there are ―new or unforeseen circumstances.‖

If additional activities not described in this document are added to this program, an amended environmental examination must be prepared and approved before any funds can be obligated.

APPROVAL OF ENVIRONMENTAL ACTION RECOMMENDED: (Type Name under Signature Line)

CLEARANCE:

Mission Director: _______________________________ Date: ________________

David Eckerson

Deputy Mission Director: ________________________ Date: ________________

Deborah Grieser

CONCURRENCE:

Bureau Environnemental Office ____________________ Date: ________________

Brian Hirsch Approved:

Disapproved: _____________

Filename: _Uganda_FY07_EG_SO7_Blanket_IEE_091808___ (USAID/W BEO)

General Counsel (Africa Bureau): ______________________ Date: _____________

ADDITIONAL CLEARANCES: (Add as appropriate; type name under signature line)

Mission Environmental Officer: ______________________ Date: ______________

Sudi Bamulesewa

Ag SO 7 Team Leader: ________________________________ Date______________

Jacqueline Wakhweya

Sr. Regional Environmental

Officer: ________/cleared by e-mail/_____ Date: 22 Aug. 2008_______

Walter I. Knausenberger

INITIAL ENVIRONMENTAL EXAMINATION

PROGRAM/ACTIVITY DATA:

Program/Activity Number: 617-007, SO7

Country/Region: Uganda

Program/Activity Title: Expanded Sustainable Economic Opportunities for Rural Sector Growth

1.0 BACKGROUND AND PROJECT DESCRIPTION

1.1 Purpose and Scope of Initial Environmental Examination (IEE)

This IEE covers all DA funded, planned activities under SO 7, ―Expanded Sustainable Economic

Opportunities for Rural Sector Growth‖. This IEE will cover the following SO7 projects; LEAD, DCA projects, STAR, NUWSS, NURRP, WILD, Biotechnology, and Dairy. This IEE will also cover future projects that have activities similar to the activities.

The purpose of this IEE is to provide a basis for Regulation 22 CFR 216 Threshold Determinations for all activities to be implemented under the SO 7 program so as to ensure that they are environmentally-sound. This also provides for future amendments of the IEE as new activities are included or existing ones are extended or cancelled.

As required by ADS 204.5.4, the SO 7 Team and activity Implementing Partners are responsible for incorporating recommended adverse environmental impact mitigation and monitoring measures in the activity design and implementation process, for all activities and to ensure that they remain as

Categorical Exclusions or within the bounds of Negative Determination with Conditions.

1.2 Background and Description of Planned Activities

USAID/Uganda’s SO7 is an integrated portfolio that combines economic growth, agriculture, environment and natural resources, and water development activities. Its aim is to assist Uganda to reduce rural poverty, conserve biodiversity, provide accessible and sustainable safe water, and increase economic growth by expanding sustainable economic opportunities, increasing employment, income and the viability of enterprises. The ―flagship‖ programs that SO7 will use to achieve its objective include: STAR, LEAD, NUWSS, NURRP, Dairy, Biotechnology, and DCA programs. These activities are covered under the two broad areas in which the SO7 program focuses, and these are:

1.2.1 Agricultural Productivity and Natural Resources Management

This aims to ensure sound use of natural resources (crop land, water, forests, and biodiversity), and restoration of the productivity of degraded natural resources, which are crucial for improving food security and economic growth. New technologies and approaches to natural resource management are important for the transitional, as well as helping the communities to preserve and to build their productive assets. Improving the water infrastructure and building the capacity of local authorities to manage the water sources and infrastructure will contribute significantly to the sustainable supply of clean water and hence increase on the time to be used for other production functions in the households. Use of improved seeds coupled with selective use of agricultural fertilizers, etc., can help to raise agricultural productivity and also, preserve soil fertility, for building an economic floor under farmers to prevent them from becoming chronically food insecure. The introduction of the aquaculture technology will reduce the pressure that is being exerted on the water bodies, hence providing a sustainable supply of fish. This can also increase the total amount of food available in

Uganda, and with better marketing structures, allow farmers to sustainably increase their incomes and add to their asset base. At the same time, raising productivity of priority commodity systems is a driving force in the agricultural growth process and requires focused attention. SO7 envisions having a competitive grants program for technology transfer in targeted sub-sectors to encourage public/private partnerships, innovation and accelerate the pace of technology dissemination and adoption. Technologies will include agricultural production, value-added product processing, product storage, and environmental management. The SO will also help to improve farmers’ access to input and product markets, reduce market transaction costs, promote new market opportunities, and forging business partnerships between producers and others in the supply chain. The SO will also support the development of the tourism sector by linking it to the rich biodiversity assets of the country.

