Document of The World Bank FILE FOR OFFICIAL USE ONLY Report No. 4783 PROJECT PERFORMANCE AUDIT REPORT NIGERIA - BENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) AND ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) November 15, 1983 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS BDSG - Bendel State Government FDA - Federal Department of Agriculture ffb - fresh fruit bunches FGN - Federal Government of Nigeria FMANR - Federal Ministry of Agriculture and Natural Resources FMG - Federal Military Government MANR - Ministry of Agriculture and Natural Resources MEU - Monitoring and Evaluation Unit MWT - Ministry of Works and Transport NAB - Nigerian Agricultural Bank NACB - National Agricultural Cooperative Bank NIFOR - Nigerian Institute for Oil Palm Research OPC - Oil Palm Company (Bendel) ONSG - Ondo State Government OOPC - Okitipupa Oil Palm Company SAR - Staff Appraisal Report SMU - Smallholder Management Unit TCU - Tree Crop Unit WSFU - Western State Farmers Union FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT NIGERIA - BENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) AND ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) TABLE OF CONTENTS Page No. Preface ............................................................ i Basic Data Sheets ..................................................... ii Highlights ......................................................... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT SUMMARY .............................. .....1.....I A. Bendel State Oil Palm Project ....................... 1 B. Ondo State Oil Palm Project ......................... 2 II. MAIN ISSUES ................................. ........... 3 A. Impediments to Success .............................. 3 B. The Course of Bank Action ........................... 8 Table 1 - Bendel State Oil Palm Project - Disbursements ............ 13 Table 2 - Ondo State Oil Palm Project - Disbursements .............. 14 PROJECT COMPLETION REPORT I. Background .................................................. 17 II. Project Formulation ......................................... 19 III. Implementation ..... ........................................ 22 IV. Agricultural Impact ......................................... 48 V. Rate of Return .............................................. 50 VI. Institutional Performance ................................... 51 VII. Bank Performance ............................................ 55 VIII. Conclusions .............................................. 56 Annexes 1 & 2 Map - IBRD 17237 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PROJECT PERFORMANCE AUDIT REPORT NIGERIA - BENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) AND ____ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) PREFACE This is a performance audit of two projects in Nigeria. Loan 1183-UNI, supporting oil palm development in Bendel State in the amount of US$29.5 million, was approved in June 1975. Although the scheduled Closing Date for this loan was December 1984 only residual disbursements were made after cancellation of US$16.5 million in June 1982; further cancellation of most or all of the remaining balance of about US$169,000 is expected. Loan 1192-UNI, supporting oil palm development in Ondo State in the amount of US$17.0 million, also was approved in June 1975; final disbursement was made and the undisbursed balance of US$10.1 million cancelled in June 1982, i.e., also prior to the scheduled Closing Date of December 1984. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) dated June 29, 1983. The PCR was prepared by the Western Africa Regional Office. The audit is based on a review of the PCR, the Appraisal Report (497a-UNI) dated March 28, 1975, the President's Report (P-1650-UNI) dated June 5, 1975, and the Loan Agreement dated December 31, 1975 for the Bendel State Oil Palm Project; and the Appraisal Report (496a-UNI) dated March 28, 1975, the President's Report (P-1649-UNE) dated June 5, 1975, and the Loan Agreement dated December 22, 1976 for the Ondo State Oil Palm Project. Correspondence with the Borrower and internal Bank memoranda on project issues as contained in relevant Bank files have also been consulted. Bank staff associated with the project have been interviewed. A copy of the draft report was sent to the Borrower for comments on July 27, 1983. No comments were received. The audit finds the PCR comprehensive and accurate with respect to the projects' principal achievements and shortcomings and has no reason to question its conclusions. The memorandum attempts to highlight some crucial issues, including aspects impeding success of these projects and the course of Bank action culminating in the cancellation of sizeable undisbursed loan balances, because of their general relevance. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET SENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) KEY PROJECT DATA Appraisal Actual or Actual as % of Item Estimate Estimated Actual Appraisal Estimate Total Project Costs (US$ mLllion) 58.8 38.6 Ia 66 Loan Amount (US$ million) 29.5 29.5 100 Disbursed 29.5 12.8 44 Undisbursed - 0.2 - Cancelled - 16.5 - Repaid (as of 07/31/83) - 3.3 - Outstanding - 9.7 - Date Board Approval - 06/17/75 - Date Effectiveness 04/29/76 /b 10/14/77 280 /c Date Physical Components Completed 12/31/83 06/82 /a 82 Fe Proportion Then Completed (%) 100 53 53 Closing Date 12/31/84 12/83 /a 90 /c Economic Rate of Return (%, OPC-17 TCU-8 Negative - Institutional Performance - Poor Agronomic Performance - Poor - Number of Direct Beneficiaries 4,800 1,640 34 CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 Appraisal estimate (US$ million) 0.8 2.7 4.7 6.8 9.3 13.3 19.4 24.5 27.8 29.5 Actual (US$ million) - - - 1.0 4.3 6.3 9.5 12.7 12.8 12.8 Actual as % of estimate - - - 15 46 47 44 52 47 44 Date of final disbursement Not yet fully disbursed as of 09/30/83 Date of cancellation June 16, 1982 MISSION DATA Date No. of Mandays Specializations Performance Types of Mission (m7yr) Persons in Field Represented /d Rating /e Trend /f Problems /i Identification 11/72 4 44 Preparation 02/73 4 44 Appraisal 11/73 8 100 Subtotal 188 Supervision 1 07/75 1 6 C 1 2 M Supervision 2 07/76 2 12 B,C 2 2 M,P Supervision 3 04/77 3 27 B,C,E 3 2 P,M,T Supervision 4 08/77 1 5 B 3 2 P,M,T Supervision 5 03/78 2 10 A,C 3 2 F,M,T Supervision 6 12/78 2 16 A,C 2 1 F,M Supervision 7 04/79 1 10 A 2 1 F,M Supervision 8 12/79 2 10 A,C 3 3 M,F Supervision 9 03/80 1 8 A 3 2 M Supervision 10 06/80 1 5 A 3 2 M,F Supervision 11 11/80 4 20 A,B,C,PE 3 3 M,F Supervision 12 02/81 2 5 E,C 3 3 M'F Supervision 13 06/81 2 5 E'C 3 3 M,F Supervision 14 09/81 1 5 E 3 3 M,F Supervision 15 10/81 1 5 C 3 1 M,F,0 Supervision 16 12/81 2 5 E,C 3 3 M,F,O Subtotal 154 TOTAL 342 OTHER PROJECT DATA Borrower Government of Nigeria Executing Agency Bendel State (Oil Palm Company; Tree Crop Unit) Fiscal Year January 1 - December 31 Name of Currency (abbreviation) Naira (N) Currency Exchange Rate: Appraisal Year Average US$1.00 - N 0.66 Intervening Years Average US$1.00 - N 0.67 Completion Year AveraE:e US$1.00 = N 0.67 Follow-on Project: None in Bendel State /a The reduced project cost, advanced Completion Date and Estimated Closing Date shown were due to cancellation of the Loan cn June 16, 1982. /b Date specified in Loan Agieement. Due to late signing of Loan Agreement (12/31/75), this date fell ten months after Board approval. /c Calculated in terms of morths from the date of Board approval. Td A - Agriculturist; B = Agricultural Economist; C = Financial Analyst; E - Economist; PE - Processing Engineer. /e 1 - Problem-free or minor problems; 2 = Moderate problems; 3- Major problems. /f 1 = Improving; 2 = Stationary; 3 - Deteriorating. F = Financial; M - Managerial; T - Technical; P - Political; 0 - Other. - iii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET NIGEREA - ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) KEY PROJECT DATA Appraisal Actual or Actual as % of Item Estimate Estimated Actual Appraisal Estimate Total Project Costs (US$ million) 34.0 20.1 la 59 Loan Amount (US$ mIllion) 17.0 17.0 100 Disbursed 17.0 6.9 41 Cancelled - 10.1 - Repaid (as of 02/28/83) - 1.8 - Outstanding - 5.1 - Date Board Approval - 06/17/75 - Date Effectiveness 01/20/77 /b 02/L3/78 168 /c Date Physical Components Completed 12/3L/83 06/82 la 82 77 Proportion Then Completed (Z) 100 28 28 Closing Date 12/31/84 06/16/82 Ia 74 /c Economic Rate of Return (Z) OOPC-15 SMU-16 Negative - Institutional Performance - Poor - Agronomic Performance - Poor - Number of Direct Beneficiaries 2,600 656 25 CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 Appraisal estimate (US$ million) 0.5 1.6 2.7 4.7 7.7 10.3 11.9 13.2 15.2 17.0 Actual (US$ million) - - - 2.8 3.7 4.3 5.2 6.9 6.9 6.9 Actual as % of estimate - - - 50 48 42 44 52 45 41 Date of final disbursement June 16, 1982 Date of cancellation June 16, 1982 MISSION DATA Date No. of Mandays Specializations Performance Types of Mission (mo/yr) Persons in Field Represented /d Rating e Trend /f Problems 18 Identification 11/72 4 44 Preparation 02/73 4 44 Appraisal 11/73 8 100 Subtotal 188 Supervision 1 07/75 1 5 C 1 2 M Supervision 2 06/76 2 10 B,C 2 1 T Supervision 3 04/77 3 27 B,C,E 2 1 F,T Supervision 4 03/78 2 10 A,C 2 2 F,T Supervision 5 11/78 2 10 A,C 2 3 M,F Supervision 6 04/79 1 5 A 3 3 F Supervision 7 11/79 2 16 A,C 3 3 F,M Supervision 8 04/80 1 7 A 3 2 M Supervision 9 06/80 1 4 A 3 2 M Supervision 10 11/80 5 35 A,B,C,PE 3 3 M,F Supervision 11 02/81 2 4 E,C 3 3 M,F Supervision 12 06/81 2 4 E,C 3 3 H,F Supervision 13 10/81 1 5 C 3 1 M,F,O Supervision 14 12/81 2 2 E,C 3 3 M,F,0 Supervision 15 02/82 2 14 E,C 3 3 X,F,0 Subtotal 158 TOTAL 346 OTHER PROJECT DATA Borrower Government of Nigeria Executing Agency Ondo State (Okitipupa Oil Palm Company; Smallholder Management Unit) Fiscal Year January 1 - December 31 Name of Currency (abbreviation) Naira (N) Currency Exchange Rate: Appraisal Year Average US$1.00 - N 0.66 Intervening Years Average US$1.00 - N 0.62 Completion Year Aveiage US$1.00 = N 0.67 Follow-on Project: None In Ondo State Is The reduced project cost and advanced Completion and Closing Dates shown were due to cancellation of the Loan on June 16, 1982. /b Date specified in Loon Agreement. Due to late signing of Loan Agreement (09/22/76), this date fell nineteen months after Board approval. /c Calculated in terms of months from the date of Board approval. d A = Agriculturist; B = Agricultural Economist; C = Financial Analyst; E - Economist; PE = Processing Engiiieer. Ie 1 - Problem-free or ainor problems; 2 = Moderate problems; 3= Major problems. If I = Improving; 2 S.ationary; 3 = Deteriorating. /g F Financial; M - Kinagerial; I = Technical; 0 = Other. - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM NIGERIA - BENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) AND ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) I. PROJECT SUMMARY 1/ 1. In late 1972-early 1973 Bank staff played a key role in identifying and preparing what were then considered five separate oil palm development projects in four States of Nigeria. Three of these were appraised together in 1973 and eventually approved by the Board on the same date. The other project which eventually resulted was the Rivers State Oil Palm Project, for which Loan 1591-UNI was approved in June 1978. Of the three earlier projects two are the subject of this report while the third, the Imo State Oil Palm Project (Loan 1191-UNI), remained under implementation as scheduled. The names of these projects were changed after the reorganization of States in Nigeria: the Bendel State Oil Palm Project is the former Mid-Western State Oil Palm Project, and the Ondo State Oil Palm Project is the new name for the Western State Oil Palm Project. A. The Bendel State Oil Palm Project (Loan 1183-UNI) 2. This project was appraised in November 1973. The Loan was approved in June 1975 and signed in December 1975, but did not become effective until October 1977 due to Government's inability to meet the agreed conditions. The major delaying factors were difficulties in concluding subsidiary loan agreements and in acquiring the necessary land for estate plantations. After this slow start project activities continued to lag severely, prompting the Bank to formally suspend disbursements for parts of the project in mid-1981. The suspension was lifted in November 1981 but was reinstated for the whole project in May 1982 and was followed by the cancellation of US$16.5 million on June 16, 1982; most of the residual undisbursed balance of about US$169,000 also is expected to be cancelled. The original Closing Date was December 31, 1984. 3. The project's objectives were to help meet the country's rapidly rising demand for edible oils, raise the incomes of smallholders, provide additional employment through the planting of oil palms on smallholder and nucleus estate land, improve local roads, provide financing and training to farmers, construct two palm oil mills, and establish a collection system for fresh fruit bunches. Provisions were also made for establishing a Monitoring and Evaluation Unit (MEU) responsible for all treecrop projects in the South, and for initiating field studies of small-scale palm oil processing. 1/ Adapted from the PCR. -2- 4. The implementation of the project was not successful. Only 42% of the planned 8,000 ha smallholder plantings and 63% of another 8,000 ha estate plantings were actually established. The production shortfall is likely to be even greater because of the serious neglect of the planted fields. A fruit collection system for smallholders was not established. Of the two planned oil mills only one reached the construction phase, but remained uncompleted. The required roads were not upgraded or maintained, and no studies on small-scale mills were undertaken. It was also intended to establish a joint pricing committee, but the committee never became operational. 5. Some of the implementation problems can be traced back to poor staff quality and to political interference in project management. Rapid inflation caused production costs to rise, reducing the incentives for smallholders. There was also a trend for rural labor to migrate off the land, leading to a scarcity of labor and to high wages. The reluctance of smallholders to change production patterns, particularly to forego inter- cropping, was not sufficiently appreciated at appraisal. Another shortcoming in this direction was an underestimation of the socio-political problems of land title transfer for smallholders and the difficulty of the nucleus estate to acquire the anticipated land area. A major hurdle was insufficient funding by the State and Federal Governments, aggravated by overly lax management attitudes. 6. The estimated cost of the portion of the project completed at the cancellation date was about US$39 million, compared with the appraisal estimate of US$58.8 million for completion of the whole project. A re-evaluation showed that total cost would have risen to about US$149 million had the project been completed as appraised. The cost per established hectare of oil palms was about US$5,740 as per latest estimate (December 1981), or 80% above appraisal levels. 7. The financial as well as economic rates of return on investments made prior to cancellation were re-estimated to be negative. B. The Ondo State Oil Palm Project (Loan 1192-UNI) 8. While this project was appraised in November 1973 and approved in June 1975 together with the other two projects (Loans 1183-UNI and 1191-UNI), the Loan for this project was not signed until September 1976. Furthermore, effectiveness was delayed until February 1978. The reasons for these delays were similar to those experienced in Bendel State: lack of satisfactory arrangements for the acquisition of estate lands, delays in execution and delivery of subsidiary loan agreements, and failure to submit legal opinions. Disbursements were also temporarily suspended in 1981 and final suspension and cancellation of the loan was effected on the same dates (May/June 1982) as with the Bendel State Oil Palm Project, i.e., 30 months before the original Closing Date of December 31, 1984. - 3 - 9. With the exception of support for MEU and for special studies the objectives and features of this project were very similar to those of the Bendel State Oil Palm Project (para. 3), but the overall scope in terms of plantings was about 38% smaller. 10. The implementatLon of the project was a failure. Only 35% of the 4,000 ha smallholder target and 26% of the 6,000 ha estate target was met by the end of December 1981, compared with 100% estimated at appraisal. Smallholder achievements under this project were especially poor, both in terms of the number of participants as well as their production performance. The fruit collection system was inadequate and the processing of smallholder fruit inefficient. Satisfactory aspects in the smallholder component included road construction and the functioning of a committee established to determine smallholders' fresh fruit prices. The estate performed poorly. The general standard of crop husbandry was low, resulting in deteriorating palm stocks and low yields. Estate roads were not maintained adequately, adding to the cost of transport. The mill improvement program was seriously lagging and involved a disqualification for disbursement of Bank funds because of misprocurement. 11. The overriding problems in this project were poor management and inadequate funding, similar to the Bendel State Oil Palm Project (para. 5). 12. Project costs at the date of cancellation were estimated at US$20 million, compared with thE, appraisal estimate for complete implementation of US$34 million. The latest revised estimate for completion of the project was about double the appraisal estimate. There was an exorbitant increase in establishment costs for oil palm up to December 1981, reaching US$6,910 and US$7,840 per hectare for smallholder and estate plantings, respectively;2! these levels exceeded appraisal estimates by 267% and 176%, respectively. 13. The returns to investments made up to the date of cancellation, both financial and economic, were re-estimated to be negative. II. MAIN ISSUES A. Impediments to Success 14. Cost Escalation. Actual total project costs cannot be compared directly with appraisal estimates as the projects were not completed. However, it is clear that the projects were on the way to be much costlier than estimated at appraisal due to implementation delays, inefficient operations and higher than expected inflation. This problem was recognized early as is shown, for example, by an upward revision of costs for the Bendel project by a supervision mission in 1976 - more than a year prior to Loan 2/ Oil palm plantations established in Ivory Coast during the same period cost about US$1,400 per ha. effectiveness. It is estimated in the PCR that total project costs would have more than doubled had the projects been completed as originally designed, based on the status of implementation in late 1981. But even with timely implementation there would have been a sizeable cost overrun because of the inadequate price contingencies allowed at appraisal. The PCR also states (para. 3.63) that the cost of establishing oil palm per hectare by late 1981 had exceeded appraisal estimates by 80% for the Bendel project, and by about 180% to 270% for the Ondo project. In retrospect, that the appraisal assumptions were inadequate can be surmised from the following table, although the Consumer Price Index can only serve as an imprecise proxy for factor cost inflation relevant for the projects: CONSUMER PRICE INDEX AND APPRAISAL PRICE CONTINGENCIES, 1974-1981 Appraisal Assumptions for Increases in the Cost of Actual Increase Civil Works, Vehicles, Equipment Labor, Salaries in Consumer Buildings and Non-Labor Farm Operations, Con- Price Index and Houses Inputs sultancies and Training --------------------------------Percent--------------------------------- 1974 12.0 18.0 14.0 7.0 1975 33.0 15.0 11.0 7.0 1976 24.0 12.0 7.5 7.0 1977 19.0 12.0 7.5 7.0 1978 19.0 12.0 7.5 7.0 1979 11.0 12.0 7.5 7.0 1980 11.0 12.0 7.5 7.0 1981 22.0 12.0 7.5 7.0 Compounded Total 1974-1981 293.0 168.0 95.0 72.0 15. Rapid inflation posed significant problems for smallholders and estates alike, rendering existing financing arrangements inadequate and threatening the operations' financial viability. Especially wage rates went out of bounds, increasing from around NO.70 per day in 1974 to between N5.00 per day (for regular work) and N10.00 per day (for harvesting) in late 1981. This amounts to an annual increase of about 35%, compared with 7% assumed at appraisal. Since the sale price of fresh fruit bunches increased only from N20/t to N70/t, the much more rapidly rising cost of hired labor, mainly used for oil palm establishment, acted as a disincentive for - 5 - smallholder production. For the estates, the high wages in combination with the employment of considerably more workers than were required contributed greatly to the deterioration in their financial position. 