National context and rationale for IFAD intervention

1. Community setting and carer guidance. Building on the experience acquired during the first phase, the field facilityators, recruited locally, are now an integral part of a transparent and truly participatory approach, liked at identifying the constraints and aspirations of young people, which resulted in strong ownership of the project.
   Job creation based on microenterprise development models needs to be more demand-driven. The precise needs of the labor market must be taken into account, especially in the context of the links to be established between young people and the sectors.
   Economies of scale and sustainability of pro-poor financial service delivery. The first phase of the FIER project effectively tested a system in which term deposits served as collateral for young targets on a case-by-case basis. This has limited the reach of microfinance institutions. To compensate for this gap, the FIER 2 project team will set up not only a mechanism that encourages the optimization of savings, but also a guaranteed fund managed by professionals, which will allow microfinance institutions to increase their portfolio of young clients.
   Service provider contracts should be results-based, while ensuring continuity. Service providers should be able to plan for the long term, which does not exempt them from annual performance reviews.
   The two-phase approach of expanding the project area in the first phase delayed implementation. The FIER 2 project will adopt a process-oriented approach, which will allow a gradual and progressive expansion of the project to new areas as conditions permit, including the security situation.
   Connecting targeted young people to well-structured sectors increases the likelihood that their economic activities will produce lashing results. To do this, we need to encourage the type of organizational development that allows young people to participate in wholesale purchasing and sales in the most structured and regulated sectors.

1. The FIER 2 project has the development objective of promoting entrepreneurship in rural areas, and facilitating the economic integration of young people into agricultural sectors and non-agricultural sub-sectors.
   It will thus contribute to achieving the second strategic objective of the Country Strategic Options Program (COSOP): promoting access to markets for small producers.
   The geographical area of intervention corresponds to the COSOP targeting strategy, which encompasses eight regions. Implementation will start in the 12 poorest regions (circles) located in the densely populated south of the country: Koulikoro, Sikasso, Kayes and Ségou. After having covered these "concentration zones" (previously covered in the first phase), the FIER 2 project will be able to broaden its scope of action to "extension zones" (including the regions of Mopti, Gao, Timbuktu and Kidal) , depending on a series of conditions to be met, in particular those relating to security issues.
   The selection of target groups will be in line with IFAD Producer organizations and specialized service providers will be responsible for registering eligible rural youth and providing them with counselling and carer guidance services. Some 60,000 young rural people aged 15 to 40 will follow vocational training or benefit from economic integration through paid employment or in a microenterprise, and 9,000 young rural people will be attached to sectors; overall, 40% of benefits will be women.

The project components are as follows: i) improve the institutional and socio-economic environment favouring the promotion of entrepreneurship and employment of rural youth; ii) support rural youth to generate recent outcomes through sustainable access to financial and non-financial services, adapted to their aspirations and markets requirements; (iii) coordinate and manage the project.

The expected results by component are summarized below:

Component 1 will create an institutional and socio-economic environment more conductive to promote entrepreneurship and employment of rural youth in rural areas. This will be the overall result of the following activities: activity 1.1.1. – Strengthening the capacities of the Ministry of National Entrepreneurship, Employment and Vocational Training and its services; activity 1.1.2. – strength the capabilities of vocational training centres and regional and local actors responsible for offering services that meets the needs of young rural people;
activity 1.1.3. – built the capacity of rural youth federal organizations and other similar organizations and umbrella agencies, as well as their local services.
Component 2 will create employment for young people (self-employed and employees) in several segments of the workers. It will be the overall result of activity 2.1.1. – target rural youth and offer them counselling and carer guidance services. The project management unit will recruit, through competitive bidding, NGOs as setting and advisory agents for young people. In addition, it will sign strategic partnership contracts with specific umbrella farming organizations, selected based on an assessment of their capacities to provide the required services; activity 2.1.2. – provide rural youth with appropriate training and provide them with business support and monitoring services which will be graduated phased out. The project management unit will contract with service providers for training and support of young people. These will be selected through competitive bidding, in particular agencies which have been strengthened under sub-component 1.1.; and activity 2.1.3. – integrated young rural people trained in agricultural and non-agricultural sectors.
Component 3 will ensure proper coordination and management of the project. Activities will include financial management, procurement, monitoring and evaluation, as well as knowledge management.

The project costs are estimated at EUR 99.1 million over seven years, consisting of base costs of EUR 90.4 million (91.2% of total costs), and provisions for material contingencies and price increase of EUR 8.7 million (8.8% of total costs). These costs are calculated on the basis of a national inflation rate of 2.6% per year and an international inflation rate of 2.0% per year; and provisions for material contingencies up to a level of 5% for certain categories of expenditure, taking into account recent experience from the country program.
Investment costs represent 88% of base costs, or EUR 80 million, of which 12% is operating expenditure (EUR 10.4 million).

The significant financing gap of USD 39.6 million can be financed through subsequent rounds of the Performance-Based Allocation System (PBAS) or the Mechanism for Access to Borrowed Resources (MARE), granting to financing conditions to be determined and subject to internal procedures and subsequently approximation by the Board of Directors, or through co-financing to be determined during execution.

Subcomponent 1.2 of the project referring to resilient infrastructure is partly related to climate action. The total amount allocated by IFAD to the project for climate finance, calculated using the methods of multilateral development banks for monitoring financing of adaptation to climate change and mitigation of its effects, is estimated at EUR 15.1 million.