Industrial Park Project

The Industrial Park Project, located within the Airport domain, will develop a platform for industrial activity (initially 100 hectares (ha)) to meet the high and growing demand for well managed and serviced industrial land. The 100 ha industrial park (the ``Industrial Park'') is intended to be an anchor for a growing industrial sector in Mali, thereby alleviating a key constraint to value added production and economic growth. Reliable provision of utility services, including electricity, water, and wastewater, will increase business productivity.

The Industrial Park Project includes the following activities:

The Alatona Irrigation Project is focused on increasing production and productivity, increasing farmer incomes, improving land tenure security, modernizing irrigated production systems and mitigating the uncertainty from subsistence rainfed agriculture. This project seeks to develop 16,000 ha of newly irrigated lands in the Alatona production zone of the Office du Niger (the ``ON''), representing an almost 20 percent increase of ``droughtproof'' cropland. The Alatona Irrigation Project will introduce innovative agricultural, land tenure, and water management practices, as well as policy and organizational reforms aimed at realizing the ON's potential to serve as an engine of rural growth for Mali.

The Alatona Irrigation Project includes the following activities:

The table below outlines the estimated MCC contribution to the program by year and category over the term of the Compact.
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III. Impacts

The Airport Improvement Project will expand Mali's access to markets and trade through improvements in the transportation infrastructure at the Airport, as well as better management of the national air transport system. Evidence suggests that economic growth and poverty reduction depend on enhanced access to markets and trade. However, Mali's access is severely constrained. Mali is landlocked and heavily dependent on inadequate rail and road networks. Mali depends on freight transport through ports in unstable countries, such as Conakry, Guinea (Bamako's closest port, which is 1000 km away) and Abidjan, Cote d'Ivoire. In the last few years, the instability in Cote d'Ivoire has dramatically limited Mali's market access. Before the outbreak of the Ivorian crisis, 70 percent of Malian exports were leaving via the port of Abidjan. In 2003, this amount dwindled to less than 18 percent. Mali cannot control overland routes to international and regional markets. Therefore, air traffic has become Mali's lifeline for transportation of both passengers and export products.

Malian exports are predominantly agriculture based and depend on rural
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smallscale producers, who would benefit from increased exports in highvalue products such as mangoes, green beans, and gum arabic. Additionally, international tourists arriving at the Airport spend the majority of their time in rural areas, benefiting businesses in far away places such as Timbuktu, Mopti, and Djenne. Finally, the improved management of the national airport system will facilitate links to primary destinations through regional air travel.

The Industrial Park Project will leverage national reforms in the business sector, reducing the cost and time to register a business, and enhance management and planning of the industrial sector. The existing, heavily congested, poorly managed, and degraded ``industrial zone'' is inappropriately located, lacks basic utilities and services, and has no room for expansion. The proposed Industrial Park would become the anchor for a growing industrial sector in Mali and alleviate a key constraint to valueadded production and economic growth. Businesses in the agroprocessing sector, where Mali has a comparative advantage, are likely to install in the Industrial Park. Growth generated by the Industrial Park will generally be poverty reducing due to the link to smallscale agricultural production.

The Alatona Irrigation Project focuses on a highpotential geographical zone in one of the poorest areas of central Mali. The Alatona Irrigation Project will develop 16,000 ha of irrigable agricultural land in the Alatona zone of the ON resulting in increased productivity and production, as well as diversification of highvalue crops. MCC's investments will include construction of a road, irrigation infrastructure, and social infrastructure, such as schools, clinics, and water and sanitation facilities. This project will provide social services, access to credit, and agricultural extension and will help establish and empower rural producer organizations by giving them access to information and productive assets. The Alatona Irrigation Project will leverage policy reforms expected to have a broad impact on the agricultural landscape throughout Mali.

Together, the three projects will result in increased industrial growth in the urban area, increased agricultural production and productivity in the ON and improved access to national, regional, and international markets.

