Document of The World Bank Report No. 15216-GUI STAFF APPRAISAL REPORT REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT MARCH 12, 1996 Agriculture and Environment Division Western Africa Department Africa Region CURRENCY EQIJIVALENTS Currency Unit = Guinean Franc (GNF) US$ 1.00 = GNF 978 (as of December 26, 1995) ABBREVIATIONS AND ACRONYMS BCPA - Bureau de Coordination de la Politique Agricole (Agricultural Policy Coordination Office - MAEF) CfD - Caisse francaise de Developpement EU - Union Europeenne (European Union) DNA - Direction Nationale de l'Agriculture (National Agriculture Department) DNE - Direction Nationale de 1'Elevage (National Livestock Department) IRAG - Institut de recherche agronomique de Guinee (Agricultural Research Institute). LPDA - Lettre de Politique de Developpement Agricole (Letter of Agricultural Development Policy) MAEF - Ministere de l'Agriculture. de l'Elevage et des Forets (Ministry of Agriculture, Livestock and Forests) MC - Ministere de la Cooperation Francaise (French Ministry of Cooperation) M&E - Monitoring and Evaluation System NASP - National Agricultural Services Project PNAE - Programme National d'Action Environnementale SMS - Subject Matter Specialist SNPRV - Service National de la Promotion Rurale et de Vulgarisation (National Rural Development and Agricultural Extension Service) SNSA - Service National des Statistiques Agricoles (Agricultural Statistics Office - MAEF) SPAAR - Special Program for African Agriculture Research T&V - Training and Visit Extension USAID - United States Agency for International Development FISCAL YEAR January I to December 31 - 11 - REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT STAFF APPRAISAL REPORT CONTENTS Page No. CREDIT AND PROJECT SUMMARY . . ............................ iv I. Country and Sector Background ..I A. Current Agricultural Situation .I B. Main Sectoral Issues and Sector Strategy .I II. The Project ..3 A. Lessons Learned and Results of Previous Bank Involvement .3 B. Project Rationale and Objectives .3 C. Summary Program/Project Description .4 D. Detailed Features .5 E. Project Costs and Financing .10 F. Procurement, Disbursement, Accounts and Auditing .11 G. Project Implementation .11 H. Monitoring and Evaluation .12 III. Assessments .12 A. Technical Assessment .12 B. Institutional Assessment .13 C. Economic Assessment .13 D. Financial Assessment .14 E. Environmental Assessment .14 F. Project Sustainability .15 G. Benefits .15 H. Risks .15 IV. Agreements Reached and Recommendation .16 This report is based on the findings of an appraisal missioii that visited Guinea in July, 1995, comprising Fraiiz Schorosch (mission leader), Mathurin Gbetibouo, Marie-Helene Collion, and Lucie Tran (AF5AE); Noel Chabeuf (AF3AE); Joseph Toledano (Resident Mission, Conakry, Guinea); Daphne Spurling, Pierre Rondot, Hannibal Muhtar (consultants). The mission was joined by Liba Feldblyum (LOAAF) and Bernard Abeille (AF5DR). The following representatives of cofinanciers participated in the appraisal: P. Remy, A. Borderon, R. Gouin (French Cooperation); J. Dean (USAID); and F. Viault (European Union). The docwnent was cleared by Messrs. R. Harris (Division Chief, AF5AE) and B. Fredriksen (Acting Director, AF5). - iii - ANNEXES Page No. Annex 1: A: Estimated Project Costs ................................................. 18 B: Financing Plan ................................................. 18 C: Summary Cost Tables ................................................. 19 Annex 2: Procurement, Disbursement, Accounts and Auditing Arrangements .......................... 27 Annex 3: Monitoring and Evaluation Plan and Project Performance Indicators ........................ 33 Annex 4: Economic Analysis ................................................. 38 Annex 5: Agricultural Sector Policy Note ................................................. 51 Annex 6: Issues Concerning Agricultural Extension ................................................. 60 Annex 7: Documents Available in the Project File ................................................. 61 MAP: IBRD 27658 - iv - STAFF APPRAISAL REPORT REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Guinea Implementing Agency: Ministry of Agriculture, Livestock and Forests (MAEF) through the Agricultural Research Institute (IRAG), the National Rural Development and Agricultural Extension Service (SNPRV), and the Livestock Department (DNE) Beneficiaries: Farmers and herders Poverty: Not applicable Credit amount: SDR 23.6 million (US$35.0 million equivalent) Terms: Standard IDA terms, with 40 years maturity Commitment Fee: 0.50 percent on undisbursed credit balances, beginning 60 days after signing, less any waiver Onlending Terms: IDA funds for agricultural research would be made available to IRAG as executing agency in the form of a grant. Financing Plan: See Annex I Net Present Value: N/A Map: IBRD 27658 Project Identification Number: 1081 STAFF APPRAISAL REPORT REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT I. Country and Sector Background A. Current Agricultural Situation 1. The First Republic (1958-1984) imposed heavy taxation on agriculture and provided little support for technology development and dissemination and rural infrastructure. Consequently, the performance of the agricultural sector was poor and the agricultural trade balance became negative. With the change in regime and economic liberalization, agriculture has grown since the late 1980s at a rate of over 3.0 percent p.a., reaching a peak of 5.1 percent in 1994. Agriculture has great potential for increased production through yield increases, given Guinea's favorable climatic and agro-ecological conditions, and the currently low levels of technology. B. Main Sectoral Issues and Sector Strategy 2. Guinea's agriculture is characterized by small holdings (70 percent of farms have less than 2 ha), and very low labor and land productivity due to limited use of improved agricultural technology, genetic material, animal traction, and commercial inputs. Consumption of fertilizers is only about 8,000 tons per year, and pesticide consumption is negligible. Average yields (kg/ha) for the major crops are as follows: paddy -- 600-1,500; fonio -- 500; corn/millet and sorghum intercropped -- 900; groundnuts -- 600; and cassava 7,000. These yields are low due to declining natural soil fertility, low input use, poor seed quality, and poor husbandry practices. Except for the last few years, yields were stagnant and production increases were mostly the result of area expansion. Over the years, the agricultural trade balance has deteriorated: rice imports have increased and agricultural exports have stagnated. Prior to 1984, total rice imports remained below 80,000 tons; in 1985 they reached 110,000 tons; and by 1994, 270,000 tons. In 1994, these rice imports amounted to about US$50.0 million or five times the value of major agricultural exports. 3. In addition, the public expenditure review carried out by IDA and the Government in early 1995 raises the following key issues concerning agricultural investments and the role of the Ministry of Agriculture, Livestock and Forests (MAEF): (a) public sector involvement in agriculture is large and disproportionate to what is needed to provide an enabling environment for agricultural growth. The functions, structure and size of the MAEF (currently about 9,000 employees) need to be reexamined. This is all the more important as producer organizations, village associations and small enterprises are increasingly able to carry out some of the activities previously provided by Government departments; (b) the current pattern of funding of recurrent and investment expenditures in agriculture is untenable. Personnel expenditures take up almost all (97 percent) of MAEF's recurrent budget, and donors are financing 85 percent of investment expenditures as well as 80 percent of recurrent expenditures. This situation has led to a donor-driven and fragmented investment program; (c) insufficient attention is paid to operation and maintenance expenditures, especially for rural infrastructure. Credible strategies for - 2 - maintenance and cost recovery need to be developed; and (d) the cost of public investment in agriculture is high (including substantial expenditures for technical assistance) and its impact is limnited. Criteria need to be established for judging the acceptability and priority of investment projects. MAEF also needs to ensure that extemally financed projects fit into the core investment program, that their numbers remain within manageable limits and that their development impact is commensurate with the expenditure made. Expansion of cultivated area, low and stagnant crop yields, and rising per capita food imports are all indications that the efficiency of agricultural investment urgently needs to be enhanced. As implementation capacity in MAEF expands, and in order to accelerate this process, all projects remaining in the public sector domain should be integrated into national programs under the line departments; the creation of parallel project implementation units should be avoided. All of this will require a new partnership between MAEF and intemational donors. In this context, the role of long-term technical assistance needs to be reviewed with a view to reducing it over time and replacing it with short-term consultancies whenever outside expertise is needed. 