Document of
The World Bank
Report No: 21737-ET
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSED LEARNING AND INNOVATION LENDING (CREDIT)
IN THE AMOUNT OF SDR 2.0 MILLION
(US$ 2.597 MILLION EQUIVALENT)
AND
A PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY
IN THE AMOUNT OF SDR 1.4 MILLION
(US $ 1.802 MILLION EQUIVALENT)
TO THE
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
FOR
CONSERVATION AND SUSTAINABLE USE OF MEDICINAL PLANTS
January 22, 2001
Rural Development 2 (AFTR2)
Country Department 6 (AFCO6)
Africa Region



CURRENCY EQUIVALENTS
(Exchange Rate Effective September 30, 2000)
Currency Unit = Birr
LC = US$
US$1.00 = EthiopiaBirr 8.1
FISCAL YEAR
July 8 -July 7
Vice President                             Callisto E. Madavo
Country Director                           Oey Astra Meesook
Sector Manager                             Joseph Baah-Dwomoh
Team Leader                                Berhane Manna



ABBREVIATIONS AND ACRONYMS
AAU          Addis Ababa University
BDI          Biodiversity Institute
CAS          Country Assistance Strategy
CBD          Convention on Biological Diversity
CIDA         Canadian International Development Agency
COP          Conference of Parties
CSE          Conservation Strategy of Ethiopia
DANIDA       Danish International Development Authority
DCA          Development Credit Agreement
DDR          Department of Drug Research
DOB          Department of Biology
EA           Environmental Assessment
EARO         Ethiopian Agricultural Research Organization
EHNRI        Ethiopian Health and Nutrition Research Institute
EISC         Ethiopian Islamic Supreme Council
ENDA         Environmental Development Action
EOC          Ethiopian Orthodox Church
EORC         Essentials Oils Research Center
EPA          Environmental Protection Authority
ESTC         Ethiopian Science & Technology Commission
EWCO         Ethiopian Wildlife Conservation Organization
FOM          Faculty of Medicine
FVM          Faculty of Veterinary Medicine
GEF          Global Environment Facility
GEFSEC       Global Environment Facility Secretariat
GOE          Government of Ethiopia
GSBA         Globally Significant Biodiversity Area
HSDP         Health Sector Development Program
lBCR         Institute of Biodiversity Conservation and Research
IBRD         Intemational Bank for Reconstruction and Development
ICB          International Competitive Bidding
ICDP         Integrated Conservation and Development Project
ICR          Implementation Completion Report
IDA          Intermational Development Association
IDR          Institute of Development Research
IPR          Intellectual Property Rights
IUCN         The World Conservafion Union
LIL          Learming and hinovation Lending
MEDAC        Ministry of Economic Development and Cooperation
MOA          Ministry of Agriculture
MOH          Ministry of fHealth
MOU          Memorandum of Understanding
MTR          Mid-Term Review
NCB          National Competitive Bidding
NPC          Natural Products Chemistry
NGO          Non-Governmental Organization
NH           National Herbarium
ii



PCMU         Project Coordinating & Monitoring Unit
PCP          Project Concept Paper
PDF          Project Development Fund
PIC          Project Implementation Committee
PIM          Project Implementation Manual
PIP          Project Implementation Plan
PC           Project Coordinator
PPTC         Project Preparation Technical Committee
QAG          World Bank's Quality Assurance Group
SIDA         Swedish International Development Agency
SOE          Statements of Expenditure
SOP          School of Pharmacy
STAP         Scientific and Technical Advisory Panel
THA          Traditional Healers Association
THP          Traditional Health Practitioner
UNDP         United Nations Development Programme
WCMC         World Conservation Monitoring Centre
WHO          World Health Organization
WWF          Worldwide Fund for Nature
iii



ETHIOPIA
CONSERVATION AND SUSTAINABLE USE OF MEDICINAL PLANTS
CONTENTS
A Project Development Objective .................................................................2
L.a. Project development objective .................................................................2
l.b. Project Global objectives .................................................................2
1 .c. Follow-up  project objectives .....................                                ...........................................2
2. Key performance  indicators .................................................................2
B Strategic Context .................................................................3
l.a. Sector-related Interim  Support Strategy (ISS) goal supported by the project ............. 3
l .b. GEF operational strategy/program objective addressed by the project .......................3
2. Main  sector issues and  Govemment strategy ...........................................................                                   4
3. Learning and development issues to be addressed by the project ..................................5
4. Leaming  and  innovation  expectations ...........................................................6
C   Project Description  Summary  .................................................................6
1. Project components ................................................................7
2. Key  policy  and  institutional reforms supported  by the project ................                                     ......................9
3. Benefits and target population .................................................................9
4. Implementation  and  institutional arrangements ...........................................................  10
5. Monitoring  and  evaluation  arrangements ................................................................                               10
D  Project Rationale ................................................................                                                                   10
1. Project alternatives considered  and reasons for rejection ............................................ 10
2. Major related projects financed by the Bank and/or other development agencies .......1  1
3. Lessons leamed  and reflected  in  the project design .....................................................1  1
4. Indications of borrower commitment and  ownership ...............................                                    .................... 14
5. Value  added  of Bank  and  GEF  support in  this project ................................................. 14
E Summary Project Analysis ................................................................                                                             15
1. Economic ................................................................ 15
2. Financial ................................................................                                                              15
3. Technical ................................................................                                                              16
4. Institutional ................................................................                                                          16
5. Social ................................................................                                                                 17
6. Environmental assessment ................................................................                                               18
7. Participatory  approach ................................................................ 18
iv



F Sustainability and Risks ............................                       19
1. Sustainability ......................                               19
2. Critical Risks ...................... 20
3. Possible Controversial Aspects ...................... 20
G Main Loan Conditions ............................ 21
1. Effectiveness Conditions ...................... 21
2. Other ...................... 21
H Readiness for Implementation ............................ 21
I Compliance with Bank Policies ............................ 22
Annexes
Annex 1.     Project Design Summary
Annex 2.     Detailed Project Description
Annex 3.     Estimated Project Costs
Annex 4.     Incremental Costs and Global Environmental Benefits
Annex 5.     Financial Summary
Annex 6.     Procurement, Disbursement and Financial Management Arrangements
Table A.     Project Costs by Procurement Arrangements
Table B.     Thresholds for Procurement Methods and Prior Review
Table C.     Allocation of IDA Credit Proceeds
Annex 7.     Project Processing Budget and Schedule
Annex 8.     Documents in Project File
Annex 9.     Status of Bank Group Operations in Ethiopia (Statement of Loans and Credits)
Annex 10.    Ethiopia at a Glance
Map
v



ProJctc  Appraisal Doctiment
I thiiopiai Conservation & Sustainable Use of Medicinal Plants Project
Ethiopia
Conservation and Sustainable Use of Medicinal Plants
Project Appraisal Document
Africa Regional Office
Rural Development 2 (AFTR2)
Date: May 2000                                       Team Leader: Berhane Manna
Country Director: Oey Astra Meesook                  Sector Manager: Joseph Baah-Dwomoh
Project ID: ET-PE-52315                              Sector: Rural Development/Agriculture
GEF Supplement ID: ET-GE-35147                       Theme(s): PA/EN
l,ending Instrument: LIL                             Poverty Targeted Intervention:   [X] Yes  []  No
Project Financing Data
[ ] Loan    [X] Credit (IDA)     [X] Grant (GEF)   [  Guarantee      [] Other [Specify]
For Loans/Credits/Others:
Amount (US$M):
Proposed terms:  [    ] To be defined   [     ] Multicurrency      [     ] Single currency
[     ] Standard Variable    [X] Fixed   [    ] LIBOR-based
Grace period (years):           10
Years to maturity:             40
Commitment fee:                 0.5%
Service charge:                 0.75%
Government                            0.768*            0.009             0.777
IDA                                   0.893             1.614             2.597**
GEF                                   1.029             0.773              1.802
Total:                                2.690             2.396              5.176
Borrower: Federal Democratic Republic of Ethiopia
Guarantor: Not Applicable
Responsible agency: Institute of Biodiversity Conservation and Research (IBCR)
* of which US$0.503 million in taxes.
Including PPF amount of US$90,000
Estimated disbursements (Bank FY/US$M):
Fy ,9.,2OP .                                         .., f S .'<XE9
Annual        2.431        1.108        0.723        0.558        0.265
Cumulative       2.431         3.539        4.262        4.821        5.086
Project implementation period: IDA: 4 years; GEF: 5 years
Expected effectiveness date: July 2001                Expected closing date: IDA: June 30, 2005
GEF: December 31, 2006
Implementing agency: Institute of Biodiversity Conservation and Research (IBCR)
Contact person: Dr. Abebe Demissie/Dr. Medhin Zewdu
Address: P. 0. Box 30726, Addis Ababa, Ethiopia
Tel: (251-1) 61-2244 or 61-5607   Fax: (251-1) 61-3722        E-mail:     biod-eta telecom.net.et
()CS PAD Form: October 9, 1998



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Project Appraisal Document
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
A: Project Development Objective
l.a. Project development objective: (see Annex 1)
Medicinal plants provide a vital contribution to human and livestock health needs throughout Ethiopia,
and are especially important to the rural poor. Many medicinal plants are coming under increasing threat
in the country due to agricultural expansion, deforestation, overgrazing, drought, fire and over-
harvesting. Also, the traditional health care knowledge is not being disseminated and is likely to be lost
due to lack of preservation and documentation. The overall objective of this project is to initiate support
for conservation, management and sustainable utilization of medicinal plants for human and livestock
healthcare in Ethiopia. The project's specific objectives are to: (i) strengthen institutional capacity; (ii)
identify and document selected commonly used/indigenous medicinal plants used for the treatment of
major human diseases with emphasis on the following three namely tapeworm infections,
bronchopneumonia and hypertension and livestock diseases with emphasis on the following three namely
tapeworm infections, mastitis and dermatophilosis; (iii) initiate studies for the safe utilization of effective
medicinal plant remedies for these three major human diseases and three livestock diseases; (iv) assess
the economic benefits derived from medicinal plants in human and livestock healthcare on a national
level and for possible export potential; (v) develop a national medicinal plant database; and (vi) support
in-situ conservation and management and initiate ex-situ cultivation of medicinal plants. The lessons and
benefits derived from the project are applicable throughout Ethiopia and elsewhere in Africa where there
is a high dependency on medicinal plants and traditional health systems.
l.b. Project Global objectives (see Annex 1):
The global environmental objective of the project is to promote in-situ conservation and sustainable use
of medicinal plants in and around a site of global significance - the Bale Mountains National Park. The
project would support: (i) on-site management including zoning of key areas, and detailed socio-
economic and biological surveys to assess the status of medicinal plant species used, their distribution,
mnanagement status and volumes harvested; (ii) identify and implement appropriate management options
including preparation of guidelines for sustainable harvesting of medicinal plants; (iii) monitoring and
evaluation to assess impact of harvesting guidelines and management interventions; (iv) initiate pilot,
farmer-based cultivation trials for selected threatened species in available lands including home gardens,
boundary and buffer zones of the national park; (v) training of appropriate personnel of the national park
staff, and local communities; and (vi) public education and awareness activities.
l.c. Follow-up project objectives
If the project objectives are achieved, follow-up project activities will focus on: (i) in-situ and ex-situ
cultivation of selected medicinal plants; (ii) integration of selected phytomedicines into MOH primary
health care system; and (iii) expanding the GEF conservation activities in relevant sites.
2. Key performance indicators: (see Annex 1)
The success of the project will be evaluated based on the following key indicators:
(i)    Medicinal plants effective for the treatment of 3 major human diseases and 3 major livestock
diseases confirmed and documented by end PY1;
(ii)    Assessment of economic benefits derived from use of medicinal plants in human and livestock
healthcare on a national level and export potential completed by end PY2;
(iii)   Medicinal plants tested for safety and efficacy, and dosage and fornulation determined by end
PY4;
(iv)   National Medicinal Plant and Indigenous Knowledge Practices Database established by mid PY3
building upon the medicinal plants for common diseases identified under (iii) and from Bale



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Mountains survey;
(v)    Farmer-based pilot cultivation trials of the selected common medicinal plants important for the 6
major diseases (under i) established by end PY4;
(vi)   Socio-economic and biological surveys in Bale Mountains National Park to identify protected
core zones and harvesting zones completed by end PY2; and
(vii)  Guidelines developed (by PY3) and implemented (by PY4) for management and sustainable
harvesting of medicinal plants in the Bale Mountains National Park.
B: Strategic Context
1. a. Sector-related Interim Support Strategy (ISS) goal supported by the project: (see Annex 1)
ISS report number: 21189-ET      Date of latest ISS discussion: November 9, 2000
One of Ethiopia's major development objectives is sustained rapid growth with poverty reduction. The
Bank's Interim Support Strategy focuses on: food security and agricultural inputs, HIV/AIDS and weak
institutions/inadequate human capacity. The proposed project will contribute to poverty alleviation and
human development with important links to health and environment. The project will strengthen the
foundation for conservation and management of medicinal plants, as well as integrating selected
phytomedicines and traditional healthcare systems into the MOH primary healthcare system.
1.b. GEF operational strategy/program objective addressed by the project
Ethiopia signed the Convention on Biological Diversity in July 1994. The Institute of Biodiversity
Conservation and Research (IBCR) has overall responsibility for biodiversity conservation and
management. The project is consistent with the GEF Operational Strategy for Biodiversity especially the
Operations Programs for Forest and Mountain Ecosystems, as well as Article 8(j) of the Convention of
Biological Diversity (CBD) regarding the protection and conservation of medicinal plants, benefit
sharing and protecting indigenous knowledge. The project responds to Conference of Parties (COP)
guidance on eligibility of projects that strengthen conservation, management, and sustainable use of
ecosystems and habitats, particularly environmentally vulnerable and threatened habitats and species.
Specifically, it responds to COP3 and COP4 guidance through promoting economic incentives and
alternative livelihood opportunities for local communities.
The site chosen for in situ conservation activities, the Bale Mountains massif, is one of the most
important conservation areas in Ethiopia and recognized as such in the World Conservation Union
(IUCN) Review of Protected Areas of the Afrotropical Realm as globally important. It also lies within the
Global 200 Ecoregions. It supports the most extensive Afro-alpine ecosystem on the continent and has
the most extensive altitudinal continuum of natural vegetation in the country, mostly comprising forests.
Local diversity and endemism are also high. The massif is an Important Bird Area (IBA), recognized as
one of the Global 200 Ecoregions, and a refuge for many endemic and threatened plants and animals
including the Ethiopian wolf and also endemic Afroalpine plants. Activities to be tested under the GEF
project, including development of sustainable use guidelines and propagation of indigenous and
threatened medicinal plants will provide useful lessons for replication elsewhere in Ethiopia and eastern
Africa. Work on intellectual property issues, documentation of traditional knowledge and benefit sharing
will provide best practice guidelines, relevant to other GEF and Bank projects.



