Kosovo Agriculture and Rural Development Project (KARDP)

Financed by the World Bank

P158710 (Credit Number 60170)

Horticulture Development Grant Program

Guidelines for Grant Applicants

Deadline for submission of application:

30/10/2019 at 16:00

October 2019

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TABLE OF CONTENTS

1 AGRICULTURE AND RURAL DEVELOPMENT SUPPORT PROGRAM 3

1.1 Background 31.2 The Horticulture Development Grant Program (HDGP) and Objectives of the Program 41.3 Financial allocations – Size of grants 51.4 Bodies governing and implementing the HDGP 5

2 RULES FOR THIS CALL FOR PROPOSALS 6

3 OPERATION OF THE HORTICULTURE DEVELOPMENT GRANT PROGRAM 7

3.1 Application procedures 73.1.1 Applications 63.1.2 Where and how to send applications 73.1.3 Deadline for submission of applications 83.1.4 Information sessions about applicants 8

3.2 Initial review, evaluation of applications and on-site visits 83.3 Eligibility criteria 10

3.3.1 Eligibility of applicants 103.3.2 Eligible investments 103.3.3 Eligibility of costs: costs that can be included 12

3.4 Approval process and contract award 133.5 Monitoring and Evaluation of the grant beneficiaries 133.6 Conditionals for implementation following grant award process 13

3.6.1 Reporting requirements 133.6.2 Interim report and final report 143.6.3 Financial report 143.6.4 Project audit report 15

3.7 Procurement procedures to be followed by the beneficiaries of the HDGP 153.8 Payment to the beneficiary 153.9 Project audit report of the sub project/grant activities 19

Application checklist 15

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1 AGRICULTURE AND RURAL DEVELOPMENT SUPPORT PROGRAM

1.1 BACKGROUND

Agriculture is an important sector in Kosovo’s economy with contribution of around 11.4 % to the GDP in 2014 (second only after wholesale and retail trade). Over 62 % of the country’s population lives in rural areas and depends, directly or indirectly, on agriculture for its livelihood. The sector is the largest private employer, accounting for about 35 % of total employment, although primarily on an informal basis. Poverty in rural areas is especially high and over 40 % of the rural population is unemployed. The lack of job perspective, especially among the rural young population is putting a strain on social cohesion and encouraging out-migration. Often, agriculture serves as a safety net for much of the population.

Recognizing the significant role of agriculture in Kosovo’s overall economic and social development, the government is undertaking critical measures to re-vitalize the sector. The objectives of the National Agriculture and Rural Development Plan (NARDP) 2014-2020 are to undertake actions to overcome bottlenecks holding back sustainable rural development in the country and align Kosovo’s rural sector with the axes of the European Union (EU) Instrument for Pre-accession for Rural Development (IPARD). The NARDP lays out several measures for implementation support over the next programming period , including inter alia, investments in the physical assets of agricultural holdings as well as processing and marketing of agricultural and fishery products; agri-environmental measures and organic farming; farm diversification and business development; improvements in training, advisory services and vocational training; land consolidation; and irrigation. On the institutional front, the government is building the capacity of important institutional structures, such as the Managing Authority (MA) and Agriculture Development Agency (ADA) (also known as the Paying Agency (PA)), for improved performance of the agriculture sector as well as to approximate their functioning with EU requirements. These efforts are being carried out with assistance from several donors, including the EU, Danish International Development Agency (DANIDA), the United States Agency for International Development (USAID), Austrian Development Agency, German Agency for International Cooperation (GIZ) and the World Bank, through the ongoing International Development Agency (IDA)-financed Agriculture and Rural Development Project (ARDP).

The ARDP has provided support to implementation of Rural Development Grant Program (RDGP) and has financed 648 beneficiaries under two measures of the NARDP, i) investments in the physical assets of agricultural holdings as well as ii) processing and marketing of agricultural and fishery products. The findings of an independent study on the results of investments have shown that the RDGP is: (i) having a significant positive effect on beneficiary, the farmers’ incomes and a positive effect on the profits of processing enterprises. RDGP support contributed to increasing gross profit per beneficiary enterprise by 16 percent; (ii) generating employment on farms and agro-food processing enterprises. RDGP increased the employment per beneficiary farm by on average 3.35 persons per farm or by 52 percent in 2015 (e.g., by hiring additional workers to man assembly lines improved by installation of new processing and handling equipment financed by RDGP); (iii) increasing productivity, both of labor and land; and (iv) catalysing wide improvements in the value chains of the targeted sub-sectors.

During the period 2012-2017, the project provided grants to 337 beneficiaries who operate within the horticulture value chain (producers and processors). In response to the success of RDGP and Government’s priority given to the subsector of horticulture beside livestock, through an Additional Financing (AF) to the ARDP, project aims at supporting the horticulture subsector by matching grants to address various issues along the value chain, such as enhancing quality and quantity, linkages between the actors of the chain through contractual agreements, marketing and any other innovative actions to enhance economic and social benefits in the subsector. This support would be provided through the Horticulture Development Grant Program (HDGP).