4. The Government is aware of these issues and has started to rationalize public sector investments in agriculture, and to coordinate the interventions of different donors more closely. Two specific measures have been taken in this context: (a) development of this operation, i.e., the National Agricultural Services Project (NASP) as a tool to rationalize public expenditures; and (b) formulation of an agricultural sector policy note (Annex 5). The NASP harmonizes donor interventions in key areas of agricultural development, and its design addresses in a practical manner the concerns raised in the public expenditure review. The agricultural policy note, which is an integral part of this operation, states the Govenmment's position in key areas: (a) respective roles of the public and private sectors in agricultural development; (b) improvements in the quality of individual investment projects and in the agricultural public investment program as a whole; (c) cost recovery and recurrent cost financing; (d) technical assistance; (e) input supply systems; and (f) the procedure that will be followed with all the donors to update the Agricultural Development Policy Letter. In the agricultural policy note, MAEF states clearly that its primary role is to encourage private sector initiative and investments by creating the enabling environment, and by limiting itself to the provision of services and infrastructure that have a public goods nature. MAEF is determined to transform a public sector administration that was bloated under the First Republic into a lean, technically competent development administration. To this effect, MAEF has carried out an institutional analysis of all its units and their staff and is in the process of readjusting the staffing of the Ministry in accordance with a more narrowly defined mandate. The proposed project will help accelerate this process and promote a viable solution to the problem of overstaffing within the Ministry through voluntary staff reductions (see para. 14). 5. The Govemment's overall goals and strategy for the agricultural sector are articulated in its 1991 Letter of Agricultural Development Policy (LPDA), which was submitted to IDA as part of the National Agricultural Export Promotion Project (Cr. 2407-GUI). The overall goals are to: (i) promote food security and reduce food imports (especially of rice); (ii) promote agricultural exports (coffee, fruits, and cotton); (iii) provide essential support services to rural producers, and (iv) ensure a rational management of natural resources. The Govemment strategy to achieve these objectives is to: (a) pursue the macro-economic reforms agreed under the SAL and sector adjustment programs to reinforce the market economy; (b) continue to disengage the State from productive activities and from services that can be privatized; (c) improve business conditions to attract private agricultural investments, (d) improve agricultural research and extension, and develop a seed industry; (e) improve rural infrastructure, and (f) build up local administrative capacity. The agricultural policy letter will be fomally revised by December 31, 1996, by which time the Government, after consultation with IDA and other donors, will organize a donors' meeting to review investment needs not covered by this project. Main areas for investment are rural infrastructure (rural roads, village water supply, and small-scale irrigation), and credit. The agricultural sector policy note referred to in para. 4 will form the basis for the revised agricultural policy letter. II. The Project A. Lessons Learned and Results of Previous Bank Involvement 6. The proliferation of small, incoordinated donor-financed projects has in the past overtaxed MAEF's sector management capacity, leading to parallel implementation arrangements, insufficient counterpart funds, lack of commitment by Government to implement them, and contradictory philosophies of development. This approach needs to be replaced with long-term national programs. Synergy between agricultural services is best achieved when projects are under common management. Experience under the Gueckedou Agricultural Development Project and the First Agricultural Services Project (Credits 1635/1636-GUI), for which Perfornance Audit Reports are available, shows that it is essential to: (a) have flexible and simple program designs with clear objectives and well-defined management structures; (b) ensure timely availability of counterpart funds; and (c) avoid complex co-financing arrangements. Draft Implementation Completion Reports are also available for the recently completed Livestock Sector Rehabilitation Project (Cr. 1725-GUI) and the National Seeds Project (Cr. 1864-GUI). The main lessons learned from the successful Livestock Rehabilitation Project are the importance of: (a) a proper macroeconomic incentive framework; (b) good identification and preparation which highlight the main difficulties facing the subsector; (c) regular supervision missions staffed with the right skills and including cofinanciers; (d) constructive dialogue with the line implementing agency; and (e) training for project staff and beneficiaries (herders). Experience with this project also highlighted the problems associated with inadequate counterpart funding. Major lessons learned from the less successful Seeds project are: (a) the need to create a demand for improved technology through effective agricultural support services (research and extension) and appropriate pricing policies; (b) the importance of involving private sector stakeholders at the outset to develop a private seeds industry; and (c) the importance of strong management based on the development of local capacity, with less reliance on expatriate technical assistance. All of these lessons have been incorporated in the design of the present project and plans for its implementation and supervision. 7. A quantitative impact evaluation of extension activities supported under the Agricultural Research and Extension Project (Cr. 1955-GUI) is currently underway. It is based on a random sample of 1,024 farmers. The final results should be available by April 1996, after the rice harvest. Preliminary results indicate that the extension program is working satisfactorily: (a) 61 percent of the sample of farmers indicated that they knew of the program's existence; (b) 26 percent reported that they had received advice directly from an extension agent; (c) nearly all farmers (92 percent) receiving extension advice considered it to be "very useful" and deemed it important for the extension service to continue disseminating messages on imnproved practices (95 percent). When asked to rate the impact on crop output of the extension recommendations they had adopted, 59 percent of these farmers rated it as "very successful" and 39 percent as "successful". B. Project Rationale and Objectives 8. The agricultural sector in Guinea has great potential for responding rapidly to a carefully designed investment program in agriculture with special emphasis on the provision of agricultural services (technology generation and dissemination, and improved animal health and husbandry practices). Agriculture can play a significant role in the economic adjustment process by providing the initial supply - 4 - response needed to stimulate economic activities, and also by reducing food imports and providing a sustainable source of export earnings to support long-term economic growth. If the anticipated growth is to materialize, MAEF's policy formulation and coordination capacity needs to be strengthened, and greater efficiency in service delivery and in the provision of aid will be essential. Donor support to Guinean agriculture needs to be well coordinated and MAEF needs to regain control over externally funded projects. Under the NASP, there would be a partnership between the Government and donors for the provision of agricultural services. The Government would be responsible for identifying and preparing its priority programs, and would work with donors to improve the efficiency and sustainability of those programs, without sacrificing ownership. 9. The NASP is a direct successor to two ongoing operations financed by IDA and other donors -- the Livestock Sector Rehabilitation Project (Cr. 1725-GUI) and the Agricultural Research and Extension Project (Cr. 1955-GUI) -- and would build on their achievements. It would also be closely coordinated with the IDA-financed Rural Resources Management Project which is scheduled for Board presentation in FYI 997. The NASP's overall development objective is to improve nationwide agricultural productivity and production, incomes of farmers and food security. The operation is designed to: (i) reshape the public sector role to complement the private sector and support private sector led growth; (ii) develop human capital, i.e., the knowledge and skills of both professionals (researchers, extension agents and livestock specialists) and farmers; and (iii) improve MAEF's capacity to provide services that are "public goods" and to arrest environmental degradation. The project's imnplementation objectives are to: (a) strengthen the field presence and technical capacity of MAEF in the areas of sectoral policy formulation, project and donor coordination, and agricultural statistics; (b) strengthen agricultural extension to accelerate the dissemination of appropriate and sustainable technologies, and increase land and labor productivity; (c) improve agricultural research's output of appropriate technologies for increased productivity; (d) improve animal production and veterinary support services to herders; and (e) increase responsiveness to social and gender issues as well as environmental concems. 