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
2. Main sector issues and Government strategy:
The key issues associated with the sector are as follows:
(a) Limited institutional capacity for the development of medicinal plant-based traditional
healthcare systems for human and livestock and their integration with modern medicine. Currently,
80% of the human population and 90% of livestock rely on some form of traditional healthcare systems
(IBCR Project Proposal, 1999). The Bank supported Health Sector Development Program (HSDP)
focuses on modem medicine and at completion in 2003 aims to increase primary health care access from
45 to 55-60%. Therefore, a large segment of the rural population will still remain without access to
modem medicine and will continue to depend on medicinal plants and traditional healthcare practices. At
the same time a significant proportion of the urban population, while benefiting from the improvements
in modem medicine, will also continue to rely on traditional medicines. The proposed project is expected
to strengthen the foundation for filling in this gap.
(b) Limited research and information regarding extraction, standardization, safety, efficacy,
dosage and formulation of medicinal plant remedies. The World Health Organization (WHO) is
providing limited support (which will end June 1999) for the Department of Drug Research (DDR) of the
EHNRI to conduct extraction, standardization and formulation studies of five common cosmopolitan
plant species (Allium sativa, Datura sp., Carica papaya, Osmium sp., and Eucalyptus sp.) using
information published in the Indian Pharmacopoeia. The WHO supported project has been useful for the
DDR scientists in understanding the basic methodologies utilized in Formulation Studies. The School of
Pharmacy (SOP), Addis Ababa University (AAU) is able to undertake the processes of extraction,
standardization, safety and efficacy, and dosage and drug formulation. DDR lacks the technical expertise
and equipment to complete the formulation phase. The Faculty of Veterinary Medicine (FVM), AAU
lacks the technical and laboratory capacity to carry out any of the above steps. However, they will
collaborate closely with SOP to develop the necessary expertise to formulate livestock phytomedicines.
The Faculty of Medicine (FOM) and Natural Products Chemistry (NPC) of the AAU can play a role in
certain aspects of the phytomedicine development process. The project will significantly enhance the
capacity of the laboratories to produce safe and efficacious phytomedicines by providing specific
research equipment and technical training. Each of the laboratories is already collaborating with
laboratories outside of Ethiopia. It is recommended that the Ethiopian laboratories utilize that linkage to
verify extraction, standardization, safety and efficacy, and dosage and formulation studies, where
warranted, and upgrade technical training where appropriate. In addition, it is also recommended that
WHO Traditional Drug Guidelines be followed and linkages with WHO be maintained. The proposed
project will build on the experience gained and give support for the development of additional approved
formulations of important high-demand local phytomedicines.
(c) Inadequate quantitative data on economic benefits derived and long-term sustainability of
supply of medicinal plants. At present, there is no formally documented information on the number of
people (rural/urban) dependent on medicinal plants. Similarly, no data are available on source of supply,
volumes and values purchased, under what conditions people use plant medicines, and if the present level
of supply is sustainable. The proposed socio-economic assessment in selected regions will provide such
baseline data. The PDF Block B Grant provides funding to initiate biological and socio-economic studies
in the Bale Mountains that will facilitate the regional baseline studies proposed under the project. The
Institute of Development Research (IDR), AAU among others has the expertise necessary to carry out
such quantitative studies and analyses.
(d) Habitat degradation, inadequate in-situ conservation programs and unsustainable collection
practices of medicinal plants. The present knowledge on Ethiopia's plant biological diversity is being
recorded in a Modem Flora of Ethiopia. However, the limited conservation and management measures



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
being undertaken do not adequately deal with the ever-advancing factors of genetic erosion. Several
sources report the accelerated loss of medicinal plants due to habitat degradation, and probable over-
harvesting of wild populations of medicinal plant species. More than 600 medicinal plants are known to
be used in herbal preparations of which at least 18 species (WCMC, 1998) are considered under threat of
extinction in Ethiopia - probably an underestimate. The successful conservation and management of
medicinal plant resources will require the active participation of communities and their close
collaboration with the public sector. Attention should be given to the capturing of local health traditions
- many of which are oral in nature and therefore largely undocumented. Recognition must be given to the
need to acknowledge the rights of THPs, communities and religious organizations to the benefits
accruing from this knowledge by clearly defining Intellectual Property Rights (IPRs). Support will be
provided to Ethiopian Science and Technology Commission (ESTC) and Traditional Healers Association
(THA) for developing guidelines for IPRs for sharing the traditional medicinal knowledge.
Government Strategy: In 1993 the GOE promulgated Health and National Drug Policies. Priority 4 of
the Health Policy reads: "Due attention shall be given to the development of the beneficial aspects of
Traditional Medicine including related research and its gradual integration into Modern Medicine".
Article 3 of the Drug Policy reads: "Facilitate the gradual integration of traditional drugs with modern
medicine by giving due attention to traditional practices and identfying the benefiial and harmful
aspects through investigation and research ". Ethiopia's commitment to the sector is high, however its
ability to provide increased resources for the study and sustainable use of medicinal plants is limited.
Strengthening of DDR, and collaborating research institutes (SOP, FVM), to carry out a program to
deterrnine the safety, efficacy, and dosage levels of commonly used medicinal plants for the treatment of
major human and livestock diseases would offer the health services sector additional ways and means of
fulfilling the terms of reference of the Health and Drug Policies to provide affordable healthcare. The
Minister of Health's letter endorsing the important contribution the project will make to improved
healthcare is evidence of the government's commitment to facilitate and integrate traditional and modern
health systems.
Ethiopia has now in place a Conservation Strategy and an Environmental Policy. The Conservation
Strategy of Ethiopia (CSE) has 11 sectoral and 11 cross-sectoral policies, and many of these are relevant
to the conservation and sustainable use of medicinal plants. A Biodiversity Conservation and
Development Strategy and Action Plan is being developed. Medicinal plants are explicitly recognized as
important components of the natural heritage of Ethiopia. A medicinal plant inventory and better
protection of habitats constitutes one of the highest priorities. Community-based approaches with the full
participation of women in the management of natural resources are also given high priority.
Agricultural research is guided by a National Science and Technology Policy (December, 1993) which
has specific sections on agriculture and natural resource development and environmental protection. The
government has identified the IBCR, under the IBCR Board (IBCRB), as the lead agency in identifying a
medicinal plant R&D strategy and action plan for conservation and sustainable utilization. IBCR has
established a working link with the THA by providing land at regional stations where local healers can
cultivate selected medicinal plants. Close collaboration is required between IBCR, collaborating
institutions, farmers, communities, religious groups, and THAlTHPs, for medicinal plant R&D.
3. Learning and development issues to be addressed by the project:
Limited institutional capacity. The project will: (i) strengthen the lead institute (IBCR) by establishing
a Project Coordinating Monitoring Unit (PCMU) within IBCR; (ii) strengthen research, technical and
human resources' capacity of collaborating institutes/agencies; (iii) support ESTC for developing IPR
guidelines with inputs from THA; and (iv) ex-situ cultivation trials of selected medicinal plants. In
addition, the project will support establishment of a central database on usage, distribution and status that



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
would include medicinal plants used for the control of 3 major human diseases (tapeworm infections,
bronchopneumonia, hypertension) and 3 livestock diseases (tapeworm infections, mastitis,
dermatophilosis). The database will draw together information from oral, traditional, modem literature,
and herbarium collections, with emphasis on medicinal plants species identified from Bale Mountains
National Park area. This systematic documentation and evaluation of threat, rarity and demand will be
unparalleled in the East African region in terms of its scope and comprehensiveness and will have global
and regional, as well as national benefits.
Lack of quantitative data on economic benefits and safety issues. The project will support studies to
assess current levels of usage of medicinal plants (used for 3 human and 3 livestock diseases), including
market and field surveys to assess pressures on wild plant populations and habitats at selected sites. And,
to better understand local community and national dependence on medicinal plants for human and
livestock health care. This information will provide input to the national database and priority setting for
in-situ conservation activities. The project will support testing for safety, efficacy and dosage levels for
selected commonly used remedies derived from native plant species. The project will also support studies
to identify methods for the propagation and cultivation practices for a small number of selected medicinal
plants for cultivation in home gardens, farms and degraded habitats.
Conservation of medicinal plants. In view of the probable over-harvesting and loss of medicinal plants,
inventory, surveys of distribution and status are highest priorities. The project, through GEF funding, will
support activities to promote in-situ conservation and sustainable use of medicinal plants at sites of
global significance; the Bale Mountains National Park and surrounding forests which have been
identified as a priority pilot site. Methodologies for the sustainable harvesting of in-situ medicinal plants
will be identified that recognize the unique biological and physical characteristics of protected areas. It is
expected that such methodologies and practices involving the participation of local communities in
management, decision making and monitoring developed under the project can be replicated in and
around other national parks and other relevant sites in Ethiopia.
4. Learning and innovation expectations:
[ X] Economic [ ] Financial [X] Technical [X] Institutional [X] Social [X] Environmental [X]
Participation [X] Other (IPR)
The learning and innovation expectations by the end of the project are that we would have: (i) established
the institutional capacity for determining safety and efficacy, dosage testing and formulation of
phytomedicines; (ii) confirmed and tested six medicinal plants effective for the treatment of 3 human
diseases and 3 livestock diseases and determined their safety, efficacy and dosage levels; (iii) identified
effective harvesting guidelines to sustainably improve the supply of, and access to, wild medicinal plants;
(iv) in collaboration with farmers identified sustainable cultivation methodologies and an institutional
framework for identifying endangered medicinal plants; and (v) strengthened on-site management of
medicinal plants in protected areas.
C: Project Description Summary
The project will be co-financed by IDA and GEF. The IDA credit will support: development of a national
database of medicinal plants including the plants used for the control of the 3 major human diseases and
3 livestock diseases, as well as an inventory of plants identified from the Bale Mountains; assessment of
current levels of usage and economic benefits derived in the country from use of medicinal plants;
training and institutional strengthening; developing IPR guidelines for sharing traditional medicinal
knowledge; determining safety and efficacy, and identifying dosage levels for selected commonly used
remedies derived from plant species; initiate studies for the propagation and cultivation methods for the



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
selected medicinal plants; and project implementation, monitoring and evaluation. The GEF grant will
support biodiversity conservation and sustainable management of in-situ medicinal plant resources in
and around the Bale Mountains National Park as a means of reducing harvesting pressure on wild plants.
The GEF grant will also cover the costs of education and mass awareness campaigns, local training, and
pilot farmer-based cultivation trials of selected threatened medicinal plants in home and community
gardens and boundary and buffer zones of the national park.
1. Project components: (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown)
(a) Institutional Strengthening, Human Resource Development, and Project Monitoring & Evaluation
- US$1.134 million (IDA US $0.821 million, GOE US$0.313 million). Under this component, the
project will support: (i) strengthening institutional capacity of IBCR - lead implementing agency; (ii)
developing human resource capacity of collaborating institutions for implementing project activities; (iii)
(a) 1BCR in collaboration with relevant bodies including traditional healers and other collaborating
institutions to establish a medicinal plant field gene bank and for organizing a national workshop for
same; and (iii) (b) ESTC to develop IPRs policy and guidelines for sharing traditional knowledge; and
(iv) establishment and functioning of PCMU.
(b) Studies, Research and Data Base Development - US$1.949 million (IDA US $1.686 million, GOE
US$0.263 million). This component will support: (i) development of methods to collect, analyze and
interpret quantitative data on socio-economic benefits derived from medicinal plants used in human and
livestock healthcare on a national level, (ii) ethnomedical survey to explore utilization of medicinal
plants and traditional healthcare practices for prevention of HIV and mitigation of adverse impact of
AIDS; (iii) research on propagation and cultivation methods of selected commonly used medicinal plants
for human and livestock diseases, (iv) Formulation Studies: extraction, standardization, safety and
efficacy, and dosage testing and formulation of phytomedicines for 3 human diseases and 3 livestock
diseases; and (v) development of a National Medicinal Plant Database.
(c) In-situ Conservation and Sustainable Use in the Bale Mountains Area - US$2.003 (GEF US$1.802
million, GOE US$0.201 million). Many medicinal plants are coming under increasing threat in Ethiopia
due to agricultural expansion, deforestation and over-harvesting that can be directly related to rapid
human and livestock population growth. GEF funding will support in-situ conservation, management
and sustainable use of medicinal plants in the Bale Mountains National Park and surrounding forests.
These activities will be implemented by IBCR and Oromya Regional Government and in collaboration
with the Ethiopian Wildlife Conservation Organization (EWCO), and other relevant NGOs and farm
communities. By addressing issues such as sustainable methods and levels of harvesting and ex-situ
propagation and cultivation of medicinal plants the project contributes to managed use of biodiversity,
sustainable development, poverty alleviation, and rural health. In particular, the project evaluates the
biodiversity of medicinal plants in Bale Mountains and assesses the distribution and status of threatened
or rare species. In addition, through a participatory process involving local communities, THPs and
local/regional institutions, the project will assist in developing a program for conservation and
sustainable use of medicinal plant resources. This information will be used to identify key park areas for
zoning for appropriate use and harvesting levels with the option, where appropriate, of controlled
harvesting of highly threatened species. The inventory of medicinal plants and their abundancy status in
the Bale Mountains National Park will be an important contribution to the National Medicinal Plant
Database being initiated under the IDA component. More specifically, this component will support:
(i) On-site management including: (a) in-depth socio-economic survey and assessment (building upon the
preliminary survey conducted under the PDF B phase) to: (i) identify villages/users having the greatest
impact on wild populations of medicinal plants through harvesting and other activities, (ii) identify
villagers/farmers for on-farm pilot propagation and cultivation trials of medicinal plants to remove
pressure on wild populations; (b) in-depth biological survey and assessment of in-situ and ex-situ



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conservation (building upon the preliminary survey conducted under the PDF B phase); zoning of key
areas within the Park and strengthening park management in collaboration with the EWCOlWWF-Dutch
project.
(ii) Development and implementation of appropriate management policy options and guidelines for
sustainable levels of harvesting of medicinal plants and/or their products, including development of a
comprehensive biodiversity monitoring and evaluation system. The findings of the in-depth biological
and socio-economic surveys completed in PY 2 will form the basis for the development and
implementation of appropriate management options and guidelines for sustainable levels of harvesting in
PY 3 and PY 4.
(iii) Monitoring to assess: (a) impact of harvesting of medicinal plants in permit areas; (b) preliminary
impact of harvesting guidelines/management interventions in the park; (c) project interventions in
protecting threatened/rare medicinal plant species; (d) market and threatened/rare medicinal plant
species; and (e) market and THP surveys to determine levels of use locally, and nationally of plants
harvested from Bale Mountains National Park.
(iv) Pilot farmer-based cultivation trials for a selected number of threatened and indigenous species in
home gardens and boundary and buffer zones of the national park to: (a) supply local needs; and (b)
provide alternative income generation. Micropropagation techniques will be used where appropriate
(v) Training of: (a) relevant personnel in the conservation, management and monitoring of medicinal
plants within the park and adjacent forests; and (b) farmers for pilot propagation and cultivation trials
and management.
(vi) Education and mass awareness campaigns of the relevance of conservation and management
programs of medicinal plants and importance to Ethiopia's biodiversity and long-term healthcare needs.
a. Institutional        Institutional       134   22.3        0.821   32.7                    0.313
Strengthening, Human     building &
Resource Development, and  Project
Project Monitoring &     management
Evaluation
b. Studies, Research and   Research/        1.949   38.3      1.686    67.3                   0.263
Data Base Development      Info.Mgmt
c. In-situ Conservation  Biodiversity       2.003   39.4                           1.802      0.201
and Sustainable Use in    conservation
Bale Mountains Area
Total       5.086  100        2.507   100          1.802      0.777
* Includes Contingencies.