1.2.2 Trade Competitiveness and Rural Finance

This aims to create more open and competitive markets leading to better distribution of resources and food across the country; encouraging agricultural productivity by providing outlets for produce; and helping diversify rural economies and livelihoods. The strengthening of agribusinesses, producer organizations and small and micro enterprises are crucial to make input and product markets work effectively, by creating and diversifying livelihood opportunities, and supporting rural economic growth. Additionally, market and enterprise programs will lead to better food security for targeted populations of the five million chronically food insecure and will improve the economic security and resilience of targeted populations.

SO7 will provide business development services and technical support to cooperatives, producer organizations, commercial farmers, agribusinesses and small entrepreneurs to improve production or manufacturing processes and practices; increase access to market information and market intelligence; and improve the grades and standards of their products whether for domestic, regional or international markets. Development Credit Authority loan guarantees are envisioned to meet the short and medium-term credit needs of agricultural cooperatives and marketing groups, agribusinesses, and small and micro enterprise. Strengthened producer organizations, business associations, and apex/umbrella private sector institutions will help to ensure long-term sustainability.

Expansion of rural marketing centers will help stimulate the demand and grow the size of the market.

1.3 Foreign Assistance (F) Framework Technical Program Areas for Uganda Strategic

Objective (SO) 7: “Expanded Sustainable Economic Opportunities for Rural Sector Growth”

SO 7 aims to achieve increased agricultural income as a key to the reduction of rural poverty, managing of the natural resources both within the protected areas and the communities, improve health by providing easily accessible safe water, and support the local business institutions access credit for business growth.

The success within SO 7 will be achieved through the following five Program Areas (PAs):

PA 4.2: Increased Trade and Investment.

Efforts will be geared towards facilitating the start up of on and off farm enterprises and increase trade capacity through public-private partnerships in staple food crops, cash crops, fish, livestock and dairy value chains; the mobilization and increased availability of rural, agricultural and trade finance to farmers and others involved in the value chains; sustainable trade linkages between producers and domestic, regional and global markets; and the leveraging of support for investments in various form of infrastructure development.

Also alliances between producers, processors and exporters will be forged and private investment will be facilitated with the sub grants, which will leverage private resources and fund private sector research and technology development. Through the sub-grants, export firms will be linked with out-grower farmer groups and other value chain participants.

PA 4.5: Increased Agriculture productivity.

Through generation and dissemination of more productive and resilient agricultural technologies (both pre-and post-harvest), formation of partnerships between agricultural input providers, cooperatives, agro-processors, commercial framers, and government institutions for validation ,demonstration and transfer of improved agricultural technologies (agricultural production, dairy and aquaculture technologies, value-added processing, and product storage ); providing support for the establishment of cooperatives with ties to broader agri-business markets and input suppliers; providing assistance to improve farmers’ access to input and product markets,; supporting business partnerships between producers and others in the supply chain; providing business development services and technical support to producer organizations, commercial farmers, agribusiness and small entrepreneurs (improve production or manufacturing processes, increase access to market information and market intelligence and, improving the grades and standards of products; and financial support for infrastructure development which may include warehouse, access roads etc. Provide biotechnology research support to be both on-farm and on station. Providing technical assistance to address policy constraints to increased agricultural commercialization; to create a conduce Biotechnology Regulatory

Environment, and to re-orient agricultural training to be demand driven.

PA 4.6: Private Sector Competitiveness.

Providing loan guarantees under the Development Credit Authority (DCA) to meet short and medium-term credit needs of producer organizations , marketing groups, agribusiness and SME’s,; helping to strengthen cooperative unions and rural savings and credit cooperative to provide services to members; linking agricultural producers to domestic and international markets through the establishment of a warehouse receipts system, improved market information and dissemination, infrastructure development and cooperative development; providing technical and financial assistance to MFI’s to develop greater rural out reach; and, providing technical assistance on improvement of regulation for overall trade competitiveness and financial sector.

PA 4.8: Environmental Degradation Reduced and Critical Ecosystems Conserved.

Providing technical assistance that will enable local communities and districts to effectively manage natural resources and biodiversity, as a threat based approach to conserve biodiversity in critically important ecosystems. These inputs include training and improved technology packages to provide for strategic agriculture and natural resource planning at the district level, as well as providing technical and material support for community-based watershed management interventions and conservation of key biodiversity assets. Provide technical assistance to address policy constraints to increased natural resource management, and to provide technical assistance for a strengthened environmental advocacy. Provide technical assistance to improve the tourism sector and assist the

Government of Uganda and the Private Tour Operators to market the country’s tourism potential.