10. The NASP is consistent with the Bank's country assistance strategy (CAS) for Guinea, which was presented to the Board in February 1994. It is the first step in a strategy to move towards integrated investment lending in the agricultural sector, and constitutes the first in a series of time slices fmanced under a long-term program. It is cofinanced by several donors and links key subsectors of the agricultural investment program more closely. It was prepared primarily by Guinean task forces, including broadly-based participation of stakeholders in the definition of agricultural research priorities. It will be implemented by MAEF without the creation of separate project units. IDA's strategy in supporting NASP is to focus on the provision of basic, core agricultural services and to concentrate on systemic solutions in the form of time slices within long-term national programs. C. Summary Program/Project Description 11. The overall agricultural services program is being supported by the European Union (EU), France (MC and CfD), and IDA. Project preparation for the NASP started in November 1994 when a joint Borrower/lDA mission provided advice on expanding the scope of agricultural services throughout the country. A Project Preparation Facility advance of $1.0 million was granted in October 1995 to finance project start-up and prepare project executing agency staff for integrating previous projects' activities into the new national program. The NASP has four components: (a) institutional capacity building in MAEF; (b) agricultural extension; (c) agricultural research; and (d) livestock and animal health. It will be executed by some 3,000 of MAEF's 9,000 staff (SNPRV/extension -- 1,700; IRAG/research -- 600; DNE/animal health -- 600; BCPA/policy coordination; and DNA/agricultural field offices -- 100). The EU is financing - 5 - animal health, genetic selection of milk cattle, animal traction, and slaughter and marketing facilities in certain parts of the country, as well as agricultural research in one of the six research stations. France is financing technical assistance for IRAG through its Ministry of Cooperation (MC), and the component to strengthen producer organizations, and support to the development of poultry and small ruminants through its Caisse fran,aise de Developpement (CfD). The IDA project would cover the remaining gaps for policy analysis, project coordination, and agricultural statistics; agricultural extension; agricultural research in the remaining five research stations; and animal health and livestock marketing and processing in the areas not funded by EU. This four-year, US$90.5 million program (about US$22.6 million/year) represents about 40 percent of the Government's annual public expenditure in agriculture, and will give farmers throughout the country access to quality agricultural services. Donor support by component is shown in Table 1. Table 1: Donor Support by Component Component IDA EU MC CfD a) Institutional Capacity x Building of MAEF b) Extension (1) Field Extension x (2) Support to Farmers Organizations x c) Research x x x d) Livestock Development and Animal Health x x x D. Detailed Features Institutional Capacity Building of MAEF (Base cost - US$6.9 million; 9 percent of total base costs) 12. To improve the capacity for policy formulation and coordination of donors and projects, the project would provide professional advisory services and staff training in economic analysis to the Agricultural Policy Coordination Office (BCPA) of MAEF. With this support, BCPA would carry out several policy and organizational studies. Two of the priority studies to be carried out by BCPA would be: (a) a study aimed at reorganizing and streamlining the National Agriculture Department (DNA) inter alia through a redefinition of its functions and redeployment of staff; and (b) a study analyzing the Borrower's current agricultural input distribution system with a view to increasing its efficiency and encouraging the development of a private sector input distribution system. At negotiations, assurances were obtained that the study conceming the reorganization and streamlining of DNA, and the policy study concerming the agricultural input system, would be carried out and completed by September 30, 1996. The results and recommendations of these two studies will be presented to IDA for its review and comment before December 31, 1996 (para. 35 (a)). In addition, and based on the findings of the Guinea Public Expenditure Review of December 1995 and issues addressed in the "Agricultural Policy Note", BCPA would carry out inter alia the following policy studies: (c) review of the existing agricultural sector investment program in - 6 - order to determine the associated recurrent costs and to identify possibilities for cost recovery through, inter alia, introduction of a levy on commercial crops, and/or user fees for services delivered by MAEF (rural roads, land titling, extension advice); and (d) agricultural sector review with special emphasis on an analysis of how best to encourage private sector investments, improve agricultural marketing, and stimulate agricultural exports. These studies will be carried out and completed by September 30, 1997, and their results and recommendations will be submitted to IDA for review and comment not later than December 31, 1997 (para. 35 (a)). Thereafter, the Borrower will promptly implement the recommendations of these four studies as agreed upon and in accordance with a timetable satisfactory to IDA, and taking into account all measures required to update the agricultural policy letter which was submitted to IDA under the National Agricultural Export Promotion Project (Cr. 2407-GUI). 13. The project would also finance support for: (i) MAEF's agricultural statistics office to produce reliable data; and (ii) rehabilitation of MAEF's office space for staff at the regional and departmental levels. 14. The project would support the formulation and implementation of a pilot operation (entrepreneurship capacity building scheme) to encourage MAEF employees, especially those who are already engaged in subsidiary economic activities, to leave the public sector and become private entrepreneurs. An information campaign for all MAEF employees would be carried out, explaining all aspects of the operation. During an initial short training module, applicants would be screened for their aptitude as business people. Successful candidates would then receive further tailor-made training directly related to the kind of business they would like to engage in and would be assisted in preparing their investment projects and in obtaining credit on commercial terms. The precise procedures to be followed would be modeled on the success in this field of the private enterprise development project "PRIDE" financed by USAID and executed by the NGOs VITA and PRIDE/Guinee. Assurances were obtained at negotiations that the Borrower shall: (a) not later than December 31, 1996, carry out a detailed design study required to develop the entrepreneurship capacity building scheme; (b) submit the results and recommendations of this study to IDA for review and comment; and (c) promptly thereafter, implement this scheme in accordance with the implementation modalities and schedule agreed upon with IDA. This study would include, inter alia, a determination of the kind of separation benefits, over and above training and access to credit, that would be needed to induce people to leave MAEF in favor of private sector entrepreneurship, and of the practical steps needed during the transition period (para. 35 (b)). Government would sub-contract this pilot operation to VITA PRIDE/Guinee and financing of up to US$2.0 million would be set aside for the training of future entrepreneurs (US$0.2 million) and for credit for their new enterprises (US$1.8 million). Receipt of a report and recommendations on implementation modalities and schedule satisfactory to IDA for this entrepreneurship capacity building scheme, will be a condition of disbursement of IDA funding for this scheme (para. 37). Separation benefits would not be financed by IDA; other donors have expressed their interest in financing such benefits if the feasibility study is conclusive. After an initial, specially designed information campaign, the first training module would be launched in July 1996. These training modules would be repeated every three months, and it is expected that some 500 MAEF employees would participate during the two-year pilot phase. Based on the experience of PRIDE to date, it is expected that some 30 percent of the participants would become successful entrepreneurs and would leave the Ministry. Before July 31, 1997 and during the mid-term review, results of this pilot operation would be evaluated to make the necessary adjustments and if feasible, accelerate its rate of implementation. -7 - Agricultural Extension Component (Base cost - US$3 1.0 million; 39 percent of total base cost) 15. The main objective of this component would be to provide a continuous flow of appropriate extension recommendations to Guinea's 670,000 farm families. The extension service (Service National de la Promotion Rurale et de Vulgarisation - SNPRV) would be in direct contact with about 200,000 farmers (organized into about 20,000 contact groups) through some 1,300 field extension workers, backed up by supervisors and Subject Matter Specialists (SMSs). All farmers would be encouraged to apply and test technical recommendations in small plots or on selected animals and to adopt new technologies more widely. On the qualitative side, the project would seek to: (a) further decentralize the management of the SNPRV and improve management of the logistical aspects of the extension service; (b) continue to upgrade the skills of staff at all levels through continuous tailor-made training. A training and human resource management program would be carried out, including (i) fortnightly training of extension staff by subject matter specialists; (ii) monthly technological review meetings involving research and extension staff, and farmers; (iii) training of farmer organization specialists; (iv) training in field diagnosis, monitoring and evaluation, and surveys; (v) training of trainers; (vi) training in supervisory techniques; (vii) management training; (viii) training in techniques involved in carrying out tests and trials in farmers' fields; and (ix) study tours inside the country and abroad. (c) continue to improve the "diagnostic skills" of front-line extension agents; (d) further expand the achievements of the completed IDA-funded Agricultural Seeds Project (Cr. 1864-GUI) and popularize improved varieties through formal and informal distribution channels; (e) strengthen the existing monitoring and evaluation system by introducing systematic client consultation and "beneficiary assessments"; (f) promote, strengthen and work more closely with farmer organizations through the provision of advice to farmers for the organization and management of groups and associations, and better access to commercial marketing and supply outlets, credit institutions, and seed producers, plant and improved livestock breeders; and (g) broaden extension recommendations to cover not only production aspects, but also crop protection, natural resource management, and storage, processing and marketing. 