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2. Key policy and institutional reforms supported by the project:
The project supports Ethiopia's Health Policy (1993) in relation to traditional medicine:
(i) Strengthening the sector through research and development of traditional drugs which are in wide use
(Health Policy: Traditional Drugs, 9.1);
(ii) Facilitate the gradual integration of traditional drugs with modem medicine by giving due attention to
traditional practices and identifying the beneficial and harmful aspects through investigation and research
(Health Policy: General Policy, No. 3); and
(iii) Enhancing conditions for the application of traditional drugs ascertained to be safe and effective for
treatment (Health Policy: Traditional Drugs, 9.2).
The project also supports strengthening of IBCR in its new role as lead biodiversity institution
responsible for all aspects of biodiversity conservation.
3. Benefits and target population:
The principal beneficiary population would be the majority of the country's rural and urban poor that
depend on medicinal plants and herbal remedies for healthcare. These groups will benefit through the
dissemination of reliable information on safety, efficacy and dosage levels of selected herbal
formulations through education public awareness programs. Communities, including women, poor
households, farmers and THPs, will participate in the decision-making process by contributing to the
identification and implementation of medicinal plant conservation, management, cultivation and
harvesting strategies.
Local benefits to Bale Mountains communities would include: implementation of a managed harvesting
regime with improved protection of park biodiversity; wider availability of safe and efficacious herbal
remedies; and an additional source of income. Women involved in home healthcare using medicinal
plants and THPs will also benefit through formal recognition of their roles.
National benefits will occur through identification, documentation and determination of safety, efficacy
and dosage levels of selected indigenous medicinal plants commonly used for the treatment of 3 major
human diseases (tapeworm infections, bronchopneumonia, hypertension) and 3 livestock diseases
(tapeworm infections, mastitis, dermatophilosis). These activities will significantly contribute to
improved supply of phytomedicines for human and livestock healthcare in the future. In addition,
development and utilization of a medicinal plant national database will help the government formulate
and implement national programs for conservation, cultivation, management and sustainable utilization
of medicinal plants, and maximize national benefits from these resources. The project will strengthen
institutional capacity and collaboration through the provision of technical training, workshops, research
facilities, and increase public awareness on conservation and management of medicinal plants.
Global benefits will occur through the conservation and management of endemic and threatened species
of medicinal plants within the Bale Mountains National Park - a Globally Significant Biodiversity Area
(GSBA). Such actions will help to secure continued existence of these valuable resources and their
potential, future medicinal, as well as other values. Specifically, the development of park zoning and
management guidelines for sustainable levels of harvesting will enhance biodiversity protection.
Furthernore, the project will document and underscore the important role traditional knowledge and
cultural heritage can play in global biodiversity conservation and medicinal plant management programs.



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4. Implementation and institutional arrangements:
Implementation period: A four-year project period is planned for IDA supported (LIL) activities, and a
five-year period for GEF-funded conservation activities. A longer implementation period is required for
the conservation activities, due to time required to complete biodiversity surveys, develop and
implement medicinal plant management guidelines, and determine and monitor sustainable harvesting
levels for medicinal plants from the Bale Mountains National Park. If this project succeeds, a follow-up
project will be developed.
Implementation agencies: A Project Coordinating and Monitoring Unit (PCMU) will be established at
IBCR, which has been identified as the lead agency by the government. The PCMU will facilitate
achievement of project objectives, and be coordinated by a Project Coordinator (PC). The PM will have
adequate control regarding budgetary matters, be responsible for coordinating project activities between
collaborating institutions, and monitor and report project progress. Furthermore, the PM will be
supported by one Accounting and Disbursement Specialist, one Monitoring and Evaluation Specialist,
one Procurement Specialist and adequate administrative staff. The PCMU will be guided by a Project
Implementation Committee (PIC). The Chairperson of PIC would be the General Manager of the IBCR,
and Secretary of PIC would be the Project Manager of PCMU. The other members will be designates
from the collaborating institutes/agencies, including one representative from EPA.
5. Monitoring and evaluation arrangements:
The PCMU would implement a systematic and detailed monitoring and reporting system focusing on
both the output and outcome of the project. The system should allow an effective evaluation of (i) the
effectiveness of the project's delivery mechanisms and procedures; (ii) the impact of the laboratory and
field activities on the basis of the stated objectives, and input, output and impact indicators identified in
the Project Design Summary (Annex 1); and (iii) the replicability of the in-situ and ex-situ activities at a
wider national scale. The progress towards project outcomes would be evaluated during project
supervision and an in-depth review 18 months after the project becomes effective; followed by a Mid-
Term Review at the 30 months stage. The in-depth review after 18 months would determine the extent to
which the project is performing vis-a-vis its development objectives. The Mid-Term Review at the 30
months stage would determine the possibility of developing a full-scale project. An Implementation
Completion Report would be prepared at least six months prior to final disbursement of the Credit. The
Government would prepare its own evaluation of the project, including a plan for a full-scale project.
D: Project Rationale
1. Project alternatives considered and reasons for rejection:
Initially, a full-scale project was planned. In November 1998, an identification mission identified several
issues (e.g. lack of adequate capacity of the lead agency-IBCR, institutional complexity of the project,
lack of data on medicinal plants used for the treatment of major human and livestock diseases, lack of
information on economic benefits derived in the country by the use of medicinal plants, etc.) that needed
to be addressed before a full-scale project could be launched on medicinal plants. Based on the findings
of the mission, it was decided that a LIL would be a better instrument, and was communicated to GOE on
December 21, 1998. A Project Proposal was received by the Bank on February 4, 1999, and a Pre-
Appraisal mission was undertaken in May 1999.



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2. Major related projects financed by the Bank and/or other development agencies:
Agricultural Productivity    *  Agricultural Research Proj ect (Cr. 15 2 1 -   
and economic growth           ET), closed in 1994
*  Fourth Livestock Development Project            S                S
(Cr. 1782-ET), closed in 1994
I Peasant Agricultural Development Project         S                S
(Cr. 1956-ET), closed in June 1997
on2oinme:
*  Agricultural Research and Training              S                S
Project (Cr. 17794-ET)
*  National Seeds Project (Cr. 274 1-ET)           S                S
Forestry, and Biodiversity! Ongoing:
Medicinal Plants          *  Kerala Forestry Project (Cr. 30530-IN)           S                S
Conservation
*  Sri Lanka: Conservation and Sustainable
Use of Medicinal Plants Project
(GEF TF-Grant 17160-CE)
Health Sector             On2oins
*  Ethiopia Health Sector Development              S                 S
Program (Cr. 3140-ET)
Other development
aaencies
WHO                       *  Support to Dept. of Traditional Medicine
now DDR. Closing June, 1999
UNDP/GEF                  *  A Dynamic Farmer-based Approach to
the Conservation of African Plant Genetic
Resources. Closing June, 1999
WWF-Dutch ICDP            *  Bale Mountains Project (On-going)
Germany Supported         *  Integrated Forest Management Project,
Adaba/Dodola (IFMP-A-D) (1990-2000)
Germany Supported         *  Forestry Genetic Resources Project
(1992-2001)
SIDA/SAREC-National       *  Flora of Ethiopia (contributing agencies:
Herbarium                     NPC, ESRC)
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)



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3. Lessons learned and reflected in the project design:
From the Bank supported Agricultural Research Project in Ethiopia. (Cr. 1521-ET). completed in 1994:
(i) in order to optimize the integration and collaboration of the different public institutions and agencies
and private sector, implementing institutions/agencies should be familiar with IDA's procurement and
disbursement procedures; towards this end, training should be provided to implementing agencies; (ii)
project implementing institutions/agencies should be given the financial authority to manage resources
allocated for the components; and (iii) adequate systems/resources for financial recording, reporting and
accounting must be in place for efficient functioning of any institution and agency.
From WHO proiect in Ethiopia implemented by DDR: As a first step, the project was designed to
familiarize and build some capacity of DDR to initiate basic Formulation Studies. The project essentially
worked in isolation with only limited collaborative links with international laboratories. However,
recently collaborative links have been developed with international laboratories. In the design of the
proposed project, assurance will be obtained that the DDR continues collaboration with the advanced
laboratories from within and outside the country.
From UNDP/GEF project - Dynamic Farmer-Based Approach to the Conservation of Ethiopia's Plant
Genetic Resources implemented by IBCR: Farmer participation is essential in germplasm conservation
programs and women are key elements in community-based conservation and management strategies.
Successful collaboration between farmers and researchers is enhanced by good agricultural extension
services. The documentation of germplasm/farmers' varieties can play an important role in biodiversity
conservation and sustainable use.
From WWF-Dutch ICDP proiect in the Bale Mountains. Bale. Ethiopia implemented by EWCO: The
WWF-Dutch ICDP supported project aims to: (i) strengthen institutional capacity to manage the
country's important protected areas, with an emphasis on forests; and (ii) conserve and sustainably
manage the Bale Mountains and the Harenna Forest. This proposed medicinal plant project will
emphasize on conservation and sustainable management of medicinal plants in Bale Mountains. A
collaborative link with the WWF-Dutch ICDP project will also be established.
From the German Government supported Integrated Forest Management Project (IFMP) -Adaba/Dodola:
The IFMP working area covers the Adaba -Dodala Regional Forestry Priority Area, located in the North-
Western part of the Bale Mountains. IFMP concept is mainly based on joint forest management of the
Adaba-Dodola forest, i.e. usufructury rights of communities for utilization of wood products and grazing
rights. The objective of the proposed medicinal plant project will be complementary to the efforts of
IFMP since it might open up a new avenue for income generation for local communities from sustainable
utilization of forest resources, thus increasing the value attached to the forests by communities. The
proposed medicinal plant project will establish collaborative ties with IFMP. One of the important
lessons learned from the IFMP project is that stakeholder involvement is essential for successful
development and implementation of natural resources management project and the proposed medicinal
plants project has reflected this aspect in the project design.
From the German Government supported Forestry Genetic Resources Project (Assistance to the Institute
of Biodiversity Conservation and Research (IBCR): This project aims at building capacity for conserving
forest genetic resources. The focus of the project is on woody plants. Herbal species, which play an
important role for medicinal applications are not planned to be inventorised and collected under this
project. For field activities, this project has given high priority for forest genetic resources conservation
in the Harenna forest on the southern escarpment of the Bale Massive. This project could benefit from
the data that will be gathered through an in-depth biological survey planned under the proposed



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medicinal plant project in the Bale Mountains area. The proposed medicinal plant project will seek
possible cooperation from the Forestry Genetic Resources project being implemented by IBCR.
From the GEF supported Sri Lanka Conservation and Sustainable Use of Medicinal Plants Project
(Project ID: LK-GE-35828): questions have been raised by two local NGOs regarding the lack of
protection of information related to the distribution and uses of medicinal plants, and information
collected from practitioners of indigenous medicine. Because this information is not presently protected
from Property Rights regimes the data will be available to anyone who may seek to privatize and profit
from the indigenous knowledge of the Sri Lanka people. Public consultation was missing and legislative
protection of medicinal plant information has not been secured. The proposed project will support ESTC
develop IPR guidelines for sharing traditional medicinal knowledge with the full participation of THA.
From the Bank supported Kerala Forestry Project. in India: Recognizing the fact that open access to
medicinal plants in the wild is one of the main reasons for the current unsustainable levels of harvesting
and the trend of harvesting too much and growing and protecting too little is contributing to
unsustainability. The Kerala Forestry Project is supporting a pilot program that involves tribal and other
forest-dependent communities in the inventory, conservation, and sustainable development of medicinal
plants. The project supports technological improvements for artificial propagation of endangared plant
species; research and training in better harvesting and processing techniques; community management of
plant propagation, harvesting, and marketing; establishment of community-managed, forest-based
enterprises for income generation; and monitoring and evaluation of the status of these natural resources
with the assistance of local communities. The proposed medicinal plant project in Ethiopia also identifies
some of the similar concems and has included in the project design a detailed biological survey to
evaluate the biodiversity of medicinal plants in Bale Mountains (GSBA) and assess the distribution and
status of threatened or rare species. In addition, through a participatory process involving local
communities, THPs and local/regional institutions, the project will assist in developing a program for
conservation and sustainable use of medicinal plant resources. It will support development,
implementation and, monitoring of guidelines for sustainable levels of harvesting of medicinal plants
and/or their products in the Bale Mountains area. The proposed project will also support farmer-based
cultivation trials for a selected number of threatened and indigenous species in home gardens and
boundary and buffer zones of the national park to supply local needs, and provide alternative income
generation.
From QAG review of GEF-supported biodiversity projects in Africa: (i) biodiversity projects need to
deal effectively with the economic and social pressures on ecosystems; (ii) integration of biodiversity
conservation agenda into the broader national development agenda is essential; (iii) "ownership" of a
biodiversity conservation agenda should be at both the local and national levels; (iv) clearly defined goals
and objectives are essential to focus on project efforts, monitor progress and demonstrate impact; (v)
government commitment and funding are essential for the success of biodiversity conservation projects;
and (vi) the problems of biodiversity loss among "abundant" and cultivated species is a growing concern
and need to be addressed. The proposed project supports socio-economic studies for effective
implementation; has well focussed goals to support medicinal plant conservation; and has both local and
government support through the development of Conservation Strategy and Environmental Policy.
Further a Biodiversity Conservation and Development Strategy and Action Plan is being prepared by
IBCR which explicitly recognizes the importance of medicinal plants.
GEF STAP review carried out on March 4, 1999 acknowledges that this is an innovative project and with
successful implementation would yield many global benefits. It could serve as a desperately needed
model for other areas of the world where populations depend on wild plants for primary health care
needs. The review indicates that: details regarding methodologies for medicinal plant species selection