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Horticulture is one of the subsectors in Kosovo with all necessary pre-conditions for a thriving agriculture sector and rural development. Horticulture is important livelihood subsector for rural communities and it represents part of cultural identity. Over 53 percent of Kosovo’s territory is classified as good arable land and the country is endowed with generally good agro-climatic conditions highly suitable for horticultural production. Over the past decade, demand for high-value horticulture products has surged more than any other food category and there is a strong consumer preference for locally grown fruits and vegetables, both for fresh consumption and processing. Through support to horticulture subsector, there is good potential for decreasing imports and boosting exports to regional and EU markets; introduce new and high value crops with higher productivity; enhance employment in rural areas given the labour intensive nature of this subsector; create economic opportunities for women in agriculture production and value-added activities through processing into local products like pickles, jams, juices; and provide opportunities for young farmers to engage in any of the segments of the horticulture value chain.

Implementation of the HDGP would follow the application procedures and processes as detailed in this Guideline for Grant Applicants and will be administered through launch of one round of Call for Proposals (CfP)

1.2 THE HORTICULTURE DEVELOPMENT GRANT PROGRAM (HDGP) AND OBJECTIVES OF THE PROGRAM

The objective of the Horticulture Development Grant Program (HDGP) is to promote the development of the horticulture subsector by strengthening backward and forward linkages in the Fruits and Vegetables (F&V) (particularly vegetables) value chain of the subsector. The overall aim is to improve productivity, quality, value addition, and market linkages within the subsector to enhance its competitiveness towards increased exports and reduce imports as well as job creation, improved beneficiary incomes, and increased economic opportunities for women and youth in the rural sector.

Specific objective of the HDGP grant is to: To improve competitiveness of horticulture sub-sector by increasing production potential and

quality in primary production and processing; To promote cooperation between the value chain actors with regards to production of market-

oriented products by introducing and/or improving quality and safety standards in production, marketing and adopting environmental safeguard measures.

The entry point for project support will be the aggregators, i.e. private collection centers and agro-processors, handling and/or procuring horticultural produce. The project will provide matching grants to qualifying aggregators, who will promote and strengthen backward integration strategies through the provision of supply contracts for inputs and extension services to small-holder farmers, thereby enabling them to enhance their productivity as well as product quality (including meeting Global Good Agricultural Practices (GAP) certification requirements). As under RDGP, the grants will include the EU cross compliance principles to ensure the proposed agricultural investments protect the environment and conserve natural resources. Through the grant support to aggregators and related backward integration activities, farmers would benefit from improved access to innovative technologies, such as new and better seed varieties, good quality fertilizers and pesticides, small-scale agricultural production equipment (such as seeders for sowing, sprayers, power tillers, mobile harvesters, etc.), drip irrigation, etc. to increase their farm productivity. Input support would be complemented with training and advisory services to assist farmers with sound implementation of the new technologies. This approach would also serve to guarantee farmers markets for their produce. Any surplus production through aggregator support, over and above the contracted amount, could be sold elsewhere for additional income.

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The proposed activity will also exploit the value addition potential of the sector through improved postharvest management by providing aggregators a mix of investment and TA support to increase their capacity for handling and processing horticultural produce. The project will finance the rehabilitation or upgrading of product sorting, processing, storage, and conservation/preservation infrastructure facilities as well as provide support for packaging and labelling. Thus, the project will enable aggregators to increase the intake of fresh produce from farmers upstream and increase their supply of fresh produce and processed products to domestic and export markets downstream.

1.3 FINANCIAL ALLOCATION – SIZE OF GRANTS

The HDGP will be implemented by funding through the ARDP AF with total budget support of €3.0 million to be allocated in one Call for Proposals.

Grants will be awarded on the bases of the evaluation and selection criteria described in this guideline.

Size of eligible investments and grants

Application made under the HDGP must be between the following minimum and maximum amounts of the eligible investment:

Minimum amount: 100,000 Euro (for which the corresponding grant contribution would be EUR 65,000)

Maximum amount: 300,000 Euro (for which the corresponding grant contribution would be EUR 195,000).

The co-financing rate of the grants under the HDGP covering the total eligible investments under the grant application will be 65% of the total eligible investments of the project application. The applicant will co-finance the remaining 35%.

Duration of projects

The grant applications and the budget for their implementation must be designed for completion not less than 12 months and not exceeding 14 months. All grants under HDGP should be completed no later than April 30, 2021.

1.4 BODIES GOVERNING AND IMPLEMENTING THE HDGP

The Project Implementation Unit (PIU) will be responsible for administering the grant scheme funded by the ARDP AF under the sub-component “Promoting Development of the Horticulture Subsector”, in accordance with the Guidelines for Grant Applicants at hand. The PIU shall report to the General Secretary of the Ministry of Agriculture, Forestry, and Rural Development (MAFRD) assigned as a contact person from the line Ministry and the Task Team Leader of the ARDP from the World Bank, both assigned to follow up with the implementation progress of this activity and the project in general. The PIU shall also report on the outcomes of the work of the Evaluation Committee (EC) as well as of the Monitoring and Reporting Committee.

The Evaluation Committee (EC) is an independent structure established to screen Aggregators’ applications for project support based on the evaluation criteria in this Guideline. The EC consists of fully professional staff and will be represented by one member from the PIU, one from the MAFRD/ADA and an Independent Consultant, with ability to review and evaluate applications based on the evaluation criteria, having wide knowledge on the horticulture business development.

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The role of this Committee will be: To conduct administrative control of grant applications, To review and evaluate the grant applications against evaluation criteria set in this guideline, To carry out on-site visits to verify information related to the grant application and complete the

on-site visit report required for financing decision.