16. The project would finance training, and acquisition of 4-wheel drive vehicles, motorcycles and bicycles for 1,700 extension staff, short-term consultant services, equipment and a modest amount of civil works for the rehabilitation of existing buildings. During the first year, the project will also support the launching of pilot extension initiatives to: (a) improve the quality of extension recommendations by putting more emphasis on their economic and financial aspects; (b) develop a mass communications strategy to support face-to-face extension activities; and (c) develop contractual relationships with specialized NGOs in extension support activities. More pilot operations may be identified and executed over the life of the NASP. Government will formulate projects for the identified pilot initiatives, as needed, - 8 - and obtain IDA's non-objection before implementation. Lessons learned from the pilot initiatives will be appropriately adapted and then mainstreamed. A2ricultural Research Component (Base cost - US$20.3 million; 25 percent of total base cost) 17. The main objective of this component would be to build a sustainable agricultural research capacity within Guinea's agricultural research institute (Institut de Recherche Agronomique de Guinee - IRAG) that responds to farmers' needs by developing appropriate technologies. The NASP will support priority research programs and the evaluation of professional staff working in research. An on-the-job training and scientific tutoring program will be developed for the researchers and implemented with the help of existing French technical assistance. In addition, young graduates will be recruited and further training will be provided locally or abroad. The Institute will be reorganized to: (a) adjust the composition and functions of its governing bodies; (b) separate financial and accounting functions from that of procurement; (c) create a position for internal auditing and human resource management at IRAG headquarters; (d) create a position of station manager at each research center. The project will also support continuing improvement in research organization and management by: (a) improving the relevance of research by involving extension agents and farmers in the programming, monitoring and evaluation of research activities; (b) strengthening the autonomy of IRAG, as well as its accountability, by granting more decision-making power to its Board of Directors and its management; and (c) ensuring higher quality and more efficient research. To this end, a system for ongoing performance evaluation and reward will be put in place, based on a researcher "statute" to be included in the revised organizational rules and procedures of IRAG; (d) improving the logistical and financial management of IRAG; (e) rationalizing IRAG's network of experimental stations and laboratories, and improving management and maintenance of infrastructures through systematic on-the-job training; and (f) participating closely in regional research within the SPAAR framework. The credit provide funding for research activities only in the following centers: Koba, S&edou, Bordo, Foulaya, Bareng, and Kilissi (excluding the seed production center). The agro-processing laboratory at Foulaya will be rehabilitated during the third year of project implementation, once the agro-processing research team has been constituted. 18. The following assurances were obtained at negotiations. The Borrower shall, by December 31, 1996, reorganize IRAG as required to increase its overall efficiency including, inter alia, by establishing personnel rules and adopting an operational manual, all satisfactory to the Association. Furthermore, the Borrower shall cause IRAG to: (a) carry on its operations and conduct its affairs im accordance with sound administrative, financial and research practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; (b) (i) carry out by December 31, 1996, a comprehensive assessment of the competency skills of its research staff; and (ii) by March 31, 1997, formulate and thereafter promptly implement a career development plan designed to attract and retain talented research staff within IRAG; (c) (i) submit to the Association for its review and comments the draft competency skills assessment report and career development plan referred to in paragraph (a) above; and (ii) promptly finalize and implement them in accordance with the recommendations and timetable agreed upon with the Association; and (d) enhance its financial management system by not later than December 31, 1997, by adopting appropriate procedure to record all of its expenditures through a cost accounting methodology acceptable to the Association (para. 35 (c)). - 9 - Livestock and Animal Health ComDonent (Base Cost - US$21.2 million; 26 percent of total base cost) 19. The main objective of this component would be to increase the productivity of Guinean livestock, thereby augmenting national meat and milk production and improving nutrition, and raising the income and standard of living of herders. It would have four main sub-components: (a) Improved Animal Health would be achieved through increased vaccination coverage against gazetted diseases (CBPP, Rinderpest, peste des petits ruminants), and improved drug distribution. Vaccination, currently a public service, is gradually being transferred to private veterinarians operating under contract (the so-called mandat sanitaire). All vaccinations will eventually be carried out by private operators. The Government pharmaceuticals procurement agency (CAVET) is scheduled for privatization before September 30, 1996. Drug import and distribution, already 50 percent private, will then be entirely private. (b) Institutional Support - Government staff will be retained to carry out "public good" services (collection of sectoral economic data, public health duties), and to help support herder and other professional organizations (livestock traders, butchers) so they can modernize their operations. Headquarters staff will further develop their capacity to devise development policies and monitor their implementation. (c) Animal production systems improvement will be achieved through support to village poultry production, to peri-urban poultry and pig farming, to regional dairy development and animal traction, as well as through support to the modernization of livestock and animal product marketing facilities. Village poultry production would be boosted through the development of vaccination coverage against Newcastle disease by grassroots auxiliaries operating in cooperation with village associations and private veterinarians (an activity that has already started). Breeding for improved dairy production will be further developed around Boke and Beyla based on the "open nucleus selection system" involving village herds around the breeding stations. New traditional milk processing technologies will be introduced (manufacture of Wara cheese), and dairy product marketing will be left entirely to the private sector. A credit scheme will help finance semi-modem peri-urban pig and egg-layer farms operated by qualified technicians no longer employed by Government. (d) Infrastructure and natural resources management support - holding pens and concrete slabs would be built for the marketing and slaughter of animals, under a commitment from users to manage and maintain them and collect fees for that purpose. Similarly, small pastoral infrastructures (drinking troughs, cattle crushes, access tracks) would be developed on a matching grant basis with the contribution of beneficiaries, in order to help improve natural resource management and conservation, and on the basis of the commitment of herders to maintain the facilities. ResDonsiveness to Social. Gender, and Environmental Issues (Costs included under the other components) 20. All project components include actions to improve the social and gender responsiveness of the agricultural support services: a small unit will be created inside the SNPRV at the national level and selected female agents will act as socio-cultural SMSs at the regional level; all extension agents will receive training on how to deal effectively with different target groups; transformation and conservation - 10- technologies (typically women's activities) will be introduced into the research and extension agendas; promising income-generating activities will be tested with women's groups; and female leaders will be trained in group and financial management. 21. All project components also include actions to reduce possible negative effects of agricultural production technologies on the natural environment and to enhance their positive impact. To this end, a mitigation plan will be put in place and its implementation will be assessed during the mid-term review. This mitigation plan -- funded under the project -- will consist of the following five elements: (a) careful evaluation and selection of agricultural technologies that have a positive impact on the natural environment, with heavy emphasis on soil and water conservation practices and agroforestry; (b) environmental training (for staff) and a mass communications plan; (c) training of farmers and their organizations to deal with soil degradation problems; (d) environmental monitoring actions in related areas; and (e) adaptive research activities geared towards these issues. All of these activities will be carried out by staff of executing agencies (extension and livestock agents and researchers) with short-term technical assistance. E. Project Costs and Financing 22. The total base cost of the project, net of taxes and duties, is estimated at about 78.7 billion Guinean Francs (US$80.4 million equivalent). The base cost estimates reflect November 1995 prices. Physical contingencies amount to about US$4.4 million and are estimated to be 10 percent of civil works, 10 percent for goods, 5 percent for other investment costs and for operating costs. Price contingencies, amounting to US$5.6 million, represent about 7 percent of total base costs and are based on estimated annual forecasts of international inflation rates for foreign manufactured goods (from 1.9 percent to 3.0 percent) and estimated annual inflation rates in Guinea for local costs (5 percent per annum). Foreign exchange portion of total project cost is 40 percent. A summary of total project costs is given in Annex 1. 