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and cultivation trials need to be identified during the project development; greater emphasis should be
placed on identification of sustainable harvesting practices; role of community involvement in project
management is crucial; and a committee of outside experts could add value to the implementation and
management of the project once it is underway.
4. Indications of borrower commitment and ownership:
Following the request of the Minister of Agriculture to fast track a project for the conservation and
sustainable use of medicinal plants, a GEF-PDF A grant was provided for a workshop to identify an
Action Plan. A Project Preparation Technical Committee (PPTC), with representatives from ESTC,
MOA, IBCR, ORG, EARO, DDR, EORC, AAU (SOP, NII, Institute of Pathobiology, IDR, FVM) THA,
EOC, EISC, ENDA and EWCO was established to identify an agenda and organize the workshop. Based
on the unanimous recommendations of all workshop participants, the PPTC produced a Project Concept
Paper (PCP) that was formally submitted to Bank in August 1998. The PPTC has been meeting regularly
since its inception, and has been working as the Steering Committee for the development of this project.
During the Bank identification mission in November 1998, the Minister of Health and the Director
General of EARO provided letters of endorsement and strongly supported the development of the project.
In addition, for the GEF related project preparation activities, a PDF B grant proposal was prepared and
submitted by the government to Global Environment Facility Secretariat (GEFSEC) in December 1998.
The GEFSEC has approved the PDF B grant and it is currently being implemented. Under the PDF B
grant the IBCR will initiate socio-economic and biological surveys of medicinal plants in the Bale
Mountains National Park; identify indicators for biodiversity monitoring and evaluation; review database
systems in place for medicinal plants. A letter of endorsement from the Environmental Protection
Authority (EPA) (GEF focal point) for the project was received on February 26, 1999.
5. Value added of Bank and GEF support in this project:
The Bank involvement would allow valuable lessons and initiatives tested by the project to be scaled up
into a larger program in the future. The project implementation experience could be utilized by the GOE
to potentially develop a comprehensive program enhancing in-situ and ex-situ conservation and
management of medicinal plants, as well as integrating selected phytomedicines and traditional health
systems into the MOH primary healthcare system, including a potential for exports. More specifically,
Bank collaboration is expected to make a significant contribution in: (i) gathering comprehensive and
authoritative information (e.g. on economic benefits derived, use of biological resources as part of a
national sustainable development strategy, related socio-economic issues, etc.) on medicinal plants and
their uses; (ii) initiating research on medical efficacy of traditional pharmacopoeia in relation to quality
control, dosage and safety; (iii) recognizing, formalizing, and promoting the important role medicinal
plants and traditional healers play in providing affordable healthcare; and (iv) assessing and improving
the collaborating institutions/agencies capacity to coordinate and implement initiatives on conservation,
management and sustainable utilization of medicinal plants for human and livestock healthcare in the
country. The project would also help in securing future coordination with other relevant donor agencies,
harmonizing various approaches to the development of medicinal plant conservation, management and
sustainable harvesting from natural ecosystems, and development of ex-situ medicinal plants cultivation
research.
The GEF value added comes from its global experience on the design, implementation and financing of
biodiversity projects. The GEF support is justified by the Bale Mountains biodiversity and by the unique
opportunity to focus on conservation, management and sustainable utilization of medicinal plants many
of which are rare and endemic. GEF funding will enable the project to target globally valued and



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threatened plants and habitats. The Bank's suite of GEF and biodiversity and medicinal plants projects
in the region provides opportunities for promotion of exchange of ideas, cross-fertilization with other
GEF projects, and strengthened biodiversity monitoring and evaluation, review and scientific oversight.
E: Summary Project Analysis: (detailed assessments are in the project file, see Annex 8)
1. Economic: (supported by Annex 4)
[ ] Cost-Benefit Analysis: NPV= n/a   million; ERR= n/a
[ ] Cost Effectiveness Analysis
[X] Other (Incremental Cost Analysis)
At present, there are no quantitative data available on the supply of or consumer demand for medicinal
plants, and on economic benefits derived in the country by the use of medicinal plants and their
contribution to healthcare. Socio-economic surveys (including market surveys) to be conducted during
preparation and under this project will help to fill such data gaps. The IDA-LIL components are basically
aimed at innovative studies/research and capacity building (studies/surveys, identification of medicinal
plants and database development, training, safety and efficacy testing, and dosage and formulation of
selected medicinal plants) and do not focus on actual production (other than few pilot propagation and
cultivation trails) and consumption of medicinal plants. The LIL components of this project will form the
basis for initiating large-scale production and use of selected medicinal plants in the future (presumably
during the next project phase) producing clear tangible benefits (e.g. better health, more income etc.).
Therefore, given the capacity building and innovative character of the project at this LIL phase, it does
not readily lend itself to standard cost-benefit and financial analyses. For the GEF component of the
project, incremental cost analysis has been considered as the principal economic evaluation criterion as
presented below:
Incremental Cost Analysis: Under the baseline conditions GOE's expenditure on conservation and
management of medicinal plants forms a small percentage of the budgetary allocation for environment
and scientific research. The project's scope to conserve medicinal plants yields global and domestic
benefits. Global incremental benefits will include the conservation and sustainable use of medicinal
plants not being targeted by current activities. Increased information and awareness on the properties
and uses of medicinal plants is another global incremental benefit from the project. Domestic incremental
benefits from the project will include less expensive healthcare and in the long run locally produced and
patented phytopharmaceuticals. Incremental costs of the GEF component total US$ 1.8 million and cover
the costs of financing the GEF alternative (see Annex 4).
2. Financial: (see Annex 5)      NPV=n/a                        FRR= n/a
(Given the capacity building and innovative character of the project, a standard financial analysis is not
readily possible).
The estimated project cost is US$ 5.086 million (Birr 40.179 million equivalent), of which US$ 0.777
million or 15.3 percent will be funded by the government, US$ 1.802 million or 35.4 percent will be
funded by GEF, and the remaining US$ 2.507 million or 49.3 percent will be funded by IDA. The
breakdown of investment costs and recurrent costs and project financing plan are presented in Annex 5.
Fiscal impact: As the project at this LIL phase does not include commercial production of
phytomedicines derived, the likely fiscal impact will be insignificant. Only in the long-run (presumably
during the next project phase) when (and if) large-scale production of effective phytomedicines occur,
government spending could change in the following manner: (i) increased use of medicinal plant-based



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herbal remedies in the country would help reduce costly imports of pharmaceuticals thus freeing up
resources for other applications in the sector; (ii) if substantial health benefits (due to increased supply
and use of affordable and locally available herbal remedies) result, then presumably government would
have to spend less on the national health system; and (iii) if production of medicinal plants increases, and
can be taxed, then this would have an effect on government revenues.
3. Technical:
The technical capacity and training needs of the collaborating institutions will be assessed during
preparation through PDF-B grant and during the first year of the project. The project will scale up the
technical capacity of such institutions to facilitate appropriate analytical requirements, technology
generation and transfer, and training. The main technical contributions of this project would be: (i)
establishment of a medicinal plant inventory and national database; (ii) identification of sustainable
cultivation practices; (iii) establishment of management guidelines and sustainable harvesting levels for
medicinal plants in protected areas; (iv) identification of standard processes for evaluating extraction,
standardization, safety and efficacy, and dosage and formulations for 6 selected medicinal plants.
4. Institutional:
Executing Agencies: IBCR with overall responsibility for the conservation and management of the
nation's genetic resources has been designated as the lead agency. IBCR's main responsibilities include:
(a) initiate policy and legislative proposals on conservation, research and utilization of biodiversity and,
upon approval, enforce as well as ensure their implementation; (b) explore and survey the diversity and
distribution of the country's plant, animal and microbial genetic resources; collect samples for ex-situ
conservation and facilitate utilization of these genetic resources for research and development; (c)
conserve the country's biological resources using ex-situ and in-situ conservation methods; (d) devise a
strategy to harmonize biodiversity conservation and research programs with federal and regional
agricultural, industrial and health development strategies and plans; and (e) work in cooperation with the
concerned federal and regional bodies with respect to protection, research, conservation and utilization of
biodiversity resources (refer Proclamation No. 120/1998 dated June 25, 1998 for details).
Following the Proclamation, the mandate and the organizational structure of IBCR was revised in April
1999. The revised structure provides for 56 scientific staff members including a General Manager, a
Deputy General Manager, a Director for Plant Genetic Resources Center, five Heads of Departments
(Ecosystem Conservation and Research, Biotechnology and Biosafety, Animal Genetic Resources,
Microbial Genetic Resources, and Ethnobiology) and two Heads of Services. The earlier structure of
IBCR had only 15 scientific staff. In addition, a new Department for Policy and Legal Matters has been
created. The responsibility of this department is to review and streamline the various international
conventions on biodiversity (such as the Convention of Biological Diversity (CBD) to which Ethiopia is
a signatory) in the context of Ethiopia's national interest; and to develop policy for management and
sustainable harvesting of medicinal plants in Ethiopia and develop national legislation on appropriate
biodiversity conservation and sustainable utilization issues. The planned increase in staff will build the
institutional capacity of IBCR for project implementation. The planned increase in staff of IBCR is
independent of the project. The planned increase in staff will build the institutional capacity of lBCR for
project implementation.
IBCR will be responsible for the overall project management, and project monitoring and evaluation. To
facilitate overall project management and coordination and ensure timely implementation of project
activities, IBCR will create a Project Coordinating and Monitoring Unit (PCMU). The PCMU will be
guided by a Project Implementation Committee (PIC). The PCMU will coordinate day-to-day project



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planning, procurement, disbursement, monitoring and reporting of all project activities. The basis of the
interactions between 1BCR and the collaborating agencies will be a Memorandum of Understanding
(MOU). IBCR would sign an MOU with each collaborating agency not directly under its control.
Submission of these MOUs would be a condition of Credit Effectiveness.
IBCR will have to work closely and support the activities of the collaborating institutes, THA and other
relevant agencies. ESTC and MOH need to play a more active role in integrating into their programs
research related to sustainable production and utilization of medicinal plants. The Bale Mountains
National Park authorities fall administratively under the ORG, but technical advice is provided by
Ethiopian Wildlife Conservation Organization (EWCO). One reason for doing the institutional
assessment of IBCR is to see if/how IBCR can cope with its extended mandate and responsibility for all
biodiversity matters in Ethiopia.
Project Management: IBCR currently has limited capacity to manage the project. There is a need to
support a PCMU in IBCR. PCMU will need a full time Project Coordinator (PC) to coordinate project
activities. The PC will be assisted by one Accounting and Disbursement Specialist, one Monitoring and
Evaluation Specialist, one Procurement Specialist and adequate administrative staff. The PC should have
sufficient authority to take timely decisions. A Project Implementation Plan (PIP) was prepared by 13CR
in consultation with collaborating agencies and was finalized and submitted during Technical
Discussions. Establishment of a fully staffed PCMU and an acceptable PIP will be a condition for Credit
Effectiveness. During pre-appraisal, an agreement was reached on the Project Implementation Manual
(PIM) including design and implementation of accounting system which would enable the project to
prepare and operate the simplified model for the Project Management Report (PMR)Ibased disbursement.
5. Social:
The project is likely to have a positive social impact because it aims to help evaluate the therapeutic
value of six traditionally used medicinal plants with the ultimate objective of improved health status of
human and livestock populations. It will work closely with THPs, and women who use medicinal plants
on a daily basis for home healthcare needs. As the majority of rural THPs and women are also farmers
they will play an important role in identifying cultivation practices, as well as sustainable harvesting
practices for wild medicinal plants. It seeks to raise the status of traditional medicine and promote its
integration with modem medicine. As medicinal plants and traditional health systems are a major source
of healthcare for the majority of the rural and urban poor, any effort to improve and standardize the
safety and efficacy of commonly used herbal remedies will benefit the population. Coverage of primary
healthcare services will increase with the production of affordable phytomedicines.
Socio-economic factors that affect the Bale Mountains component of the project will be monitored
continuously. To the extent possible the project will take these factors into account, thereby minimizing
individual and community concerns regarding knowledge rights, and maximizing its effects on improved
healthcare and the social fabric. Gender, as well as different cultural groups within Ethiopia, view the
ownership and practices of traditional healthcare knowledge in different ways. Care will be taken to
ensure that individuals, especially women, and Traditional Health Practitioners (THPs) are involved as
co-partners in the development and knowledge transfer process.
6. Environmental assessment: Environmental Category   [    I A      [     ] B        [X] C
The project will focus on documenting the distribution, availability, safety and efficacy of 6 medicinal
plants used for the treatment of 3 major human diseases and 3 livestock diseases. Every effort will be
made to focus on commonly used and available medicinal plants so as to take the pressure off endemic



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and threatened/rare species found in protected areas. Policy and guidelines will be developed for the
sustainable management and harvesting of threatened/rare medicinal plants in protected areas. The
negative environmental impact is therefore considered to be insignificant.
The project activities focus on documentation and strengthening conservation and management programs
of medicinal plants in the Bale Mountains National Park. Other activities, such as identification of
demonstrable cultivation practices are small-scale and narrowly focused, and are not likely to cause
major soil disturbance or degradation. Activities will not involve the use of agro-chemicals or pesticides.
The implementation of the proposed project is not expected to have any adverse environmental impact.
All pilot community-based trials in the Bale Mountains area will be carried out in collaboration with
farmers. If rare plants are being utilized (as discovered from surveys) then under the project there are
resources for their protection and management, as well as to attempt cultivation in available lands. There
is also under the project a real opportunity through the planned public awareness and education programs
to get people to use more commonly available plant remedies.
7. Participatory approach:
A National Workshop on Biodiversity Conservation and Sustainable Use of Medicinal Plants was held in
Addis Ababa in April 1998. The stakeholders included the Traditional Healers Association, Traditional
Health Practitioners, government research scientists, policy makers, technical specialists, private sector,
Addis Ababa University, and NGOs including EOC and EISC. Representatives of these stakeholders
make up the PPTC. The unanimously approved recommendations of the workshop identified a consensus
and an Action Plan from which the objectives of the proposed project and proposed interventions have
been identified.
The project design requires a participatory approach in project implementation. It is anticipated that local
level, site-specific planning will provide the basis for identifying conservation, management and
sustainable harvesting guidelines for all medicinal plants (threatened and ubiquitous) in the Bale
Mountains National Park. Local communities, park officials, researchers, local government agencies,
NGOs, and line agencies will collaborate in the implementation of the project at the local level.
Participation of various stakeholders at different stages of project preparation, implementation and
operation can be summarized as follows:



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Ident/Prep    Implement    O eration
a. Primary beneficiaries and other affected groups:
ESTC, IBCR, DDR/EHNRI, AAU (NH, FVM, SOP,  IS/CON/COL    IS/CON/COL   IS/CON/COL
IDR, DOB, FOM), ORG
Farm Conmnunities and THPs                  IS/CON/COL    IS/CON/COL   IS/CON/COL
b. Other key stakeholders:
EARO, MEDAC, EORC, EWCO                     COL            COL            COL
Donors                                      is             is            is
IS - Information Sharing; CON - Consultation; COL - Collaboration.
Both the socio-economic and the biological surveys to be conducted in Bale Mountains area under the
GEF component will include apart from the Subject Matter Specialists, local THPs and farmers as survey
team members. Before conducting these field surveys, two introductory local workshops will be
organized in Bale Mountains area involving local community members (farmers, women), THPs, local
NGOs, National Park Administration, and local government officials to discuss the purpose and expected
benefits of the surveys and to secure local participation and cooperation. Development of sustainable
harvesting guidelines will be based on participatory approach and will seek active participation of and
inputs from local communities and THPs This activity will include 2 local workshops (I in PY3 and 1 in
PY4) and 1 regional workshop (in PY4) involving local farmers (both men and women), THPs, women
involved in home healthcare, and other local stakeholders. Local community outreach and farmers
training are also included in the project activities to secure their active collaboration. A series of training
workshops will be organized during PY 3 and PY4.
F: Sustainability and Risks
1. Sustainability:
The project has the potential to be sustainable if the following are given sufficient attention:
*  The GOE provides sufficient resources to support the project's priorities such as upgrading of the
DDR's technical capacity, quality control mechanisms are attained, and there is an improvement in
availability and affordability of herbal drugs for the treatment of the corresponding human and
livestock diseases. Financial sustainability could be improved through successful cost recovery
measures, increased community participation, and improved efficiency in the use of available natural
resources.
*  Participatory approaches are designed to reinforce a sense of ownership at all levels and enhance the
efficiency of resource management and contribute to sustainability. In terms of outcomes,
sustainability will depend on replicability. The full collaboration of THPs and communities in this
pilot phase is required to create the right conditions for later replication in other regions.
*  Dissemination of information regarding safe dosages and use of low-cost phytomedicines in
appropriate local languages and media.
*  Financed research will verify within the project period the direct applicability of technical options
for implementation at the laboratory, farm, and protected area levels.
*  Well-trained and well-motivated DDR, SOP and FVM staff are crucial to the development of safety
and efficacy standards and dosage levels of traditional herbal medicines and their integration into



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modem medicine.
* Institutional capacity building under the project will develop in-country expertise to manage and
implement project activities and plan for future expansion.
* A well functioning monitoring and evaluation system to help keep the project on track.
*  The active involvement of rural communities in resource conservation and management programs
will play a major role in project success, particularly in the protection and sustainable use of
Ethiopia's medicinal plant biodiversity.
2. Critical Risks: (reflecting assumptions in the fourth column of Annex 1)
From Outputs to Objective
Lack of institutional capacity and collaboration for  Modest   Funds will be provided to strengthen capacity of
medicinal plants conservation, mnanagement and                 collaborating institutions.
utilization.
Delays in the development of project mnanagement   Modest      Establishment of a Project Coordinating and
capacity of IBCR.                                              Monitoring Unit at IBCR with adequate staff and
authority as a condition of Credit Effectiveness.
Inadequate research capacity for deternining safety,  Modest   Funds will be provided to upgrade the DDR, SOP
efficacy, dosage testing and formulation of herbal             and FVM's research facilities and to imnprove
medicines in huran and animal healthcare.                      technical skills of their staff.
Traditional medicine practitioners will not share  Substantial   Support will be provided to ESTC for developing
knowledge.                                                     policy and guidelines for IPRs in collaboration
with THA for sharing the traditional medicinal
knowledge.
Lack of motivation and collaboration of local     Substantial   Local community outreach and farmers training are
conimunities to adopt sustainable medicinal plants             included in the project activities to secure their
management and harvesting practices in the Bale                active collaboration.
Mountains area.
MOH will not acknowledge/accept locally produced   Modest      Establishment of safety, efficacy, and dosage levels
phytomedicine healthcare.                                      of phytomedicine and affordability.
Overall Risk Rating                            Modest         I
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), and N (Negligible or Low Risk).
3. Possible Controversial Aspects
Rural populations are very much aware of the importance of medicinal plants, and their use in healthcare
is generally guarded information by THPs. Socio-cultural differences can be expected. The knowledge
that THPs, religious organizations, women and farmers can bring to identifying, implementing and
managing medicinal-plant conservation and cultivation programs is seldom sought or utilized. The first
step in developing a successful strategy to conserve, enhance and sustainably utilize medicinal-plant
resources is to include those knowledgeable individuals as equal partners and collaborators. If such
recognition is not given the project will have difficulty achieving its goals and objectives. The project
includes provision to support ESTC and THA for developing IPRs policy and guidelines and incentive
mechanism for THPs, women, farmers and communities for sharing their knowledge and experience
about medicinal plants.



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The project is sensitive to the risk of foreign access to medicinal plant genetic material and loss of
ownership. Many individuals treat with skepticism the outsiders' interest in their plants and therapies,
believing they will receive no credit or royalties for any future drug discoveries derived from their
knowledge. The policy and guidelines that would be developed by ESTC will address these concerns.
The project is sensitive to the concerns likely to be raised regarding regulatory measures relating to the
safety, efficacy, quality and dosage levels of marketed traditional herbal medicines. To manage this
concern the project will assist in the preparation of pharmacopoeial monographs for the initial herbal
medicines.
G: Main Loan Conditions
1. Effectiveness Conditions:
(i) Borrower will provide a letter confirming that two Project Accounts one for IDA and one for GEF are
opened and the initial deposits of US$60,000 and US$30,000 are made by the borrower into the said IDA
and GEF Accounts respectively;
(ii) Financial auditors, acceptable to the IDA, have been contracted by IBCR;
(iii) PCMU is staffed with the appropriate personnel satisfactory to the Bank (Project Coordinator,
Accounting and Disbursement Specialist, Procurement Specialist, Monitoring and Evaluation Specialist
and adequate administrative/support staff);
(iv) PCMU has established an accounting and financial management system for the project satisfactory to
the IDA;
(v) The Borrower has adopted the Project Implementation Plan (PIP) and the Project Implementation
Manual (PIM) in form and substance satisfactory to the IDA;
(vi) Signed Memorandum of Understandings between IBCR and the collaborating institutions have been
submitted;
(vii) The Borrower has appointed a conmmittee of experts with qualifications and experience satisfactory
to the IDA to review the implementation and management of the GEF component; and
(viii) The Borrower shall prepare and furnish to the IDA the annual work program for the first Fiscal
Year of project implementation.
2. Other: (classify according to covenant types used in the Legal Agreements)
IBCR will submit annual audit reports within six months after closing of each FY.
H: Readiness for Implementation
[     ] 1. a) The engineering design documents for the first year's activities are complete and ready for
the start of project implementation.
[X] 1. b) Not applicable.



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[X] 2. The procurement documents for the first year's activities are complete and ready for the start of
project implementation.
[XI 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality.
[     ] 4. The following items are lacking and are discussed under loan conditions (Section G):
1: Compliance with Bank Policies
[Xj 1. This project complies with all applicable Bank policies.
] 2. The following exceptions to Bank policies are recommended for approval. The project
complies with all other applicable Bank policies.
[signature]
Team Leader: Berhane Manna
[signature]
Sector Manager: Joseph Baah-Dwomoh
[signature]
Country Director: Oey Astra Meesook            JG



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Annex 1: Project Design Summary
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
A. Sector-related CAS Goal:              Sector Indicators:                 Sector Country Reports:   (from Goal to Bank
Mission)
I. To improve human and livestock        A. I Improved availability and    A. I Government
hcalthcare                               utilization of medicinal plants for  publications              Improved management of
human and livestock healthcare                                medicinal plants and
B. GEF Operational Program Goal:                                                                        enhanced sustainable social
B. I In-situ conservation and     B. I IBCR Biodiversity      and economic development
- To secure globally significant biological   management in Bale Mountains  Conservation Report        through improvement in
resources                                National Park                                                  health care
B.2 GEF-Project Progress
Report
Project Development Objective:           Outcome / Impact Indicators:       Project Reports:            (from Objective to Goal)
1. To initiate support for conservation,  1.1 3 medicinal plant species for 3    1 . I Published Reports  GOE commitment to
management and sustainable use of        major human diseases                                           medicinal plants
medicinal plants for human and livestock                                                                conservation, management
healthcare                               1.2 3 medicinal plant species for 3    1.2 Published Reports   and utilization remains
major livestock diseases                                      strong
1.3 Zoning of areas for harvesting  1.3 Baseline Survey &     Continued GOE
medicinal plants in Bale Mountains   Project Progress Report  commitment for integration
of phytomedicines into the
MOH national primary
health care system, would
be a condition for a follow-
.___________________________________________________________________ I up project
Output from each component:              Output Indicators:                Project Reports:             (From Output to PDO)
1. Institutional Strenethenine, Human
Resource Development, & Project
Monitorine & Evaluation
I I PCMU fully operational, and project  1.1. I PCMU fully operational by  1.1 Project Supervision     Commitment by IBCR to
monitoring and evaluation system         end PY I                           Reports                     fully operationalize the
developed and implemented                                                                               PCMU and implement the
1.1.2 M&E System operational by                               project
end PY I
1 2 IBCR, DDR. AAU (SOP, FVM, NH and   1.2.1 Institutional assessment       1.2.1 Project Supervision
DOB), ESTC and THA capacity for          conducted & training needs        Reports
implementing project activities strengthened  identified by end PY I
and institutional collaboration established
1.2.2 Training Completed by end   1.2.2 Project Supervision
PY 2                              Reports
1.2.3 Professional Assessment of  1.2.3 Implementation
Status after Training by end PY 4  Completion Report (ICR)
[HS, S, U, HU- Criteria to be
developed]
1.3 THA organized workshop and           1.3 Workshop in PYI and field gene   1.3 Project Supervision
established medicinal plant field gene bank    bank in PY2                  Reports
1.4 ESTC developed IPR policy and        1.4 IPR policy and guidelines     1.4 Project Supervision



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guidelines for sharing traditional knowledge  developed by end PY2      Reports
2 Studies. Research and Data Base
Development
2.1. Assessments of current levels of usage,  2.1 Assessments completed by end    2.1.1 IDR published Reports
national dependence and economic benefits  PY I
derived in the country by the use of                                    2.1.2 Project Supervision
medicinal plants conducted and reports                                  Reports and National
prepared                                                                publications
2.2 Ethnomedical survey to explore     2.2 Survey completed by end PY3    2.2 Published Survey Report
utilization of medicinal plants and
traditional healthcare practices for
prevention of HIV and mitigation of adverse
impact of AIDS
2.3 National medicinal plant database  2.3.1 Number of plants identified  2.3.1 Project Implementation  The 3 medicinal plants will
established identifying and documenting all  for the three human diseases by PY    Progress & Supervision  be effective and affordable
plants commonly used for the control of the   I, and                    Reports                    for human healthcare
3 major human diseases and 3 livestock  database developed by PY 3
diseases, including the medicinal plants
identified (from biological survey) in the  2.3.2 Number of plants identified  2.3.2 Project Implementation  The 3 medicinal plants will
Bale Mountains National Park           for the three livestock diseases by  Progress & Supervision  be effective and affordable
PY 1, and database developed by  Reports                    for livestock healthcare
PY 3
2.3.3 Medicinal plants identified in   2.3.3 Project Implementation
Bale Mountains entered into the  Progress
national database by PY3         & Supervision Reports
2.4. Safety, efficacy, dosage and      2.4 Formulation Studies completed    2.4 DDR, SOP, FVM,
formulation determined for commonly used   by end PY 4                  FOM, NPC Published
herbal remedies for 3 Human and 3                                       Technical Reports
Livestock diseases
2.5.Propagation and cultivation methods for  2.5 Methodologies prepared by end   2.5 Extension Bulletins/
selected medicinal plants developed    PY 4                             Annual Technical Reports
3. In situ Conservation and Sustainable
Use in Bale Mountains area
3.1 On-site management including detailed   3.1 Surveys completed by end PY 2.  3.1 Baseline Survey and
socio-economic and biological surveys and   Changes in community cooperation   IBCR Progress Report
zoning conducted in the Bale Mountains  with Park staff
area
3.2 Guidelines for sustainable management   3.2 Guidelines developed by PY3  3.2 Guideline Document  Communities will not
and harvesting of threatened/rare medicinal  and implemented by end PY 4  published by IBCR        encroach on protected areas
plants from Bale Mountains and                                                                      and will collaborate in
surrounding forests developed                                                                       sustainable management of
medicine plants
3.3 Impact of harvesting guidelines and  3.3 Monitoring & evaluation    3.3 PCMU Monitoring and
management interventions monitored and    initiated by PY 5. Impact of  Evaluation Progress Reports   Can provide early waming
evaluated                              harvesting reduced                                           of impacts on species
before changes in numbers
3.4. Fx-situ pilot cultivation trials of  3.4 Number of pilot cultivation trials  3.4 Project Supervision  become obvious
threatened and rare medicinal plants   initiated by end PY 4, including  Reports and PCMU Reports
initiated                              number of people engaged
3.5. Training for park staff, rangers and  3.5 Training programs implemented   3.5 Training Manuals
local communities conducted            by PY 3. Change in number of
trained Park staff



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3.6. Public education and mass awareness    3.6 Pilot programs developed by PY   3.6 Education and Mass  Public interest and support
campaigns implemented                   2. Number of awareness programs    Awareness Documents       of communities and
undertaken                                                  commitment to sustainable
resource use/conservation
activities
Project Components/Sub-components:      Inputs: (budget for each         Project Reports:           (from components to
component)                                                   Outputs)
1. Institutional Strengthening, Human  US $0.134 million                 Project Reports and        GOE commitment to
Resource Development, and Project       (IDA: $0.821 mil.; GOE: $0.313   Disbursement Reports        project remains strong
Monitoring & Evaluation                 mil.)
Timely execution of key
2. Studies, Research and Data Base      US $1.949 million                Project Reports and         studies, and completion of
Development                             (IDA: $1.686 mil.; GOE: $0.263   Disbursement Reports        Formulation Studies
mil.)
Timely procurement of
3. In situ Conservation and Sustainable Use   US $2.003 million          Project Reports and         goods and services
in Bale Mountains area                  (GEF: $1.802 mil.; GOE: $0.201   Disbursement Reports
mil.)