The Monitoring and Reporting Committee, is another independent structure established to monitor the implementation of grants in accordance with the evaluated application and awarded grant agreement. The Committee will consist of the PIU M&E Specialist, one representative from the MAFRD and one representative from the ADA. The Monitoring Committee will conduct its visit to beneficiaries at the end of the first 6-months period after grant contract award and at the end of grant implementation prior to the last payment.

The role of this Committee will be:

To review and monitor implementation of the grant, its operation vis-à-vis reported indicators at the application phase, and any relevant documents and records relating to the implementation (bills/invoices, bank transfers, technology/equipment, etc).

To prepare Monitoring report outlining the progress in grant implementation and possible challenges faced.

The Monitoring report will be shared with the MAFRD Project Leader and the Task Team Leader of the ARDP from the World Bank.

2 RULES FOR THIS CALL FOR PROPOSALS

These guidelines set out the rules for the submission, selection and implementation of the projects financed under this call. In addition, all proposals submitted under this call for proposals should be aligned at all stages to the relevant national legislation, as applicable.

The relevant national legal framework includes: Law No. 02/L-26 on Agricultural Land Law No. 03/L-016 on Food Law No. 03/L-024 on Environment Impact Assessment Law No. 03/L-025 on Environmental Protection Law No. 03/L-029 on Agricultural Inspection Law No. 03/L-042 on Plant Protection Products Law No. 03/L-043 on Integrated Prevention Pollution Control Law No. 03/L-098 on Agriculture and Rural Development Law No. 03/L-160 on Air Protection Law No. 03/L–233 on Nature Protection Law No. 04/L – 110 on Construction Law No. 04/L-019 on amending and supplementing the Law 02/L-8 Law No. 04/L-060 on Waste Law No. 04/L-074 on Agriculture and Rural Development Advisory Services Law No. 04/L-078 on General Product Safety Law No. 04/L-090 on amendment to the Law No. 03/098 on Agr. and Rural Development Law No. 04/L-120 on Plant Protection Law No. 2003/10 on Artificial Fertilizers Law No. 2003/20 on Pesticides Law No. 2003/5 on Seeds Law No. 2004 /13 on Planting Material Law No. 2004/17 on Consumer Protection Law No. 2004/2 on Gender Equality in Kosovo.

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The ARDP considers that by submitting applications under this Call for proposals, the applicants implicitly commit to comply with all pieces of relevant national legislation in force. If at any stage in the evaluation process or, in case of approval of a project, during implementation, an application can be rejected or a grant contract can be terminated, as applicable, if the ARDP finds out that this has not been the case of the action concerned by the respective application or contract.

3 OPERATION OF THE HORTICULTURE DEVELOPMENT GRANT PROGRAM

The Horticulture Development Grant Manual set out the rules for the preparation and submission of applications, evaluation, selection and implementation of the proposals financed under this program and other procedures for reporting, auditing and financing.

3.1 APPLICATION PROCEDURES

3.1.1 Applications

Applicants will submit their applications in accordance with Guidelines for Applicants and using Business Plan Form as part of this guideline (Annex 1). The following are instructions regarding the application process:

1. There is only one application per applicant,

2. If two applications are substantially the same (i.e. project proposals, similar innovative technology and product and service), both applications will be rejected,

3. All documents and information (including business plan) need to be written in English language, with the exception for the official/administrative documents requested to complete application that are issued only in official languages of the Republic of Kosovo.

4. The standard business plan template cannot be modified by the applicant who is required to provide a description of the proposal including all information as requested in the business plan.

5. The applicants co-financing should be 35% of eligible investments.

6. A copy of the applicant’s business registration, VAT registration, accounts of the latest financial year (the balance sheet and income statements for the latest two years for which the accounts have been closed) must be submitted with the business plan in a clear visible manner.

7. Only completed business plans following the application checklist (see page 20 of this Guideline), will be accepted and evaluated, therefore it is very important to complete business plan with all relevant information requested. If the evaluation committee estimates that there is any major inconsistency related to the application instructions or if the amounts for the different investments/services/activities described in the business plan are much higher than the real prices in the market may reject the application.

3.1.2 Where and how to send applicationsThe business plans together with all other relevant documents requested, must be SUBMITTTED ELECTRONICALLY in the email: application.ardp@gmail.com, within the deadline.

All applicants will receive a confirmation that their applications have been received.

Please note that incomplete applications may be rejected. Applicants are advised to verify that their applications are completed using the application checklist (page 20).

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3.1.3 Deadline for submission of applications

The Call for Proposals will be open for 30 calendar days and the dates will be set in the Guidelines for Applicant.

3.1.4 Information sessions about applicants

After the publication of the Call for Proposals, the ARDP project will organize information sessions to inform all interested participants, about objectives of the Horticulture Development Grant Program, eligibility criteria for applicants, eligible actions/investments, and eligibility of costs, application process and all other relevant information about the Call for Proposals. The information sessions will be organized in cooperation with the MAFRD and all municipalities in order to inform all potential applicants to attend the sessions.

In addition, the interested applicants may send questions by e-mail no later than 15 days before the deadline for the submission of applications in the:

E-mail address: application.ardp@gmail.com

The ARDP project has no obligation to provide clarifications to questions received after this date.

Replies will be given no later than 10 days before the deadline for submission of applications.

All questions and answers will be published on the ARDP website www.ardp-ks.org (there will be no individual replies).