23. The proposed IDA credit of US$35.0 million would finance about 38.8 percent of total program costs of US$90.5 million, including 55 percent of foreign exchange and 28 percent of local costs. In addition, the project would be financed by: (a) Government contribution of US$26.7 million equivalent, mostly for salaries (US$23.5 million) and recurrent expenditures; (b) beneficiary contributions of US$1.0 million equivalent, mainly in the form of labor and local building materials, and (c) cofinancing contributions of US$27.8 million, distributed as follows: US$10.9 million equivalent from the European Union (EU); US$11.1 million equivalent from the French Ministry of Cooperation (MC); and US$5.8 million equivalent from the Caisse francaise de Developpement (CfD). Taxes and duties foregone, estimated at about US$20.5 million, represent the Government's additional contribution but are not included in the total project costs. To ensure timely availability of adequate counterpart funds (US$800,000 per year), assurances were obtained at negotiations that the Borrower will: (a) open and maintain an account (the Project Account) in a commercial bank on terms and conditions satisfactory to the Association; (b) deposit into the Project Account an initial amount equivalent to US$300,000; (c) thereafter, deposit into the Project Account by the first day of each calendar quarter, an amount equivalent to US$200,000 or such other amount as shall have been agreed upon at the beginning of each fiscal year between the Borrower and the Association in the light of the budgetary requirements of the Project; and (d) - I1 - ensure that funds deposited in the Project Account shall be used only for the purposes of defraying the cost of expenditures incurred for the execution of the Project (para. 35 (d)). The initial deposit of US$300,000 equivalent will be a condition of credit effectiveness (para. 36 (a)). F. Procurement, Disbursement, Accounts and Auditing 24. Details of procurement, disbursement, accounts and auditing are provided in Annex 2. The main executing agencies (SNPRV, IRAG and DNE) have satisfactory financial management systems in place and are fully familiar with Bank procedures concerning procurement, disbursements, and accounting and auditing. IDA would finance: (a) goods totaling about US$9.1 million to be procured through international competitive bidding (ICB) procedures; (b) works and goods totaling about US$1.0 million to be procured through national competitive bidding (NCB) procedures; and (c) goods and services totaling about US$25.0 million to be procured through other procedures, including international and local shopping for goods and short lists for consultants' services. The project's three cofinanciers would administer procurement for their share of the financing according to their respective rules and procedures. The proposed IDA Credit of US$35.0 million equivalent would be disbursed over four years, with disbursements to be completed by December 31, 2000. IDA funds for agricultural research would be made available by the Borrower to IRAG as a grant, under a grant agreement to be entered into between the Borrower and IRAG and satisfactory to IDA. Execution of this grant agreement on behalf of the Borrower and IRAG is a condition of credit effectiveness (para. 36 (b)). To facilitate disbursements, a special account would be established for each executing agency and operated in a commercial bank, under terms and conditions satisfactory to IDA. All cofinancing would be on a parallel basis and administered by each donor. During negotiations, assurances were obtained that project accounts will be audited by international, independent auditors under TORs acceptable to IDA and reports on such statements will be provided within six months after the close of each fiscal year (para. 35 (e)). The contracting of independent auditors, on a multi-year basis, and certification by auditors that the accounting system of each implementing agency is operational, is a condition of credit effectiveness (para. 36 (c)). G. Project Implementation 25. MAEF would have overall responsibility for implementing the NASP and no parallel administrative project units would be created. Each of the executing agencies, i.e., BCPA, SNPRV, IRAG, and DNE would be responsible for the execution of their respective components. The NASP implementation manual was reviewed during negotiations and its adoption is a condition of credit effectiveness (para. 36 (d)). Thereafter, the Borrower will take all measures necessary to ensure that the Project is carried out in conformity with the project implementation manual (PIM) and shall not make any change to the PIM which would materially or adversely affect the execution of the Project; and maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to IDA, the carrying out of the Project and the achievement of its objectives. To coordinate implementation of all NASP components, assurances were obtained during negotiations that the Borrower will establish by June 30, 1996, and thereafter maintain: (a) (i) a Project Steering Committee; and (ii) a Project Technical committee, all with membership and functions and responsibilities satisfactory to Association; and (b) ensure that each technical department of MAEF responsible for carrying out any part of the Project is headed at all times by staff with experience and qualifications satisfactory to the Association (para. 35 (f)). The chairman of the NASP Steering Committee would be the Secretary General of MAEF and members would comprise the Directors of the executing agencies, the Director of the Rural Resources Management Project, senior officials from the Ministries of Plan and Finance, and representatives of the private sector (farmers' organizations). BCPA would be responsible for - 12 - consolidating the annual work program, preparing sector budgets for approval of the NASP Steering Committee, and coordinate with donors on annual reviews, supervision missions and implementation issues. The Steering Committee would have a sub-committee on environmental impact monitoring, composed of the Directors of BCPA, the Rural Resources Management Project, the PNAE, and the NGO Guinee Ecologie. The Project Technical Committee would be composed of the Directors of the executing agencies. In addition, during negotiations the following assurances were obtained: (a) by September 30 of each year, MAEF would submit its draft annual work programs, investment proposals and related budgets for each project component to IDA for its review and comments; (b) by November 30 of each year, finalize the said work programs and related budgets by taking duly into account the comments and recommendations made by IDA; and (c) promptly thereafter, carry out the work programs as they shall have been finalized in agreement with IDA. Finally, the Borrower has agreed to ensure that any new investments to be made for the purposes of fostering agricultural extension, research and livestock development activities are included in the MAEF's work program; meet criteria of economic return acceptable to IDA; and have the funding required to cover their anticipated recurrent costs available through the Borrower's budget (para. 35(g)). H. Monitoring and Evaluation 26. Details on the project's monitoring and evaluation arrangements, including the key performance indicators, are provided in Annex 3. Each executing agency already has a monitoring and evaluation (M&E) system, that will be further strengthened under NASP. Assurances were obtained at negotiations that MAEF and the executing agencies will maintain a project monitoring and evaluation system satisfactory to IDA, including adequate policies and procedures to enable monitoring and evaluation of NASP on an ongoing basis, in accordance with indicators satisfactory to IDA. At Project completion and not later than six months after the Closing Date (December 31, 2000) the Borrower will furnish to IDA a plan for the future operation of the project (para. 35 (h)). In addition, a joint mid-term review by the Borrower, IDA, and the co-financiers would be carried out not later than March 31, 1998 to assess the progress achieved in the execution of the project (para. 35 (i)). This review will cover: (a) the implementation and management aspects of the project, including policy reforms, the performance and use of technical assistance personnel, the role of national counterpart staff, the status and results of training, reporting, accounting and audit performance, disbursement and procurement procedures, the functioning and the level of amounts deposited in the Project Account, and the progress achieved in the formulation and execution of the voluntary departure pilot scheme; (b) not later than thirty (30) days prior to the mid-term review, the Borrower shall furnish to IDA, for its comments, a detailed report, including an evaluation of the progress achieved in implementing the various components of the project, and a draft action plan containing proposals for remedying identified deficiencies; (c) the Borrower shall, promptly thereafter (i) prepare and adopt an action plan, acceptable to IDA, based on the recommendations stemming from the aforementioned review; and (ii) thereafter, carry out the said action plan for the remaining period of project implementation. m1. Assessments A. Technical Assessment 27. The design of NASP is based on the experience gained in the implementation of two, ongoing, IDA-funded projects and is technically sound. Design of the agricultural extension component is based on Training and Visit (T&V) management principles that have been internalized, have proven their effectiveness, and are being applied flexibly (see Annex 6). In addition, through pilot operations that were - 13 - started in 1994, a methodology for farmer participatory research has been developed and is now being used systematically by SNPRV. Hence, extension recommendations are developed jointly between researchers, extension agents and farmers and are situation-specific. This has been facilitated through considerable investments in training (abroad and in-service) of staff, especially Subject Matter Specialists. Special attention has been given to attune the extension service to women farmers' needs and to involve NGOs in service delivery. Finally, with support from CfD, producer organizations are being strengthened, which in turn facilitates the task of developing and providing extension advice. In the design of the research component, care was taken to address all the fundamental weaknesses of IRAG and to systematically build up its research capacity. Research priorities were defined with Bank support