16. The cost escalation problem and the associated financing implica- tions were decisive factors in the Bank's cancellation decision. In the audit's view, cost overruns were the leading cause of project entities' financial difficulties and of the deteriorating viability of the projects. However, the unsuccessful implementation should not a priori be attributed to cost escalation. Possible remedies for cost overruns would have been a reduction in project scope and/or provision of supplementary financing. As an attempt to scale down the project at the appropriate time was not made, the financing problem became overwhelming. 17. Local Funding. Shortage of local funds under inflationary condi- tions became an increasingly severe constraint in the implementation of both projects. In addition to shortfalls in appropriations by the Federal and State Governments, the erratic release of the limited funds that were avail- able made project operations extremely difficult. The only entity not suf- fering from a severe financial problem in early 1982 was the Tree Crop Unit (TCU) in Bendel State, mainly because TCU failed to pass on to the Oil Palm Company (OPC) part of the contribution received from the Federal Department of Agriculture (FDA). OPC, in contrast, was in dire financial straights as Bendel State Government (BDSG) failed to budget adequate amounts and refused even to release already budgeted funds on account of disputes with OPC man- agement. A separate problem had developed regarding the construction of the Nsukwa Palm Oil Mill. For several reasons, including absence of procurement conditions, project management decided to finance construction of the mill through the Nigerian Agricultural Cooperative Bank (NACB) from which funds had become available only after completion of the Bank Loan Agreement. But this arrangement later encountered difficulties, jeopardizing progress in the mill's construction. In Ondo State, the Smallholder Management Unit (SMU) was desperately short of funds, and the Bank insisted that an overdraft faci- lity be provided for SMU; arrangements for that facility were never complet- ed. The terms of financing provided by Ondo State Government (ODSG) for the Okitipupa Oil Palm Company (OOPC) remained in dispute, leaving the company in an illiquid situation. 18. The seriousness of the funding problems was aggravated for two rea- sons. First, the rapid inflation had caused sharp increases in the projects' capital and operating costs and, consequently, in the executing agencies' financial requirements. Second, Government's worsening revenue situation and overcommitment regarding investments in other sectors reduced the projects' priority ranking. The Bank's judgment that it was unlikely that sufficient local funds could be provided for the completion of the projects was a major factor in its cancellation decision. In the audit's view, as the Borrower had not been meeting obligations to provide adequate funds for these projects and Government's general revenue conditions were deteriorating at that time, the Bank's assessment of future funding prospects was realistic. - 6 - 19. Management Weaknesses. A major causative factor of the project's poor progress and eventual demise was management deficiencies in all participating entities: TCU, OPC, SMU, OOPC and the MEU. But because of their pivotal role, management problems in the companies, i.e., OPC and OOPC, were most detrimental overall. The problems were due to inadequate staffing and outside interference. The consequences were poor planning of operations, failure to provide audited accounts on a timely basis and to meet other terms of the Loan/Project Agreements, staff indiscipline, irregular practices, and failure to respond adequately to Bank supervision recommendations. Although problems with management were identified early it proved extremely difficult to take corrective measures. The engagement of a managing agent at OPC was accomplished only in the face of imminent cancellation, and certain key staff positions in other agencies were never filled to the Bank's satisfaction. Interference with political overtones at the State level certainly was a contributing, if perhaps not a decisive factor. There was a perceptible link between the funding and management difficulties. In some cases funds were not released for the projects because of antagonism between project management and Government officials, and, contrariwise, there is evidence that management deteriorated as a result of shortage of funds. 20. The audit considers management deficiencies as the primary operational cause of the projects' unsatisfactory outcome. Organizational aspects, such as lack of managerial autonomy of the project entities, aggravated the situation. Areas where better management could have improved performance directly include procurement and the application of available funds, accounting, operation of the nurseries, maintenance of established palm stands, collection of fruits from smallholders, and improvement of roads. The question whether increased involvement of expatriate staff could have altered the outcome cannot be answered conclusively. Major prerequi- sites for effective expatriate assistance are the recruitment of suitable individuals and full support on the part of local authorities. It is doubt- ful whether the necessary independence would have been granted by the authorities, and experience with the quality of expatriate staff that actually was involved was only mixed. 21. Land Acquisition. The projects provided for an expansion of the nuclear estates through acquisition of land by the respective States and conveyance of this land to the estate companies under long-term lease arrangements. In Bendel State OPC was to receive an additional 2,800 ha each at Nsukwa and Mosogar, and in Ondo State OOPC was to expand the Igbotako estate by 800 ha and establish new estates at Oluwa and lyansan with an area of 1,200 ha and 4,000 ha, respectively. Since acquisition of additional lands for the estates was recognized at appraisal as a difficult undertaking under local conditions, land acquisition was made a condition of Loan effec- tiveness. 22. The experience with land acquisition was discouraging. Initially, the loans did not become effective for over two years, partly because of difficulties in obtaining the required areas. In fact, the condition was relaxed informally from the companies' having to take possession of all lands - 7 - to having taken possession of sufficient areas to begin operations. The consequence of this action was that land acquisition remained an issue under both projects until the date of cancellation. The surrounding communities were reluctant to sell Land to the States, especially since agreement on compensation could not be reached. In the latter years, payment for the tracts of land that could. be obtained became a major obstacle in view of the tight financial situation, as is evident from the conditions presented to Government by the Bank to avoid cancellation in late 1981. These included payments to Obaretin community in Bendel State and for lyansan land in Ondo State. 23. The uncertainty arising from land acqusition posed serious problems for the companies, both in terms of sizing investments in processing facilities and in planning their operations. The audit is of the opinion that the complex issue of land acquisition adversely affected the implementation of the projects, but did not cause the failures. In retrospect the Bank's actions in this regard can be questioned. Instead of repeatedly impressing upon the Nigerian authorities the need to acquire the agreed areas, it might have been more productive to restructure the project with a view to reduce incremental land requirements. Having failed to do this and given the provisions in the Loan Agreements it is, of course, difficult to escape the conclusion that the Borrower was unable to live up to essential commitments and, therefore, that cancellation was partly justified on these grounds. 24. Smallholder Participation. The performance of smallholders, though below appraisal estimates, was encouraging from time to time before it deteriorated markedly in recent years, particularly in Ondo State. Two major adverse factors can be identified. The first includes project design flaws and unfavorable externalities during implementation, while the second comprises organizational aspects of smallholder production. There were two major shortcomings in project design, related to land tenure and food security. Under traditional local patterns of land tenure, which entail communal control, it was difficult to secure the necessary long-term user rights for project participants. Smallholder participation was thus reduced on account of unresolved land problems. The food security element entered the picture when farmers were originally prohibited from intercropping young oil palm stands with food crops in order to facilitate weed control and maximum growth of the trees. However, farmers tended to be unwilling to accept the risk of subsistence food shortfalls and were hardly participating at all until some intercropping was tolerated. While these problems could not have been completely averted, they could have been treated with more foresight at appraisal. 25. A number of occurrences beyond the control of project or even State authorities also agitated against smallholder participation. Foremost among these were effects related to the boom conditions of the late 1970s, i.e., the migration of rural labor to the growing economic centers and rapidly rising costs, particularly wage costs. The previously established norms for farmer cash loans of N100/ha were inadequate by the time the Bank loans were - 8 - declared effective and, because of the continuing general inflation, cost increases had again outpaced the credit provision when it was finally raised to N300/ha in 1980. In addition to the reduced profitability of oil palm, farmers were thus faced with severe liquidity problems in the years after planting. 26. Major disincentives to smallholder participation were also due to organizational/managerial problems. The involvement of several agencies with respect to management and services was a disadvantage for both projects. Furthermore, both executing agencies in charge of smallholders, i.e., TCU and especially SMU, suffered from managerial deficiencies with far-reaching consequences for the farmers. They were unable to induce sufficient cooperative development to assure an adequate supply of credit or to mitigate the effects of poorly functioning credit cooperatives through alternative measures. Inputs often were not available in a timely fashion. Nurseries were poorly managed. Road construction and maintenance were unsatisfactory in Bendel State. The collection of fresh fruit bunches was neglected, and processing was hindered by the operation of run-down oil mills. The committee established to oversee the pricing of smallholder fruit did not become functional in Bendel State. In addition to these shortcomings of TCU and SMU, the estate companies, i.e., OPC and OOPC, were mostly delinquent with respect to their obligations towards smallholder producers. 27. In the audit's view, the ingredients for success were patently lacking in the smallholder components of these projects. It should be instructive to determine in a future audit of the Imo State Oil Palm Project why the smallholder component in that project has been proceeding more satisfactorily than it had in the two present projects. 28. In conclusion, the audit considers poor management and lack of Government commitment as the prime sources of failure of these projects. Cost escalation and funding problems certainly were contributory factors but, with better management and more political support, costs could have been contained more effectively and funds possibly provided. An appropriate and timely reformulation of the project could have minimized the problems of land acquisition and smallholder participation - and at the same time reduced cost overruns. B. The Course of Bank Action 29. Project Formulation and Appraisal. The Bank played a major role in the preparatory phase of these projects. Bank involvement started with an identification mission in November 1972, prompted by an accurate assessment of a growing edible oils deficit in the country. There also was a desire to generate projects for Bank support in the Southern States. A massive preparation effort followed in January 1973 which resulted in the completion in June 1973 of feasibility work for five oil palm projects in four States. Three of these were jointly appraised in November 1973; a fourth was separately prepared and appraised later. There were no major issues at appraisal and few changes were made in project design, largely because of - 9 - continuity of key Bank staff involved. After Board approval, the Bank was heavily involved in the recruitment of project staff through its West Africa Agricultural Project Management Unit (APMU). 30. The question presents itself whether assuming such a high profile in these projects placed the Bank in a special position with respect to the projects' outcome, particularly considering that two of the initial three projects were prepared, appraised, approved, suspended twice and cancelled simultaneously. After all, project preparation could have been undertaken by consultants for the State Governments, and loans could have been scheduled in sequence over several years. In defense of the Bank's strategy, there were presumed to be economies involved in developing several projects together. Furthermore, since the Nigerian States are fully self-administering, project operations in one State have no direct bearing on project operations in other States, considerably weakening the argument of local overcommitment. In some respects, therefore, the Bank's approach was justified. But there remain aspects of appraisal risk and of workload implications for Bank staff. By promoting several oil palm projects without relevant prior experience in the Southern States, there was an enhanced risk of committing mistakes at appraisal and of failing to take appropriate remedial action when needed because of the missing experience factor. There also was the risk of assuming the conditions in the four States to be more alike than they actually were, reducing the validity of replicating a model design in these States. 31. The PCR does point out some weaknesses in project appraisal which became apparent during implementation. For example, the problems of land availability for estate expansion and of land use rights with respect to smallholders' perennial tree crop cultivation either did not receive sufficient attention or were misjudged. The role of intercropping in relation to smallholders' foodcrop production was incorrectly assessed, and institutional aspects were misjudged. It is difficult to say whether these shortcomings could have been easily avoided, but there can be no argument that their impact was aggravated by the fact that there was more than one project involved. It is equally plausible, on the other hand, that certain adverse developments, such as the flight of rural labor and high inflation, could hardly have been assessed more accurately in these projects than in appraisals of other projects in Nigeria or elsewhere. 32. The experience with the projects suggests that while the Bank's simultaneous involvement in three oil palm projects in Nigeria was not a direct determinant of the eventual outcome, it did expose the Bank to the increased risk of being party to failing projects and, as such, turned out to be an undesirable strategy. It also shows that extensive participation of Bank staff, be it in project preparation or the recruitment of project staff, in itself is no guaranteE for success. More Borrower responsibility in the preparation of these projects might even have had a salutary effect. 33. The Decision to Cancel. In sharp contrast to the expeditious intial processing of these projects - it took only 23 months from - 10 - identification to loan negotiations - progress was extremely slow thereafter. Board approval occurred nearly eight months after the completion of negotiations on account of unresolved matters pertaining to interest rates. Moreover, the period between Board approval and loan effectiveness was 28 months for the Bendel project and 32 months for the Ondo project.3! The idea of cancelling the loans instead of declaring them effective was considered in September 1977, but rejected on country as well as project grounds. Disbursement of the loans was suspended for the first time about three years after the Date of Effectiveness; cancellation followed about one year and a half after that. 34. To evaluate the Bank's decision to cancel, the projects' progress has to be compared against their own targets, as well as the experience with other projects. By the cancellation date, the projects had achieved 45% (11,515 ha) of their combined final planting target and claimed 43% (US$19.7 million) of the combined loan amount in disbursements; compared with the appraisal disbursement estimates for June 1982, actual disbursements repre- sented 52% of the target. Cancellation took place one and a half years prior to the original completion date and two and a half years prior to the original closing date.4/ A comparison with disbursement profiles for 21 Bank-financed agricultural projects in Nigeria (FY71-81) shows that the rate of disbursement for the two projects was approximately one-half the rate typical for the agricultural sector in that country. The profiles are given below. COMPARATIVE DISBURSEMENT PROFILES Year From Approval Date Loans 1 2 3 4 5 6 7 8 9 ------------------(Percent)--------------- 21 Agricultural Projects 1 9 21 36 53 69 83 93 100 Loan 1183-UNI 0 0 3 15 21 32 43 Loan 1192-UNI 0 0 17 22 25 31 41 3/ The equivalent average period for 55 agricultural projects included in OED's Ninth Annual Review of Project Performance Audit Results (Report No. 4720, dated 09/16/83) was 7.5 months. 4/ To put this observation into perspective, actual completion of 54 agri- cultural projects reviewed by OED in 1982 exceeded the completion period estimated for those projects at appraisal by an average of 19 months. - 11 - 35. In reviewing progress of these projects, the impression is gained that overall performance in the years immediately preceding cancellation was neither significantly worse nor better than during the earlier years; it was poor throughout. The problems of management, local funding and land availability existed from the beginning, and the number of participating smallholders never approached the annual target. The problems of fresh fruit collection and milling capacity only became more pressing in latter years because of the increasing volume of fresh fruit to be collected and processed. Based on this pattern of performance, the Borrower's failure to comply with a number of key covenants in the Loan/Project Agreements (PCR, para. 3.71), the inadequate response by Federal and State authorities to the Bank's conditions to avoid cancellation, and the reduced viability of the projects, the audit considers cancellation of the loans amply justified. 