3.2 INITIAL REVIEW, EVALUATION OF APPLICATIONS AND ON-SITE VISITS

Once the deadline for application expires, the Evaluation Committee (EC) appointed by the MAFRD General Secretary, will carry out:

i) Administrative control by checking if application files consist of the documents in accordance with the application checklist of documents as requested under the call; and

ii) Relevance of the application with the eligibility criteria set in the Call for Proposals.

The Committee will examine and check if all documents as specified in the application checklist are available as well as conduct verification of the data and documents in order to ascertain the legitimacy of the information provided in application file. If any of the requested information is missing or is incorrect, the Committee will ask the applicant for clarifications and if applicant cannot prove the clarification the application will be rejected and will not be evaluated further.

All rejected applicants will be notified in writing with explanation for the reason(s) of rejection.

The applications that have passed the administrative control will be subject to evaluation based on the criteria set in the Evaluation Grid below. The Evaluation Grid will include criteria for evaluation of the financial and operational capacity of the applicant, quality of application and its compliance with the set of objectives and requirements of the Call for Proposals.

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Evaluation Grid

CriteriaMax score

1. Financial and operational capacity 15

1.1. Does the applicant have at least 2 years’ experience before application in business operation? (evidenced by business registration certificate)

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1.2. Does the applicant have sufficient management capacity? (Including staff, equipment and ability to handle the budget for the project)?

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1.3. Did they foresee appropriate staff positions for the implementation of the project? 2

1.4. Does the applicant have stable, sound financial and business history and record confirmed by the independent audit no older than 2 years?

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2. Relevance 202.1. How relevant is the proposal to the objectives of the call for proposals? 52.2. How clearly defined and strategically chosen are those involved (intermediaries, final

beneficiaries, target groups)?5

2.3. Have the needs of the target groups proposed and the final beneficiaries been clearly defined and does the proposal address them appropriately?

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2.4. Does the proposal contain specific elements of added value, such as innovative approaches, models for good practice, strong and evident local/regional impact, environmental issues, promotion of gender equality and equal opportunities?

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3. Methodology 303.1. Are the activities proposed appropriate, practical, and consistent with the objectives and expected

results?5

3.2. How coherent is the overall design of the project? (In particular, does it reflect the analysis of the problems involved, take into account external factors?)

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3.3. Is the target groups' and final beneficiaries' level of involvement and participation in the project satisfactory (no of trainings involving beneficiaries, agriculture inputs provided to beneficiaries etc)?

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3.4. Is the project plan clear and feasible? 53.5. Does the proposal clearly defines results to be achieved through the project implementation, in

terms of: Increase of productivity (tons/year before and after investment), Improvement of product quality, Improvement of food safety (ISO standards, HACCP, Global GAP), Introduce new technology, Strengthening linkages with farmers and market.

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4. Sustainability 20

4.1. Is the project likely to have a tangible impact on its target groups? 54.2. Is the proposal likely to have multiplier effects? (Including scope for replication and extension of

the outcome of the project and dissemination of information.)5

4.3. Are the expected results of the proposed project sustainable: Economically - the incremental number of sub-contracted farmers, number of additional jobs

created or employees hired, increased handling/processing capacity. Financially (how will the activities be financed after the grant funding ends?)

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55. Budget and cost-effectiveness 155.1. Business plan efficiency (the cost-effectiveness ratio)? 105.2. Are the activities appropriately reflected in the budget? 5Maximum total score 100

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Those applicants who fulfilled administrative requirements and got highest ranked will be pre-selected and undergo an on-site visit by the Evaluation Committee to ascertain:

Their existence and that of their business

The correctness of data and statements provided under the application file related to the suggested implementation of the grant.

The overall business operation and how activities under grant application will benefit the business.

The on-site visits to the pre-selected applicants will take place within three weeks after the pre-selection results are received. Only pre-selected applicants will be notified through an email about on-site visits.

Following the on-site visit, the EC will complete the On-site Visit Report as per Annex 21 of this Guideline which together with other information will be used by the Committee to release an Evaluation Report with the final list of beneficiaries to be financed.

As a result of above examinations, if any application is rejected, it will be replaced by the next highest placed application in the “reserve list” that falls within the available budget allocated for the call, for which will then be carried out an on-site visit to verify the data and information as presented in the application.

3.3 ELIGIBILITY CRITERIA

3.3.1 Eligibility of applicants

Applicant

Applicant is a company applying for a Horticulture Development Grant and to be eligible for a grant, the applicant must:

Be a legal business unit (legal person), registered at the Business Registry Agency of Kosovo and located in Kosovo;

be registered as agro-food processing establishment or Collection Centre (for fruit and/or vegetable),

be registered and operational in the Republic of Kosovo for the at least two years,

be a private sector, micro, small or medium sized company,

be directly responsible for the preparation and management of the project,

have no debts to the State.