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Annex 2: Project Description
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
By Component:
Project Component 1: Institutional Strengthening, Human Resource Development, and Project
Monitoring & Evaluation - US$1.134 million
1.i. Strengthening Institutional Capacity of the Institute of Biodiversity Conservation and Research (1BCR) -
Lead Implementing Agency - US$94,700
l.ii. Develop Human Resource Capacity of Collaborating Institutions for Implementing Project Activities
(DDR, SOP, FVM, NH, DOB, ESTC and THA) - US$356,300
Liii. Establishment of Medicinal Plant Field Gene Bank and Development of Intellectual Property Rights (IPR)
Policy and Guidelines -US$81,400
(a) Support to IBCR, EORC and Traditional Healersand other collaborating institutions for Establishing
Medicinal Plant Field Gene Bank- US$23,700
(Cost for organizing National THA Workshop to provide inputs to ESTC for the development of IPR
guidelines is included under item l.ii above)
(b) Support to Ethiopian Science and Technology Conmmission (ESTC) for Developing IPR Policy and
Guidelines (with Participation of THA) for Sharing the Traditional Medicinal Knowledge - US$57,700
l.iv. Establishment and Functioning of Project Coordinating and Monitoring Unit (PCMU) - US$601,200
Project Component 2: Studies, Research and Data Base Development - US$1.949 million
2.i. Develop methods to Collect, Analyze and Interpret Quantitative Data on Socio-Economic Benefits Derived
from Medicinal Plants in Human & Livestock Health Care on National Level (IDR, AAU) - US$384,700
2.ii. Ethnomedical survey to explore utilization of medicinal plants and traditional health practices for preventio)
of HlV and mitigation of adverse impact of AIDS - US$55,500 (DDR, AAU Facultty of Medicine in
collaboration with THA)
2.iii. Research on Propagation and Cultivation Methods of Selected Indigenous Medicinal Plants for Human and
Livestock Diseases - US$256,400 (AAU Department of Biology in collaboration with EARO)
2.iv. Formulation Studies: Phytomedicine Extraction, Standardization, Safety, and Efficacy Testing, Dosage
Determination and Formulation - US$1,083,200
(a) Faculty of Veterinary Medicine (FVM), AAU - US$271,000 (FVM in collaboration with NPC, AAU
(b) Department of Drug Research (DDR), Ethiopian Health and Nutrition Research Institute (EHNRI) -
US$305,100 (DDR in collaboration with AAU Faculty of Medicine)
(c) School of Pharmacy (SOP), AAU - US$507,100 (SOP in collaboration with NPC, AAU)



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2.v. Development of National Medicinal Plant Database - US$169,400
Project Component 3: In-situ Conservation and Sustainable Use of Medicinal Plants in Bale
Mountains Area - US$2.003 million (IBCR lead implementing agency)
3.i. On-Site Management - US$674,000
(a) In-depth Socio Economic Survey and Assessment to: (i) identify villagers/users having greatest
impact on wild populations of medicinal plants through harvesting and other activities; and (ii) identify
villagers/farmers for on-farm pilot propagation and cultivation trials of medicinal plants to remove
pressure on wild populations - US$274,200
(b) In-depth Biological Survey and Assessment of In-situ and Ex-situ Conservation, Zoning of Key
Areas Within the Park and Strengthening Park Management in Collaboration with WWF-Dutch Project -
US$399,800
3.ii. Development and Implementation of Appropriate Management Options and Guidelines for Sustainable
Harvesting of Medicinal Plants and Their Products - US$376,300
3.iii. Monitoring to Asses: (a) preliminary impact of harvesting of medicinal plants in permit areas; (b) impact of
management interventions & harvesting guidelines in the park; (c) project interventions in protecting
threatened/rare medicinal species; (d) market and threatened/rare medicinal plant species; (e) market and THP
surveys to determine levels of use: (i) locally; and (ii) nationally of plants harvested from Bale Mountains
National Park - US$215,300
3.iv. Piloting of Farmer Based Cultivation Trials for a Selected Number of Threatened and Indigenous Medicinal
Plant Species in Home Gardens, and Boundary and Buffer Zones of the National Park - US$319,000
3.v. Training of: (a) relevant personnel in the Conservation and Management of Medicinal Plants in the Park
and Adjacent Forests; and (b) Farmers for Pilot Propagation and Cultivation and Management - US$206,700
3.vi Public Education and Mass Awareness Campaigns of the Relevance of Conservation and Management
Programs of Medicinal Plants and Importance in Ethiopia's Bio-diversity and Long Term Health Care Needs -
US$212,100



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Annex 3: Estimated Project Costs
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
1. Institutional Strengthening, Human Resource          564.2          421.4          985.5
Development, and Project Monitoring and
Evaluation
2. Studies, Research and Data Base Development           712.4        1,010.1        1,722.5
3. In-situ Conservation and Sustainable Use in Bale    1,079.0          675.9        1,755.0
Mountains Area
Total Baseline Costs                                   2,355.6        2,107.4        4,463.0
Physical Contingencies                                184.1          187.2          371.3
Price Contingencies                                   150.8          101.0          251.9
Total Project Costs               2,690.5        2,395.6        5,086.1
1. Goods:
Vehicle                                          265.5          217.3          482.8
Equipment                                        197.6          750.5          948.0
2. Consultant Services:
National Consultants                             340.2           37.8          378.0
International Consultants                          8.5           76.4           84.8
3. Training and Workshops:
Local Training                                   193.1           21.5          214.5
Overseas Training                                 34.5          310.2          344.6
Workshops                                        108.3           27.1          135.3
4. Studies and Research:
Surveys/Studies                                  416.9          278.0          694.9
Research                                         183.8          183.8          367.6
Publication & Documentation                       84.5           36.2          120.7
5. Incremental Operating Costs\a*                       522.8          168.8          691.6
Total Baseline Costs                                   2,355.6        2,107.4       4,463.0
Physical Contingencies                           184.1          187.2          371.3
Price contingencies                              150.8          101.0          251.9
Total Project Costs               2,690.5        2,395.6       5,086.1
Includes costs for: vehicles & equipment operation and maintenance, incremental salaries, perdiem & allowances, office &
laboratory supplies, utilities, telephone and conmmunication.



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Annex 4: Incremental Costs and Global Environmental Benefits
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
Overview:
1.    In Ethiopia the per capita share of public expenditure on health is approximately US $0.16, one of the
lowest in the world. This figure only takes into account the formal market for conventional healthcare and does
not consider the informal market that accounts for the traditional healthcare administered. If the majority of the
rural population were to lose their culturally viable and affordable source of healthcare, it would be impossible
for the MOH to provide a comparable service at affordable prices. The situation is no different for livestock
healthcare. The majority of rural stockholders are far from veterinary stations, and those that have access may not
be able to pay for services. Exploitation of traditional animal health services is regarded by veterinarians as a
possible alternative or complementary option. Ethiopia has committed to protect its natural resources and to
preserve its biodiversity under its 1997 Conservation Strategy. At the same time, the MOH is committed to the
integration of traditional and modern health systems and strengthening research priorities that ensure the safety
and efficacy of traditional herbal remedies. The IBCR is embarked on a program of ensuring that the use of
medicinal plant genetic resources is scientifically sound and ecological sustainable. This project aims to provide
safe and efficacious healthcare relying on traditional medicin es and medicinal plants while protecting the
resource base.
The Country Context and Broad Development Goal:
2.    One of Ethiopia's major development objectives is sustained rapid growth with poverty reduction. The
Government has a strong rural support base and a keen sense of the importance of improving the welfare of rural
residents. Nevertheless, the bulk of the rural poor that are most vulnerable in terms of health live in remote areas
isolated by the difficulty of access to roads. The Government is aware that more than 80% of the rural population
depend on medicinal plants for their basic healthcare needs and that many of these plants are being harvested on
an unsustainable basis from natural and protected areas. Medicinal plants will continue to have an important role
to play in the health and productivity of the rural population. The conservation, management and sustainable use
of medicinal plants is crucial to achieving natural resource, food security and health development goals.
Baseline
3     At present several government agencies implement activities that can be regarded as contributing to the
conservation of medicinal plants and to their sustainable use. They include: the Environmental Protection
Agency, the Institute of Biodiversity Conservation and Research (IBCR). The National Herbarium, Department
of Biology and the Faculty of Veterinary Medicine of Addis Ababa University. In the absence of GEF facilities,
GOE would be expected to allocate approximately US $1.0 million to cover capital expenditures for medicinal
plant conservation and management through the govemment agencies. However, the commitment of resources
would continue to be low, in view of the more pressing environmental priorities of drought, deforestation, and
agricultural expansion throughout the country.
4.     The National Herbarium  (NH) is the primary source of information regarding the identification,
distribution and possible status of Ethiopia's medicinal flora. The national medicinal plant database will be
centered at the NH. NH research funds are estimated to be US $60,000. The Faculty of Veterinary Medicine
(FVM) has recently initiated a program to cultivate three medicinal plants used by pastoralists for the control of
endoparasites. They have also started a program to document ethnoveterinary medicinal plants used in the
Oromya Region. FVM's research funds are approximately US $21,700.



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5.    IDA's commitment to the conservation, management and sustainable use of medicinal plants is through
institutional strengthening, human resource development and project monitoring and evaluation. In addition,
support will be provided for the identification of 6 medicinal plants, for the treatment 3 human diseases and 3
livestock diseases; testing of safety and efficacy, formulation studies and registration; the development of
cultivation methods; and establishment of a national medicinal plant database. The cost of these initiatives is
estimated to be US $4.7 million. The IDA components are not specifically focused on Bale Mountains National
Park needs, however both the IDA and GEF initiatives complement, and will benefit from each others activities.
6.    The WWF-Dutch ICDP project in the Bale Mountains/Harenna Forest has two major objectives: (i) to
strengthen institutional capacity to manage the country's important protected areas, with an emphasis on forests;
and (ii) to conserve and sustainably manage the Bale Mountains National Park and the adjacent Harenna Forest.
The park is under significant threat from settlement, forest clearance, livestock and coffee cultivation. The
project will work with the national park authorities to strengthen their capacity to conserve key areas within the
park management zone. The project will also work in the buffer zones to achieve consensus-based agreements
with local people to conserve remaining intact ecosystem areas within the forests. The Dutch commitment to
the Bale Mountains project is US $2.0 million over 5 years. This work will complement the proposed GEF
project. The Park Administrative commitment is estimated to be US $200,000 over 5 years for a total US $2.2
million
7.    The Baseline Scenario is therefore estimated to cost US $7.98 million. It is based on a realistic
assessment of available resources and is consistent with the existing institutional capacity and national
development goals.
Global Environmental Objective
8.    The global environmental goal of the project is to conserve the medicinal flora of the Bale Mountains
through achieving the following objectives over and above the Baseline Scenario: (i) support on-site
management, including zoning for appropriate use, protection and traditional harvesting; (ii) develop
management guidelines for sustainable harvesting of medicinal plants; (iii) monitoring and evaluation of
harvesting and management interventions; (iv) on-farm pilot cultivation trials to grow medicinal plants to take the
pressure off wild populations; (v) training of park staff and farmers; and (vi) education and mass awareness
campaigns for medicinal plant conservation and sustainable use.
GEF Alternative
9.    As part of the GEF in-situ conservation and sustainable use component the GEF alternative will build on
the Baseline Scenario by strengthening on-site management, including support for the socio-economic and
biological assessment of medicinal plants harvested, status (threatened, rare), and their habitats in the Bale
Mountains National Park. This information will be used to derive appropriate zoning and management regimes
within the park and will complement park protection activities initiated by WWF-Dutch ICDP. The cost of
implementing GEF alternative over the five year period is estimated to US $0.5 million.
10.   In an effort to regulate the harvesting of medicinal plants and/or parts thereof, the GEF altemative would
actively link the development of sustainable management guidelines for harvesting with community demand for
such products. Communities would identify management and enforcement criteria and be expected to play a
major role in protecting in-situ medicinal plant resources. Estimated cost is US $0.4 million.
11.   Monitoring and evaluating the status of key threatened/rare medicinal plants as indicators of ecosystem
health and human demand in the Bale Mountains National Park is estimated at US $0.2 million.



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12.    The establishment of pilot farmer-based cultivation trials outside the Bale Mountain National Park would
utilize farmer and medicinal plant user knowledge to ensure a sustainable supply of medicinal plants and/or parts.
The GEF alternative would also intensify current efforts to capture traditional knowledge, and expand knowledge
of the botany of medicinal plants and their use in Ethiopia. Estimated cost is US $0.3 million.
13     The project will support the development of training programs that focus on park conservation and
management and identification and application of cultivation methods by farmers. Estimated cost is US $0.2
million.
14.    The project will finance education and public awareness to generate public support for the management
and sustainable use of the importance of medicinal plants in human and livestock healthcare. And, to encourage
the acceptance of management guidelines which would aid the sustainability of the conservation efforts.
Estimated cost is US $0.2 million.
Incremental Costs
15.    Total financing of the GEF alternative is US $9.78 million over the period 1999-2003. The GEF is
requested to fund US $1.8 million which is the incremental cost or difference between the Baseline Scenario (US
$7.98) and the GEF alternative (US $9.78). The details of the Baseline and the GEF alternative are presented in
the attached Incremental Cost Matrix.