36. There are aspects, however, that could have been handled dif- ferently, given the unsatisfactory history of these projects. For example, the audit strongly questions the timing of cancellation. In restrospect, with the poor progress and rapid inflation, there would have been good grounds for the Bank to refuse to declare the loans effective and cancel after a reasonable waiting period, but not later than two years after Board approval. Instead, the Bank eased one effectiveness condition (land acqui- sition) and declared the two loans effective 28 and 32 months, respectively, after Board approval.. Barring cancellation at that time, more decisive action could have been taken following the Bank's warning letter to Govern- ment in December 1979. But what must be really questioned was the decision to lift the suspension of disbursements in November 1981. The suspension had been initiated in February of that year and cancellation was indicated as a possible option if certain conditions were not met. Several supervision missions reported poor progress during the suspension period. By the end of October 1981, none of the required actions had been completed, except a managing agent had been appointed for OPC. Yet the Bank considered progress adequate and resumed disbursements. With hindsight, cancellation at that point would have been appropriate. Actual cancellation seven months later constituted a sharp reversal of the November 1981 decision in the light of the undramatic changes in project performance during the intervening period. 37. An aspect that, with hindsight, could have enhanced the efficiency of the Bank's decision making concerns the supervision process. Essentially, the level of supervision was gradually intensified from a below-average level in the initial years to a frantic pace immediately prior to February 1982. The threat of suspension/cancellation was advanced in an escalating but not very consistent manner from late 1977 onwards. Two aspects might have been handled differently by the Bank. First, there were too many rolling deadlines for action to be taken by the Borrower, starting with the first deadline in March 1980. Compliance dates were frequently postponed in the following months and prior to the first suspension about one year later, and again before the second suspension and eventual cancellation. The disad- vantage of this approach is that, on the one hand, it gives the Borrower a sequence of relatively short periods within which to act while on the other hand, it lacks the air of determination. The other questionable aspect on - 12 - the Bank's part was the pattern of supervision, specifically the fact that the size and staff composition of the ever more frequently arriving supervision missions remained virtually the same, and time spent in the field remained inadequately short. Moreover, supervision missions were interspersed with various other Bank individuals visiting project authorities for discussions.5/ The audit considers that a more effective measure than this intensive but scattered effort would have been a complete re-appraisal some time in 1979/80. An appraisal mission, adequately staffed, could have reduced the scope of the projects, reevaluated the organizational/managerial and financial situation and made operational recommendations. Cancellation might have followed immediately if unacceptable economic rates of return had been arrived at. But if the reformulated projects had been found viable, schedules of performance indicators should have been established, with major reviews and firm prospects for possible cancellation set about a year after reappraisal. In this way, Government would have received a stronger signal of the Bank's concern and determination, the projects would have been set on a firmer footing, and project authorities would have had a reasonable period to show decisive results. 38. A lesson to be drawn from this experience is that the Bank should take drastic and timely action, such as reappraisal, where major implemen- tation problems are indicated to persist and cancellation may have to be considered. Such action should be aimed at introducing changes in design that might be required and putting the Borrower on firm notice of the possi- bility of cancellation within a clearly specified period. 39. The Aftermath. At the time of loan cancellation OPC, OOPC and SMU were facing serious financial problems, and all entities involved were having operational difficulties. There were over 1,400 smallholder participants who had made oil palm investments on the basis of certain expectations with respect to being offered continued services and to the eventual pay-off. The PCR fails to provide any information concerning the projects' financial arrangements subsequent to cancellation of the Bank loans and the likely effect on the executing agencies and intended beneficiaries. In the audit's view, the Bank should assess in these and other cases where loans are cancelled prior to completion of the projects the physical and financial consequences to the organizations, contractors, individuals and others imme- diately affected and prepare a cancellation impact statement as part of the PCR. 5/ The Region advises that: "Towards the end of the project, little or nothing was happening in the fields (because of lack of local funds and management) and the priority issues for attention were the financial problem and the weak management. Supervision missions were accordingly constituted to deal with these issues and not technical ones." - 13 - TABLE 1 PROJECT PERFORMANCE AUDIT REPORT NIGERIA - BENDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) DISBURSEMENTS Loan Agreement Final Category Schedule 1 (12/31/75) Disbursement /a (US$ millions) (US$ millions) 1. Grants and sub-loans to smallholders 2.4 1.0 2. TCU - Project administration and services, buildings and roads, equipment, staff salaries, operatiag expenses and training 1.6 1.2 3. OPC (a) Development of estates and related infrastructure and operating expenses 5.4 7.8 (b) Investment in palm oil mills and fruit collection 4.6 - (c) Salaries, allowances and other operating expenses of non-Nigerian staff - 0.2 4. Tree Crop Section of MEU, buildings and equipment, staff salaries, operating expenses and consultancy services 2.8 2.6 5. Field studies for small scale processing, equipment needed for NIFOR training center 0.3 /b 6. Unallocated 12.4 - Total disbursed 29.5 12.8 Undisbursed - 0.2/c Cancelled 16.5 /a As of 09/30/83. /b Actual disbursements were less than US$10,000. /c There remained an undisbursed balance of about US$169,000, most of which was expected to be cancelled. - 14 - TABLE 2 PROJECT PERFORMANCE AUDIT REPORT NIGERIA - ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) DISBURSEMENTS Loan Agreement Final Category Schedule 1 (09/22/76) Disbursement /a (US$ millions) (US$ millions) 1. Grants and sub-loans to smallholders 1.2 1.0 2. SMU - Project administration and services, buildings and roads, equipment, staff salaries, operating expenses and training 1.0 1.3 /b 3. OOPC (a) Development of estates and related infrastructure and operating expenses 5.0 4.6 (b) Investment in palm oil mills and fruit collection 2.7 - 4. Unallocated 7.1 - Total 17.0 6.9 Cancelled - 10.1 /a As of June 16, 1982, the date of final disbursement from the Loan. /b An amendment to the Loan Agreement provided for a separate disbursement sub-category for SMU for "salaries, allowances and other operating expenses of non-Nigerian staff". Actual disbursements were about US$0.30 million for this sub-category, and about US$0.99 million for the remainder of Category 2. - 15 - NIGERIA BEYTDEL STATE OIL PALM PROJECT (LOAN 1183-UNI) ONDO STATE OIL PALM PROJECT (LOAN 1192-UNI) PROJECT COMPLETION REPORT June 29, 1983 Western Africa Projects Department  - 17 - NIGERIA BENDEL AND ONDO OIL PALM PROJECTS (Loans 1183 and 1192-UNI) Completion Report I. BACKGROUND 1.01 Responding to a request from the Federal Military Government of Nigeria to help finance the expansion of high yielding oil palm, the World Bank appraised proposals and agreed in 1975 to lend N43.2 million (US$65.5 million) for three projects to be located in the then Western, Mid-Western and East Central States. These projects subsequently became known as Ondo, Bendel, and Imo Oil Palm Projects. 1.02 This is the completion report for the Ondo and Bendel Oil Palm Projects, the loans of which were cancelled in June 1982. The Imo Oil Palm Project is still in the process of implementation. The Agricultural Sector 1.03 Agriculture provides all but a small proportion of the Nigeria's food supply. Until about 15 years ago, it was a major earner of foreign exchange. Presently, its entire production of staple foods, animal products, palm oil, cotton, and groundnut is consumed locally and is declining relative to demand. 1.04 The varied ecological conditions in the country are conducive to a wide range of agricultural activity that is highly specialized by region and function. Concentrated in about 2.5 mn ha in the higher rainfall states of Ondo, Bendel, Imo, and Rivers in the southern part of the country, oil palm is generally the wild type and cultivated mostly by smallholders. The yield of the wild palm is about 2.5 t/ha of fresh fruit bunches (ffb). Because of the growing demand for palm oil and palm kernel oil, the Government of Nigeria has been trying to stimulate production in order to remain self-sufficient in these commodities. The demand projections for 1985 indicated that the country would have to develop an additional 125,000 ha of high-yielding trees (10-12.5 t/ha ffb per annum) between 1975 and 1985 to avoid any importation of these oils or their substitutes. The four oil palm projects supported by the Bank beginning in 1975 in Ondo, Bendel, Imo, and later in Rivers State were to contribute towards such self-sufficiency. The projects would to help raise smallholder productivity by ensuring that the necessary technology, inputs, and infrastructure were available for them to take full advantage of production incentives. - 18 - 1.05 The Bendel Oil Palm Project, comprising a smallholder element and nucleus estates, is concentrated in two main areas: (1) The Sapele ara in the west center of the state with (a) two nucleus estates--the new Mosogar of 2,800 ha and the old Ajagbodudu (formerly Cowan); and (b) about 4,000 ha smallholders within the area lying in the zone north of the Ethiope and Benin Rivers. (2) The Agbor Area in the East Center with (a) one nucleus estate of 2,800 ha at Nsukwa; and (b) about 4,000 ha smallholdings lying in the zone west and southeast of the Nsukwa nucleus estate. 1.06 The Ondo Oil Palm Project, comprising a smallholder element and a nucleus estate, is located in two distinct areas in the south of the state and divided by the Oluwa iver as follows: (a) 3,000 ha of tmallholder development west of the river within a radius of 30 km of the mill at Okitipupa and 1,000 ha east of the river and to be served by a proposed new mill in that area; (b) 2,000 ha of nucleus estates west of the river, including expansion of the existing Igbotado estate by 800 ha; 4,000 ha east of the river, and a new mill. 1.07 The climate, soil and other natural production factors are suitable for oil palm, but communications and other infrastructure required upgrading. The areas are heavily populated. In 1974, populations were about 160,000 and 260,000 in the Sapele and Agbor areas of Bendel, giving densities of 200 persons/km2 and 250 persons/km2, respectively. Until the oil boom, they had labor surpluses and little alternative to agriculture for employment. 1.08 The land use pattern is guided largely by a tenure system that was dominated by communal lands controlled by the head of the community in consultation with chiefs and elders. Individuals or families may use these lands under conditions established by the community elders. With already dense populations, restrictions were rigidly applied. State acquisition of lands was possible, either by compulsory or voluntary arrangements through the Public Lands Acquisition Law, but compulsory acquisition is normally a last resort. 1.09 The main smallholder enterprise is food crop production, using simple technology and based on the traditional bush fallow/arable crop rotation for fertility regeneration. In Bendel, the main cash crop was rubber which is no longer profitable, and in Ondo, it was foodcrops. While some oil palm is gradually being planted, the bulk of smallholder production is harvested from wild trees. - 19 - II. PROJECT FORMULATION 2.01 The Bendel and Ondo Oil Palm Projects were identified in late 1972 by the Federal Government and prepared by a team of consultants and Bank staff in 1973. Appraisal took place in 1974. They were designed to establish 26,000 ha of high yielding trees and four modern central milling facilities under the State Ministries of Agriculture and Natural Resources (MANR). Since a continuous and adequate supply of fresh fruit is necessary for efficient mill management, the plan was to establish a little over half the area--8,000 ha in Bendel and 6,000 ha in Ondo--as nucleus estates with the surrounding smallholders contributing the remaining 8,000 and 4,000 ha. 2.02 The 26,000 ha of new palms were to be established over nine years (1975-1983) and were to have been Phase I of a program to establish 43,000 ha by the end of 1986. The projects were to include: Smallholders (a) planting about 8,000 ha of oil palm on smallholdings in Bendel, and 4,000 ha in Ondo; (b) creating, by the Bendel State Government, an Oil Palm Division with two regional sections within the Tree Crop Unit (TCU) established under the Second Cocoa Project; and in Ondo, a Smallholder Management Unit (SMU); (c) improving about 299 km of earth roads in Bendel and 148 km in Ondo to facilitate all-weather collection of fresh fruit from smallholders; (d) operating grant/credit schemes for smallholders; (e) training staff and smallholders at selected institutions and through in-service courses; Estates (f) new planting/replanting about 8,000 ha of nucleus estates to be managed by the Bendel Government-owned Oil Palm Company (OPC) and 6,000 ha by the Western Oil Palm Company, later renamed the Okitipupa Oil Palm Company (OOPC) in Ondo, also Government-owned; (g) constructing and operating two palm oil mills each by the OPC and OOPC for estate and smallholder production; (h) establishing fruit collection systems to be operated by the OPC (Bendel) and OOPC (Ondo) for estates and small- holder production; - 20 - Evaluation and Research (i) establishing under the Federal Department of Agriculture a Monitoring and Evaluation Unit (MEU) with a Tree Crop Section at Benin; (j) initiating field studies at the Nigerian Institute for Oil Palm Research (NIFOR) in small-scale processing of fruits from wild palm. Essential Features Smallholders (a) The Smallholder Management Unit (SMU) in the Ondo State Ministry of Agrigulture and Natural Resources and the Tree Crop Unit (TCU) of the Bendel State Ministry of Agriculture and Natural Resources (MANR), headquartered in Benin City, were to have appropriate field units to appraise smallholder applications for credits and grants and to supervise technical and financial services in establishing and monitoring the crop. (b) The smallholdings were to be within a radius of 25 and 30 km of the mills. Planting was to be restricted to a farm size of between 1-10 ha located within 600 meters of all-weather roads capable of accommodating at least seven tonne fruit collection trucks. (c) The fruit collection road network for Bendel consisted of 451 km, of which 106 km were paved and 345 km were earth roads. About 299 km earth roads were to be upgraded by the project, and 75 km paved roads were to be repaired by the Ministry of Works and Transport (MWT). The two areas in Ondo were already served by an adequate network of 239 km of which 67 km were paved, but most were in need of repair or upgrading. The Ministry of Works and Transport was to repair the paved roads out of its recurrent budget and the project would upgrade 148 km earth roads, contracting it under the supervision of the SMU Road Engineer. A paved two-lane access road (500 m) was also to be provided for the new OOPC oil mill. The MWT of each state would maintain the roads within their jurisdiction. (d) The projects were to provide smallholder incentives such as grants of plants, materials, and cash loans for clearing, planting, and maintenance of fields. In addition, measures were to be instituted to ensure - 21 - satisfactory prices by the mills and reliable fruit- collection systems. 2.03 The projects limited the grants and credits to smallholders with a minimum of one hectare and a maximum of ten. One ha is the smallest unit then considered practical to administer, while ten ha would require the smallholder to hire outside labor to maintain mature palms and his food crop cultivations. Participants were required to be members of a registered cooperative society or (in Ondo) the Western State Farmers Union (WSFU), which would serve as agencies that would determine the amount of grants/credits to members, monitor the use of funds, and undertake repayment collection. The Government of Nigeria, with assistance from FAO, instituted a major program for the development of farmers' cooperatives. 2.04 Total cost of clearing land, planting, and maintaining palms into the fourth year was estimated at N330/ha. TCU and SMU were to administer the programs as follows: (a) They would distribute free palm seedlings, cover crop seeds, wire netting, fertilizer and other chemicals to a value of N170/ha. (b) They would provide cash credit of N100/ha for part cost of labor. (c) Credit terms would be for 13 years at 9.5% interest with a grace period of 7 years, during which interest could be capitalized. (d) The smallholder was to contribute the estimated balance of N60/ha in the form of labor and tools. (e) Smallholder repayments to the TCU and SMU for the loans were to be made through the cooperatives by deductions of fruit sold to central processing mills, and for which they were to give binding undertakings. 2.05 Training of varying duration was to be provided at appropriate institutions in Nigeria and abroad. It would be for the wide cross section of Nigerian field and management staff who would assume full responsibility for the project on completion of expatriate staff contracts. Estates 2.06 The Bendel OPC was to establish two new estates of 2,800 ha each at Nsukwa (Agbor area) and Mosogar (Sapele area) and to replant 2,240 ha on Ajagbodudu estate (Sapele). The Ondo OPC was to expand Igbotado Estate by 800 ha, and the new Omi-Orisa Estate (renamed Apoi) east of the Oluwa River by 1,200 ha, and establish 4,000 ha at lyansan Estates. The lands were to be acquired and registered by the State Governments under the Public Lands - 22 - Acquisition Law and leased to the O.C and the OOPC under a 99 year term. The project included land clearing and plant preparation, roads, staff and labor housing, crop maintenance, and new mills. Since labor was sufficient, land clearing was done by hand, using chainsaws where possible. Pre-germinated palm seeds were to be obtained from NIFOR and adequate nurseries were to be established on each estate. Weed control, particularly of Eupatorium, was mainly by establishing cover crops. 2.07 In Bendel, the existing mill at Ajagbodudu estate was to process early production up to 1981 by which time two new mills, one of 30 t/hr capacity in Sapele and the other of 20 t/hr in Agbor, were to be constructed by 1982. It was estimated that by 1990 full production of 115,000 t of ffb in Sapele and 72,000 t ffb in Agbor would be reached. Milling facilities were to be planned for the production buildup from 1982 and 1990. In Ondo, a new mill of 10 t/hr capacity, expandable to 20 t/hr, was to be constructed somewhere between Apoi and lyansan Estates, while the 20 t/hr mill at Okitipupa was to be expanded to 30 t/hr. Consultants acceptable to the State and the Bank were to be retained by OPC to prepare mill design and tender specifications. 