3.3.2 Eligible investments

The following investments are eligible:

Investments for equipment required to expand handling/processing capacity assuring adaptation to modern technologies;

Costs required for technical assistance/training/extension service, including study tours/trade fairs for participation of the aggregators, farmers and other downstream value chain actors;

Investments required for construction, renovation and modernization of handling/processing capacities;

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Costs of supplying inputs to farmers as well as small-scale agricultural production equipment (such as seeders for sowing, sprayers, power tillers, mobile harvesters, etc.), drip irrigation, etc., not exceeding 15% of the total eligible investment; support to one farm should not exceed the value of more than Euro 1,000;

Investments required for achieving quality and safety standards and to adopt production and handling practices according to Global GAP, HACCP, ISO and other internationally recognized food safety systems;

Facilities and equipment for quality control, including laboratories for basic tests such as acidity, moisture, nitrite and nitrate measurements, water testing, etc.;

Investments in environmental protection, waste treatment and disposal facilities; Refrigerating equipment, including storages, freezing tunnels, refrigerated trucks and other

equipment needed to ensure continuity in the cooling chain, and to have lower produce losses and better quality of produce delivered to final consumers;

Equipment for post-harvest treatment, classification, labeling, packaging and storage; Equipment for fruit and vegetable conservation / pasteurization, drying, filling lines, wrappings

and other specialized equipment; IT equipment (hardware and software) for monitoring, control and management; Development of computer-based business models that ensure better farm management,

information and planning; Demonstration plots to increase the speed of adaptation of new technologies resulting in higher

productivity, reduced losses, better quality and prices. Some of demo fields specifics for consideration are outlined below:o Presentation of competitive varieties, technologies, etc. are encouraged; o Focus on marketing season extension with calculations of how much could be gained if

produce was available earlier or later in the season;o Demonstrate modern on-farm drying techniques (shade drying with ventilation, e.g.);o Organize field days at various stages of production with participation of producers, suppliers

as well as buyers;o Demonstrate other activities of the value chain such as postharvest handling (PHH),

packing, pre-cooling, etc. and not only production;o Always combine theoretical training with practical demonstrations;o Record on video these trainings;o Closely monitor and publish results (technologies used, yields by variety and technology,

etc.) Renewable energy/infrastructure (small) to reduce energy costs, improve energy efficiency and

explore alternative energy options specifically for the facility included in the application not exceeding 5% of the total eligible investment;

Promotion and marketing activities including marketing studies, product preparation and printing of catalogues, leaflets, brochures, posters, promotional audio and video spots (the maximum value for marketing costs is limited to 5% of the total eligible investment); marketing campaigns at regional or national level with aim of promoting Kosovo products in Kosovo and target export markets;This will ensure:

o Aggregators receive the equipment, technical assistance and training they need; o Farmers receive input supplies and extension advice needed; o Other value chain actors (collection centers, processors, exporters) receive technical

assistance and training needed.

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3.3.3 Eligibility of costs: costs that can be included

Since the objective of the project is to promote the development of the horticulture subsector, the majority of funds under this call for proposals should be used for development and commercialization activities of the horticulture sector. The ARDP recommends that the Applicants structure their project budget based on the Annex 2 – Project Budget, as follow:

Expenses for human resources (salaries of the staff engaged in project implementation), Equipment and supplies, Office expenses (i.e. paper, pencils, toner cartridges, file folders, paper clips, etc. with a clear

explanation on how the expense directly benefits the project), Financial support to third parties (support to farmers), max 15% of the total eligible investment, Quality standards certification, Sales and marketing costs (max 5% of the total eligible investment), Project audit fees, Indirect costs (max 5% of the total eligible investment).

Financial support to third parties

Applicants may award financial support to third parties in order to help achieving the objectives of the project.

The maximum amount of financial support for third party should not exceed 15% of the total eligible investment. The support amount to one farm should not exceed Euro 1,000.

Eligible indirect costs

The indirect costs incurred in carrying out the project may be eligible for flat-rate funding, but the total must not exceed 5% of the total eligible investments. Indirect costs are eligible provided that they do not include costs assigned to another budget heading in the standard grant contract. Eligible indirect costs include costs of architects, engineers and other costs for studies and/or designs, as well as costs for acquisition of relevant documents and permits, and costs for preparation of business plan, as necessary. These costs including those before effective contract period (preparation of business plan), shall be eligible only if the project has been selected and contracted by the ARDP.

Non-eligible costs

The following costs will not be considered for financing by the ARDP include, but are not limited to:

Items already financed through own budget or another program or institution/company; Interest or debts to any party and expenditures and provisions for possible future losses or debts; All kind of taxes, including VAT (based on the law no. 2012/04-L-108, on amending and

supplementing the law no. 03-L-146 on Value Added Tax as amended and supplemented by the law no. 03-L-197), duties and charges;

Currency exchange losses, fees or penalties; Credit to third parties; Purchase of immovable property (land or building); Purchase of second-hand equipment; Advance payments.

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3.4 APPROVAL PROCESS AND CONTRACT AWARD

On completion of the evaluation process, the Evaluation Report with the final list of proposed selected beneficiaries to be financed shall be sent to the World Bank for review and No Objection.

Upon receipt of No Objection from the WB, applicants will be informed of the ECs decision concerning their application, and if rejected, they will be notified of the reasons for rejection.

Those applicants who will be awarded a grant will be invited to sign a standard Grant Contract (see Annex 3) that will be signed between the MAFRD General Secretary and the beneficiary. The implementation of grants will start immediately after grant contract signature and according to the contract agreement; beneficiaries will be required to report based on the requirements as set forth in this guideline.

3.5 MONITORING AND EVALUATION OF THE GRANT BENEFICIARIES

The purpose of the monitoring visit by the MC is primarily to verify that the project, the environmental and the financial activities are occurring as reported and as stated in the approved project documents. The MC will perform after 6-months monitoring visit during project implementation and prior to final reimbursement to the grant beneficiary to ensure investments are carried out in due diligence and are in compliance with the investments as presented in the submitted project proposal. The MC will notify the grant beneficiary in writing by email in advance about the monitoring visit.

