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Cost and financing of the FIER II Project
Initiating institution: IFAD
Borrower/beneficiary: Minister of Economy and Finance
Executing agency: Ministry of National Entrepreneurship, Employment and Vocational Training
Total project cost: EUR 99.1 million (approximately USD 100 million)
The total cost of the project over seven (07) years (Contingencies and all taxes included) is estimated at 100.0 million USD equivalent to 59.5 billion FCFA. The base costs are 91.2 million USD equivalent to 54.3 billion FCFA, or 91.2 percent of the total costs. The physical and financial unforeseen amounts to 8.8 million USD, or 5.2 billion FCFA corresponding to 8.8 percent of the total costs. Investment costs represent 88 percent of the base project costs, or USD 80.7 million (approximately FCFA 48.0 billion). Operating costs represent 12 percent of these costs (10.5 million USD approximately 6.3 billion FCFA), (see details in the table Summary of project costs by expenditure category).
The implementation of the project will require approximately 12.8 million USD (equivalent to 7.6 billion FCFA) in foreign currency, or 13% of the total project costs, and 87.2 million USD (or 51.9 billion FCFA) in local currency, or 87% of the total project costs. The share of foreign currency costs is mainly explained by the specific needs linked to equipment, vehicles, work to set up aggregative infrastructures and other expenses linked to operations, study trips, training abroad. As much as possible, the project will call on national institutions, regional/national consultancies and consultants to limit the use of foreign currencies. Likewise, the purchase of equipment and vehicles is limited to what is strictly necessary.
Project costs by component
FIER 2 is structured into three (03) following components: (i) Make the institutional and socio-economic environment favorable to the promotion of entrepreneurship and employment of rural youth which includes the following sub-components: 1.1 Strengthen public and private institutional capacities for the training and economic integration of rural youth and 1.2 Creation of resilient aggregative economic infrastructures for young people, which will be operated and managed sustainably; (ii) Support rural youth to generate decent income through sustainable access to financial and non-financial services adapted to their needs and market requirements, which includes the sub-components, 2.1 Support rural youth to choose their professional trajectory and to access adapted non-financial services and 2.2Promote rural youth’s access to adapted financial services; (iii) Project coordination and management.
The component, “Supporting rural youth to generate decent income through sustainable access to financial and non-financial services adapted to their needs and market requirements, which includes the sub-components” is the main component of the project with an estimated cost of 62% of the base cost. It is followed by the first component “Making the institutional and socio-economic environment favorable to the promotion of entrepreneurship and employment of rural youth” whose implementation will require 23% of the base costs of the project. The third and final component, “Project coordination and management Strengthening institutional, management and monitoring and evaluation capacities” will absorb approximately 15% of the base costs of the project.
Coûts du projet par catégorie de dépenses
The FIER 2 project is organized into twelve (12) expenditure categories, seven (07) expenditure categories following: (i) Civil/rural engineering, (ii) Guarantee fund, (iii) Refinancing fund, (iv) Equipment/ equipment, (v) Vehicle, (vi) Cost-share subsidies, (vii) Consultant services, (viii) Non-consultant services, (ix) training, information, awareness, communication, (x) workshop, seminar, (xi) ) operation and (xii) Staff costs. Based on the importance of the resources allocated to each of them, the main categories of expenditure are (i) “Cost-share subsidies”, (ii) “training, information, awareness, communication”, (iii) “Engineering civil/rural and (iv) “staff costs” with a forecast allocation representing respectively 34%, 22%, 16% and 10% of the basic project costs. Then come the following categories of expenditure: (v) “equipment and materials” and (vi) “non-consultant services” which each consume 4% of the basic project costs, (vii) “guarantee fund” and (viii) “refinancing fund” whose cost each represents 3% of the basic costs of the project, (ix) “operation”, (x) “consultant service” and “vehicle” whose forecast allocations represent 2% and 1% each of the basic project costs. The allocation for the “workshop and seminar” expense category is less than 1% of the base project costs.
Project funding
It is provided by: (i) IFAD under a super concessional loan, a concessional loan and a commercial loan, (ii) the beneficiaries, (iii) the government of Mali and (iii) co-financiers47 to be sought. IFAD’s contributions amount to USD 39 million (CFAF 23.2 billion), including USD 27.6 million as a super concessional loan, USD 6.9 million as a concessional loan and USD 4.5 million as a loan. commercial, corresponding in total to 39.0% of the total project cost. These contributions would essentially be provided for the first three years of project implementation. The co-financiers to be sought would contribute up to 39.6 million USD equivalent to 23.6 billion FCFA, or approximately 39.6% of the total cost of the project. These contributions would come from the third year of project implementation, thus leaving ample room for maneuver for the government supported by IFAD to identify interested co-financiers. The Beneficiaries would provide approximately 14.0 million USD (8.4 billion FCFA) including 5.6 million USD in direct contribution in kind and/or in cash as well as 8.4 million USD as a loan from the SFD.