2.08 Mill development proposals were to be in line with overall production programs, and confirmation of this was to be provided by TCU, SMU and the Tree Crop Section of the Monitoring and Evaluation Unit. In addition, OPC and OOPC were to adopt, not later than 1980, a pricing formula for the purchase of ffb from smallholders, determined in accordance with principles acceptable to the Bank, by a Price Policy Committee of specified officials, and institutional and farmers' representatatives. TCU and SMU were to ensure that acceptable percentages (agreed with OPC and OOPC) of the estimated smallholder production would be delivered to the different mills. Any losses incurred by OPC and OOPC as a result of delivery shortfalls would be assumed by the respective State Governments. III. IMPLEMENTATION A. Effective iess and Start-up 3.01 The Bendel project became effective on October 14, 1977, 18 months after the original date,April 29, 1976, while Ondo became effective on February 13, 1978, 14 months after the original date of December 21, 1976. The termination dates were postponed six times for Bendel and five times for Ondo. The delays were due to the following: (a) lack of satisfactory arrangements for acquiring land for estate development; (b) delays in executing and delivering the subsidiary loan agreements between the Federal Military Government (FMG) and the states, and between the states and their respective companies, Ondo State and the Okitipupa Oil - 23 - Palm Company Ltd. (OPC), Bendel State and the Oil Palm Company Ltd. (OPC); and (c) delayS in the submission of state and federal legal opinoas. 3.02 The Bendel project startup was delayed by lack of counterpart funding and difficuli.ies in recruiting suitable management staff. These two issues caused problems for the project from the start and jeopardized the progress of its three components: OPC, TCU, and MEU. By May 1978, OPC had not succeeded in finding a qualified General Manager, an Estate Manager, a Senior Accountant, and an Internal Auditor. TCU had an acceptable General Manager who was seconded on a temporary basis only. Its Field Operation Controller was unsuitable; its accounting staff, inadequate, and its Internal Auditor was not appointed. On the issue of funding, both the Bendel State Government and Federal Government failed to provide on a regular basis the funds needed for the project to operate and develop properly. 3.03 The Ondo project's late startup can be attributed to the following problems: (a) difficulties in acquiring land for estate development; (b) the scarcity of labor, which became a serious constraint, especially for OOPC; and (c) delays in organizing SMU to attend to the smallholder program. At the start, funding was not an issue. The project had sufficient funds for its immediate needs, but as it gained momentum, funding became a major issue. Since 1977, state funding of OOPC ceased, and FMG's contributions to both SMU and OOPC, as well as State Government subventions to SMU, became inadequate, irregular, and in arrears. B. The Development Program 1. Bendel (i) Tree Crop UnLt (TCU) 3.04 Smallholder Participation. Social and economic conditions during implementation had changed significantly from those during appraisal in 1974/75 and contributed substantially to the smallholder shortfalls on SAR targets. Table 1 shows the extent of smallholder participation in the scheme. It was consistently below target. At the end of 1981, it had reached only 42% of the 1980 final target. The reasons for these failures stem from the following: NIGERIA Table 1 BENDEL STATE OIL PALM Smallholder Participation 1976-1981 1976 1977 1978 1979 1980 1981 Total Number of Parti&ipants - New 134 109 210 184 186 120 943 " "s - " Cumulative - 243 453 637 823 943 - Number of Previous Participants Extending - 53 104 198 270 332 - Number of Farms Planted 134 162 314 382 456 452 943 Planting Target - SAR (ha) 800 1,200 1,600 2,000 2,400 - 8,000 " - " " Cumulative 800 2,000 3,600 5,600 8,000 - Actual Planted (ha) 262 267 532 633 861 816 3,371 " " " Cumulative 262 529 1,061 1,694 2,555 3,371 2 Target Planted 33 22 33 32 28 - 42 Average Area Planted per Participant (ha) 1.95 1.65 1.69 1.66 1.89 1.80 3.57 - 25 - (a) Cost Increases - The cost of land clearing, planting and maintaining one hectare of oil palm up to the bearing age (three years) had increased sharply as shown below: Estimated Cost (N) per Hectare 1975 (SAR) 1977 (TCU) 1. Labor - for clearing, planting, and maintenance (a) Farmer's Contribution 60 174 (b) Hired (Credit) 100 300 2. Materials (Govt. Grant) - plants, seeds, wire netting, fertilizer 170 284 330 758 An increase in the loan limit was recommended in 1976 by the Advisory Committee. The State Government resisted the increase but in 1980, ultimately agreed to a raise of N300 per ha. In the meantime, farmers found it difficult to meet the increased labor cost. (b) Labor Shortage. The new activities arising from increased petroleum prices caused an exodus of agricultural labor to construction and other industries. Labor became scarce. The smallholder who depended on his family members to maintain his field now had to hire outside labor. (c) Availability of Land. Much cultivable land is held by the community which is often reluctant to allow individual planting of perennial crops. Some influential village heads were so opposed to the project that they discouraged members with individual holdings to participate. (d) Lack of Registered Cooperatives. Potential participants could have benefitted from the scheme only through membership in a recognized, well managed, registered cooperative. However, the cooperatives were relatively new, so few qualified, reducing sharply the number of eligible participants. Of the 57 cooperatives in the scheme, 52 were registered, but most were relatively new, weakly managed, and did not have the necessary experience in credit operations. TCU tried to help as many individuals as possible meet requirements but without much success. - 26 - (e) Delays in Supply of Inputs. Smallholders were often discouraged by long delays due to poor planning in securing supplies of farm inputs, particularly fertilizers and wire mesh, and credit for labor. (f) The Prohibition of Intercropping. Smallholders gave foodcrop cultivation the highest priority in the use of scarce land resources. If they were to put a relatively large part (at least one hectare) of their land solely on oil palm, their family food security would be endangered, and they therefore had no choice but to reject the scheme. Thus, after the Governments agreed to limited intercropping, smallholder participation increased. 3.05 TCU did not favor community or group-owned farms to participate, since there was no evidence of a communal or cooperative spirit to suggest that they would be properly maintained. Instead, it attempted, but without much success, to get the community leaders interested in oil palm planting on their holdings, hoping that their participation would trigger others to join. 3.06 The quality of the reduced smallholder plantings was mostly poor, and the causes have been outlined above. However, if extension staff were more committed and supervised farmers more frequently, field maintenance might have improved. Advantage could have been taken of the smallholder's anxiety to grow foodcrops between palms so as to maintain plants better, preventing their severe overcrowding and excessive shading. 3.07 The replacement of dead or damaged plants was generally late or neglected. Plants were provided late in the season after all new fields had received their requirements. This problem was particularly serious in the Agbor region. The Sapele region received better attention. Here, the amount of replacement plants ranged from 13% to 20% of fields planted in the period 1976 to 1979. The high wastage in the first year of planting was due both to the low quality of plants from the nurseries, as well as the subsequent lack of attention, overcrowding of weeds and intercrops, and rodent damage. 3.08 The problems of intercropping could have been reduced or avoided had proper and timely guidelines been drawn up on intercropping methods, range of compatible crop types, adequate weed control, and fertilizer application. Strict monitoring by extension staff could also have made a difference. 3.09 TCU Nurseries. Two nurseries located at Mosogar and Ejeme Unor provided plants for smallholders. Seed supplies from NIFOR were of acceptable quality and generally obtained on time. However, nursery management was below standard, and wastage was more than was necessary. The pre-nursery plants were often transplanted late in the main nursery, resulting in root binding and stunting, and a high culling percentage. - 27 - 3.10 In the main nursery area, inadequate attention was paid to weed and disease control. Fertilizer applications and watering were irregular and inadequate. Despite the high percentage of plants discarded, there was enough supply for the reduced hectarage each year. 3.11 Roads. The road improvement program did not begin until late 1980, when the road construction unit was established and a road engineer appointed. Because of past delays, the Bank provided technical assistance in recruiting a consultant. He prepared specifications and bid invitations for road construction equipment, so that procurement could take place before the road engineer and support staff were in post. 3.12 The Bank received the draft bid invitations for road construction equipment for review on September 29, 1980 and and gave its comments shortly afterwards. The -roject opened bids late in the year. Hence, delivery of equipment was too late to take advantage of the 1981 dry season. Furthermore, the project only advertised for Nigerian technical support staff in November 1980; hence, appointments were made well into 1981. 3.13 It was late in 1981 when the unit was fully organized to commence road upgrading. Preparatory work in survey and planning had taken much staff time. In the dry season of 1982, only about 20 km of the 299 km roads were constructed. 3.14 The MWT failed to maintain the roads within its jurisdiction, including the 451 km requiLred for the project, particularly for fruit - collection. The local government councils attempted limited maintenance on some roads within their jurisdiction, but their efforts were far short of what was needed to keep them in motorable condition. 3.15 Fruit Collection. No progress was made in establishing the fruit collection facility. In 1.980, it was agreed by both TCU and OPC that because of the considerably reduced area of bearing trees, their scattered nature, and inadequate road network, it was not economical then to organize the fruit collection system. The matter was to have been reviewed in 1981 with the hope of organizing the 1982 crop collection (expected to be sub- stantial enough for a central collection system), but no progress was made. Producers who harvested either processed for domestic use or sold the fresh fruit to small private processors nearby. 3.16 Processing of Smallholder Fruit. Until the construction of the planned mills in 1982, smallholder fruit was to have been processed at the existing OPC mills at Ajagbodudu and Nsukwa. With extra shifts, these mills had sufficient capacity to process the smallholder crop. It was also expected that should the need justify it, the old 9 t/hr mill at Obaretin (Cowan) could be renovated at moderate expense to provide additional capacity. The mill at NIFOR could also have taken some fruit as a Last resort. - 28 - 3.17 Pricing of Fresh Fruit. The committee for establishing a fair pricing formula for smallholder fruit was appointed and held its first meeting in November 1980, but up to a year later, it had not established any pricing formula. (ii) Oil Palm Co. (OPC) 3.18 Performance of Estates. Data in Table 2 collected from (1) MEU 1981 Reports, (2) Bank supervision reports, and (3) a Bookers Agriculture International Report (February 1982) disagree on planting achievements. The MEU figures, at best, show that by 1980 project estates had achieved 83% (4,633 ha) of the 1979 cumulative target of 5,600 ha of new plantings. In 1981, another 1,026 ha were planted bringing the total new plantings to 5,659 ha--slightly over the SAR 1979 totai carget. However, only 455 ha were replanted, about 31% of the SAR 1981 cumulative target of 1,440 ha. The overall achievement for new and replanted fields was about 87% of the 1981 cumulative targets. In the initial years, the OPC was ahead of schedule on new plantings at Nsukwa Estate. However, it lost momentum in failing to acquire in time the land required for the expansion program at Obaretia Estate. The difficult land acquisition process lasted almost four years during which alternative areas were sought. 3.19 The report by Bookers is based on surveys made in late 1981 when they took over management of the OPC estates. Their total planting figure of 4,930 ha comes more closely to that of the Bank, which at 5,180 ha is 85% of the MEU total of 6,104 ha and 74% of appraisal for 1981. Striking features of the Bookers data are the absence of planting statistics for 1977 and the somewhat high figures for 1980 and 1981. 3.20 In spite of some serious operational difficulties, the planting achievements up to December 1981, were surprisingly not unfavorable (MEU data 87%, Bank data 74% and Bookers data 70%). However, management and maintenance operations deteriorated further, and all agronomic practices became badly neglected. 3.21 The poor performance arose from lack of funds for labor and materials, and also from weak management. The differences which appeared between the estates can only be attributed to quality of management and field supervision. Labor force was inadequate, first for planting new areas and later for replanting old fields. Preparations for planting were often incomplete. Tree trunks and other debris left in the fields hampered maintenance operations, particularly weed control. In only a few instances was the Pueraria cover crop successfully established. Bush growth was generally excessive, especially the noxious Eupatorium. 3.22 Planting and maintenance were costlier than expected. Apart from the increased cost of labor and materials, weak management--including lack of forward planning of field operations and supplies, and supervision of labor--was again responsible. Table 2 OPC Estates Planting Program - Targets and Achievements (RA) t1975 - 1981) Year of Planting M n L . 180 19-1 19B2 Total New Plantings - (Obaretin and Naukva Estates) 1) BAR Targeta 800 1,200 1,600 2,000 5,600 BAR Targets - Cumulative 800 2,000 3,600 5,600 5,600 5,600 5,ooo 5,600 2) Actuals a. MWU Figure. 597 1,505 9.5 116 352 1.08d :k0pI 1,659 MW Figures - Cumulative 597 2,102 3,047 3,163 3.505 4,633 5,659 b. Bank Figures 597 1,060 882 116 382 654 600 4,291 Bank Figures - Cumulative 597 1,657 2,539 2.655 3,037 3,691 4,291 'o c. Booker, Figures 597 766 116 6h0 909 1,045 h,0T3 Bookers Figures - Cumulative .597 1,363 1,363 1,479 2,119 3,028 4,070 Reglantinga - A.,abodudu Estate (Formerly Cowan) 1) BAR Targets 60 800 800 2,240 SAR Target. - Cumulative 610 I,440 2,2h0 2) Actuals a. NEU Figures 445 445 MEU Figures - Cumulative 115 b. Bank Figures 434 455 889 Bank Figures - Cumulative 434 889 c. Bookers Figures '432 h25 857 Bookers 71gures - Cumulative h12 Ar7 Grand Totala - -EU - Bank 5,180 - Bookers 1,930 - 30 - 3.23 Estate Nurseries. Management of the OPC nurseries was average to poor. Good seeds were generally provided by NIFOR. Germination rates were invariably satisfactory. Nursery wastage was high, however, sometimes exceeding 40%. The problems stemmed from delays in transplanting from the pre-nurseries; inadequate fertilizer applications, and poor disease and weed control; irregular irrigation; and the holding of plants too long in the main nurseries. Irrigation equipment was badly maintained. Fertilizer was often in short supply. Disease infestations were sporadic as control measures were not properly organized. 3.24 Estate Fruits Yield and Processing. Estate fruit yields were short of potential. In 1979, average yield was gi-ea as o.1 t ffb per ha. This low figure was ascribed to the mediocre performance of harvesting labor, which was inadequately supervised and left auch of the fruit on the trees. Likewise, low fertilizer applications and generally poor field maintenance contributed to the reduced yield. Project officials also believed that a considerable amount of fruit was stolen and went to small private processors. 3.25 Plans to construct two mills to begin operation in 1982 in the Sapele (Mosogar and Ajagbodudu Estates) and the Agbor (Nsukwa Estate) areas were not implemented. Decision was made to proceed with the mill for the Agbor area. However, because of cost increases and uncertainties about financing sources, it was not until 1980, after financing problems were resolved with the State Government and the NACB, that construction contracts were signed. Eventually, the project decided against the option of Bank financing for part of the factory cost, preferring to use NACB and state funds only. 3.26 Progress on the Agbor mill had been negligible, having stopped at civil works stage for lack of state funds to pay contractors. No decision had been taken on the timing of the other mill, and because of the small- holders' failure to reach anticipated plantings, the need for the mill now is clearly not justified. 3.27 In the meantime, estate fruit is processed in the old mills, all of which are operating at low efficiencies. The old pioneer mill at Nsukwa had to be reactivated to take care of the crop from the 1975-77 plantings, but its capacity is inadequate for all expected fruit. Another pioneer mill nearby was to be reactivated in 1982 to make up for the shortfall. Even so, their total capacity would be inadequate if all smallholder production is collected. 3.28 Fruit Collection System. The obligations of the OPC to collect and process smallholders' fruit were not honored because of lack of milling capacity and the estimated high collection cost. OPC, even if it had the milling capacity, was not satisfied that the collection system needed for all participating smallholders could be economically justified with the reduced and widely scattered production areas. In any case, shortage of funds would have made it difficult to acquire the equipment and other - 31 - facilities for an adequate collection system. Also, the road network was still in such an unsatisfactory condition to accommodate collection vehicles and rapid transport. 3.29 Studies of Small-scale Processing of Wild Palm. Provisions for a study on means of improving processing of fruit from wild trees made little progress. The implementing agency, a UNDP/NIFOR team located at NIFOR, had not started the study by :he end of 1979 when its contract was to end. Requests were then made to the UNDP to extend their contract, while arrangements to recruit specialist staff--an engineering manager and a processing manager--were started, and necessary funds released by the FDA. In early 1982, there was no progress made on these plans. ONDO (i) Smallholder Management Unit (SMU) 3.30 Smallholder Participation. The achievements of SMU and program participants are poor. Table 3 shows the SAR target and achievements in numbers of participants and the hectarage cultivated up to 1981. At the end of the projected planting program in 1980, only 30% of target was achieved. Planting continued beyond 1980, but at the end of 1981, reached only 35% of the target. Table 3. TARGETS AND ACHIEVEMENTS - ONDO OIL PALM PROJECT Smallholders (SMU) 1976 1977 1978 1979 1980 1981 TOTAL Plantings (ha) SAR Estimate 400 600 800 1,600 600 - 4,000 SAR Estimate - Cumulative 400 1,000 1,300 3,400 4,000 4,000 - Actual 124 238 251 310 264 201 1,388 Actual - Cumulative 124 362 613 923 1,187 1,388 - Actual/SAR % 31 40 31 19 44 - 35 Actual/SAR % - Cumulative 31 36 34 27 30 35 - Participants (No.) New participants 82 117 97 65 65 38 464 New participants - cumulatilve 82 199 296 361 426 464 - Participants extending - 55 92 124 115 87 - No. of Farms planted 83 172 189 189 180 124 - Avg Area planted per farm 1.49 1.82 2.07 2.56 2.79 2.99 2.99 3.31 Based on an average smallholder planting of 2 ha, total participants were expected to be 2,000 by 1980, but reached only 464 or less than 25% of target. - 32 - 3.32 The average area planted per holding was almost 3.0 ha. Smallholders who agreed to participate seemed to have accepted the program well and readily extended their plantings in subsequent years. These participants belonged '.o the upper end of the smallholding size scale, where there was enough land for traditional foodcrops and bush fallow, as well as for pure stands of oil palm. In Bendel, the reasons for overall low level of participation were the priority given to foodcrops, and the shortage and rising cost of labor. 