through a participatory method that brought together all the major stakeholders. All activities under the livestock and animal health component are extension of activities that were already successfully carried out under the IDA financed Livestock Sector Rehabilitation Project (Cr. 1725-GUI). B. Institutional Assessment 28. SNPRV is the successor organization of the IDA-financed national extension program and its management and staff are competent and dynamic. Since 1987, when pilot extension activities were started with Bank support, management and staff have gained considerable experience through learning-by- doing, short-term technical assistance, various types of training, and support from Bank and other donor missions. Expansion of the size of the extension service and its geographic coverage has been gradual, thereby allowing adequate time to build up management capacity and carefully select and train new staff. IRAG on the other hand, has been less successful in benefiting from the support that was provided under IDA financing. IRAG lacks competent researchers and its research management, as well as human, financial and physical resources management is still weak. The Ministry has agreed to a series of remedial measures: giving greater autonomy to IRAG, hiring a few young researchers every year on contract to rejuvenate the institute, and carrying out a formal evaluation of all researchers to define training needs of each researcher. In addition, MC has agreed to change the terms of reference of its technical assistance inside IRAG to place much more emphasis on scientific tutoring and training of Guinean researchers than in the past. Finally, management of research has been strengthened by appointing one scientific director per station to be responsible for the quality of all research activities, and by introducing closer supervision from the scientific director of IRAG. DNE, which was completely restructured under the Livestock Rehabilitation Project and had all of its staff has retrained, is competent to fulfill the tasks assigned to it under the NASP. C. Economic Assessment 29. Given the large size and composite nature of the current project, the overall assessment of its economic viability is based on several criteria: (a) traditional cost-benefit analysis for the livestock component, (b) cost-effectiveness and cost-benefit analysis for the extension and research components, and (c) fiscal impact analysis of the whole project. Most of the benefits from the livestock component would come from increased beef and milk production in cattle herds with better animal health and a more conducive institutional environment. The rate of growth of the cattle herd is assumed to increase from 1.0 percent in 1996 to 1.35 percent by the year 2009. Similarly, milk production would increase by about 30 percent over the same time span. Under these assumptions, the National Directorate of Livestock estimates that the ERR would be around 30 percent. An independent ex-post estimate of the ERR for similar investments financed under the recently completed Livestock Services Rehabilitation Project was found to be 18 percent. Concerning research and extension, there is wide scope for increasing returns. Current crop yields are low and over the past five years, 50 percent of farmers have adopted one or more technical messages extended by SNPRV. The agricultural research and extension components will contribute to - 14 - improved crop and animal husbandry practices and to developing and disseminating new agricultural technology. Monitoring and evaluation surveys by SNPRV indicate that with existing technology, crop yields have increased by about 30 percent for farmers having direct contact with the national extension service. Ex-post and independent measures of the economic impact of agricultural extension in countries with lower agricultural potential than Guinea suggest returns ranging from 70 to 100 percent. A combined ERR was estimated at 46 percent, assuming that the national agricultural extension service will cover 50 percent of the territory by the year 2000 (up from 30 percent currently) and that about 70 percent of rice farmers (compared with less than 50 percent current) would adopt the improved technical messages. Key assumptions on area covered, adoption rates and yield increases by crop and by natural region are in Annex 4, pages 11 to 13. Under the recently completed National Research and Extension Project (Cr. 1955-GUI), it was estimated that to achieve a 25 percent ERR, aggregate crop yield would have to increase by 15 percent between 1988 and 1995. Actual rice yield increased by 44 percent, cassava 50 percent, groundnut 33 percent, and maize 11 percent in areas covered by the national service. This suggest that the 46 percent ERR is reasonable and can be obtained from the proposed project, especially given that the project will foster synergy between livestock and agricultural activities, leading to positive externalities on higher crop yields particularly in transhumance areas of Guinea Maritime. D. Financial Assessment 30. Annual expenditures for the services covered under the project as a percentage of the agricultural GDP in 1994 (US$750 million) are as follows: research - 0.7 percent; extension - 0.8 percent; and livestock services - 0.7 percent. These percentages are well within international norms for these kinds of public expenditures. All three components were carefully tailored to the absorptive capacity of the respective executing agencies, and the proposed investments constitute least-cost solutions. The project support to institutional strengthening, including a much needed restructuring of MAEF, would have a positive impact on public finances and can be expected over time to lower the salary bill. For more detailed information, see the economic analysis in Annex 4. By integrating ongoing and future investments in research, extension and livestock services into national programs, the unit costs for these services will be lowered significantly. Especially in the case of extension, the unit costs per farm fanily will be lowered from between US$20 - US$100, depending on the type of crop- or area-based extension project, to US$10 for the SNPRV under the NASP. In the case of livestock services, pharmaceuticals are sold on a commercial basis and herders pay 200 GNF per animal and vaccination, which constitutes 50 percent of the costs for these services. Overall, the proposed project would generate estimated annual incremental recurrent cost of US$6.5 million equivalent in 1995 prices, representing 6 percent of total public expenditures on agriculture in 1994. Given the low income of a large proportion of the rural population, cost recovery at this time would have adverse welfare implications. However, the possibilities for partial cost recovery of agricultural services will be analyzed as part of the review of MAEF's current investment program and its associated recurrent costs (see para. 12). E. Environmental Assessment 31. The NASP is rated "B" for environmental assessment purposes, and an environmental analysis was carried out during August/September 1995. The report (available in the Project File) concludes that the NASP would have a neutral or positive impact on the natural environment, provided that the mitigation plan to be funded under the project, described in para. 21, is put in place and carried out. - 15 - F. Project Sustainability 32. After studying the multiplicity of projects in extension, research and livestock development carried out in the past, the Government has, on the basis of results and least-cost considerations, committed itself to a national program which will integrate ongoing and future efforts in the provision of agricultural services. This approach will lower the unit cost of delivering these services and limit it to some US$20 per farm family or about 2 percent of agricultural GDP. Expenditures of this magnitude fit within the country's public finances and are likely to be sustained over the long term. Through the provision of more professional and regular agricultural services, the project will contribute to a growing confidence of the farming community in the administration, which should, if successful, ensure longer term sustainability of project efforts. Further, the Government will study the possibilities for cost recovery through introduction of a cess on commercial crops, and/or some cost recovery for extension advice. Also, under the NASP, the Government will pilot initiatives for private sector/NGO participation in extension on a cost-sharing basis. Over time, it can be expected that improved prosperity of the farming sector will permit more cost recovery and generate a demand for extension services from sources other than those publicly funded. The institutional sustainability of the program is enhanced by the fact that there is strong government and beneficiary ownership; the program has been designed by Guineans and would use existing channels for implementation. G. Benefits 33. The NASP would benefit the economy in several ways. It would focus the role of the Ministry of Agriculture on the provision of key agricultural services; increase the efficiency and impact of the provision of these services and reduce waste in public expenditures. The institutional improvements in extension, research, and animal health would translate into the widespread diffusion and adoption of better agricultural technology, increase farmers' productivity, production and incomes, and accelerate the agricultural growth rate. The NASP would have a favorable impact on rural poverty alleviation through increased crop and livestock production and diversification. Women play important roles in Guinea's agricultural sector as farmers, managers, decision makers, farm laborers, and are expected to be major beneficiaries of the NASP. Increased incomes for women should result in improved household food security, nutrition and health areas where women are largely the decision makers. H. Risks 34. The risks foreseen include: (i) ineffective management and training of widely scattered extension, research and livestock agents; (ii) the failure of Government and/or donors to sustain the long- term commitment required to achieve durable improvements in the effectiveness of