Monitoring visits will typically include a review of project implementation (e.g. procedures, milestones with measurable results, timelines, tasks, agreements, policies, and financial documentation) as well as in-person meetings with relevant project team members. At the end of monitoring visit the MC will discuss, with relevant project team members, findings from the meeting and clarify any corrective actions to pursue after the visit. If the monitoring visit has identified any concerns, the grant beneficiary will be required to correct deficiencies within agreed timelines. The further financing depends on the severity of problem and it will be suspended until the deficiencies are corrected.

As a formal step in the evaluation process of the investment’s fulfilment, prior to the final reimbursement, the MC will meet up with the representatives of the grant beneficiary. The grant beneficiary upon formal request will take all measure to enable the representatives of the MC to visit the investment site for the purposes related to the Project Implementation.

The MC on site visits to the grant beneficiary will take place within approximately 2 (two) weeks after the claim for reimbursement are received as per Annex 22 – Payment Request. Materials submitted during Application, Reports and Reimbursement process will be discussed during the on – site visit. The MC will register and take pictures to all investments in place and put all on site findings in the on-site visit report (Annex 21 – On Site Visit Report) which will be used by the ARDP PIU along with other information in the reimbursement process.

The on-site visit Report has to be fulfilled and signed from the 3 Members of the Monitoring Committee and the grant beneficiary.

3.6 CONDITIONALS FOR IMPLEMENTATION FOLLOWING GRANT AWARD PROCESS

3.6.1 Reporting requirements

The grant beneficiary is obliged to prepare and submit interim narrative report to ARDP’s PIU, after six months of signing the contract. The grant beneficiary is obliged to prepare and submit financial reports (at both stages when submitting interim and final report) of signing the contract. The interim narrative report should describe in details all information related to the activities developed during the reporting period

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vis-à-vis planned and expected results. The progress and results reported will be subject to screening and verifying by Monitoring Committee during the monitoring visits.

The templates for the narrative Reports as well as the financial reports will be part of the contract agreement with the beneficiary. These reports signed and stamped by the authorized company representative’s must be submitted in hard copy at the ARDP office to the PIU person responsible for the HDGP.

The progress and financial reports should be accompanied with hard copies of invoices and bank account statements relevant for the reporting period. Bank account statements should show all relevant transactions related to submitted invoices.

Any request for changes to the project (e.g. regarding project implementation, timelines, project budget, deliverables, project staff, etc.) will be subject to review and assessment by ARDP PIU. The request should be communicated to the ARDP in writing at the time of the assessment for changes needed. The ARDP will then respond within a one month time by approving or disapproving the required changes, while the consent might be subject to further clarification requirements by the PIU. Such changes should not take place before the written consent issued by the ARDP to the grant beneficiary.

3.6.2 Interim report and final report The purpose of the interim report is to enable the PIU to monitor project progress and to assist in making decisions relating to the continued funding of the project. Timelines, conciseness, and agreement with the Project Proposal are key features of the interim report. Interim report will be submitted to the PIU, Training Specialist after six months within 30 calendar days following the end of the reporting period in question, in English in one original copy and one electronic format.

The period of reporting covered in the report should coincide with the period in the accompanying financial report. The interim report will be prepared using the format under Annex 19 Interim Report Template and will be reviewed by the PIU only after both progress- and financial- reports are received. This will enable the PIU to associate completed tasks and activities reported in the progress report to the relevant expenditures in the financial report.

Final report will be prepared and submitted to the PIU within 30 days after contract implementation period.

3.6.3 Financial reportThe purpose of the financial report is to enable the PIU to monitor actual expenditures on the project and to assist decisions relating to the continued financing of the project. All expenses incurred in a ARDP-supported project for the actual period must be itemized in accordance with Approved Project Proposal, and all payments from the dedicated project account in all categories should be shown.

Financial reports should be submitted during interim reporting and shall include supporting documentation related to the payments and proof of purchase, such as bank account statements and payroll calculations for salaries, travel expenses calculations, contracts, invoices, delivery receipts, service delivery reports, and bank statements for all purchases, contracts and consultants. Monitoring by the PIU will include verification of compliance between Periodic Financial Reports with Approved Project Proposal and detailed verification of all supporting documentation for the reporting period on a sample basis.

If any concerns arise during the review of the financial report by the PIU, the grant beneficiary may be asked to submit additional accounting documentation. The grant beneficiary is expected to maintain financial records for the project sources and uses of funds separate from other existing and/or future projects for the period of the project duration.

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3.7 PROCUREMENT PROCEDURES TO BE FOLLOWED BY THE BENEFICIARIES OF THE HDGP

The responsibility for the implementation of the grant, and therefore, award and administration of any purchases under it, rests with the grant beneficiary. All procurement packages, as foreseen under the application file, shall be finalized after potential beneficiaries have been informed that they have been pre-selected and Before Contract Signature of Grant.