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Incremental Cost Matrix:
Component             Cost         US$   |           Domestic Benefit                     Global Benefit
l  Category   Million
1. Institutional       Baseline
Strengthening, Human
Resource
Development, and
Project Monitoring and
Evaluation:
1. a. Institutional                  1.75      Increased institufional capacity of the  Increased public sector capacity
strengthening                                   Institute of Biodiversity Conservation and  to manage biodiversity.
Research (IBCR)
(Lead national institute)
Increased technical and research capacity of
relevant institutes - Department of Drug
Research (DDR), School of Pharmacy
(SOP) and Faculty of Veterinary Medicine
(FVM) for phytomedicine related scientific
research.                                                           l
With GEF     1.75       Same as above.                           Same as above.
Altemative                                                                                   l
Incremental   0.0
1.b. Human Resource    Baseline      2.46      Increased efficiency and long-term
Development                                     effectiveness of the implementation of
biodiversity conservabon and management,
and medicinal plants utilization initiatives.
With GEF     2.46       Same as above.
Altemative
Incremental   0.0      .                                                                     l
1 .c. Project          Baseline      0.68      Increased capacity to coordinate, implement,
Coordination, Monitoring                        monitor and evaluate project activities aimed
and Evaluation                                  at long-term conservation and sustainable
use of medicinal plants.                                            l
With GEF     0.68       Same as above.
Altemative                                                                                   l
Incremental   0.0
2. Studies, Research   Baseline
and Data Base
Development:
l.a. Studies                         0.2       Increased understanding of the role
(Medicinal Plants                               medicinal plants play in national human and
Related Socio-Economic                         livestock healthcare (e.g. through collection
Studies)                                        and analysis of information on utilization of
medicinal plants, economic benefits derived
in the country).
With GEF     0.2        Same as above
Alternative
Incremental   0.0
2.b. Research          Baseline      1.48       Establishment of safety, efficacy and dosage
(Research on Safety,                            levels of the 6 commonly used remedies
Efficacy and Dosage                             (used for the control of 3 major human
Levels; and Research                            diseases and 3 livestock diseases) derived
on Propagation and                              from nafive plants species.
Cultivation Methods)
Improved scope for popularizing
phytomedicines and integrating them into
national healthcare system.
Development of propagation and cultivation
methods and piloting of ex-situ cultivation of
selected medicinal plants used for the
treatment of 3 major human diseases



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
(tapeworm infections, bronchopneumonia,
hypertension) and three livestock diseases
(tapeworm infections, mastitis,
l ______________________  _____________   _________   derm atophilosis).
With GEF      1.48
l _____________________  Altemative
Incremental   0.0
2.c. Database           Baseline       0.74       Identification, documentation and
Development                                       development of a national database of
indigenous medicinal plants including the
plants used for the control of 3 major human
and three livestock diseases, as well as the
medicinal plants identified (from biological
survey) in the Bale Mountains National Park.
With GEF      0.74       Same as above.
Altemative                                                                                        l
Incremental   0.0
3. In-Situ Conservation   Baseline
and Sustainable Use in
Bale Mountains Area:
3.a. On Site                           2.2        Strengthen conservation and management
Management                                        of protected areas with emphasis on large
l___________              mammal conservation.
With GEF      2.7        Documentation of status and usage of       Improved conservation of rare
Altemative               medicinal plant species, including         and threatened medicinal plants
threatened/rare species from Bale         and sustainable management in
Mountains National Park areas. Improved   unique Afromontane
._________________  ___________  park management and zoning.         ecosystems.
Incremental   0.5
3.b. Preparation and    Baseline       0.0
Implementation of
Management Plans and
Sustainable Harvesting
Guidelines
With GEF                 Development of management regimes for      Best practice guidelines for
Altemative    0.4        sustainable harvesting of medicinal plants in   management and sustainable
appropriate zones in and around Bale      harvesting of medicinal plants
Mountains areas.                          and their products.
Participatory schemes for sustainable
management and harvesting of medicinal
|~ ~ ~ ~~~______    ____   plant resources.I
Incremental   0.4
3.c. Monitoring and     Baseline       0.0
Evaluation
With GEF      0.2        Effective management and harvesting of     Effective management of
Altemative               medicinal plants in Bale Mountains area.  investments aimed at
conserving globally significant
biodiversity in protected areas
and promoting sustainable use
of plant resources.
Incremental   0.2
3.d. Piloting of Farmer-    Baseline   0.0
Based Ex-Situ
Cultivation Trails
With GEF      0.3        Development of propagation and cultivation    Reduced collection of
Altemative               methods and piloting of ex-situ cultivation of  threatened/rare medicinal plants
medicinal plants around Bale Mountains    from the wild including
l _____________________                           area.                                      protected  areas.
Incremental   0.3
3.e. Training           Baseline      0.0
With GEF      0.2        Increased knowledge and management         Long-term sustainability of
Altemative               skills of Park staff, rangers and local    conservation efforts through
communities- for biodiversity conservation  increased local capacity for
and management activities in Bale         biodiversity conservation and
l  Mountains area.                         management.
l __________________     Incremental   0.2       I                                         I



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Project Appraisal Document
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3.f. Public Awareness        Baseline         0.0
and Education
With GEF         0.2          Increased public awareness of issues              Sustainability of conservation
Altemative                    related to biodiversity and medicinal plants      efforts related to globally
conservation.                                     important biodiversity.
Increased understanding of the
role biodiversity plays in
l ___________________       ____________      ________     _____________________________________             sustainable   developm ent.
Incremental    0.2
Total                        Baseline         9.51
With GEF         11.31
Alternative
Incremental   1.8



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Project Appraisal Documnent
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 5: Financial Summary
(US$ '000)
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
Year  I   Year 2  I  Year 3         Year 4      Year 5*      Total
Project Costs
Investment Costs             2256.6       922.8       553.7        379.4       155.6      4268.1
Recurrent Costs               174.8       185.5        169.2       179.1       109.3       817.9
Total Project Costs              2431.4      1108.3       722.9        558.5       264.9      5086.0
* For GEF component only.
Financing Sources
IDA                          1402.4       771.4        176.2       157.0         0        2507.0
GEF                           688.6       211.2       394.0        338.6       169.6      1802.0
Government                    340.4       125.7        152.7        62.9        95.3       777.0
Total Project Financing      2431.4      11083         722.9       558.5       264.9      5086.0



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Project Appraisal Document
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Annex 6: Procurement, Disbursement and Financial Management Arrangements
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
Procurement
1.    All goods and services financed under the IDA Credit and GEF Grant would be procured in accordance with IDA
guidelines of goods and services [Guidelines: Procurement under IBRD Loans and IDA Credits, January 1995 as revised
in January and August 1996 and September 1997 (Goods and Works Guidelines), and Guidelines: Selection and
Employment of Consultant by World Bank Borrowers, January 1997 (Consultants Guidelines)]. Contracts to supply
goods and equipment, vehicles and consulting services would be processed and awarded by the project management. The
Project Coordinating and Monitoring Unit (PCMU) which would be staffed with procurement proficient staff would carry
out all procurement.
Procurement of Goods and Equipment
2.    Goods (including vehicles) estimated to cost equal or more than US$ 100,000 equivalent per contract will be
procured by International Competitive Bidding. Goods and Services estimated to cost US$50,000 equivalent per contract,
up to an aggregate amount not to exceed US$600,000 equivalent may be procured by National Competitive Bidding
(NCB) procedures, acceptable to IDA. Contracts under US$50,000 for the procurement of items that cannot be grouped
into bulk procurement and for readily available off-the-shelf goods would be procured by comparing price quotations
obtained from at least three local suppliers. Procurement by this methods should not exceed the total sum of
US$300,000 over the project's life. The PCMU would be required to prepare a computer-based system to monitor that
the aggregate amounts agreed upon would not be exceeded during project implementation. IDA's prior review procedures
would apply to all purchases for which the contract value is equivalent or in excess of US$50,000 for goods and services.
Consultants' Services
3.    Consultants' services shall be procured in accordance with the provisions of the Introduction and Section IV of
the guidelines: "Selection and Employment of Consultants by World Bank Borrowers" published by the Bank in January
1997 (the Consultant Guidelines) and the following provisions of this Section I.
3.1    Qualitv- and Cost-based Selection
Except as otherwise provided in paragraph 3.2 below, consultants' services shall be procured under contracts
awarded in accordance with the provisions of section II of the Consultant Guidelines, paragraph 3 of Appendix I thereto,
Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based
selection of consultants.
The following provisions shall apply to consultants' services to be procured under contracts awarded with the
provisions of the preceding paragraph. The short list of consultants for services such as technical assistance, studies,
support for local communities to promote biodiversity conservation, training of beneficiaries, public education and
awareness activities, and preparation of technical documents estimated to cost less than US$50,000 equivalent per
contract, may comprise entirely national consultants in accordance with the provisions of paragraph 2.7 of the
Consultants Guidelines.
3.2.   Other Procedures for the Selection of Consultants
a)   Least-cost Selection. Services for audit and advisory services estimated to cost less than US$50,000
equivalent per contract may be procured under contracts awarded in accordance with the provisions of



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Project Appraisal Document
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
paragraphs 3.1 and 3.6 of the Consultant Guidelines.
b)   Selection Based on Consultants' Qualifications. Services for technical and logistical support to
producers groups for propagation and multiplication/cultivation trails of medicinal plants, biodiversity
conservation, feasibility studies, and extension estimated to cost less than US$50,000 equivalent per
contract, may be procured under contract awarded in accordance with provisions of paragraphs 3.1
and 3.7 of the Consultant Guidelines.
c)   Individual Consultants. Services for tasks that meet the requirements set forth in paragraph 5.01 of the
Consultant Guidelines shall be procured under contracts awarded to individual consultants in
accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
3.3    Review by the Bank of selection of Consultant
a)   Selection Planning Prior to the issuance to consultants of any requests for proposals, the proposed
plan for the selection of consultants under the Activities shall be furnished to the Bank for its review
and approval, in accordance with the provisions of paragraph I of Appendix 1 to the Consultant
Guidelines. Selection of all consultants' services shall be undertaken in accordance with the
provisions of said paragraph 1.
b)   Prior Review (i) With respect to each contract for the employment of consulting firms estimated to
cost the equivalent of US$100,000 or more, the procedures set forth in paragraphs 1, 2 (other than the
third subparagraph 2 (a)) and 5 of the Appendix 1 to the Consultant Guidelines shall apply. (ii) With
respect to each contract for the employment of individual consultants estimated to cost the equivalent
of US$50,000 or more, the qualifications, experience, terms of reference and terms of employment of
the consultants shall be furnished to the Bank for its prior review and approval. The contract shall be
awarded only after said approval shall have been given.
3.4    Post Review
With respect to each contract not governed by paragraph I of this Part, the procedures set forth in paragraph 4 of
Appendix 1 to the Consultant Guidelines shall apply.
Disbursement
Disbursements would be made against standard IDA documentation using traditional disbursement procedures during the
first 18 months after effectiveness of the project. The IDA-LIL support for the project is expected to be completed over a
four-year period and the credit is expected to be closed by June 30, 2005; and GEF component is expected to be
completed over a five-year period and the Grant is expected to be closed by December 31, 2006.
Use of Statements of Expenditures (SOEs):
1. Disbursements would be fully documented except for contracts below the equivalent of US$50,000 for individual
consultants and US$100,000 for goods and consulting firms as well as for all operating costs including local and
foreign training. For such contracts borrower would be allowed to submit withdrawal applications based on
Statement of Expenditures (SOEs). All supporting documents for such applications would be retained by the PCMU
and made readily available for review by periodic IDA supervision missions and external auditors. All expenditures
related to contracts above the equivalent of US50,000 for individual consultants, and US$100,000 for goods and
consulting firms would be fully documented (no SOE use).



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Project Appraisal Document
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Special Account:
2. To facilitate payment of expenditures by the project, Special Accounts (separate accounts for IDA and GEF) in
US dollars would be established in the National Bank of Ethiopia or in a commercial bank acceptable to IDA. The
Authorized Allocation to the Special Account is US$ 350,000. IDA would make initial estimated deposit of
US$175,000 from Credit immediately after effectiveness.
Flow of funds.
3 All expenditures would be paid from the Special Account, except for expenditures greater than 20% of the
outstanding Special Account advance which could be made directly by IDA.
Project Accounts/Counterpart Account.
4. Project Accounts (separate accounts for IDA and GEF) and Counterpart Accounts would be both opened at the
National Bank of Ethiopia or at a commercial bank under terms and conditions satisfactory to IDA.
PCMU would ensure that disbursements are effected in accordance with Bank procedures. PCMU would have
financial monitoring responsibility.
The counterpart funds received from the advance payments would be credited to the account open by the GOE at the
National Bank of Ethiopia or at a commercial bank. The account would operate under the responsibility of the
Ministry of Economic Development and Cooperation (MEDAC).
Financial Management
Existing Financial Management System of the Institute
The implementing agency IBCR, like other ministries and commissions, obtain its annual budget from the Federal
Government of Ethiopia, Ministry of Finance (MOF). The cash basis of accounting is used by the Institute. The receipts
of cash and withdrawals are recorded in standardized journal. No annual accounts are prepared by the Institute. The
Ministry of Finance is responsible for the compilation of annual accounts.
Currently, the Institute is administering a Global Environment Facility (GEF) Fund amounting to US$2.4 million. The
institute quarterly reports to the financier on a standardized format in a very simplified way.
The Institute has a finance division comprising of 7 staff, some of them are diploma holders from the Commercial
College. The practical experience for most of them is the cash basis of accounting based on the MOF standard formats.
Internal Control
The institute has an Internal Audit Division consisting two staff who are diploma holders. The division usually conducts
pre-audit activities. There is a strong push from the MOF to engage the internal auditors in the post audit activities. This
department could perform some post audit activities on the project financial transaction in the future.
LACI Capability
The capacity of the Institute to handle LACI procedures as outlined in the LACI handbook is limited as discussed above
and a decision has been reached between the Bank and the Institute to establish a Project Coordinating and Monitoring
Unit (PCMU) to undertake the day to day activities of the project. In the unit an Accounting and Disbursement Specialist
will be employed to look after the financial affairs. Thus, as the establishment of the PCMU is at its very early stage, the
IBCR is not ready for PMR based disbursement based on the LACI guidelines of the Bank. Disbursements will begin
using the traditional disbursement procedures which is currently in place in the Bank and will continue upto
approximately 18 months. Under the existing disbursement procedures, payments could be made by direct payments
special commitments and SOE procedures. Detailed guidance could be obtained from the Disbursement Handbook and



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Project Appraisal Document
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
training will be given at the project launch workshop. The following steps should be undertaken before the IBCR is able
to meet PMR based disbursements:
-Appointment of a Project Accountant      (Before effectiveness)
-Development of a financial manual        (within 6 months of effectiveness)
-Development of a financial reporting format
acceptable to the Bank                    (within 6 months of effectiveness)
-Definition of a clear cut flow of funds  (by negotiation)
-Evaluation of the IBCR capacity by the Bank
staff to determine compliance with the
LACI guidelines                           (12 months of effectiveness)
-Preparation of draft PMR for initial review    (15 months of effectiveness)
-Production of PMRs                       (21 months of effectiveness)
Amendment of the DCA in line with LACI
Requirements                              (18 months of effectiveness)
Provided these steps are taken, it is expected that the IBCR should be LACI capable 18 months from the date of
effectiveness. Once the IBCR and the PCMU are assessed to be LACI compliance, the Credit Agreement will be
amended to reflect that disbursements will be made on the basis of PMR. A detailed note on LACI is included in the PIP.



Project Appraisal Document                            Page 40
Ethiopia. ConseTvation & Sustainable Use of Medicinal Plants Project
Annex 6, Table A: Project Costs by Procurement Arrangements'
(in US$'000 equivalent)
1. Goods:
Vehicle                        550.5                                            550.5
.               ~~~~~~(302.8)                                     (302.8)
Equipment                     1,077.9                                          1,077.9
(965.6)                                         (956.6)
2. Consultant Services:
National Consultants                                   395.7                    395.7
(395.7)                  (395.7)
International Consultants                               87.3                     87.3
(87.3)                   (87.3)
3. Training and Workshops:
Local Training                                         252.0                    252.0
(252.0)                  (252.0)
Overseas Training                                      398.2                    398.2
(398.2)                  (398.2)
Workshops                                              160.2                    160.2
(160.2)                  (160.2)
4. Studies and Research:
Surveys/Studies                                        757.8                    757.8
(757.8)                  (757.8)
Research                                               436.6                    436.6
(436.6)                  (436.6)
Publication & Documentation                            151.8                    151.8
(151.8)                  (151.8)
5. Incremental Operating Costs\a:                              818.8                    818.0
(401.5)                  (401.5)
Total                             1,628.4                 3,457.7                  5,086.1
(1,268.4)              (3,041.1)                (4,309.5)
Note:  N.B.F. = Not Bank-financed (includes elements procured under parallel cofinancing procedures,
consultancies under trust funds, any reserved procurement, and any other miscellaneous items). The
procurement arrangement for the items listed under "Other" and details of the items listed as "N.B.F."
need to be explained in footnotes to the table or in the text.
Figures in parenthesis are the amounts to be financed by the IDA credit and GEF grant.
For details on presentation of Procurement Methods refer to OD 11.02, "Procurement Arrangements for Investment Operations."
Details on Consultant Services can be shown more easily in the Table Al format (additional to Table A, where applicable).
Includes costs for: vehicles & equipment operation and maintenance, incremental salaries, perdiem & allowances, office &
laboratory supplies, utilities, telephone and communication.