PA 3.5: Health-Water development

Providing technical assistance that will enable the local authorities provide easily accessible clean and safe water. The assistance will include training, studies, forming water user committees, and incentives to the local authorities and the private sector that is involved in the sustainable supply of water. Also is envisaged that material support will be provided in form of construction of water sources (e.g. boreholes, pumping stations etc. Within the SO7 SO, this program Area with focus on the provision of water. The activities will be centered on providing technical assistance to local authorities to manage the water resources and water infrastructure. Also, the activities will include support to maintenance of existing water infrastructure, and also putting in place new infrastructure that will improve the supply.

2.0 COUNTRY AND ENVIRONMENTAL INFORMATION (BASELINE INFORMATION)

2.1 Introduction

Despite tremendous gains during the last 15 years, Uganda remains a poor country whose principal foreign exchange earnings come from agriculture and natural resource exploitation (particularly fish).

Approximately 85% of the population and 96% of the poor live in rural areas, and their population is growing at a rate of nearly 3% per year. Rural people are four times more likely to be poor than their urban counterparts.

Although a relatively small country (241,000 km ), Uganda’s natural environment is one of the richest in Africa. Aquatic ecosystems, most notably Lake Victoria, cover about 18 % of Uganda’s surface area.

Occupying a transition zone between East African savanna and the moist tropical forests of the Congo

Basin, Uganda’s highly diverse landscape includes rift valleys, highlands and mountain ranges, papyrus swamps, acacia savannas, and an extensive network of interconnected rivers and lakes. Seven of

Africa’s 18 biogeographic regions (the highest concentration on the continent) and 90 vegetation communities are represented in the country.

Forests and woodlands covered 45 % of the land area in 1890, but these have declined to about 21 % today. Of special note is the decline in tropical forest - from 14 % of the land area at the turn of the century to less than 4 % today. Reduction in forest cover is attributed to agricultural expansion, increased population, urbanization, fuel wood harvesting, logging, and infrastructure development.

Uganda’s agricultural sector currently accounts for 43% of the GDP, generates approximately 90% of foreign exchange earnings, and provides the main source of livelihood for over 80% of Uganda’s 21 million people. The typical seven-person agricultural household owns from 0.4-3.0 hectares of land, but this is declining as the population grows and population density, currently at a national average of 107 people/km , increases. Access to piped water, protected springs and boreholes is still very low; the

National average is about 27%.

Low productivity, unsustainable resource exploitation, and lack of competitiveness are the key issues

Uganda must address to sustain a rate of economic growth that will permit continued reductions in poverty.

2.2 Uganda's Policy Framework Relevant to SO7

Since the mid-1980s, Uganda’s development policy has increasingly recognized the critical importance of natural resources to the country’s economic base. There is also an increasing realization of the link between environmental degradation and poverty, population and inappropriate economic policy. This is apparent in Uganda’s current political focus on poverty alleviation, as reflected in the Poverty Eradication Action Plan (PEAP), and in its overall focus on broad social and economic development. A number of policies contain references to the conservation of natural resources and biodiversity in Uganda. The more relevant of these are described below.

The Poverty Eradication Action Plan (PEAP). The PEAP which is being revised as the National

Development Plan (NDP) currently guides GOU’s development strategy with the objective of effecting a dramatic reduction in poverty. The GOU sees the wise use of natural resources as a means of eradicating poverty, and government’s strategy hinges on conservation of soil, forests and biomass, water, wetlands and wildlife.

The goal of the National Environment Management Policy (NEMP) is to enhance the quality of life for all Ugandans. The NEMP is supposed to guide sustainable economic development through sound environmental and natural resources management using a participatory approach. The NEMP promotes environmentally responsible social and economic growth and recognizes biodiversity conservation as a form of natural resources management that is critical to meeting the needs of Ugandans.

The National Environment Management Authority (NEMA) was created as a result of the National

Environment Environmental Action Plan (NEAP) process and the National Environmental Statute.

NEMA is the government body charged with ensuring that projects, programs and activities undertaken by the public and private sectors do not have negative environmental impacts. NEMA is expected to encourage, supervise, monitor and coordinate environmental actions among and between sectors, provide technical and training input, and provides policy level assistance to other agencies.

Specifically regarding Environment Impact Assessment (EIA), NEMA has recruited competed EIA specialists and registered private firms that have the skills in carrying out EIA’s. NEMA with the mandate of government is engaging the private sector to include EIA in the planning phase of investment.

The Plan for Modernization of Agriculture (PMA) is a poverty–focused framework that firmly endorses improved household food security and income generation through the market, and envisions an agricultural sector that is competitive, productive, diversified, export-oriented, and private-sector driven.

The PMA gives a framework for increasing agricultural output through increased acreage, improved crop and animal varieties, and management.