General Provisions applicable to all types of acquisitions

Below are general provisions applicable to all types of acquisitions;

If the implementation of an Action requires procurement by the Beneficiary, the contract must be awarded to the lowest (technically responsive) bid for goods/works and highest ranked for consultancy services, in accordance with the principles of transparency and fair competition for potential suppliers/contractors/firms and taking care to avoid any conflicts of interest. The acquisitions must respect the eligibility investments set within the business plan e.g. in terms of return of investments, cash-flow etc. The procedures for procurements refer only to the eligible investments; non-eligible investments are not required to follow procurement procedures;

There are 3 types of procedures: direct acquisitions, selection based on at least 3 offers and selection based on advertised procurement (open bidding);

The procedure to be applied depends on the value of acquisitions; It is forbidden to split/divide the acquisitions for the same type of goods, construction works or

consultancy services with the purpose of avoiding the procedures rules applicable to a higher threshold;

The bidder must not be in a conflict of interest; In case of misrepresentation in supplying the information required by the Beneficiary or fail to supply

this information, the bidders will be excluded from bidding; Following the procurement procedures is a mandatory condition for the expenditures to be considered

eligible. Therefore, the reimbursement claim must contain a proof of purchase to fulfil the procurement procedures (Annex 4).

3.8 PAYMENTS TO THE BENEFICIARY The grant payment to the beneficiary will be carried out in the following manner:

A pre-financing, amounting at 40% of the grant contribution, will be paid upon contract signature, and

The final payment will be executed not later than within 30 days of the Monitoring and Reporting Committee’s final reporting accompanied by:

o A request for payment of the remaining balance conforming to the model in Annex 22 Payment Request accompanied by documents serving as proof to investments made under the grant contract,

o Final financial report conforming to the model in Annex 24 Final Financial Report and SOE Template.

Payment request

All beneficiaries are obliged to submit Payment Request at the finalization of the investments for final payment. The Payment Request (Annex 22) is required to be duly completed following the Budget

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Template Financial Reports as per Annex 2 – Budget Template of this Manual, and Annex 24 – Final Financial Report, including Statement of Expenditure.

The Payment Request should be accompanied by documents relevant to the investment, such as Invoices for all procured items, copies of Contracts (if required), Bank Statements and other documents enlisted in the Payment Request template:

# Evidence Advance Final instalment

1Official letter from the bank stating the bank information(The documents should not be issued earlier than 30 days before submission of the claim)

Yes Yes

2 Business Registration form, and tax identification if different Yes Yes3 The project final report No Yes

4 The project financial report, including statement of expenditure No Yes

5All the original invoices for the incurred expenditures supported by proper fiscal documentation, as per the tax legislation in place

No Yes

6Contracts with employees, supplies, vendors and consultants, and farmers (for financial support) as applicable for expenditure items claimed

Yes Yes

7 Procurement procedure evidence as required in the procurement section. Yes Yes

8 Audit report on the final financial report of subproject/grant activities (see section 2.10). No Yes

9 Invoices, receipts, tickets, bills or any other supporting document as evidence of Project eligible expenses No Yes

10 Payment documents (payment order and bank statements No Yes

11 Copies of the consultant reports, outputs, evidence of training and workshops held No Yes

Receipt of payment request

The PIU maintains a register where all the Claims for Payment are recorded as received, indicating the date received, documenting the administrative checks performed, and steps taken and the status of the payment processing.

The PIU check the submitted documents completeness and compliance. If during administrative control it is confirmed that the “Claim for payment” is not complete – some documents are missing or there is a need of additional clarifications/explanations, the Claim for payment will be considered incomplete.

Notification for clarification of the documents shall be sent by email from the PIU to the Grant Beneficiary in order to inform him/her about the documents that he/she needs to send.

The beneficiary is obliged to send the documents within 15 days from the receipt of notification.

In case Grant Beneficiary hasn’t sent the requested documents within the required deadline, the Claim for payment will be rejected.

In case Grant Beneficiary has provided the documents, but still there are uncertainties and/or missing documents, the Claim for payment is considered not eligible. The Claim for payment will be rejected.

In case Grant Beneficiary has sent the requested documents and it is confirmed that the Claim for payment is complete and the documents are eligible. The PIU will prepare a memo confirming the completeness and compliance of the payment request and sign it. The memo will be part of the payment authorization file.

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On-site inspections

The MC will conduct on site visits to the grant beneficiary within 2 (two) weeks after the Final Payment Request is received. The MC will register and take pictures to all investments in place and put all on site findings in the on-site visit report.

Review and approval of the final report and financial report

The review and approval of the Final Report, financial report and supporting documentation is done in accordance with the provisions of the Matching Grant Agreement. The review and approval of the report will take approximately two weeks to complete.

In case of changes in objectives from the original proposal, if any, the PIU/ MC approval should be sought and finalized before the payment request is submitted. Otherwise the payment request will not be accepted. (See process described in 2.6 for the authorization of changes)

The following verifications and controls are performed on the validity of the evidence submitted with the payment request. The verifications are conducted by the MC, monitoring and evaluation specialist, PIU procurement specialist and the financial management specialist.

Control Checklist

Control Activity Advance Final Responsible

1 Completeness, conformity and consistency of the final report with the matching grant agreement, interim report, project deliverables and outputs, and on the site visit if any.

No Yes Training Specialist, MC

2 Completeness, conformity and consistency of the financial report with the original budget, and submitted evidence No Yes

Financial management specialist, Training specialist

3 Formal correctness and the validity of the general supporting documents (ex. the ID copy, the bank accounts, VAT registration)

Yes YesFinancial management specialist

4 Formal correctness and the validity of the general supporting documents (Contracts and procurement evidence)

Yes Yes Procurement specialist

5 Conformity and consistency of the procurement packages and contracts with matching grant agreement, original proposal and budget.