Project Appraisal Document                        Page 41
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 6, Table B: Thresholds for Procurement Methods and Prior Review2
US $ thousands                                 US $ millions
1. Goods
Equal or more than          ICB              Equal or more than
US$100,000                                   US$100,000
Up to US$100,000           NCB
Less than US$50,000    Shopping
2. Services
Equal or more than
US$50,000 for
individuals and equal
or more than
US$100,000 for firms
All TORs (firms and
individuals)
3. Miscellaneous
Overall Procurement Risk Assessment:
High
Average
Low
Frequency of procurement supervision missions proposed: One every 12 months (includes special
procurement supervision for post-review/audits)
2 Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the
Regional Procurement Adviser for guidance.



Project Appraisal Document                        Page 42
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 6, Table C: Allocation of IDA Credit and GEF Grant Proceeds
1. Goods:
*  Vehicles                               140,000                  100% FC, 85%LC
*  Equipment                              800,000                  100% FC, 85%LC
*  Furniture & Materials                    5,000                  100% FC, 85%LC
Sub Total Goods:                          945,000
2. Specialist Services:
.  Consultants                             300,00                 100% of total
*  Training                               440,000                 100% of total
.  Studies                                320,000                 100% of total
Sub Total Specialist Services:           1,060,000
3. Incremental Operating Costs:                  270,000                   80% of total
4. Unallocated:                                  232,000
Total                                 2,507,000
1. Goods:
*  Vehicles                               130,000                  100% FC, 85%LC
.  Equipment                               60,000                  100% FC, 85%LC
Sub Total Goods:                          190,000
2. Specialist Services:
*  Consultants                            615,000                 100% of total
*  Training                               240,000                 100% of total
*  Studies                                480,000                 100% of total
Sub Total Specialist Services:           1335,000
3. Incremental Operating Costs:                   95,000                   80% of total
4. Unallocated:                                  182,000
Total                                   1,802,000



Project Appraisal Document                      Page 43
I thiopia: Conservation & Sustainable Use of Medic[nal Plants Project
Annex 7: Project Processing Budget and Schedule
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
Time taken to prepare the project (months)           4                   4
First Bank mission (identification)              11/02/1998          11/07/1998
Pre-appraisal mission departure                  05/05/1999          05/05/1999
Negotiations                                     09/10/2000          10/12/2000
Planned Date of Effectiveness                    12/01/2000          07/01/2001
Prepared by: Institute of Biodiversity Conservation and Research (IBCR)
Preparation assistance: GEF PDF (A & B) grant: US$ 0.11 million
Bank staff who worked on the project included:
Project Team:
Berhane Manna            Task Team Leader                                 AFTR2
Devendra Baj gain        Agricultural/Natural Resources Management Specialist AFTR2
John Lambert             Medicinal Plant Specialist                       AFTR2
Kathy MacKinnon          Senior Biodiversity Specialist                   ENV
Palitha M. Wijesinghe    Senior Disbursement Officer                      LOAAF
Solange Alliali          Senior Counsel                                   LEGOP
Lucie Houng-Giang Tran    Operations Analyst                              AFTR3
Soulemane Fofana         Operations Analyst                               AFTR2
Samuel Haile Selassie    Procurement Officer                              AFMET
Eshetu Yimer             Financial Officer                                AFMET
Remi Kini                Environmental Economist                          AFTEI
Shimwaayi Muntemba       Social Scientist                                 AFTEI
Zenobia Raghunandan      Team Assistant                                   AFTR2
Ouality Assurance Team:
Joseph Baah-Dwomoh       Sector Manager                                   AFTR2
Jaime M. Biderman        Lead Specialist                                  AFTQK
Francesco Samo           Principal Procurement Specialist                 AFTQK
Elizabeth Otubea Adu     Principal Counsel, Operations                    LEGOP
Peer-Reviewers:
Jan Bojo                 Senior Environmental Economist                   AFTEl
Nadim Khouri             Senior Agriculturist                             SASRD



Project Appraisal Document                         Page 44
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 8: Documents in the Project File*
Ethiopia: Conservation and Sustainable Use of Medicinal Plants
A. Project Implementation Manual - October 5, 2000
B. Bank Staff Assessments
1. Bank Identification Mission Aide-Memoire, dated December 21, 1998
2. Environmental Data Sheet
3. Bank Pre-Appraisal Mission Aide-Memoire, dated June 1, 1999
4. Technical Discussions, Minutes, dated March 17, 2000
5. Negotiations, Minutes, October 12, 2000
C. Other
*Including electronic files.



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 9: Status of Bank Group Operations In Ethiopia (Operations Portfolio)
As Of January 8, 2001
Closed Projects 62
Acive                                                                                                        Difference
Projeds                                                                                                     iB3tween
Last PSR                                                                Expected and
Actual
Supetvision Rating bI          Oriqinal Amount In USS                        Disbursements
Milions
Project Project Name      Develoomen Imlementat Fiscal    IBRD          IDA GRANT        Cancel.  Undisb.  Orig.     Frm
ID                        tObieie   ion Prvs~s Year                                                                 Revd
P000733 AG. RESEARC &     HS               S       1998         0        60       0           0      46.6    9.7       0
TRAIN
P000758 CALU8 ENERGY      U                U       1994         0         0       0           0        0      0        0
DEV. PROJECT
P073196 DemobiiizatIon and   #                     2001         0      170.6      0           0    172.7      0        0
Reintegramtion Project
P000732 EDUCATION         S                U       1998         0        100      0           0      67.6   22.6       0
SECTOR
INVESTMENT
P067084 EMERGENCY                                  2001         0       230       0           0    232.8      0        0
RECOVERY
PROJECT
P000736 ENERGYII          S                S       1998         0       200       0           0    142.1   36.1        0
P000771 ESRF I            S                S       1996         0        120      0         11.5    46.5   63.2      36.9
P069886 MULTISECTORAL   #                          2001         0        60       0           0       60      0        0
HIVWAIDS PROJECT
P000756 HEALTH SECTOR    S                 U       1999         0        100      0           0      76.2   27.3       0
P000753 NAT. FERTILIZER    S               S       1995         0       120       0          0.1     19.9   26.7       0
PROJ
P000752 NATIONAL SEEDS   S                 S       1995         0        22       0           0      10.5   12.3       0
PROJECT
P000734 ROAD              S                S       1993         0        96       0           0      28.6   34.4       0
REHABILITATION
P000755 ROAD SEC. DEV.   S                 S       1998         0      309.2      0           0    231.8  130.5        0
PROG.
P000764 WATER SUPPLY      S                S       1996         0       35.7      0           0      17.2    21        0
DEV&REH
P050342 WOMEN'S                                    2001         0          5      0           0        5       0       0
DEVELOPMENT
INITIATIVES
PROJECT
TOTAL        0      1628.5     0          11.6   1157.5  383.9    36.9



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Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Annex 10: Ethiopia at a Glance
Ethiopia at a glance                                                                 8,21/00
Sub-
POVERTY and SOCIAL                                            Saharan      Low-
Ethiopia    Africa   income       Development diamond'
1999
Population, mid-year (millions)                        62.8       642      2,417                 Life expectancy
GNP per capita (Atlas method, US$)                      100       500       410
GNP (Atlas method. US$ billions)                        6.5       321       988
Average annual growth, 1993-99                                                                          l
Population (%)                                          2.7        2.6       1.9                     .
Labor force (%)                                         2.3        2.6       2.3     GNP                              Gross
per    I      ,                 primary
Most recent estimate (latest year available, 1993-99)                                capita                        enrollment
Poverty (% of population below national poverty line)    45
Urban population (% of total population)                 17        34        31
Life expectancy at birth (years)                         43        50        60
fr nitmortality(per1,000livebirths)                     107        92        77
Cniiid malnutrition (% of children under 5)              ..        32         43                Access to safe water
Access to improved water source (%6 of population)       27        43         64
Illiteracy (% of population age 1+)                     63        39        39
Gross primary enrollment (% ofschool-age population)     43        78        96                 Ethiopia
Male                                                   55        85        102                  Low-income group
Female                                                31         71        86                                    - - - - - - -
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1979     1989       1998      1999
Economic ratios*
GDP (US$ billions)                              ..      8 1        6.6       6 5
Gross domestic investment/GDP                   ..    13.5        17.2      17 8                     Trade
Exports of goods and services/GDP               ..      9.2       15.8      13.7
Gross domestic savingsJGDP                      ..      7.9        5.3       2.7
Gross national savings/GDP                      ..      9.8        9.3       7.1
Current account balance/GDP                     ..    -3.6        -7.9     -10.4     Do tic
Interest payments/GDP                           ..      0.9        1.6       1.2                                  Investment
Total debUGDP                                   ..    96.8       149.5     141.9     Savings
Total debt servicelexports                     6.2     40.2        3.1      17.6
Present value of debt/GDP                                 ..    120.5
Present value of debt/exports                   ..       ..    751.5
Indebtedness
1979-89  1989-99     1998       1999   1999-03
(average annual growth)
GDP                                  0.9       4.2     -1.0        5.8       5.6                   Ethiopia
GNP per capita                       -1.9      0.9     -4.2        3.3       3.1             -.Low-income group
Exports of goods and services        2.8       5.6     -7.8       -9 3       7.0
STRUCTURE of the ECONOMY
1979     1989       1998      1999      Growth of Investment and GDP I%)
(% of GDP)
Agriculture                                     ..    48.5        52.3      52.3      0
Industry                                        ..    14.2        11.1      11.1       -
Manufacturing                                 ..      8.5        7.0       7.0     20
Services                                        ..    37.3        36.5      36.5      o
Private consumption                             .,    73.5        80.4      81.3    -20      54   s     05 e   9    a 98   99
General government consumption                  ,.    18.7        14.2      16.0              -GDI    --GOP
Imports of goods and services                   .,    14.8        27.7      28.8
1979-89  1989-99      1998       1999     Growth of exports and Imports (%)
(average annual growth)
Agriculture                                   -0.4      2.5      -10.3       4.2    100
Industry                                       1.2      4.6        6.3       7.6    ts
Manufacturing                               -0.9      4.8        5.8       4.9     50
Services                                       2.8      5.8       10.4       8.2
25
Private consumption                           -0.3      3.4       -2.4       4.7
Generalgovernmentconsumption                   4.4      2.7       30.6      18.5           .                  sr 9a       5
Gross domestic investment                      3.4      9.9        0.1       9.5    .25
Imports of goods and services                  2.5      4.0       11.7       6.2                  Exports            0nports
Gross national product                         0.7      4.2       -1.8       5.9
Note: 1999 data are preliminary estimates.
The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.



Project Appraisal Document                                             Page 47
Ethiopia: Conservation & Sustainable Use of Medicinal Plants Project
Ethiopia
PRICES and GOVERNMENT FINANCE                1979_1989_199__1999__'_nf____
1979     1989       1998      1999      I nflation l%)
Domestic pHces
(% change)
Consumer prices                               16.0      9.6        3 7       4.2     10
Implicit GDP deflator                           ..      4.3       9.7        3.3      5
Government finance
(% of GDP, includes current grants)                      -s                                  94   95   96   97   99
Current revenue                                 ..    23.2        18.0      17.5    -10
Current budget balance                          ..      0.6       2.3       -0.1            -    GDP defator     CPl
Overall surplus/deficit                         ..   -10.9       -6.5       -7.3
TRADE
(USS millions)                                        1989       1998      1999      Export and import levels (US$ mill.)
Total exports (fob)                           360      444        602       484      2,000
Coffee                                        ..      303      -420        281
Hides                                         ..       60        51         57     1,500 
Manufactures                                  ..
Total imports (cif)                           589    1,020       1,519     1,570     1.000
Food                                          ..  186   172   172                              I*Jj
Fuel and energy                               ..      103       246        194
Capital goods                                 ..      397       569        651        0
Export price index (1995=100)                           82         97        79            93   94  95  9b  97  98  99
Import price index (1995=100)                   .,     117        104       101                 aEvports      alImports
Terms of trade (1995=100)                       ..      70         93        79
BALANCE of PAYMENTS
1979     1989      1998       1999                          _-
(US$ millions)                                                                       Current account balance to GDP (%)
Exports of goods and services                 455      752      1,037       894       0
Imports of goods and services                 660    1,201      1,815      1,866     -2
Resource balance                             -205      -449      -778      -972       21
Net income                                              -83       -91        -85
Net current transfers                          83      238        349       374
Current account balance                      -124      -294      -520       -683     -aj
Financing items (net)                          79      284        650       633      -t
Changesin net reserves                         45        10      -129        4        2
Memo:
Reserves including gold (US$ millions)        319      123        412       434
Conversion rate (DEC, local/US$)               2.1      2.1        6.9       7.5
EXTERNAL DEBT and RESOURCE FLOWS            _1_979___                                                   ___1998_i___
1979     1989       1998      1999 r--
(USS millions)                                                                     I Composition of 1999 debt (US$ mill.)
Total debt outstanding and disbursed          740    7,842      9,612      9,286
IBRD                                         59       31          0         0                     G 619
IDA                                         221      718      1,586      1,948             F 333               B 1.948
Total debt service                             29      304         33       160
IBRD                                          9       13          0         0
IDA                                           2        9         28        31                                      C 127
Composition of net resource flows
Official grants                              ..        ..       418
Official creditors                           95      402       -209      -267
Private creditors                             6       -70        -6       -10
Foreign direct investment                    ..        ..         4                    E 4,727
Portfolio equity                             ..        ..         0
World Bank program
Commitments                                   0       72        609       160      A - IBRD                    E - Bilateral
Disbursements                                47       70         72       148      B - IDA    D - Other mulil,aleral  F - Private
Principal repayments                          4       14         17        19      C-IMF                       G-Short-term
Net flows                                    43       56         56       129
Interest payments                             7        8         11        12
Net transfers                                36       48         44       117
World Bank                                                                                                             8/21/00






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