3.33 Inadequate Publicity. Each year SMU mounted a special publicity campaign to encourage smallholders to enroll in the program the following year. This was not enough, however. Greater interest might have been developed if, in addition to these annual campaigns, a continuous year-round publicity effort was sustained by using the media and by distributing illustrated pamphlets. Aside from the limited annual effort, field staff could have organized a more vigorous extension effort aimed at encouraging smallholder participation. 3.34 The dropout of applicants from the program was generally high. The elimination stages for the years 1976-1981 are shown in Table 4. In 1981, about 1,572 out of a total of 2,122 applicants had qualified and registered in the program, but only 899 eventually planted their holdings. On average, only about 41% of the original applicants actually participated. About 10% with- drew before their lands were inspected; 16% were rejected at inspection; after inspection, another 16% withdrew before fields were surveyed and enrollment completed. During land clearing and planting preparation, another 16% dropped out, leaving overall 42% of original applicants who actually planted. In terms of land area, the figure was only 27% of applications. The dropout rate after planting was less than 2%. This was due either to the land being acquired for other purposes or errors in determining eligibility. 3.35 The quality of smallholder fields between 1976 and 1979 ranged from fair to satisfactory. Many had good legume cover. Where legume was not planted, Eupatorium infested plants completely. Hand slashing was the only control method used. 4.36 The quality of planting was fair. The mortality in the first year of planting was less than 21%, and gaps were normally supplied the following year. Maintenance was also fair. In some areas, fertilizer applications and weed control were inadequate. 3.37 With the substantial shortfall in smallholder participation, SMU considered alternative approaches to developing the required area and organized a scheme for community or group plantings in blocks of 40 ha or more. It included a cost recovery, mechanized land clearing operation which reduced the labor problem. However, only a limited amount of land was developed in this manner, and the scheme was not accepted in the Bank-financed program. 3.38 SMU provided limited land clearing assistance to individual smallholders by "lending labor" for tree clearing, the cost of which was to be Table 4. Smallholder Applications, Processing & Actual Plantinge Farms Farms Farms Applications Inspected Accepted Surveyed Farms Lined Farms Ilanted No. ha No. ha No. ha No. ha No. ha No. ha 1976 352 777 285 630 202 339 107 179 93 140 85 128 % of Applications - - 81 81 57 44 30 23 26 18 24 17 1977 382 577 380 572 225 295 207 271 175 250 172 240 Z of Applications - - .99 99 59 51 54 47 46 43 45 42 1978 564 1,247 438 968 353 515 261 380 195 265 189 253 Z of Applications - - 78 78 63 41 46 30 35 21 34 20 1979 350 1,033 338 980 338 980 259 770 205 324 189 201 % of Applications - - 97 95 97 95 74 76 59 31 54 20 1980 254 505 242 416 242 416 230 374 195 262 184 258 % of Applications - - 95 82 95 82 91 74 77 52 72 51 1981 220 522 220 522 212 500 177 347 150 281 110 188 % of Applications - - 100 100 95 96 80 66 68 54 50 36 Totals 2,122 4,661 1,903 4,088 1,572 3,045 1,241 2,321 1,013 1,522 899 1,268 2 of Applications - - 90 88 74 65 58 50 48 33 42 27 - 34 - recovered from their loans. From 1979, it also provided esistance in mechanical land clearing where holdings were contiguous. Costs were highly subsidized, starting at N40/ha and later rising to N100 ha. Despite the generous assistance, response was below expectation and even those who accepted took little interest in being involved with operations. 3.39 Nurseries. SMU operated three nurseries at Ilututin, Ode-Eringe, and Ijuosun. Management was poor, as it was unable to tailor production to the demands of the project according to smallholder participation. 3.40 Adequate supplies of good quality seed were obtained from NIFOF, but nurseries were not well organized for the task. Although the amount of germinated seedlings was in line with targets, insufficient land was prepared in the main nursery for transplants from the pre-nurseries and the largE quantities of stock carried over from previous years. In the Bendel nurseries, general maintenance was poor and wastage, high. Some of the supplies were sold to farmers outside the scheme. Over 37% of the 800,000 seedlings raised in the three nurseries were discarded. 3.41 Roads and Buildings. The roads program called for the construction of 58 km of new roads and the upgrading of 90 km of existing roads between 1975 and 1976. Work did not begin until 1978. Once started, progress was excellent on the new construction but slower on the improvement program. This is shown in Table 5. In the first year, because equipment was ordered late, many new roads were developed by hand to the standard of a jeep track and later improved with the arrival of mechanical equipment. Table 5. Road Program Targets and Achievements 1975 1976 1977 1978 1979 1980 SAR Estimates (km) (a) Improvement (Cumulative) 42 90 90 90 90 - (b) Construction (Cumulative) 26 58 58 58 58 - Actuals (km) (a) Improvement (Cumulative) - - - 32 45 - Improvement (% of SAR) - - - 35 50 - (b) Construction (Cumulative) - - - 56 107 - Construction (% of SAR) - - - 96 184 - 3.42 The program was stopped in 1979 when new construction had exceeded target by 84%, while upgrading was still short by 50%. Additional construction became necessary with the wider scatter of plantings, instead of compact blocks expected at appraisal. The Bank had no objection to exceeding the road construction target, because costs to serve participants were kept to a minimum, and maintenance arrangements were satisfactory. - 35 - 3.43 The Ministry of Works and Housing, which was responsible for maintaining new and upgraded roads, defaulted on its ducies because of lack of funds. Some maintenance was eventually passed to the local government councils which were in no better position for it. The project was therefore forced into road maintenance to keep roads in motorable condition, but it was also constrained by funding limitations. 3.44 The buildings program for the western areas was completed as planned. For the area east of the Oluwa River, no construction was done because it had few plantings. The staff accommodation was leased with the intention to review the need later should participation rate begin to increase. 3.45 Fruit Collection. OOPC was required to organize a fruit collection system to handle both smallholder and estate fruits. The drop in expected plantings and their scatter increased collection cost beyond what could be borne by the smallholder. OPC therefore deferred action on the plan. SMU, in the meantime, organized a limited collection service to assist both project and non-project smallholders. The cost to the smallholder up to December 1980 was highly subsidized at NL/t against actual cost of N25/t, but it went up to N10/t in January 1981. 3.46 The price paid by the OOPC for smallholder fruit in 1981, N70/t (the prevailing market rate), was 3.5 times the appraisal price. This was not as high as expected because of the increased costs and the value of oil. SMU served as purchasing intermediary for the OOPC, but it frequently experienced reimbursement delays from OOPC. 3.47 Fruit Processing. The inability to organize a proper fruit collection system for smallholder fruit reduced considerably the amount of fruit taken to the OOPC mill at Okitipupa. This caused some fruit to remain in the field. Hence, many smallholders returned to less efficient, traditional cottage/village methods for oil extraction, or sold the fruit to small private millers. Both ways were profitable, but the low extraction efficiency of the old systems meant less oil produced from smallholder fields. 3.48 Pricing of Fruit. The committee appointed to establish the fruit pricing formula performed well. Farmers were satisfied with the price they obtained from the Okitipupa mill. The committee monitored the application of the pricing formula by the milling company based on factors outlined in the SAR, and received the cooperation of all concerned parties in determining various production and processing costs. (ii) Okitipupa Oil Palm Co. (OOPC) 3.49 Performance of Estates. By the end of 1979, OOPC had cleared and planted 1,577 ha of oil palm--only 32% of the planned 4,800 ha, although it had a year's headstart with .320 ha in 1975. It stopped planting after 1979, and the 6,000 ha target. of 1980 was only 26% achieved. Development performance was disappointing. General management and estate maintenance were - 36 - no better. The performance figures are shown in Table 6. Project management was poor and did not satisfy most of the covenants in the loan documents. In 1981, because of the borrower's repeated failure to observe key covenants, the Bank was forced to suspend disbursements. 3.50 The project was not successful in acquiring lands needed for the expansion program. The communities which were in control strongly resisted the transfer of more lands to OOPC, since it had failed to compensate them previously. After negotiations, the communities agreed to release initially 1,841 ha at lyansan Estate and later, another 2,206 ha. However, negotiations for the complete transfer of the second portion of 2,206 ha were not finalised until late 1981 because of disagreements on compensation. For the same reason, agreement was reached late in 1981 for the 1,200 ha extension to the Gmi-Orissa Estate near the Oluwa River and the 800 ha on the western area at Igbotado. The alternative--compulsory acquisition--which was possible under a 1978 land use decree was considered but later rejected, to ensure safety on the lands and avoid alienating the community on which the company depended for labor and goodwill. Table 6. Targets and Achievements - Ondo Oil Palm Project Okitipupa Oil Palm Co. Estates 1975 1976 1977 1978 1979 1980 1981 Plantings (ha) SAR Estimates - 800 1,100 1,300 1,600 1,200 - SAR Estimates - Cumulative - 800 1,900 3,200 4,800 6,000 6,000 Actual 320 85 400 257 515 - - Actual - Cumulative 320 405 805 1,062 1,577 1,577 1,577 Actual/SAR - % - 11 36 20 32 - - Actual/SAR - Cumulative % - 51 42 33 33 26 26 3.51 Apart from the dificulty in acquiring lands in time, OOPC experienced funding problems, labor shortages, and management inadequacies. As a result, it could not proceed at the desired pace. The unsatisfactory cash provisions by the State also led to unnecessary waste-- lands cleared the year before could not always be planted completely and were soon taken over by bush. Also, land clearing was only partially completed as tree stumps and trunks were left in the field. Planting was done between excessive debris which impeded maintenance work. There was also a substantial waste of nursery plants because of annual cutbacks on projected plantings. 3.52 The standard of field maintenance was generally inadequate, being affected largely by labor shortages. Inadequate field supervision and lack of forward planning by management further contributed to the neglect. OOPC contracted out as much heavy land clearing work as possible, reserving its own labor force for final field preparation and maintenance, and for harvesting. Unfortunately, the cost of land clearing by contractors was - 37 - twice as high as by force account. Rour weeding of palms was infrequent and poor, while heavy busA growth between rows was iever fully under control. The legume cover crop was poorly established; Eupatorium spread rapidly in most areas. The bush should have been slashed at three to six monthly intervals within and between rows and round weeding done more frequently, but due to lack of funding, they were rarely attended to. It was also difficult to acquire weedicides which would have given effective control. Labor shortages for field maintenance could have been reduced with mechanical bush slashers if fields had been properly cleared of stumps and tree trunks. FertiliZer applications were infrequent and insufficient. Nutrient deficiencies, particularly potassium, were common and retarded young plants. In 1979, maintenance had deteriorated so much that plantings became completely covered with bush, and only a small proportion of the plants were expected to survive. In any case, survivals had become so stunted that that year's plantings should be regarded as a complete loss. The replacement of missing plants in the previous year's plantings was also badly neglected, and many fields had a high proportion of gaps. Losses and stunting were due to excessive shading from bush cover, rodent damage, or nutrient deficiencies. 3.53 It is estimated that of the recorded planted area of 1,577 ha, less than 1,000 ha would eventually reach full bearing if they are reclaimed in time and given minimum necessary attention. 3.54 Nurseries. Nursery operations remained poor throughout the project. However, seed supplies from NIFOR were satisfactory, except for the last year when deliveries were late. Germination rates were always over 95%, but wastage between the pre-nursery and the main nursery prior to field planting ranged from 20% to 30% of pre-nursery plants. Additionally, field plantings were between 60% and 70% of mature seedlings, leaving a large carry-over into the following year when many of them overgrew their bags and either became stunted or died. 3.55 The main reasons for the mediocre nursery performance were delays in transplanting from the pre-nurseries and removal from the main nurseries to the fields, irregular and inadequate irrigation, excessively close spacing, poor weed control, and insufficient control of leaf diseases. Management conceded that better results could have been achieved but blamed lack of funds and labor for the failure to purchase materials and equipment parts and to provide the necessary care. 3.56 Roads. Estate roads were not adequately maintained and added to transport difficulties for fresh fruit. However, the greater problem was with public roads, which were allowed to deteriorate and reduced the fruit transport capacity of the company. The State Ministry of Works and Housing and the local government councils were responsible for roads, but they consistently failed to perform the necessary repairs. When funds could be found, OOPC made some temporary repairs to prevent a complete transport stoppage. It was faced with the additional problem of excessive public use of its own roads and the need for increased maintenance. - 38 - 3.57 When the financial position of OOPC improved and it was in a better position to spend for road maintenance on public and project roads, it was handicapped by lack of equipment. It then became necessary for O0PC, which had some equipment and funds, to coordinate with other agencies that had idle equipment but no funds, and to collectively resolve problems. This, however, achieved less than expected. 3.58 Fruit processing. All project fruit was processed at the old Okitipupa mill that was to have been upgraded from 20 t/hr to 30 t/hr. The mill was in a rundown condition. Its oil extraction rate was about 18% for nuts and 29% for kernels. In addition, there were frequent equipment breakdowns which seriously delayed fruit deliveries, and worsened transport problems, thus increasing fruit wastage. The expected volume of fruit from new and old fields was not being produced, making the planned expansion of the mill unnecessary. However, frequent mill failures and the reduced oil extraction efficiency made urgent repairs and upgrading on equipment necessary. The cost of these improvements, which were mainly on the silos, conveyors, and radiators, was estimated at much less than the savings to be made on reductions in down time and increases in extraction efficiency. The company, constrained by lack of funds, did not at first agree with the engineer's recommendations but, after considerable delay, decided to proceed with the improvements. In the end, although tenders were invited and proposals received, the improvements were deferred because of lack of funds. The company did not follow Bank procurement procedures for the improvements, precluding Bank disbursement. 3.59 The new 20 t/hr mill for the Eastern area to serve the Omi-Orissa (Apoi) and lyansan estates was deferred. The company employed consultants to study yield expectations from the eastern areas and recommend mill capacity and siting. No progress was made on this because of uncertainties regarding areas to be planted, access roads of suitable standard for heavy duty (10 t axle) vehicles, and a reliable and good quality water supply. The actual planted area at lyansan could not justify a mill with a capacity in excess of 3 t/hour. In the interim, most fruit was processed at the Okitipupa mill. Transport deficiencies made it impossible to get all the fruit to the mill. Delays in transit and bad handling also caused excessive wastage prior to milling. 3.60 Fruit Collection System. The company's harvesting operations and fruit delivery system were inefficient. Although most of the hired labor was concentrated on harvesting and transport, proper planning and supervision in these areas were lacking. Excessive fruit was left on the trees either because labor did not pick all the ripe fruit, or the intervals between harvests were too long, causing fruit to become overripe. 3.61 Transport facilities were inadequate. Breakdowns were frequent. Vehicles did not have enough pay load capacity and were old. The lack of funds to purchase spares laid them up for long periods. Also, bad road conditions slowed the turnaround rate and increased the wear and tear of vehicles. Added to these was the lack of close supervision of vehicle - 39 - operators and proper scheduling of trips, leading to lengthy intervals between mill deliveries. The frequent breakdown of the mill further exacerbated the already deficient fruit handling and transport system. On occasions, vehicles were hired to assist with the transport, but this was limited by the shortages of funds. C. Project Costs 3.62 The estimated to,al costs of the two projects up to December 31, 1981 were about N13.2 mn L/ (US$20.1 an) for Ondo, or 59% of the SAR estimate, and about N25.4 mn 1/ (US$38.6 mn) for Bendel, or about 66% of the SAR estimate. Howeverc, it is quite difficult, if not meaningless, to compare SAR cost estimates and actual costs because the projects--as they were designed in the SAR---were not completed and their goals have not been achieved. 3.63 By December 31, 1981, the Bendel project had achieved about 52.5% of the SAR planting target (TCU - 42% and OPC 63%); only about 5% of the road improvement program was implemented; training was limited and far behind the original plan; and the two planned mills were still not constructed. The Nsukwa mill could not be installed because the civil works--due to lack of funds--was not completed. The Obaretin mill along with the fruit collection system had not been started, even at the preliminary stage (drawing plans, preparing bid documents, and advertisement). However, indications of the project situation in relation to the SAR in cost terms are: (1) the actual cost per established hectare rose to about N3,744(US$5,736.5) against N2,064 (US$3,137.8) of the SAR, an increase of about 80%; and (2) the total estimated project cost, if the project were to be completed with all its components, may reach N98.1 mn -(US$149.1 mn) which is about 2.5 times the SAR estimate of N38.7 mn (US$58.8 mn). The revised cost is based on the assumption that the establishment period would extend to 1988; OPC would be run efficiently by the managing agent; and MEU would be operating within the original cost frame. 