IV. Program Management

The accountable entity (the ``MCAMali'') will be organized under the laws of Mali as a service rattach[eacute] attached to the Prime Minister's office. MCAMali will have a mixed publicprivate board of directors responsible for program oversight. The board will consist of eleven voting members and two nonvoting members. A management team will have overall management responsibility for the daytoday implementation of the program. MCAMali will remain accountable for the successful execution of the program while working through implementing entities, contractors and consultants, whose interaction will be facilitated by a fiscal agent and a procurement agent. The Government of Mali (``GOM'') will also create two advisory councils to represent beneficiaries for each of the project sitesthe Airport domain and the Alatona zone. In addition to the fiscal agent and the procurement agent, financial auditors and possibly a data quality agent will provide external controls.
V. Other Highlights

A. Consultative Process

The program strongly supports the third pillar of Mali's Poverty Reduction Strategy Paper (``PRSP'')development of infrastructure and key support for productive sectors. The participatory process of the PRSP is characterized as having ``breadth'' and being ``systematic.'' The PRSP identifies the following as top constraints to economic growth in its consultative process:

The Compact was designed to address these constraints. Priorities were defined by the national PRSP structure and refinement occurred in consultation with civil society and the private sector. This consultative process enriched and helped form the GOM proposal and its development. The insistence on rural land ownership and titling derived from dialogue with civil society and private sector actors. The need for inclusion of a strong component of social services for the Alatona zone was also reinforced through the consultative process.

Members of the GOM, private sector, and civil society (Malian and U.S. nongovernmental organizations (``NGOs'')) played an active role in developing the Compact proposal. Local NGOs, including villagelevel women's associations, were directly involved in the process through numerous onsite workshops and meetings in the ON region. Consultations also took place with private sector and civil society actors around Bamako, as well as communities surrounding the Airport domain, who emphasized the need for improved infrastructure and increased economic activity to reduce poverty. In addition, the consultative process involved participation of the U.S. NGO community, which has a strong presence in Mali, working on health, education, agriculture, governance, and economic development programs throughout the country. B. GOM Commitment and Effectiveness

MCC and GOM have been in discussions over the following policy and institutional reforms that will reinforce the implementation and sustainability of the program. Relevant reforms will serve as conditions precedent in the disbursement agreement. Below is a list of policy and institutional reforms that have been adopted or are pending: Airport Improvement Project

The Mali program is embedded in the institutional framework of Mali with the limited creation of parallel structures. It reinforces GOM's approach and commitment to democracy, decentralization, and empowerment of local communities. MCCsupported interventions will complement and reinforce national strategies for poverty reduction and economic growth. The program objectives draw from the following national development strategies: PRSP, National Food Security Strategy, ON Master Plan, and Agriculture Orientation Law.

Airport Improvement Project. Under the present division of jurisdictions, a number of entities have responsibility for the civil aviation sector in Mali in general and the regulation, oversight, management, operation, and development of the Airport in particular. In response to ICAO safety and security audits and FAA assessments, GOM is in the process of restructuring and consolidating this institutional framework. One major result has been the establishment of ANAC in December 2005, which now has financial and administrative independence.

The Airport Improvement Project will reinforce the new civil aviation regulatory and oversight agency (ANAC) by providing technical assistance to establish a new organizational structure, administrative and financial procedures, staffing and training, and provision of equipment and facilities. Additionally, the project will rationalize and reinforce the Airport's management and operations agency (AdM) by providing technical assistance to establish a model for the management of the Airport and the longterm future status and organizational structure of AdM.

Industrial Park Project. In 1999, GOM passed Decree 99252 declaring the 7,194 ha of land encompassing the Airport and the proposed Industrial Park as public domain land. Based on this decree, the Ministry of Public Works and Transportation and Ministry of Territorial Administration were named the responsible parties for the management of the Airport domain. Although AdM is viewed as the asset holding agency, GOM intends to enter into a management contract with a private operator for the Industrial Park. Under the World Bank Mali Growth Support Project, APIMali will serve as the publicsector regulator for the Industrial Park, while daytoday management will be assigned to a private entity (the ``Operator'') through an international, competitive procurement process. MCC will support the recruitment and startup of the Operator, and will finance limited business support services to tenants.

To ensure the creation of new SMEs, the Industrial Park Project will help these SMEs access financial and market information, as well as export facilitation services. In addition, the project will focus on how to ensure coordination in operations and maintenance of shared utilities between the Airport and Industrial Park operators.

Alatona Irrigation Project. The Alatona perimeter is located at the ``tail end'' of the ON gravityfed irrigation system. Long term success hinges on effective and efficient management of the entire system. The project addresses this issue by financing additional capacity on the main conveyance structures, as well as supporting the ON to achieve sustainable management of its entire stock of assets. In addition, the Alatona Irrigation Project will address the need to update the existing ON Master Plan, which is based on scenarios and assumptions developed in 2001, and upon which current expansion plans are based. Maintenance of the main system and structures is the financial responsibility of GOM, which delegates this to the ON. Through a twotiered system of joint ONfarmer committees, the ON also maintains the distributors and secondary canals within the five regional zones, while farmer organizations manage the tertiary canals. The water fees collected would seem adequate to cover the operations and maintenance cost of the major distribution systems within the zones.