agricultural support services; and (iii) shortage of counterpart funds and long-term fiscal sustainability. Concerning agricultural services, good management is expected as a result of the application of T&V management principles, restructuring of research, and improving the linkages among extension, research, and farmers. Performance of the project executing agencies will be assessed through the monitoring and evaluation arrangements and through joint support missions in the field by donor agencies. The multi-donor annual review of work plans and budgets, as well as the mid-term review, will allow fine-tuning of programs and build long-term commitment. Regarding counterpart funds and fiscal sustainability, the reduction of independent projects and the reorganization of the Ministry of Agriculture will significantly reduce the unit costs of these services, and thereby increase the capacity of the Government to fund the single national agricultural services program. Also, it is expected that the review of the agricultural sector investment program (para. 12) will identify new possibilities for cost recovery. - 16- IV. Agreements Reached and Recommendation 35. Assurances were obtained at negotiations that: (a) the Borrower will carry out and complete organizational and policy studies concerning: (i) the reorganization and streamlining of DNA, and (ii) the agricultural input system, by September 30, 1996 and present the results to IDA before December 31, 1996. In addition, the Borrower will carry out and complete (iii) an agricultural sector investment review, and (iv) a review of the agricultural sector by September 30, 1997and present the results to IDA before December 31, 1997 (para. 12); (b) the Borrower shall: (a) not later than December 31, 1996, carry out a detailed design study required to develop the entrepreneurship capacity building scheme; (b) submit the results and recommendations of this study to IDA for review and comment; and (c) promptly thereafter, implement this scheme in accordance with the implementation modalities and schedule agreed upon with IDA (para. 14); (c) the Borrower shall, by December 31, 1996, reorganize IRAG as required to increase its overall efficiency including inter alia by establishing personnel rules and adopting an operational manual, all satisfactory to the Association. Furthermore, the Borrower shall cause IRAG to: (a) carry out its operations and conduct its affairs in accordance with sound administrative, financial and research practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; (b) (i) carry out by December 31, 1996, a comprehensive assessment of the competency skills of its research staff; and (ii) by March 31, 1997, formulate and thereafter promptly implement a career development plan designed to attract and retain talented research staff within IRAG; (c) (i) submit to the Association for its review and comments the draft competency skills assessment report and career development plan referred to in paragraph (a) above; and (ii) promptly finalize and implement them in accordance with the recommendations and timetable agreed upon with the Association; and (d) enhance its financial management system by not later than December 31, 997, by adopting appropriate procedure to record all of its expenditures through a cost accounting methodology acceptable to the Association (para. 18); (d) the Borrower will: (a) open and maintain an account (the Project Account) in a commercial bank on terms and conditions satisfactory to the Association; (b) deposit into the Project Account an initial amount equivalent to US$300,000; (c) thereafter, deposit into the Project Account by the first day of each calendar quarter, an amount equivalent to US$200,000 or such other amount as shall have been agreed upon at the beginning of each fiscal year between the Borrower and the Association in the light of the budgetary requirements of the Project; and (d) ensure that funds deposited in the Project Account shall be used only for the purposes of defraying the cost of expenditures incurred for the execution of the Project (para. 23); (e) To facilitate disbursements, a special account would be established for each executing agency and operated in a commercial bank, under terms and conditions satisfactory to the Bank. Project accounts will be audited by international, independent auditors under TORs acceptable to IDA and reports on such statements will be provided within six months after the close of each fiscal year (para. 24). - 17 - (f) the Borrower will establish by June 30, 1996 and maintain thereafter a Project Steering Committee and a Project Technical Committee with membership, functions and responsibilities acceptable to IDA, and ensure that each technical department of MAEF responsible for carrying out any part of the Project is headed at all times by staff with experience and qualifications satisfactory to the Association (para. 25). (g) The Borrower will: (a) by September 30 of each year, submit its draft annual work programs, investment proposals and related budgets for each project component to the Association for its review and comments; (b) by November 1 of each year, finalize the said work programs and related budgets by taking duly into account the comments and recommendations made by the Association; (c) promptly thereafter, carry out the work programs as they shall have been finalized in agreement with the Association. The Borrower will also ensure that any new investments to be made for the purposes of fostering agricultural extension, research and livestock development activities are included in the MAEF's work program; meet criteria of economic return acceptable to IDA; and have available, through the Borrower's budget, the funding required to cover their anticipated recurrent costs (para. 25). (h) MAEF and the executing agencies will maintain adequate policies and procedures to permit monitoring and evaluation of the NASP on an ongoing basis, in accordance with indicators satisfactory to IDA. At Project completion, and not later than six months after the Closing Date (December 31, 2000), the Borrower will furnish to IDA a plan for the future operation of the project (para. 26); and (i) A joint mid-term review by the Borrower, IDA, and the co-financiers, will be carried out no later than March 31, 1998 (para. 26). 36. Conditions of credit effectiveness: (a) establishment of a Project Account with an initial deposit of US$300,000 equivalent (para. 23); (b) execution of the grant agreement on behalf of the Borrower and IRAG (para. 24); (c) contracting of independent auditors, on a multi-year basis, and certification by the auditors that the accounting system of each implementing agency is operational (para. 24); and (d) adoption of a Project Implementation Manual (para. 25). 37. Condition of disbursement: for the entrepreneurship capacity building scheme receipt of a report and recommendations on implementation modalities and schedules satisfactory to IDA (para. 14). 38. Recommendation: Subject to the above terms and conditions, the proposed project would be suitable for an IDA credit of US$35.0 million equivalent to the Republic of Guinea, on standard IDA terms, with 40 years maturity. - 18 - ANNEX 1-A. I-B Page 1 of 9 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT ESTIMATED COSTS AND FINANCING PLAN A. Estimated Costs IDA Funding (including Local Foreign Total contingencies) Project Component - ----------- - A. Institutional Support to Ministry of Agriculture 1. Agricultural Policy Coordination Bureau (BCPA) 0.4 1.0 1.4 1.3 2. National Directorate of Agriculture (DNA/SNSA) 1.3 1.0 2.3 1.6 3. Support to Regional Directorates 0.8 0.6 1.4 1.3 4. Pilot Operation to Reduce Staff of MAEF 1.1 0.8 1.9 2.0 B. Extension 1. National Level " 14.6 1.5 16.1 2.3 2. Regional Level 4.1 4.6 8.6 9.1 3. Support to Farmers' Organizations 2.2 2.8 5.0 - C. Research 8.1 12.2 20.4 8.4 D. Livestock 13.4 7.1 20.5 5.8 E. Gender in Development and Environmental Action 1.1 0.7 1.8 2.1 F. PPF Refinancing 1.0 -- 1.0 1.0 Total Baseline Costs 48.1 32.3 80.4 - Physical Contingencies 2.4 2.0 4.4 Price Contingencies 3.4 2.3 5.7 - Total Project Costs/IDA Credit 53.9 36.6 90.5 35.0 1/ Includes salaries of all extension staff. B. Financing Plan Local Foreign Total ---------US S million------------ Government 26.7 - 26.7 Beneficiary Contribution 1.0 - 1.0 European Union 6.5 4.4 10.9 Caisse francaise de Ddveloppement 2.5 3.2 5.8 Ministere de la Cooperation Francaise 2.3 8.8 11.1 IDA 14.8 20.2 35.0 Total 53.9 36.6 90.5 Note: Does not include Govermuent contribution in terms of duties and taxes foregone are estimated at about US$20.5 million. GUINEA National Agricultural Services Project II (Filename: AGSERV2 (excl. taxes)/12-21-95) Components Project Cost Summnary % % Total (GNF '000) (USS) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs A. INSTITUTIONAL SUPPORT TO MINISTRY OF AGRICULTURE 1. Agricultural Policy Coordination Bureau (BCPA) 420,184 955,545 1,375,729 429,636 977,040 1,406,676 69 2 2. Direction National de l'Agriculture (DNA) (including SNSA) 1,283,961 967,286 2,251,247 1,312,843 989,045 2,301,888 43 3 3. Support to Regional Directorates Prefectoral Level Rural Development Directorate (DPDRE) 480,370 345,742 826,111 491,176 353,519 844,695 42 1 Regional Inspectors (IRAEF) 258,426 266,866 525,292 264,240 272,869 537,109 51 1 Subtotal Support to Regional Directorates 738,796 612,608 1,351,404 755,415 626,388 1,381,803 45 2 Subtotal INSTITUTIONAL SUPPORT TO MINISTRY OF AGRICULTURE 2,442,941 2,535,438 4,978,379 2,497,895 2,592,472 5,090,367 51 6 B. EXTENSION 1. National Level Conakry - Headquarters/Extension 14,282,390 1,502,584 15,784,974 14,603,671 1,536,384 16,140,055 10 20 2. Regional Level Kindia 569,600 784,779 1,354,379 582,413 802,432 1,384,845 58 2 Boke 493,264 597,838 1,091,102 504,360 611,287 1,115,646 55 1 Mamou 394,661 596,423 991,085 403,539 609,840 1,013,379 60 1 Labe 384,107 438,153 822,260 392,748 448,009 840,757 53 1 Faranah 410,549 446,861 857,410 419,784 456,913 876,697 52 1 1 Kankan 804,476 607,405 1,411,880 822,572 621,068 1,443,641 43 2 Nzerekore 901,296 1,004,080 1,905,376 921,571 1,026,667 1,948,238 53 2 Subtotal Regional Level 3,957,953 4,475,539 8,433,492 4,046,987 4,576,216 8,623,202 53 11 3. Support to Farmers' Organizations 2,107,040 