3.64 By December 31, 1981, the Ondo project had achieved about 29.5% of the SAR planting target (SMU 34.5% and OOPC 26.2%); only a few expected training programs were undertaken, and nothing had been done to implement the construction of the two planned mills. The only item that SMU was able 1/ These estimates are based on unaudited figures and accounting records which are out of date and inaccurate; consequently they should be considered as indicative only. - 40 - to complete in line, and even exceed with the SAR target, is to construct and improve 148 km of earth road. To date, over 200 km of earth roads were constructed and maintained. According to the achievement and cost figures, about 60% of the SAR project cost estimates enabled the project to produce about 30% of its SAR planting goals. If this ratio was maintained by the individual project components, the total project zost, on completion, would have been at least doubled. Another, and perhaps closer, indication of the project situation in relation to the SAR in cost terms is the actual cost per established and planted area which amounted to about N4,550 1/ (US$6,912) per hectare for smallholders and about N5,155/ha (US$7,836) for OOPC against N 1,239/ha (US$1,883/ha) and N1,871 (US$2,844) respectively, in the SAR--an increase of about 267% for smallholder and 176% for OOPC. 3.65 The large increase in cost (especially cost per hectare) can be explained by the following: (a) farmers' low interest in oil palm; (b) difficulties in acquiring land for the nucleus estates and release of community controlled lands to plant permanent crops such as oil palm by smallholders; (c) salary and wage increases, as much as 6 to 8 times at the time of SAR, from N 0.7 and N1.0 a day for small- holders and nucleus estates, respectively, to N5-6 a day for both in 1981; (d) mismanagement and inefficiency in day-to-day operations which were increased by political interference to inflate staff and overhead costs unnecessarily; (e) labor scarcity, especially in OOPC; and (f) chronic fund shortage. D. Disbursement 3.66 On June 16, 1982, the undisbursed balances of the two loans were cancelled. 2/ At that time only about 43% (US$12.7 mn) of the Bendel loan 1/ Including the smallholder contribution in labor cost which amount to N850 (US$1,292). The cash credit of N300 (US$456) covers only part of the farmers' costs; currently estimated at N1,150/ha (230 mandays at N5) for the first four years. 2/ The entire undisbursed balance (US$10.1 an) of loan 1192-UNI (Ondo State Oil Palm Project) was cancelled, as well as US$16.5 in of loan 1183-UNI (Bendel State Oil Palm Project). US$270,000 was left for (Continued) - 41 - (US$29.5 an) and 41% (US$6.9 in) of Ondo loan (US$17.0 mn) were disbursed. 3.67 Disbursements lagged behind appraisal estimates throughout the project period (as shown in Table 7a and 7b). There was, in fact, a lag of three years before the first disbursement could be made. The slowness of the disbursements reflects the projects' poor progress situation due mainly to the following factors: (a) Delays in projects' effectiveness declarations which took place about 14 months (Ondo) and 18 months (Bendel) after the original expected dates. (b) The slowness in project development due to lack of funds, scarcity of labor (OOPC), difficulties in acquiring laads (especially in OPC), farmers' low interest and mismanagement. (c) During most of 1981, Bank disbursements were informally (two months) and formally (eight months) suspended. (d) For Bendel, an additional factor was the nature of the contract for the first mill (Nsukwa) which would have violated the Bank's Guidelines for Procurement. When alternative sources of financing became available, however, the project later decided against using Bank funds for the mill. - 42 - APPPRAISAL Vs. ACTUAL DISBURSEMENT (Cumulative) (US$'000) 7a. Loan 1183-UNI - Bendel Oil Palm Appraisal Actual as a % of Estimate Actual Difference Appraisal Estimate Dec 1975 - Dec 1976 3,800 - -3,800 Dec.1977 5,800 - -5,800 - Dec.1978 8,100 962 -7,138 11.9 Dec.1979 10,800 4,344 -6,456 40.2 Dec.1980 16,900 6,287 -10,613 37.7 Dec.1981 23,000 9,518 -13,482 41.4 Jun.1982* 24,500 12,730 -11,770 52.0 Dec.1982 26,600 Dec.1983 29,500 7b. Loan 1192-UNI - Ondo Oil Palm Appraisal Actual as a % Estimate Actual Difference of Appraisal June 1975 450 - -450 - Dec.1975 1,100 - -1,100 - Dec. 1976 2,200 - -2,220 - Dec.1977 3,450 - -3,450 - Dec.1978 6,350 2,823 -3,527 44.5 Dec.1979 9,550 3,673 -5,877 38.5 Dec.1980 11,400 4,300 -7,100 37.7 Dec.1981 12,650 5,236 -7,414 41.4 Jun.1982 * 13,150 6,874 -6,276 52.3 Dec.1982 13,900 Dec.1983 17,000 On 6/16/82, the undisbursed balance of the loan was cancelled. E. Procurement (a) Bendel 3.68 Under moderate guidance from Bank supervision staff, the procure- ment of equipment and materials generally conformed with Bank requirements and Project management observed Bank procurement requirements during the first two years of project implementation before loan signature and in the next two years. 3.69 The SAR envisaged co-financing the Nsukwa Palm Oil Mill with the - 43 - Nigerian Agricultural Cooperative Bank (NACB) which made a loan of N5.34 million to the project, of which N1.6 million was for the mill. The project began procurement arrangements for this mill in accordance with Bank procedures but did aot proceed. It decided instead to obtain an increase on the NACB loan as the sole source of financing for the mill, since it had better terms and no procurement restrictions. (b) Ondo 3.70 The executing agency observed Bank procurement procedures for all goods and services for which loan funds were reimbursed. Project staff carefully monitored procurement operations and were able to advise the borrower and the executing agency in good time when they were deviating from Bank procedures and the consequences should they fail to comply. There had been instances when OOPC preferred to forego Bank funds rather than comply with procedures. This placed additional demands on the very limited counterpart funding of the company which would have been avoided if they had received Bank reimbursements for the specific expenditure. F. Covenants 3.71 The borrowers and the executing agencies failed to comply with several covenants of the loan and project agreements. This was a matter which supervision missions continuously highlighted when they reviewed progress with management and with State and Federal Government officials. It was also the subject oE exhaustive communications from the Bank to concerned parties. Compliance with at least the main covenants was a condition to resume disbu:rsements when they were suspended in 1981. While the impression was given that real efforts were in progress to resolve the issues and convince the Bank to resume disbursements, very little progress was in fact achieved in either project. The following was the status of compliance with covenants when the decision was taken to suspend the loan: (a) Bendel 1. Loan Agreement.3.01 (b). The Federal Government of Nigeria The FGN took practically no action to ensure that the Bendel State to ensure that BDSG provided Government carry out the project adequate and timely funds. properly and provide all resources Although in its letter of including necessary funding. Oct. 29, 1981 to the Bank, FMA noted the BDSG action to provide N3.2 mn to OPC in its draft 1982 budget, only M2.0 mn was allocated. - 44 - 2. Loan Agreement 3.02. The Monitoring and Evaluation Unit The MEU was never adequately to be adequately staffed at all staffed and received little times, direction from the Federal Ministry of Agriculture. 3. Loan Agreement 3.05(b)(i). The MEU to maintain proper accounts, Audited accounts were usually have them audited annually, and submitted about one year late. submit them to the Bank by April 30. 4. Schedule 2. Project Agreement 208. Project implementation to follow No paved roads were upgraded or the design description and program. maintained by Government. Owing to delays in selecting a Roads Engineer and establishing a Roads Construction Unit, only about 20 of the 299 km of earth roads were constructed. OPC estate development did not alter the program and reached only 74% of target. 5. Project Agreement 2.01(b) The BDSG to relend to OPC the Although this agreement dated amounts withdrawn from Category III June 30, 1977 stipulates repayment of the loan, under an agreement by OPC of these amounts at 8-1/2% satisfactory to the Bank. interest, the BDSG seemed to consider the Bank loan and its financing to OPC (which totaled N16.0 mn including the K13.2 mn NACB loan) as a grant. 6. Project Agreement 2.02 TCU to appoint an accountant. The internationally recruited accountant left TCU in July 1981 and was not replaced. 7. Project Agreement 2.09 TCU to be properly structured The General Manager had no and staffed. experience in either cocoa 1/ or oil palm. 1/ The TCU also managed a smallholder cocoa project. - 45 - 8. Project Agreement 2.10. A fruit collection system OPC took no positive step to to be established by OPC. attend to this, although it was proposing to handle smallholder fruit collection in 1982. The Pricing Committee agreement was never finalized, nor was the price to be paid to smallholders set. No price formula was ever established. 9. Project Agreement 2.12. TCU to prepare its budget on time. TCU was always late with its budget. 10. Project Agreement 3.01., 3.02. TCU to prepare and submit audited TCU accounting and auditing accounts. requirements were never submitted on time. 11. Project Agreement, Schedule 2. OPC operations to be properly Throughout implementation, planned and executed, with capable management and other staff of the and experienced management and project was poor and operations staff. OPC was also to keep adequate improperly planned or executed. and appropriate accounting records. Towards the end, and after considerable efforts by Bank staff, the OPC Board agreed to appoint managing agents. However, the internationally recruited firm was to assume full responsi- bility only after it had drawn up a 20-year development program which would be agreed to by the Board and the State and adequately funded. These were never fulfilled. OPC management was further weakened by a Board Chairman acting as an executive chairman and other Board members who regularly interfered with day-to-day operations. Accounting - 46 - records were out of date and unreliable, and financial controls were inadequate. (b)Ondo 1. Loan Agreement - Schedule 2 The Project Description. (a) The Ondo State Government failed to construct and maintain roads in the project areas, hindering estate development and evacuation of fruit. (b) The ONSG was unable to acquire the required land. Hence, OOPC could not proceed with the expan- sion of the Igbotado estate by 800 ha and the development of 1,200 ha of the Apoi estate west of the Oluwa River. (c) The dispute over the 2,000 ha of land at lyansan required for the development of that estate prevented planting in 1980 and 1981. (d) Because of failure to plant the required area at lyansan and at Apoi, the 20 ton mill for that area was not constructed as specified in the project agreement. 2. Project Agreement - 2.01(b) The Ondo State Government to on-lend The Government seemed to regard the amounts withdrawn by the OOPC the loan withdrawals by OPC as from Category III of the loan, a grant from the State, and no according to a State loan agreement allowance was made by the OOPC dated June 20, 1977. for repayment. 3. Project Agreement - 2.01 (c) Ondo State Government to lend to In March 1981, the State the OOPC at least $7.7 mn matching Government arranged a $3.0 the amount withdrawn by OPC under arranged a $3.0 mn loan to OOPC Category III of the loan. but took no further step to provide any of the remaining funds. The terms of the loan to the OOPC were too onerous and not in accordance with the - 47 - Project Agreement. Despite a letter of intent dated June 16, 1981 to the Bank, the Government did not revise the on-lending terms, and the loan repayments were to begin in 1982 when the project would not be able to begin such debt service. 4. Project Agreement 2.03 The Smallholder Unit to employ SMU never appointed an accountant. an accountant. 5. Project Agreements 2.05 (b), 3.01, 3.02. Auditing and accounting arrange- SMU's latest audited accounts ments satisfactory to the Bank were for 1978. to be made by SMU and OOPC. 6. Project Agreement 2.07(b) The State Government :o inform the The Government did not advise Bank of any circumstances which that (i) farmer response had interfered or threatened to inter- been poor owing to labor fere with the execution of the shortage and land tenure project. arrangements in the project area. SMU targets for planting could not be achieved; (ii) the appointment of an Executive Board Chairman led to interference in the day-to-day management of OOPC. 7. Project Agreement 2.10(b) SMU to be adequately staffed. SMU never had a qualified accountant. 8. Project Agreement Schedule 2 Clauses 1 & 2. OOPC to be properly managed and OOPC management was ineffective. to carry out the project according While project consultants to proper procedures. had provided a Mill Engineer and a Senior Field Controller in 1981, no Financial Controller was supplied as agreed. Even with new advisory support, the - 48 - General Manager was not able to deal effectively with interference from the Executive Chairman in the company's day-to-day operations. 9. Project Agreement Schedule 3 Clause 3. Formal loans to be made under sub- Sub-loan agreements satisfactory loan agreements satisfactory to to the Bank were signed by most the Bank. of the participating farmers. However, most agreements were not completed because farmers' cooperatives did not finalize their affiliation to a marketing union to qualify them to act as Guarantors. IV. AGRICULTURAL IMPACT A. Agricultural Output 4.01 TCU, SMU and Smallholders. While records show that 3,371 ha and 1,388 ha were planted, it is believed that substantial portions (as much as 20%) consisted of gaps of missing plants. These died from various causes, and most of what remains is stunted, or in an otherwise poor condition. 4.02 By 1981, the early plantings were already bearing, but most of the fruit was not taken to the mills. Although some may have been processed in households and some by local processors, the bulk was left to waste. In terms of incremental production, it is unlikely that smallholder plantings on 4,759 ha will produce by 1990 more than about 24,000 t ffb per annum instead of the SAR estimate of 120,000 tonnes from the planned 12,000 ha. Production would have gone up if the following factors had been taken care of: (a) a proper collection system, including improvements on the road network, (b) adequate processing facilities, and (c) a reasonable price for fresh fruit bunches was established to make the crop financially attractive. 4.03 Estates Output. Fruit production from new fields estimated at about 4.5 t/ha five years after planting was below the expected 7.5 t/ha at appraisal. Labor was inadequate; pickers made little effort to move the crop because of frequent delays in receiving their wages. Harvesting was poorly supervised. While the harvested fruit was only part of production, it was generally estimated that actual yield was below potential. This was the result of field neglect, shown by high weed growth and inadequate fertilizer applications. 4.04 No information is on file on actual fresh fruit and oil production for Bendel from 1979 onwards. Only rough yield estimates were provided in - 49 - different reports. Figures for Ondo show actual production under moderate management reaching up to 75% of SAR estimates. Given moderate management, annual production from fields planted in the first five years of both projects could have reached at least 50,000 t ffb at maturity and 9,000 t palm oil, as opposed to 162,000 t ffb and 32,000 t palm oil estimated at appraisal. B.- Technology Transfer 4.05 Smallholders. The main production improvements introduced to smallholders were: (a) improved high-yielding varieties; (b) better manage- ment of soil fertility by the use of fertilizers and cover crops; (c) efficient crop protection measures; and (d) improved weed control with cover crops and selective herbicides. 4.06 Apart from the use of better varieties, the impact of improved technologies was minimal. However, even the benefits of high-yfelding varieties were substantially lower than those envisaged in the project design. The full genetic potential of the crop could not be achieved under the prevailing management standards. 4.07 Fertilizer use was erratic or neglected; plants were not receiving the required nutrients. The problem of nutrient deficiencies was increased with the acute weed infestation. Intercropping, when finally allowed, was badly done. Oil palm husbandry systems were improperly developed, and farmers followed old practices without regard for the needs of young palms. 4.08 Estates. The maii technological changes expected in the estates' part of the project included: (a) use of improved varieties with high-yielding genetic potential; (b) adoption of improved agronomic practices such as the use of leguminous cover crops to control weeds; (c) improved soil fertility management by the judicious application of required plant food elements, coupled with the benefits of cover crops to augment nutrients; (d) weed control by more efficient mechanical and chemical methods; (e) efficient management of field operations, including the harvest cycle, by appropriate use of mechanized or partially mechanized systems; and (f) improvement in oil processing and greater extraction efficiency. - 50 - 4.09 All elements of the technological package were applied in varying levels at one time or another during the project period, but have either been unsatisfactory or inconsistent. Generally, the reasons for the deficiencies were inadequate funding and ineffective management. V. RATE OF RETURN 5.01 The economic rate of return (ERR) as well as the financial rate of return (FRR) were calculated during the project in-depth review in February 1982. The ERR and the FRR were calculated on the following assumptions: (a) Calculation was made for the next 20 years. (b) No residual value is attributed after that period. (c) Calculations were made in constant terms on the basis of 1981 prices. (d) All expenditures so far were assumed to be sunk costs. Even with this strong assumption, the results are poor. For the same reasons, MEU costs were not included. (e) For the ERR calculation, all cost streams have been adjusted with appropriate conversion factors and all benefits valued at border prices. (f) In regard to TCU (Bendel), the original plan of 8,000 ha to be planted will be fully implemented. (g) In regard to OPC (Bendel), calculations were based on the Bookers Agriculture International (BAI) 20- year rehabilitation program. 5.02 SMU - TCU. At a farmgate price of N70 (US$105.4) per tonne 1/ and SAR yield assumptions, a recalculated FRR is about 14% to the smallholder. If bunches are valued at N772.84 (US$110.7), the economic value of the output (20% palm oil and 4% kernels), less processing costs in border prices of N13.60 (US$20.7) per tonne,2/ the ERR to the smallholder is only 9%. When SMU or TCU overheads of about N3,400/ha (US$5,168/ha) are 1/ SMU collected ffb from farmers at N70/ton which is the price set by the Pricing Committee. 2/ Costs taken from Annex 7 of the Oil Palm Subsector Review, corrected to 1981 prices. All on farm costs were converted by applying an SCF of 0.83. - 51 - included, both the FRR and the ERR become negative. The ERR at SAR was 18.2% for the TCU-Bendel. and 16.4% for SMU-Ondo. 5.03 OPC-ONDO. Owing to the high cost of labor, the delay following the Apoi land dispute, and the estates' remoteness, the FRR and the ERR for completing estate development at lyansan are only 12% and 1%, respectively. However, a reduced program at lyansan (mini-mill - 1.5 tph and the rehabilitation of the current plantings) aad the rehabilitation of the Okitipupa mill could have produced a FRR of over 100% and an ERR of 34%. This would only have happened if OOPC's management was allowed to carry out its functions efficiently, without political interference, and with the provision of adequate and timely funding. The SAR ERR was 15.9%. OPC-BENDEL The ERR is 8.1% while at the SAR, it was 17.3%. 