The NionoGoma Coura road is part of GOM's annual routine maintenance program. Current allocations should ensure routine maintenance on this road. Periodic maintenance funding (about every 10 years) is considered a major challenge, although it is anticipated that EU and World Bank efforts to increase user fees will over time ensure such funding.

The financial services activity will provide microfinance institutions and banks with training in agricultural credit and other aspects of managing the delivery of financial services to the inhabitants of Alatona. The project will create a new legal entitythe Revenue Authorityto collect and manage the revenues generated through land payments. MCC funding will support the costs of structuring this entity and facilitate some initial capacity building. Following this, the Revenue Authority will support itself through the land revenues collected. This structure has the potential to encourage local institutions to organize themselves around project design and implementation, thereby building local capacity for community planning and service delivery and helping to strengthen nascent decentralized government.

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Research and extension are considered public goods and are funded by GOM. Over the life of the Compact, demanddriven and feebased research and extension techniques will be tested. It is expected that the financially selfsufficient Alatona producers' organization as well as farmers' groups and village associations will play a key role in demanding and paying for these services.

D. Environment and Social Assessment

Airport Improvement Project. A Category A environmental impact assessment (``EIA''), following MCC Environmental Guidelines and Malian law, will be required. The recommended wastewater treatment, expanded water supply and distribution, solid and hazardous waste disposal, power supplies, drainage and other infrastructure are currently conceived and sized to serve both the Airport and the Industrial Park. Therefore, the Airport and the Industrial Park will be treated together for purposes of the EIA and the resettlement action plan (``RAP''), because of their common infrastructure, joint road access, shared space within the Airport domain and the cumulative effects of both projects. The joint RAP (covering physical and economic displacement, both temporary and permanent in areas inside and outside the Airport domain) will be prepared based on the World Bank's Operational Policy 4.12 on Involuntary Resettlement. Some of the infrastructure poses implementation risks, because they are municipal facilities not yet funded or built and located outside the Airport domain.

Industrial Park Project. The Industrial Park will be assessed in the joint Airport/Industrial Park EIA. In this context, the RAP will address compensation for those cultivating and using land in the Industrial Park and in other locations, both on and off the Airport domain. The approach and issues discussed above for the Airport Improvement Project with respect to common infrastructure construction impacts, the EIA, and the RAP remain the same.

Alatona Irrigation Project. Irrigationrelated activities of the Alatona Irrigation Project, including activities external to the Alatona zone (such as presettlement activities and expansion and enhancement of the overall conveyance capacity of the ON's main canal system) will require a full Category A EIA, under MCC Environmental Guidelines and Malian law. The NionoGoma Coura road's Category B environmental and social assessment will be prepared in advance of the irrigation EIA to expedite implementation of road improvements. The Environmental Assessment (2003) and updated Environmental Management Plan (2005), which already exist for road rehabilitation of a much longer stretch of the national route, will be supplemented and updated for the 80kilometer section to be funded under the Compact. Cumulative impacts of the road as well as the irrigation activities will be addressed in the Alatona EIA. Both documents will include HIV/AIDS mitigation plans. Two RAPs consistent with World Bank Operational Policy 4.12 on Involuntary Resettlement will also be needed, one for the road activity and another for the irrigation activities. A prerequisite to preparing the Alatona EIA is preparation of an overall land use and natural resources management plan to address the sustainability of the Alatona largescale land development and population increase of about 60,000.

E. Donor Coordination

All three projects complement and leverage other donors' efforts in Mali. The World Bank is also investing in activities to improve the Airport, Industrial Park, and business climate. Due to the World Bank's funding gap, GOM requested additional funds from the MCC to support the larger and more costly infrastructure improvements. For the Alatona Irrigation Project, the Dutch Development Agency, French Development Agency (``AFD''), the World Bank, and the U.S. Agency for International Development (``USAID''), in particular, have been working in the ON over the past several decades, resulting in a more efficient, decentralized management structure, while increasing production and productivity of the zone. Relevant donor activities are described in more detail below.

SUMMARY: Millennium Challenge Corporation,