The Competitiveness and Investment Climate Strategy (CICS) for the private sector is firmly focused on improving competitiveness of Ugandan business and promoting export development while simultaneously implementing actions such as infrastructure development and trade policy reform to create an environment conducive to investment and private sector led growth. Past achievements have been fueled by agriculture and the future of broad-based economic growth in Uganda will continue to depend on agriculture. However, the gains of the past were based upon expansion of the cultivated area, rather than productivity. Since only 25 % of the land in Uganda is considered ―highly productive,‖ continuing expansion increasingly pushes farmers onto marginal land, producing low yields and damaging the nation’s biodiversity. Fostering growth and increasing incomes will depend on increasing productivity in the agricultural sector, primarily through the closer integration of agriculture programs with sustainable natural resource management interventions in critical landscapes. At the same time, agriculture alone cannot produce the growth that is needed to raise

Uganda’s population above poverty. It is imperative to find alternatives through economic diversification. This implies improving the capacity and sustainability of enterprises of all sizes, and creating a policy and regulatory environment that is conducive to efficiency, competitiveness, and sound environmental management.

The Government of Uganda has formulated a comprehensive development framework for Northern

Uganda the Peace, Recovery and Development Plan (PRDP),as a strategy to eradicate poverty and improve the welfare of the population in Northern Uganda. Northern Uganda has consistently fallen behind the rest of the country within the realm of human development e.g. access to basic services such as water and sanitation, as well as health facilities is poor by national standards. PRDP is committed to stabilize and recover the north over three years 2007 – 2010 through a set of coherent programs under one organizing paradigm that all stakeholders will adopt when implementing their program in the region. Strategic objective 3 is Revitalization of the Economy and the three results to be achieved are (i) production and marketing enhancement (ii) infrastructure rehabilitation and urban improvement program (iii) environment and natural resource management.

3.0 EVALUATION OF PROJECT/PROGRAM ISSUES WITH RESPECT TO

ENVIRONMENTAL IMPACT POTENTIAL

The evaluation of the environment impact potential of the various activities for Uganda Strategic

Objective (SO) 7: Expanded Sustainable Economic Opportunities for Rural Sector Growth, is done by PA, and involves the separation of the activities in terms of environmental impact potential as follows:

PA 4.2. Trade and Investment.

Some of the activities associated with increased trade and investment e.g. start up of enterprises, cluster formation and trade linkages will require training, technical assistance, studies, support to policy formulation and legislation. These activities will not have a direct effect on the environment and are

Categorically Excludable from further environmental screening under Regulation 216.

However activities that will increase agricultural activities as a result of increased access to finance may have an impact on the biophysical environment and will therefore fall under the Threshold

Determination of Negative Determination with Conditions under Regulation 216. The conditions being that for each of these activities once identified, they will need to be subjected to purpose specific environmental screening using the Africa Bureau Environmental Screening Form (ESF) for identifying activities that have a direct effect on the environment, and host country sectoral environmental guidelines for recommended measures for minimizing or preventing the occurrence of adverse environmental impacts.

PA 4.5 Increased Agriculture productivity.

Some of these activities will involve providing technical assistance for: (i) Supporting business partnerships between producers and others in the supply chain; (ii) Promote the judicious use of modern agricultural biotechnology in order to increase agricultural productivity and, (iii)

Development services for increased access to market information and market intelligence, through education and training workshops, meetings, studies, and information documentation for dissemination of information on business partnerships. These activities will not have a direct effect on the environment and are Categorically Excludable from further environmental screening under

Regulation 216.

The other activities involve: (i) Generation and dissemination of more productive and resilient agricultural technologies; (ii) Formation of partnerships between agricultural input providers, cooperatives, agro-processors, commercial framers, and government institutions for validation

,demonstration and transfer of improved agricultural; (iii) Providing support for the establishment of producer organizations with ties to broader agri-business markets and input suppliers ; (iv) Providing technical assistance to improve farmers’ access to input and product markets, (v) Providing business development services and technical support to producer organizations, commercial farmers, agribusiness and small farmers for improvement of production or manufacturing process and improvement of grades and production standards; (vi) Providing financial support for infrastructure development ( warehouse, access roads etc.). These activities will have a direct effect on the environment. The activities fall under the Threshold Determination of Negative Determination with

Conditions under Regulation 216.

The disseminated agricultural production technologies may include supply of improved seeds, use of fertilizers, farmer seed production activities, improved aquaculture practices, improved livestock practices, value added product processing, improved product storage and environmental management.

The conditions are that seed suppliers shall use certified seed sources with reputable suppliers. For the supply of seeds there is a need to ensure that:

The agro-climatic zones where various seeds varieties are being introduced are appropriate so as to utilize the maximum seed production potential fully;

All necessary clearance from local authorities has been received and appropriate measures taken to confirm that seeds that are introduced will not produce invasive plant problems;

The risk of introduction of pests, diseases and weed organisms is minimized; and, That any activities involving promotion of GMO’s are subjected to USAID biosafety review and approval, as well as host country review and approval, before dissemination of such products;

That the communities are well…