5.04 In accordance with PCR requirements the ERR for both projects were also calculated on slightly different assumptions. The changes are as follows: (1) Calculation was made for a period of 25 years starting 1975. (2) All expenditures so far were calculated on the basis of 1981 prices. The ERR for both projects are negative; Bendel -2.2% and Ondo -4.6% (Annex 2, Tables 11 & 12). VI. INSTITUTIONAL PERFORMANCE A. Management and Organisation 6.01 TCU. The Oil Palm Division of the TCU in Benin City began with serious staffing and organizational deficiencies. TCU had an acting manager who lacked the necessary initiative to organize the new oil palm division. Two section managers were appointed but other staff appointments were slow and not very satisfactory. 6.02 The Steering Committee took its responsibilities less seriously than expected. In the early stages, TCU was given inadequate policy guidance and authoritative support to resolve its difficulties. The MANR Permanent Secretary, who was the chairman of the committee, treated the unit as an integral part of his Ministry and free of the committee's influence. A large part of Bank supervision time was spent trying to get TCU properly organized and build its management capacity. While TCU faced serious difficulties in the smallholder program, the extent of failure could have been reduced had it been better organized and its staff adequately trained and motivated. 6.03 By the time the staff had settled down and understood project requirements, the problem of reduced counterpart funding began to be felt. The consequent shortages of input supplies and credit for farmers discouraged participation. - 52 - 6.04 SMU. SMU management lacked vitality and leadership capabilities and did not receive effective stimulation from the advisory committee. Most of the senior staff were recruited in the early stages of the project, and with the exception of the controller of field operations, they were all Nigerians. A qualified person could not be found to fill the post of Chief Accountant, and SMU depended on seconded staff from the MEU for its accounts and financial control. The standard of financial accounting was nevertheless unsatisfactory. 6.05 Field staff were at full strength, but with the shortfall in smallholder participation, the staff: smallholder ratio was much higher than planned, i.e. one officer to about 50 ha, or about 18 families, as against the SAR estimate of one officer to 400 ha or 200 families. 6.06 OPC. For most of the first four years of project life, OPC was headed by an acting manager, and his support staff were not all qualified. Its Board of Directors failed to exercise the degree of responsibility expected of it, further weakening of senior management. Indiscipline was common, particularly at the intermediate staff level. Poor work planning and supervision led to substantial waste, including misappropriation of funds. 6.07 The OPC Board was dissolved in October 1979. The new Board, which was appointed a few months later, had an aggressive chairman. He soon became deeply involved in the day-to-day management of the company. 6.08 The General Manager had neither the experience nor managerial capacity to control the company's activities. Financial, personnel and technical management deteriorated. The new Board chairman seemed to be more involved with making executive decisions rather than maintaining control. 6.09 When it became clear that OPC staff were incapable of functioning properly, the Bank recommended that management be placed in the hands of managing agents. Although welcomed by the General Manager, the recommendation was at first strongly resisted by the Board. They eventually agreed and sought proposals from qualified firms. After consideration, the Board's preference was for a company whose records were unimpressive and the Bank asked the Board to consider alternatives. The second choice was a firm with a proven record in Nigeria and elsewhere, and satisfactory to the Bank. During negotiations, they could not agree on contract terms, and negotiations ended. After longer negotiations with a third firm, they finally agreed on a management contract. The firm took responsibilities for OPC in late 1981. In mid-1982, however, after the Bank cancellation, the firm terminated its contract. 6.10 OOPC. At project start, OOPC was run by a management company which performed satisfactorily. Senior staff quality was high, and reflected by the good performance from of the field and mill support staff. The Board of Directors, however, replaced them with directly - 53 - recruited company staff, and the management company was retained only as consulting advisors. The iew general manager and other senior management staff were underqualified and inexperienced. The quality of management soon declined, field staff lost interest in their work, and the Board of Directors frequently interfered with the day-to-day activities of the company. Management was to be supported by the local management consulting firm, but the arrangement was loose and ineffective. While the consultants had identified problems and offered solutions, these were not put into effect if they came into conflict with the views or wishes of the Board. The activities of the Board, particularly their dealings with operational and junior staff and their extravagance with finances, led to a breakdown in discipline. Management seemed incapable of getting a large section of the staff to function propE!rly. Mill engineering staff was, on average, better qualified than field staff, although the mill was operating without a qualified engineer for some time. 6.11 In 1981, when the Bank suspended disbursements pending action on the strengthening of management, among others, the company varied the contractual arrangements with its managing consultants so that they would provide the services of a Financial Controller, a Field Controller, and a Senior Mill Engineer. In the first six months of this contract, the consultants provided only a Senior Field Controller and a Senior Mill Engineer. They were well qualified and saw the need to make necessary changes. They were unfortunately unable to do so because the changes were in conflict with the Board members'interests. The General Manager was unwilling to deal with these conflicts. 6.12 MEU. The Monitoring and Evaluation Unit (MEU) was established in October 1975 with headquarters in Benin City, Bendel State. The main task of the unit was the continual scrutiny of operations and performance of the cocoa and oil palm projects in relation to their targets, budgets, and time schedules, giving feedback of results to project management. In addition, the unit would make periodic assessments of project performance and significance, particularly In their socio-economic impact, efficiency in achieving program goals, replicability of the project to other areas, and identification of secondary effects. 6.13 Due largely to staffing and management deficiencies, MEU failed to fulfill its objectives, and to properly monitor and evaluate the oil palm projects. Towards the end, however, a new manager was appointed who made improvements but which came too late to save the two projects. B. Staff Training 6.14 TCU encountered difficulty in recruiting suitable staff. Most came from the MANR and needed additional training. Only a limited amount of training was given, usually at NIFOR, and were particularly for field supervisory staff and nursery operators. A few members of the senior staff attended short management training courses in Nigeria. Plans were to send - 54 - a few capable younger staff for overseas training in oil palm production and management and accounting, but these were not actualized. C. Accounting and Reporting 6.15 The SAR and the loan documents stipulated that all project components--OPC, OOPC, TCU, SMU and MEU--would keep adequate records reflecting their operations and financial position, audited annual accounts, balance sheets, and operating statements of all project units, to be submitted to the Bank within four months of the closing of each financial year. 6.16 Until 1981, TCU and MEU (Bendel) accounts were in good order. After the expatriate financial controller left TCU (July 1981) and the expatriate financial analyst left MEU (November 1981), accounts had deteriorated (especially TCU); they were in arrears, and the whole accounting system appeared to collapse. OPC accounting records (Bendel) were out of date and unreliable. Their accounts were seriously in arrears and were audited only up to December 1979. TCU accounts were audited up to March 1980 and MEU, to December 1980. Quarterly progress reports, especially for the OPC, were always late. 6.17 SMU accounts (Ondo) were audited only up to March 1978. Financial statements for 1978/79, 1979/80 and for December 31, 1980/81 were prepared by the unit itself. All the basic work--preparation of the annual accounts and project cost estimates--were carried out by MEU-seconded staff and its financial analyst. SMU has never had a competent accountant. Since October 1981, when MEU withdrew its seconded employees, there was no accountant, or even a senior clerk familiar with basic bookkeeping principles, in post. 6.18 OOPC (Ondo) accounts were audited upto March 31, 1979 and since then there has been no consolidated report prepared to reflect the business results of the estates and the mill . The standard of record-keeping was poor. Accounts were almost always in arrears and inaccurate, mainly because of the absence of qualified and experienced accountant staff. The centralization of accounting and expenditure control, introduced in 1979, was unsuccessful because staff were incapable of carrying it out. Labor recruitment was unsatisfactory, procurement seriously delayed, and the estate and mill managers did not receive the necessary financial and operational data. Centralization lasted 1-1/2 years and made no improvement to the accounting system. D. Monitoring and Evaluating (M&E) 6.19 Despite a clear statement in the SAR that socioeconomic data on oil palm growing areas and farming operations were limited and that a management information system was vital for effective and efficient manage- ment, the projects made little provision for a built-in M&E system. - 55 - 6.20 Neither the companies (OPC and OOPC) nor SMU and TCU had an efficient monitoring and evaluation system. Under the difficult circumstances, this activity was almost completely neglected. The lack of suitable manpower and funds on the one hand, and the existence of the FGN special unit for M&E, the MEU on the other hand, encouraged project management against considering seriously the necessity to provide for a built-in M&E. Each of the sub-units (each estate and mill in OOPC and OPC, and regions in SMU and ICU) had its own method of supervising and monitoring. In the absence of a central M&E arm, report evaluation forms were not unified as to allow valid comparisons and conclusions. E. Smallholder Credit 6.21 The smallholder credit operations failed to meet objectives. They were to depend on well managed, registered cooperative societies with experience in handling credit programs. Although there were several societies in the project areas and most were registered, a number of them were new and lacked experience in credit operations. In addition, they were badly managed and were too unreliable to supervise smallholder credit. While the majority of participants signed loan agreements, disbursements were delayed because the cooperatives could not qualify. Funding deficiencies also reduced the amount of credit, while the N100/ha credit limit to pay for ]Labor was too low. The limit was not raised in Bendel until about four years after it was recommended. 6.22 The total lending was N396,000 in Bendel in December 1981 and N238,000 in Ondo in July 1981. The mechanism of repayments, being tied to fruit delivery to the mills will now have to be reexamined by the states because of OPC's postponement of the planned collection system, the irregular harvest of fruit, and the mill's inability to accept all small- holder fruit. VII. BANK PERFORMANCE A. Preparation and Appraisal 7.01 The preparation and appraisal of the projects in 1973/74 paid insufficient attention to the tribal system of land use and tenure and problems of land title transfer. They underestimated the importance of foodcrops to smallholders and their lack of tradition or interest in tree crop cultivation. They also misjudged the factors which affect the satisfactory organization of local institutions. The consequences were sharply accentuated by the dramatic changes in the socioeconomic situation brought on by the petroleum boom from 1975. This also brought other serious problems, such as diversion of skilled people and labor from the rural areas, inflation and cost increases, and changes in government priorities. Under the changed circumstances, it was difficult, if not impossible, to complete the projects as first conceived. 7.02 A general fault in the projects' design was the narrow focus on - 56 - the achievement of the smallholder planting program. It almost completely ignored the issues on socioeconomic aspects of smallholders in this part of the country and their attitudes to agriculture, particularly to oil palm as a commercial crop. 7.03 In the first two years after loan approval, one supervision mission was made per year. The main considerations then were to satisfy conditions for loan effectiveness, including the signing of loan agreements 1/ and to acquire land for the nucleus estates. These issues received the Bank's continuous attention, both during supervision visits and more frequently by correspondence. During the first two years after loan effectiveness, specific supervision missions increased to about two per year. This was period when many the management problems began to emerge. Perhaps more frequent supervision missions at that time might have helped to prevent the deterioration which later occurred. From 1980, supervision missions were sharply increased (four or five per year) and were adequate in terms of frequency, continuity, and mix of expertise. B. Supervision 7.04 In general, supervision missions have had some salutary, even though limited, effect on progress. These benefits were fully acknowledged by the Nigerian authorities who appreciated the technical contributions, moral support, financial discipline and encouragement they provided. Nevertheless, achievements were considerably below expectations, as costs escalated rapidly and expenditures were always ahead of schedule. 7.06 In the last three years, the states' financial position deteriorated and the acute fund shortage forced them to focus on new priorities. In spite of the states' recognition of their obligations (stemming from the project agreements) and despite efforts by the Bank in writing and at meetings to put matters right, the projects were so low in priority that the necessary resources, particularly capable management and adequate funds, were not provided. The Bank exercised a great deal of patience in dealing with the attitudes of BDSG and ONSG to their projects. In retrospect, one could argue that if the Bank had been more forceful and less tolerant, especially in the last three or four years, the projects might have been saved or cancelled sooner with consequent savings in scarce funds and manpower. VIII. CONCLUSIONS 8.01 Both projects, which consisted of the TCU, OPC and MEU for Bendel and SMU and OOPC for Ondo, failed, in different degrees, to achieve their original goals. 1/ (1) Between the Bank and FGN, (2) between FGN and the states of Bendel and Ondo and (3) between the states and their oil palm companies. - 57 - 8.02 TCU and SMU planted only 42% and 34.5%, respectively, of their SAR targets. The main constraints were low farmers interest and the hardening of attitudes in communal land use in the project areas. Poor farmer response may be explained by three major factors: (a) Some farmers were not convinced of the projects' worth, while others could not wait four years to start receiving income from the new trees; (b) The experience of those who reached the stage of income generation were not very encouraging. The crop suffered vital reduction in its profitability, mainly because of the increase in labor cost which was higher than the inflation rate. The FRR to the farmer was either 14.2% or 6.2% (depending on whether transportation cost was paid by Government or by the farmer). Moreover, TCU and SMU failed (due to mismanagement and lack of funds) to provide the farmers with cash credit on time and on a regular basis. This damaged the agencies' credibility as well as burdened the already committed farmers' cash flow; (c) Difficulties in getting community lands, particularly for permanent crops. The community did not favor the allocation of land for such a long period as required for oil palm. 8.03 Although OPC (Bendel) and OOPC (Ondo) had planted about 63% and 26.2%, respectively, of SAR planting targets, it is expected that no more than 40% for Bendel and 18% for Ondo will reach bearing stage because of enormous losses arising from field neglect. In addition to the extremely bad condition of fields, equipment maintenance was far below standard and work ethics were poor. Consequently, unit costs were excessive, and productivity was low. 8.04 MEU management performance was disappointing. Their contribution to oil palm development was insignificant, and their information on projects' performance was far below expectations. 8.05 The projects are no longer economically and financially viable. The reasons are the following: (a) The oil palm industry, which is labor intensive, was badly affected by the increase in labor cost which was six to eight times over that of the SAR estimate. (b) The changes in the relative prices resulting from the petroleum boom affected the interest and priority given to the projects by the farmers as well as by the States. - 58 - (c) Poor management and inadequate financial support from the Nigerian authorities, together with political interference, reduced the projects' progress, efficiency, and profitability. 8.06 The Bank recognized some of the design weaknesses in these projects and has since made better arrangements in the appraisal of subsequent ones to ensure adequate counterpart funding and management capacity, and timely availability of critical resources such as land, infrastructure, and services. ANNEX- 1 Table 1 NIGERIA Bendel Oil Palm Project - Loan 1183-UNI TCU - Project Cost Estimate (N'000) Expenditures p to 12/31/82(1) 1983 1984 1985 1986 1987 1988 Total Nurseries 1.352 181 181 181 181 11 134 2,391 Field Costs 292 503 680 848 951 1,123 1,168 5,565 Cash Credit 627 195 205 204 240 240 205 1,916 Field Establishment 2,271 879 1,066 1,233 1,372 1,544 1,507 9,872 Administration 2,276 829 654 654 654 654 654 6,375 Capital Costs 440 70 70 70 70 70 70 860 Road Program 124 293 293 50 50 50 50 910 Total 5,911 2,071 2,083 2,007 2,146 2,318 2,281 18,017 (1) Based on unaudited figureq and estimate for 1982. ANNEX 1 Table 2 NIGERIA BENDEL OIL PALM PROJECT - LOAN 1183-UNI OPC - Project Cost Estimate (Rehabilitation Program) Naira '000 Expenditures up to 12/31/82 1983 1984 1985 1986 1987 1988 Total Field Establishment 4,536 1,455 1,797 1,684 1,408 1,226 1,676 13,182 Upkeep Maintenance 2,958 629 543 641 815 822 907 7,315 Harvesting 2,684 470 488 534 660 728 801 6,365 Fruit Collection 1,188 508 486 705 1,190 1,446 2,088 7,611 Mills & Processing 4,372 2,229 2,147 2,369 2,492 906 1,075 15,590 Road Program 1,079 343 370 586 713 593 357 4,041 0 Administration 8,713 1,857 1,864 1,797 1,398 1,383 1,383 18,395 1 Total 25,530 7,491 7,695 8,316 8,626 7,104 7,518 72,330 (1) Based on unaudited figures and estimate for 1982 - 61 - ANNEX 2 Page 1 NIGERIA Bendel Oil Palm Project - Oil Palm Company Loan 1183-UNI 'Calculations of the Financial Rate of Return (FRR) 1. The FRR was calculated for 20 years, and no residual value is attributed after that period. 