Yes YesMonitoring and evaluation specialist, procurement specialist

6 Verification of invoices (correct name, address, identification information and bank account of the payee)

No YesFinancial management specialist

7 Verification of professional rates, actual time spent (for remuneration and per diems), unit prices and quantities (for reimbursable expenditures); No Yes

Financial management specialist, Training specialist

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8 Check if the payee’s information in the invoice is the same as in the contract and payment documents;

No YesFinancial management specialist

9 Check compliance with the contract milestones (submission of deliverables, reports etc.); No Yes

Monitoring and evaluation, training specialist

10 Check whether the deliverables and reports are duly approved by the beneficiary; No Yes M&E, procurement

specialist

The financial management specialist together with the Training Specialist will review the conformity of the financial report submitted and consistency with the supporting evidence submitted. The actual expenditure will be compared with the approved project budget.

In case of discrepancy and missing information, the PIU will send a request for further explanation and missing supporting documents to the beneficiary, through which he is required to provide explanation and further information for identified discrepancies. The beneficiary must provide a response within 10 work days after he receives the request. In case the beneficiary does not respond within the allotted time, the invoice in question will not be taken into account.

The invoices, which are deemed inacceptable according to the acceptance criteria, will not be financed.

The Awardee is allowed up to ten (10) percent variation of expenses from the total Approved Project Budget within any of the major budget categories. Should the expenses’ variations related to any major budget category be expected to exceed ten (10) percent during the course of the Project, a written request for funds reallocation must be submitted for PIU’s review and approval. The approval for such variations should be sought before the payment request is submitted for processing to MAFRD/PIU. Otherwise the payment request will be rejected. (See process described in 2.6 for the authorization of changes).

For the final payment, the financial management specialist calculates the total value of support based on accepted cost items, which is then compared to grant amount included in the matching grant agreement. The amount to be authorized will not be higher than amount stated in the matching grant agreement.

A control checklist will be completed indicating all the control activity performed and signed accordingly from responsible party. The MC will prepare a memo confirming that the project is executed in accordance with the Matching grant agreement. The control checklist will be attached to the memo.

Authorization of the claim for payment

If it has been confirmed that the project is implemented in accordance with the Matching grant agreement, the process will continue with authorization of the Claim for payment.

The authorization form is completed by the PIU, confirmed by the project director and finally authorized by the General Secretary of MAFRD. The authorization form is submitted to the Budget and Finance Department for execution, together with the payment claim file. A notification letter for the authorized amount is prepared by the Training Specialist and sent by the PIU to the grant beneficiary providing information on the authorized amounts and the reasons for deductions, if any. All payments to the Awardees will be made in Euros.

The payment claim file comprises:

- Authorization form

- Beneficiary Payment claim

- All the reports and documents submitted by the beneficiary (Final Report, Financial Report,

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Invoices, copies of Contracts (if required), Bank Transactions, Procurement Procedures, etc)

- A PIU memo confirming the completeness and compliance of the payment request.

- A MC memo/report confirming the confirmed that the project is implemented in accordance with the Matching grant agreement, including on the Spot Control Findings.

- The control checklist will be attached to the memo.

- Any relevant correspondence with the beneficiary during the execution of the above procedures.

Payment execution

The authorization form, payment claim, and all the duly approved evidence is submitted to the budget and finance department of the MAFRD. The budget and finance department (i) verifies the completeness of the supporting evidence in compliance with the manual and the matching grant agreement; (ii) in collaboration with the Treasury enters the awardee data in the KFMIS; (iii) enters the payment request in the KFMIS. The steps (ii and iii) may be accomplished and executed through an approved list of beneficiaries, related payment instructions and benefit amounts.

The payment request is further (i) reviewed and cleared by the certifying officer and (ii) finally approved by the CFO and CAO.

3.9 PROJECT AUDIT REPORT OF THE SUB PROJECT/GRANT ACTIVITIES The grant beneficiaries are required that upon fulfilment of investment and prior to final reimbursement, to submit to the PIU an audit report of the financial report of the grant/subproject. The audit should be conducted in accordance with the International Audit Standards, by independent audit firms. These audit firms should meet the minimum requirements established in Annex 26. The audit firm should be appointed immediately after the signature of the grant agreement.

These reports will be part of the master file of the grant beneficiary within PIU files/registers, subject to auditing from the designated auditing company of the project and/or other auditing bodies.

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Application checklist

(To be filled in by the applicant for self-guidance purposes only)

Title of the Project:

No Before sending your application check that each of the criteria below have been met in full:

Yes No N/A

1 The correct business plan form has been used.

2 The proposal is typed and is written in an eligible language for this call.

3An electronic version of the business plan and other documents required are prepared to be submitted at the ARDP email within the deadline.

4The budget is enclosed, in balance, presented in the format requested, and stated in EUR.

5 The duration of the project implementation is between 12 and 14 months.

6The requested ARDP contribution (amount) is equal to or higher than the minimum allowed.

7The requested ARDP contribution (amount) is equal to or lowers than the maximum allowed.

8 The applicant satisfies the eligibility criteria in section 2.3 of the guidelines.

9The supporting documents were submitted in accordance with the List of Delivered Documents (Annex 27).

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