2. The cash-flow is based on the BAI program with modification of the repayment schedule of the YACB loan. BAI assumed that repayments would be rescheduled and postponcd; we assumed the original schedule with die necessary changes of increasing the loan amount from N5.3 million to N13.1 million. Another addition to BAI'= cashflow is the repayment of the Bank's loan in accordance with the Project Agreement, which BAI ignored completely. 3. We used the existing market prices for palm oil and kernels, i.e. N720 per ton and N220/ton respectively. BAI used N800/ton for oil and N220/ton for kernels. 4. We also examined the possibility that the Federal Government would not go along with the OPC program, and would not grant any more funds. This would oblige EDSG to increase its share, thus reducing the FRR. 5. Owing to the difficulty we shared with BAI in computing a value to OPC's existing assets, a range has been tested: Case I: FDA Contributes 25% of BAI Program Cost Value of Existing Assets FRR (N mn) % 5.0 11.7 10.0 9.4 nil 14.9 Case II: No Further FDA Contribution Value of Existing Assets FRR (N.mn) % 5.0 8.7 10.0 7.2 ail 10.8 - 62- ANNEX 2 NIGERIA ?age 2 Bendel Oil Par Project - TC! and Sm.n11holders Loan 1183-1'I Calculation of the Financial Rate of Return (FRR) 1. The FRR was calculated for 20 years . No residual value is attributed after that period. 2. Tuo calculations were made: (a) for 1 ha established, maintained and harvested by a smallholder; and (b) taking TCU and the smallholders together. 3. We considered two prices for ffb ton: N50/t and N70/t. Both prices are after deducting transport costs estimated at N20 a ton. The existing price is N50 a ton of ffb. 4. All costs were figured on the basis of the existing cost .of TCU; the physical inputs assumed at the SAR: and updating prices for these inputs. 5. Under the above assumptions, the FRR is as follows: Case I: TCU and smallholder together Price per ffb ton FRR 50 -7.7 10 -2.2 Case II: For 1 ha smallholder farm only Price per ffb ton FRR OK) z 50 6.2 70 14.2 - 63 - ANNEX 2 Page 3 NITCERIA Ondo Oil Palm Project - Okitipupa Oil Palm Company lyansan rstntc Loan 1192-LNI Calculation of the Financial Rate of Return (FRR) 1. The FRR was calculated for 20 years. No residual value is attributed after that period. 2. Since, of th original project program, only the lyansan estate is implementable, we ignored the other OOPC components and dealt with lyansan only. 3. Calculations were made to the most ambitious (available) program (planting of additional 2,400 ha, to bring the total planted area in the estate to 3,500 ha), as well as.a reduced program (2,480 ha). 4. Prices for palm oil and kernels are the existing market prices. i.e. X720 per ton for palm oil and N220/t for kernels. 5. The costs are based on Nijal's and the General Manager's estimations. 6. So far, N4.1 million has been spent in the development of lyansan. We assumed an opportunity cost of N2.0 million for the existing assets. 7. Under the above assumptions, the FRR is as follows: Case I: Full program Value of Existing Assets FRR (Rm n) % 2.0 11.7 0 16.3 Case II: Reduced program Value of Existing Assets FRR (N mn) % 2.0 25.3 0 100 ,, - -.N- -rå t 9 -~z: gP tl t::- o.~~1 -2 t3 a o ~ 2 1-; r- 1?Mr: rI -y .zy . - s a isI - --- - 1'- 19 7r r:, hsei i aJi~ , ANNEX 2 WICERIA Table 2 BENLEL TCU - 011. PAlM PROJECT C FARMER8 FINANCIAL RATE OF RETURN To COMPl.TE THE PROJEC? (4569) (IN FIXED TERM8) _l.IA 183- I M92 1983 "4 1983 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 199 2000 2001 Tar1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 - Area Planted (ha) - 800 800 800 00 800 569 -- (N'000) Labor 127 131 131 131 131 131 95 3 16 16 16 16 16 16 11 1.1v.u et 11 11 li 11 11 Fertitze 2 2 3 3 3 3 3 -- ttr Co;tS Q8 ! 2 i i0 20 15 1 174 tal Ist 18l t8l 181 134 12 _S.1l.older Field C-ats &&bor - 624 792 936 1,044 1.044 864 371 210 77 wire r.etting - 62 62 62 62 62 44 -- - - ftrtifizero - 6 18 35 59 59 57 49 36 17 Tol. - 6 13 59 26 32 37 37 37 37 698 885 1.052 1.191 1,197 1,020 457 283 131 Mainteninee 6 I..rveestIng --ö-- 158 336 520 712 904 1.068 1.097 1,109 . 1,15 1.'5 5,109 1.097 1,097 1.097 1.097 at zer - - 2 4 6 8 9 10 9 50 9 50 9 10 9 10 10 Tl- - - - - 6 13 19 26 32 37 37 37 37 37 37 37 37 37 37 -- - -- - - 166 353 545 746 943 1,115 5.143 1,156 1.161 1.162 5.155 1.144 1.144 k.144 1.144 9anka Loa repF- mente - - - - 21 123 133 142 155 168 182 104 - - -- -- - - Interest 39 _95 104 104 103 95 83 71 59 44 30 -- ._- -- - -- -- - 39 95 104 104 124 218 216 213 214 212 212 104 - - -- -- - -- -- Banks L.a TCU Co.a. 829 829 654 654 654 654 654 654 608 440 -- - -- -- - -- -- -- -- -- 1.003 1.747 1.815 1.991 2.130 2.526 2.379 1,884 5.850 1.730 1.327 1.355 1.260 1.161 1,162 1.155 1.144 1,543 1,144 1.144 intåger1129* 336 672 1120 1.624 1.942 2.568 2.871 3.063 3.558 3.199 3.199 3,199 3,199 3,199 fIb - - - - - 80 240 480 800 1.160 ,387 1.834 2.051 2.188 2.256 2.285 2.285 2.285 2.285 2.285 Federal Grante 250 430 430 450 500 550 550 575 650 -- -- --- -- - - - - - -- - gank's Loan _463 660 10 Total Infloc 713 1.090 531 450 500 630* 790 1,055 1.400 1,810 1.387 1.834 2.051 2.88 2.256 2,285 2.285 2.285 2.285 2.285 662* 886 1.247 1.720 2.274 1.942 2.568 2.871 3.063 3.158 3.199 3.199 3.199 3.199 3.199 get Cack scrplaol (Deficit) (290)9 (657) (1.284) (1,541) (1.630) (1,896) (1.589) (829) (450) 80 60 479 791 1.027 5.094 1,130 1.141 1.142 1.141 1.141 (290)** (657) (1s784) (1.541) (1.630) (1,864) (1.493) (637) (130) 544 615 1.213 1,611 1,902 1.996 2.044 2.055 2.056 2.055 - Cat m 50 ffl tes - afta cellectia cowt 9 at 70 ffb te - aftor celleetue teot AnPI 1 1,e, ANNEX 2 DENDEL OIL PAIM PROJECT - SMAtI.HDLDERS Table 3 MOAN 11B3-INI FM 'S FI' CIAL RATZ OF RITURN PER I HA ( IM FIXED TM) *0 1 2 3 4 5 6 7 6 9 10 11 12 13 14 Labor 780 210 180 135 To31s a 8 a 8 1otal 788 21 I 188 143 Labor 197.50 22.250 23.000 24.000 24.000 26.250 24.000 24.000 24,000 24.000 24.000 Fertlliser 2.50 250 250 250 250 250 250 250 250 230 250 Chc-icals 1o0s o00 800 600 800 800 800 800 S00 600 800 800 Loan Repayment a 7.257 7.257 7.257 7,257 7.237 7,257 Interest * 41.36 34.47 27.58 20.68 13.79 690 TOTAL OUTFLOW 78.800 21.800 18800 14.300 20,800 23.300 24.050 364.43 357.54 373.15 343.75 336.86 329.97 250.5 230.3 Cre,it 150 60 43 (a) 43 .et income aa 100 200 300 400 450 500 500 500 500 300 500 _ (b)140 280 420 420 560 630 700 700 700 700 700 TOTAL IMFLW 150 60 45 145 200 300 400 450 500 500 500 500 500 500 0% 185 280 420 560 630 700 700 700 700 700 700 0% Net Cash Flow (786) (68) (126) (96) (63) (33) 595 3.557 9.246 13.685 15,625 163.14 170.03 249.5 249.3 (23) 47 *179.5 195.57 272.46 336.85 356.25 263.14 370.03 449.5 449.5 * Including capitalised Interest up to year 7 ** Interest rates 9.52. Interest is calculated on the unrepaid bclence commeacing year 7 No Ket Income is calculated on the basis of 00 per ffb ton after collection cost, which Is estimated at N 20 per ton (a) at r 50 per ffb ton (b) at N 70 per ffb ton April 1. 1902 ANNEX 2 Table 4 VICERIA OWDD OIL PALM PROJCT LOAN 1192-U1N OOPC - A Reduced Program at Ilyansw (N'000) financial Rate of Return 3962 1983 1984 1985 1986 1987 1988 1989-2000 1990 1991 1992 1991 1994 15i- -YOO Costs A Mill -- 2,000 -- -- -- -- - --- -- --- --- ---- Mill Spate Parts -- 5-- 5 50 50 100 100 100 -- --- --- --- --- --- Mill Operation - -- 50 60 68 72 72 7- - -- --- --- Collection Equipment 48 -- --- --8 --- --- - --. ... Coilectton operating 12 19 23 28 31 33 33 33 -- --- --- --- --- --- Boats/Jetty 55 --- --- -- --- -- 30 -- --- --- --- --- Harvesting.Collecting and Maintenance 495 495 495 495 495 495 495 495 Tr3nsport of Oil 124 190 46 55 63 66 66 66 --- --- --- --- Labor housing 70 -- - - - - --- --- --- --- --- Total 804 2.704 664 688 707 766 844 766 -- 766 Bank's Loan Repayment -- --- - --- --- -- --- --- -- --- 481 500 310 -- Interest -- 25 110 110 110 110 110 110 110 110 8 (.9 26 --- Total 604 2.729 774 798 817 876 954 876 876 876 1.336 1.335 1.02 ;66 m Revene I 011 597 911 1.103 1.325 1,506 1,593 1.593 1.593 --- --- --- --- - --- Kernels 41 63 76 91 104 109 109 109 --- --- -- --- --- --- Total 638 974 1.179 1.416 1.610 1.702 1,702 1.702 1.702 1.702 1,702 1.702 1.102 1,702 Federal Grant - 500 --- --- -- --- --- --- -- --- --- Bank's Loan 291 1,000 -- --- --- -- -- Total 929 2.474 1,179 1,416 1.610 1.702 1.702 3.702 1.702 1.702 1.702 1.702 1.702 1,702 tiet Cash Surples (Deficit) 125 (255) 405 618 793 826 748 826 826 826 366 367 600 936 FRR more than 100 25.339 March 26. 1962 ANNEX 2 NICERU Table 5 ONDO 01L PROJECT Cae now maR (NPTINc TRE ITANSAN PROMRAN (IN rIm TUN) 1982 1983 1984' 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Effective (he) 1.100 Cplanli,g (ha) -- 380 P I, t!-8 --- --- st0 610 600 Ttal (HA) 1,100 1,480 2.290 2.900 3.500 C: %tt . overhead 523 600 600 600 600 600 600 600 600 600 600 600 600 600 600 1 :,.te.icc Cnålecting a: :.vestång 440 192 916 1,160 1.400 1,400 1.400 1,500 1.500 1.600 1.600 1,700 1.700 1.750 1.750 , and Housing 70 175 245 E.1;-t 420 420 420 j.:tt-,3.ats 55 30 30 '.ratr. --- 97 170 170 65 -e*i,n i600 --- 366 366 350 P1a,114 i 875 --- 332 709 535 525 1.508 2.162 3.006 2.825 2.590 2.000 2.450 2.100 2.100 2,200 2.200 2,740 2.300 2.350 2.350 --- 1,150 2.000 350 175 175 175 350 350 350 525 525 525 525 Pr.:eSning 280 280 280 280 280 280 280 280 280 280 280 b-k's Loan Repay- r.1t 575 778 842 910 981 1.065 1.152 611 0% 49 232 487 587 587 354 489 418 342 261 273 77 OD ;L OTrLOW 1.508 3.361 5.238 3.942 3.632 3.042 4.034 3.997 3.990 4.082 4,247 4.793 4.334 3.766 2,350 175 350 526 P O-. Oil 1,152 1,440 1.837 2,353 2.871 3.563 4.254 4.945 5.527 5.875 6.040 6.040 Kerneis 70 80 112 144 176 218 260 302 338 359 370 370 1,222 T.528 1,949 2.497 3,047 3,781 4,514 5,247 5,865 6,234 6,410 6.410 -A Grant* 350 825 1,300 950 900 Ba., Loan 577 2.150 3.000 1.177 TTAL OL:TF,0 1.102 3.325 4.826 3.349 2.428 1.949 2.497 3.047 3.781 4.514 5.247 5,865 6.234 6.410 6.410 .et Cash Surplus ASE CAsI . . ............. Ptlabi C.RGr #.5xIST f.P*o 9.AP?Fft C.Capitc C.CAP2C C.CAP3EC C.c:, 3 304.0 su6.0 .0 0.0 1017.3 0.0 0.0 1 - sn.0 0.0 0.0 ::34.0 0.0 1e.o. 3 ss.o 901.o 0.0 0.0 0.o 1527.% 0.0 1 sas.0 3796.0 0.0 4.0 0.0 1431.4 0.o 6 9.6 4974.0 4.0 0.0 *.0 1196.9 0.0 %. 96.0 O.G, 0.0 *.0 0.0 1042.1 6 S650. 5å. 0. 0.0 0.0 914.6 6 0.9 707s.0 t2:0.0 0.0 0.0 0.0 930. 9 0.0 7743.o .05s.0 0.0 0.0 0.0 574.& to 6.0 7s95.0 3271.0 113.0 0.0 0.0 324.7 7. 88 0.0 7105.0 3947.0 22.0 0.0 0.0 0.0 2å7. 83 0.0 s41.0 4173.0 451.0 0.0 0.0 0.0 267. 3 6.o 4090.0 4390.0 7e9.0 0.0 0.0 0.0 2a7. 4 5.0 8752.o 4511.* 101s.0 0.0 0.0 0.0 2U7. 1.6 35216.0 4173.0 1.79.0 0.0 0.0 0.0 2 Uå 0.0 5413.0 4173.0 1692.0 0.0 0.0 0.0 2*7. 17 1 .6 3301.0 4173.0 1804.0 0.0 0.0 0.0 247.1 s-:0 .0 518.9 . 4173.0 1917.O 0.0 *.o *.o .67.1 PCRIODs C.Op1c C.OPtC C.OP3C C.OPEC 8 647.4 0.0 0.0 2762.2 3 s22.1 0.0 0.0 2192.0 3» s.7 0.0 0.0 2329.6 3 532.0 0.0 0.0 :U34.4 All cost streas have been adjusted s h76.3 0.0 0.0 344.9 4 642.3 0.0 0.0 3344.9 by appropriate conversion factors. 2324. :.34.t 0.0 2267.5 290s.9 68o.6 *.o 2174.6 · 3406.0 1092.3 0.0 3040.3 All beriefits valued at border prices. 1 237.1 1092.3 24.9 3857.8 8 23s.0.4 1357.9 54.0 3403.0 82 2279.2 14-8.2 197.5 3410.5 83 2197.8 1590.6 374.0 3203.0 s4 21å1.3 W173.3 509.6 30:Z.4 85 210s.7 1608.5 710.5 2p66.0 lå 2:00.7 1431.0 nl2.0 2971.8 l7 20.:.2 I431.0 827.5 2871.8 89.210 1s0.5 1631.0 902.2 2971.8• ~keslto< STREAS roR 9ast CASE .............. ...... T0TAL TOTAL rET 1NCmhFNTAL INCkitNTAL INCREKNTAL fl810Se etNFITs COsTs IENKFLtS I 1761.0 6482.9 -4721.9 2 2419.0 6387.4 -3960.4 39e1.0 6s0.s -3579.5 4 3794.0 71&4.2 -3368.2 * 4974.0 7282.5 -230.5 996.8 3936.3 49.5 i 7894.0 6273.5 620.5 9325.0 6624.4 1500.6 9 901.0 84t9.3 1301.7 go 13279.0 7954.5 334.5 ti 112?.0' 7433.2 3444.0 3 a1l5.0 7633.2 3531.9 83 81277.0 7433.2 34å3.6 64 81279.0 7437.3 3&40.7 8s 11270.0 7s5s.S 3719.5 W0-30 81279.0 7623.2 3654.8 libstile:Ty YtSTS IPY A A2 ye0?t(NT ts?tIItNAL #ALUt &T oCC CoSis AT oCC AT eor Iffl CAStS TEST CASt VARIAT:Osl ØF 1 .0 o 11.0ø &to% [ru m*st CASE .3347.7 -S.Teóz 8.139: _i_'i 71- ANNEX 2 ONDO OIL r N 'R~oacT Table 8 F.conomic rate ofý Return for co pletin. onPC',. Prc%,rr-- t Ivar.nan micVS C.rISm!is C.AMT Ct C.RUIS C.EOPi C.Iis C.S4 C.CLII C.rti C.:!...L C.r-c I 523.00 445.0 70.C0 43.03 55.C 0.05 0.00 0.45 0.00 0.00 a 0.00 57..CO 17..C0 0.0 0.0) 97.C0 3 550 !22.02 u... 0.C 3 U0.0 914.CS 24!.C5 0.03 0.00 170.03 316.C0 555.C3 2:.C0 0.C0 4 00.00 11U.C5 0.02 0.43 0.0 170).03 35.C) 535.C4 Z .03 2".C3 S o40.C W):.0e 0. 0 Q.03 0.00 65.CO o.cl s:,.C3 . 2 .CO 4-7 60).CO 14:1.c0 l.00 0.00 0.00 0.00 0.02 0.00 175.C 22.CD -11 600.00 140:.o ('03 0.05 0.00 0.00 0.00 0.00 31.CO 2^3.-3 12-20 6C0.00 14C.00 ('.00 0.00 0.0 0.40 0.00 0.00 535.CO 280.0 SESITI.ITT I!nLTSIS f33233lEts:.:s?s3333 ?U1 Simus F ME CASE m 0r. C.ECD'1 C.TRANS C.KÅLL C.PROC C.EPTE M.FØ .01L 8.KERinLS 1 857.4 49.5 4.0 0.0 403.2 175.2 0.0 0.0 Cost stream.s baye 2 1794.5 0.0 1150.0 0.0 0.0 350.4 0.0 0.0 been correctcd bv 3 2350.6 0.0 2000.0 0.0 0.0 525.6 0.0 0.0 appropriate convers1in 4 2344.8 0.0 350.0 2*0.0 0.0 0.0 683.2 103.7 factors, I 2149.7 0.0 17!.0 220.0 0.0 0.0 849.0 129.6 I 1660.0 .0.0 17.0 280.0 0.0 0.0 1074.1 163.9 Benefit stre-:s 2 14"0.0 0.0 17,.0 280.0 0.0 0.0 1306.0 2¢9.5 rcflect border prLces 8 1660.0 0.0 350.0 260.0 0.0 0.0 1754.0 253.6 fer oil art: keri,,els 9 1660.0 0.0 35C.0 2M0.0 0.0 0.0 2028.8 311.1 based on I1.D price. 10 1660.0 0.0 35.0 280.0 0.0 0.0 2434.2 271.1 forceasts, 11 1660.0 0.0 350.0 2M5.0 0.0 0.0 2029.2 431.0 12 1660.0 0.0 525.0 2Z0.0 0.0 0.0 3162.7 482.4 13 1440.0 0.0 52!.0 280.0 0.0 0.0 331.8 512.4 14-20 1660.0 0.0 525.0 220.0 0.0 0.0 3456.2 529.1 AMMCATED STFE.2S FR 8iSt CASE 1MÅLt TOTAL ET m1HCEnENTt.L INcPESTAL 1K^RNENTAL MRID0S WRENIIS COSIS ENEFITS I 175.2 1310.1 -1134.9 2 350.4 -944.5 -2594.1 3 525.6 4350.6 -3825.0 4 284.9 2974.8 -2187.8 977.9 2604.7 -1627.1 6 1238.0 2115.0 -877.0 2 1575.5 2115.0 -539.5 2007.6 2290.0 -282.4 .9 2349.9 2190.0 59.? 00 2705.3 2290.0 415.3 11 3260.2 2290.0 970.2 12 345.1 2165.0 1180.1 u3 3874.2 2155.0 1409.2 94-20 3984.3 24M5.0 1519.3 IMSITIVIIT 1[M1U 8PV IS A 1 5.16 12.36 (0.95) Effect of Inflation, 1981-1982 + 10% Total Value per ton ffb, 1982 prices 13.60 Notes Column 1 is taken from Annex 7 of the Oil Palm Sub-sector Review. - 73 - ANNEX 2 Table 10 KTGERIA DNDO 0IL PALM PROJFCT Okitipupa 011 Palm Co: A 'Redtuccd Prro7.ram at Tvansan 1/ Economic Rate of Return 1982 1983 1984 1985 1986 1987-2001 Tons ffb 4,144 6,326 7,658 9,200 10,460 11,060 Peak Month 518 791 957 1,150 1,306 1,382 Capacity required 2/ 1.0 1.6 1.9 2.3 2.6 2.8 -'000 Naira ---- ------ Revenue/Benefits 3/ Fresh fruit bunches 301 460 Oil and Kernels 1,182.4 1,420.5 1,615.0 1,707.7 -Costs 4/ Mill 2,000 Mill spare parts 50 50 50 100 Mill operations 5/ 49.8 59.8 68 71.9 Collection equipment 48 Collection-operating 12.4 19.0 23.0 27.6 31.4 33.2 Boats/jetty 55 Barvesting, collection and maintenance 495 495 495 495 495 495 Transport of output 6/ 124.3 189.8 45.9 55.2 62.8 66.4 Labor housing 70.0 Correction to border prices - 59.7 -118.3 -101.7 -104:1 -106.4 -115.3 Total Costs 676 2,585.5 562.0 583.5 600.8 651.2 Net benefits -375 2,125.5 620.4 837.0 1,014.2 1,056.5 ERR 34% * With increase in field costs by 50%, ERR-23% With decrease in oil/kernel costs by 15%, ERR=26% 1/ No further planting. Rehabilitation of existing 1,578 ha only. 2/ Mill capacity required in tons ffb/hr, assuming 500 hours per month operation in the peak month. 3/ Valued at border prices, N72.70 per ton ffb, N154.40 per. ton ffb converted to oil and kernels. 5/ N42.10f ton ffb. 6/ N30/ton ffb. N6/ton oil 4/ Estimated costn. Conversion factors are: 0.9 for mill spareparts, collection costs, boats/jetty. 0.95 for mill operations., collection capital equipment 0.83 for other, local costs, buildings. 1.0 for mills. - 74 - AGGREGATED STREAMS FOR BASE CASE ANNEX 2 Table 11 TOTAL TOTAL NET INCREMENTAL INCREMENTAL INCREMENTAL PERIODS BENEFITS COSTS BENEFITS 1 0.0 Y96.0 -996.0 0.0 2991.0 -2991.0 0.0 1519.0 -1519.0 4 0.0 2905.0 -2905.0 5 0.0 3773.0 -3773.0 0.0 3578.0 -3578.0 0.0 2000.0 -2000.0 1782.0 7235.0 -5453.0 9 2440.0 7669.0 -5229.0 10 3002.0 7850.0 -4848.0 1! 3817.0 8579.0 -4762.0 12 4995.0 9803.0 -3808.0 6041.0 7738.0 -1697.0 14 7216.0 7894.0 -678.0 8549.0 8075.0 473.0 16 10158.0 9647.0 511.0 17 11787.0 9092.0 2695.0 11882.0 8769.0 3113.0 11956.0 8490.0 3466.0 12159.0 8500.0 3659.0 12218.0 8508.0 3710.0 12247.0 8430.0 3817.0 12259.0 8489.0 3770.0 24 12259.0 8481.0 3778.0 25 12259.0 8490.0 3779.0 RTR A. (TES OF RETURN FOR NET STREAMS N PE -2.251 PL,ESENT VALUES OF STREAMS DISC2J' FATE P.RE4 C.BEN N.BEN 2493.6 41925.0 -16989.3 SENSITIVITY ANALYSIS INTERNAL RATES OF RETURN OF NET STREAMS B.JEN UP 10% UP 20Z UP 50% DOWN 10% DOWN 20% DOWN 50% LAG 1 YEAR LAG 2 YEARS LAG 3 YEARS C.BEO -2.251 0.737 3.149 8.524 -6.250 -12.559 NONE -4.490 -6.680 -8.934 UP 10Z -5.823 -2.251 0.494 6.336 -11.097 -22.533 NONE -9.045 -10.290 -12.649 ff; 20z -10.019 -5.479 -2.251 4.205 -18.206 NONE NONE -12.275 -14.620 -17.194 ur, 502 NONE -21.170 -12.559 -2.251 NONE NONE NONE NONE NONE NONE DOWN 10Z 1.029 3.629 5.799 10.814 -2.251 -6.795 NONE -1.267 -3.456 -5.651 DOWN 20% 4.205 6.532 8.524 13.259 1.384 -2.251 NONE 1.816 -0.408 -2.585 2OWN 50% 14.561 16,445 18.136 22.392 12.427 9.941 -2.251 11.602 9.034 6.691 LAG ! YEAR - - - - - - - -3.292 -5.763 -8.239 LIS 2 YEARS - - - - - - - - -4.561 -7.337 LAG 3 YEARS - - - - - - - - - -6.136 - 75 - AGGREGATED STREAMS FOR BASE CASE ANNEX 2 TOTAL TO1AL NET Tabfe-T2 INCREMENTAL INCREMENTAL INCREMENTAL PERIODS BENEFITS COISTS BEAEFITS ----- - -- ---- ---- ---- - - -- - - - - - - 1 0.0 1565.0 -1565.0 2 0.0 1718.0 -1718.0 3 0.0 2005.0 -2005.0 4 0.0 2055.0 -2055.0 49.0 1893.0 -1844.0 6 60.0 1061.0 -1001.0 7 115.0 2295.0 -2170.0 a 225.0 1254.0 -1029.0 9 445.0 1310.0 -965.0 10 656.0 2944.0 -2288.0 11 957.0 4351.0 -3394.0 12 1153.0 2975.0 -1822.0 13 1438.0 2605.0 -1167.0 14-1 1796,0 2115.0 -329.0 16 2219.0 2290.0 -72.0 17 2560.0 2290.0 270.0 18 2915.0 2290.0 625.0 i9 3470.0 2290.0 1180.0 20 3955.0 2465.0 1390.0 4084.0 2465.0 1619.0 2---' 4194.0 2465.0 1729.0 STREr NAME INTERNAL RATES OF RE'URN FOR NET STREAMS -4.637 PRESEP"T VILUES D1 STFEAMS .4.ONO CONO N.ONO ts e51.5 17263.4 -10689.5 SEN3ITIVITY ANALYSIS INTERNAL RATES OF RETURN OF NET STREAMS B.ONC UP 10% UP 20% UP 50% DOWN 10% DOWN 20% DOWN 50% LAO 1 YEAR LAG 2 YEARS LAG 3 YEARS :*ONO -4.637 -2.598 -0.912 2.914 -7.229 -10.813 NONE -6.432 -8.444 -10.848 -6.962 -4.637 -2.767 1.350 -10.051 -14.705 NONE -8.848 -11.022 -13.712 X -9.460 -6.745 -4.637 -0.165 -13.304 -20.010 NONE -11.483 -13.886 -16.982 JP 50:. -20.010 -14.310 -10.813 -4.637 -37.549 NONE NONE -23.089 -27.237 -33.524 11OWN :* -2.396 -0.573 0.968 4.554 -4.637 -7.566 NONE -4.133 -6.030 -8.227 POUN 2r% -0.165 1.490 2.914 6.303 -2.149 -4.637 -27.055 -1.873 -3.693 -5.738 DOWN 10% 7.232 8.575 9.776 12.785 5.705 3.928 -4.637 5.438 3.666 1.833 -AG 1 YEAR - - - - - - - -5.923 -8.034 -10.523 '.AS 2 YEARS - - - - - - - -7.53o -10.130 LAS 3 YEARS - - - - - . - - - -9.652  SIBRD 17237(PPA) ow-O 'i To6c Abula TMAY 1983 Bida Bode Sadu . kwanga Lafiagi Keffi Wamba Shendam Pategi0 Baro ILORIN ,Nasarawa Lafa OAbai Ajasse WasnmOgbomosho Egbe lseyin O ADAN AdoeFhi Okene Ayangba MAKURDI0 o_Meko Ankpa AEGboko ABEOKUTA AKURE OwLTakum > ABEdKUT Ondd AKRE wo hrAuchi Idah Oturkpo Katsina Ala aBissaul Idog gam Ile eu- 0 Ond Ode Ore IKEJ JA Porto____LAGOS ENUGpa__bioi__ Bansara This map is based on 18,RD 10967, Apri 1974. Ta facilitate BE NI |TY 0s,0m0o ANU Alok. own nasaro coThe any mes, and te boundesea'ries Ag/doraka CAME -6n h an been updated. Maor rads and raatyjs have also bn added Koko Sop Onisha AvluCAM oaSnpem aeo d N l G E R I A sc,ovos q Kwaleo Okigwe Ugep -kn MAL( BENDEL STATE AND ONDO STATE loC)OWERRI eed OIL PALM PROJECTS OBurri" Umuabia UPER. r Forcados O1 L PA LM PRO JEC T A REA S A b k pen I U o < )- I E I TRUNK ROADS Yenagoa0 < RAll.WAYS PORT HARCO TALABAR RIVERS o Ork rn CAMEROON .AR 0 MAJOR TOWNS Pennigo Degem OOnne Eket 0 e REGIONAL BOUNDARIES EQATO&RILI1GUIEA - I-NTERNATIONAL BOUNDARIES 4//onlic Ocean SAPOE&PRNiE • EOPLE'S Thsnp a ee rpred by whe Wo Banks stal excfmsf for eh conniene ofBnn 5p 100 K iIometers A5R ,e .G BN EP OF h. c Weol Bk -d th I-b C' rass ido10 Miles ce eo"nA n e lea)stu f = 1any territoy or any endorsemen or acc'ptanc of such boundes-