2,771,680 4,878,720 2,154,438 2,834,029 4,988,466 57 6 Subtotal EXTENSION 20,347,383 8,749,803 29,097,186 20,805,095 8,945,628 29,751,724 30 37 C. RESEARCH Bareng 877,941 1,987,543 2,865,484 897,690 2,032,253 2,929,943 69 4 Seredou 863,004 1,924,513 2,787,517 882,417 1,967,805 2,850,222 69 4 Koba 724,314 1,765,704 2,490,018 740,608 1,805,423 2,546,031 71 3 Foulaya 1,016,394 2,204,741 3,221,136 1,039,258 2,254,337 3,293,595 68 4 Bordo 810,237 1,909,982 2,720,219 828,463 1,952,946 2,781,410 70 3 Klissi 199,394 208,916 408,311 203,880 213,616 417,496 51 1 Conakry - Headquarters/Research 3,428,496 1,970,871 5,399,367 3,505,620 2,015,205 5,520,825 37 7 Subtotal RESEARCH 7,919,781 11,972,271 19,892,052 8,097,936 12,241,586 20,339,521 60 25 D. LIVESTOCK 1. Animal Health and Livestock Development Programs 5,107,375 3,045,454 8,152,829 5,222,265 3,113,961 8,336,225 37 10 2. Slaughtering and Marketing Infrastructure 1,359,612 1,493,646 2,853,258 1,390,196 1,527,246 2,917,442 52 4 3. Subsector Studies and Surveys 124,409 467,505 591,914 127,207 478,021 605,229 79 1 4. Support to Decentralized Services 1,370,067 1,542,451 2,912,517 1,400,886 1,577,148 2,978,034 53 4 5. Training and Program Coordination 5,176,579 404,598 5,581,177 5,293,025 413,699 5,706,725 7 7 Subtotal LIVESTOCK 13,138,041 6,953,654 20,091,694 13,433,579 7,110,075 20,543,655 35 26 D) E. GENDER IN DEVELOPMENT 1,093,457 707,773 1,801,229 1,118,054 723,694 1,841,748 39 2n F. INCENTIVE SCHEME FOR MAEF 1,094,040 733,680 1,827,720 1,118,650 750,184 1,868,834 40 2 X G. PPF Refinancing 978,000 - 978,000 1,000,000 - 1,000,000 - 1 Total BASELINE COSTS 47,013,643 31,652,618 78,666,261 48,071,209 32,364,640 80,435,849 40 100o '- Physical Contingencies 2,357,393 1,990,339 4,347,731 2,410,422 2,035,111 4,445,533 46 6 o Price Contingencies 3,302,704 2,208,253 5,510,957 3,376,998 2,257,927 5,634,926 40 7 Total PROJECT COSTS 52,673,740 35,851,210 88,524,949 53,858,629 36,657,678 90,516,308 40 113 GUINEA National Agricultural Services Project 11 (Filename: AGSERV2 (excl. taxes)/12-21-95) Expenditure Accounts Project Cost Sunmnary % % Total (GNF '000) (USS) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Investment Costs A. Cil Works 1,551,916 1,561,108 3,113,024 1,586,826 1,596,225 3,183,051 50 4 B. Vehicles 233,279 4,458,548 4,691,827 238,526 4,558,842 4,797,369 95 6 C. Equlpment and Supplies 1. Agricutural Equipment 24,515 468,536 493,051 25,066 479,076 504,142 95 1 3. Office Supplies 4,862 7,337 12,199 4,972 7,502 12,474 60 - 4. Office Equipment 102,326 1,955,703 2,058,029 104,627 1,999,696 2,104,324 95 3 5. Office Fumiture 50,893 76,792 127,685 52,038 78,519 130,557 60 - 6. Other Equipment 238,460 359,809 598,269 243,824 367,903 611,727 60 1 Subtotal Equiprment and Supplies 421,056 2,868,177 3,289,233 430,528 2,932,696 3,363,224 87 4 D. TRAINING 1. Training - Overseas 262,914 1,465,485 1,728,399 268,828 1,498,451 1,767,279 85 2 2. Training - Local 5,668,132 1,165,581 6,833,713 5,795,636 1,191,801 6,987,437 17 9 Subtotal TRAINING 5,931,046 2,631,066 8,562,112 6,064,464 2,690,252 8,754,716 31 11 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatriate - 2,489,417 2,489,417 - 2,545,416 2,545,416 100 3 Consultant Services - Local 363,059 91,302 454,362 371,226 93,356 464,582 20 1 Studies - 580,830 580,830 - 593,896 593,896 100 1 Subtotal CONSULTANT SERVICES AND STUDIES 363,059 3,161,549 3,524,609 371,226 3,232,668 3,603,894 90 4 o F. Technical Assistance 406,618 8,586,705 8,993,324 415,765 8,779,862 9,195,627 95 11 G. Incentive Scheme 1,094,040 733,680 1,827,720 1,118,650 750,184 1,868,834 40 2 H. PPF_Refin 978,000 - 978,000 1,000,000 - 1,000,000 - 1 Total Investment Costs 10,979,014 24,000,834 34,979,848 11,225,986 24,540,730 35,766,716 69 44 II. Recurrent Costs A. Operation and Maintenance 1. Buildings/Roads Maintenance 396,095 196,247 592,342 405,005 200,662 605,667 33 1 2. Vehicle and Motorcycle 4,105,158 2,033,919 6,139,077 4,197,503 2,079,672 6,277,175 33 8 3. Office/Scientific Equipment O&M 295,103 146,210 441,313 301,741 149,499 451,241 33 1 4. Misc. Operating Costs 4,279,523 2,751,785 7,031,309 4,375,791 2,813,687 7,189,477 39 9 5. Technical Assist.-Related Operating Costs 1,493,162 739,794 2,232,956 1,526,751 756,436 2,283,186 33 3 Subtotal Operation and Maintenance 10,569,041 5,867,956 16,436,998 10,806,791 5,999,955 16,806,746 36 21 B. Supplies 1. Agricultural Inputs 285,298 141,352 426,651 291,716 144,532 436,248 33 1 2. Office Supplies 407,590 201,942 609,532 416,758 206,485 623,243 33 1 3. Other Supplies 556,033 275,489 831,522 568,541 281,686 850,227 33 1 4. Travel Allowance 1,809,380 896,466 2,705,845 1,850,082 916,631 2,766,713 33 3 os z Subtotal Supplies 3,058,301 1,515,249 4,573,551 3,127,097 1,549,335 4,676,432 33 6 C. Incremental Staff 542,086 268,579 810,665 554,280 274,621 828,900 33 1 D. Personnel 21,865,200 - 21,865,200 22,357,055 - 22,357,055 - 28 0 l Total Recurrent Costs 36,034,628 7,651,784 43,686,413 36,845,223 7,823,910 44,669,134 18 56 Total BASELINE COSTS 47,013,643 31,652,618 78,666,261 48,071,209 32,364,640 80,435,849 40 100 Physical Contingencies 2,357,393 1,990,339 4,347,731 2,410,422 2,035,111 4,445,533 46 6 Price Contingencies 3,302,704 2,208,253 5,510,957 3,376,998 2,257,927 5,634,926 40 7 Total PROJECT COSTS 52,673,740 35,851,210 88,524,949 53,858,629 36,657,678 90,516,308 40 113 GUINEA National Agricultural Services Project II (Filename: AGSERV2 (excl. taxes)/12-21-95) Project Components by Year - Totals Including Contingencies (USS) Totals Including Contingencies 1998 1997 1998 1999 Total A. INSTITUTIONAL SUPPORT TO MINISTRY OF AGRICULTURE 1. Agricultural Policy Coordination Bureau (BCPA) 811,312 338,007 319,170 73,997 1,542,486 2. Direction National de rAgriculture (DNA) (including SNSA) 663,243 646,376 633,997 649,040 2,592,656 3. Support to Regional Directorates Prefectoral Level Rural Development Directorate (DPDRE) 359,574 283,287 166,544 173,716 983,121 Regional Inspectors (IRAEF) 291,927 105,455 109,796 114,524 621,702 Subtotal Support to Regional Directorates 651,501 388,742 276,340 288,240 1,604,823 Subtotal INSTITUTIONAL SUPPORT TO MINISTRY OF AGRICULTURE 2,126,056 1,373,125 1,229,508 1,011,277 5,739,965 B. EXTENSION 1. National Level Conakry- Headquarters/Extension 4,233,898 4,556,740 4,205,483 4,179,359 17,175,479 2. Regional Level Kindia 479,194 349,162 315,430 476,442 1,620,228 Boke 366,425 236,984 275,068 429,514 1,307,992 Mamou 295,594 337,253 330,362 220,196 1,183,405 Labe 272,791 126,741 265,504 322,526 987,562 Faranah 312,010 261,202 259,552 187,288 1,020,053 Kankan 225,951 109,356 683,236 706,065 1,724,609 Nzerekore 628,734 526,343 667,326 450,530 2,272,933 Subtotal Regional Level 2,580,699 1,947,042 2,796,478 2,792,562 10,116,781 3. Support to Farmers' Organizations 1,363,213 1,409,054 1,457,940 1,513,194 5,743,401 Subtotal EXTENSION 8,177,810 7,912,835 8,459,900 8,485,116 33,035,661 C. RESEARCH Bareng 803,877 775,792 913,185 877,071 3,369,925 Seredou 805,780 764,001 872,966 832,892 3,275,639 Koba 735,037 633,947 785,066 767,781 2,921,829 Foulaya 904,255 802,082 1,037,184 1,052,871 3,796,392 Bordo 797,900 710,976 881,676 802,742 3,193,294 Kilissi 133,209 110,283 121,449 114,274 479,214 Conakry - Headquarters/Research 1,214,296 1,231,253 2,012,070 1,687,075 6,144,694 Subtotal RESEARCH 5,394,354 5,028,333 6,623,595 6,134,706 23,180,988 D. LIVESTOCK 1. Animal Heafth and Livestock Development Programs 2,271,744 2,392,276 2,488,011 2,592,877 9,744,908 2. Slaughtering and Marketing Infrastructure 521,744 2,130,659 694,271 97,964 3,444,638 3. Subsector Studies and Surveys 244,240 143,798 147,996 152,949 688,982 Z 4. Support to Decentralized Services 1,986,703 465,032 484,404 505,450 3,441,588 r >c 5. Training and Program Coordination 1,656,829 1,466,558 1,473,527 1,481,197 6,078,111 Subtotal LIVESTOCK 6,681,260 6,598,323 5,288,208 4,830,437 23,398,228 - E. GENDER IN DEVELOPMENT 747,472 444,695 463,597 484,051 2,139,815 5 F. INCENTIVE SCHEME FOR MAEF 108,377 1,913,274 - - 2,021,651 G. PPF Refinancing 1,000,000 - - 1,000,000 Total PROJECT COSTS 24,235,329 23,270,584 22,064,808 20,945,586 90,516,308 GUINEA National Agricultural Services Project II (Filename: AGSERV2 (excl. taxes)/12-21-95) Expenditure Accounts by Years - Totals Including Contingencies (US$) Totals Including Contingencies 1996 1997 1998 1999 Total 1. Investment Costs A. Civil Works 881,283 2,242,096 646,833 - 3,770,212 B. Vehicles 2,319,732 1,087,420 1,068,049 1,138,059 5,613,261 C. Equipment and Supplies 1. Agricuitural Equipment 320,061 - 265,585 - 585,646 3. Office Supplies 3,569 3,686 3,810 3,952 15,017 4. Office Equipment 1,012,282 584,434 451,495 409,114 2,457,325 5. Office Furniture 98,507 16,954 18,416 19,100 152,977 6. Other Equipment 215,930 12,286 220,988 293,744 742,947 Subtotal Equipnrent and Supplies 1,650,350 617,359 960,293 725,909 3,953,911 D. TRAINING 1. Training - Overseas 520,226 382,941 533,314 568,098 2,004,579 2. Training - Local 1,828,675 1,875,060 2,216,582 2,327,310 8,247,627 Subtotal TRAINING 2,348,901 2,258,001 2,749,896 2,895,408 10,252,206 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatriate 1,034,249 648,924 651,739 503,110 2,838,023 Consultant Services - Local 127,713 133,364 139,321 145,706 546,105 Studies 373,212 92,374 94,455 97,102 657,142 Subtotal CONSULTANT SERVICES AND STUDIES 1,535,174 874,661 885,516 745,919 4,041,270 F. Technical Assistance 2,497,168 2,552,880 2,613,711 2,689,740 10,353,499 G. Incentive Scheme 108,377 1,913,274 - - 2,021,651 H. PPF_Refin 1,000,000 - - - 1,000,000 Total lnvestment Costs 12,340,986 11,545,690 8,924,298 8,195,036 41,006,010 II. Recurrent Costs A. Operation and Maintenance 1. Buildings/Roads Maintenance 185,621 166,713 192,698 159,175 704,207 2. Vehicle and Motorcycle 1,701,573 1,774,057 1,888,785 1,963,611 7,328,025 3. Office/Scientific Equipment O&M 123,785 128,797 134,099 139,873 526,555 4. Misc. Operating Costs 1,891,833 2,116,801 2,173,618 2,180,983 8,363,236 5. Technical Assist.-Related Operating Costs 626,328 651,687 678,515 707,731 2,664,260 Subtotal Operation and Maintenance 4,529,139 4,838,055 5,067,714 5,151,374 19,586,283 B. Supplies 1. Agricultural Inputs 99,094 103,849 142,988 167,007 512,938 2. Office Supplies 214,814 191,122 154,578 161,234 721,748 3. Other Supplies 410,358 2,370 561,193 2,574 976,495 4. Travel Allowance 532,270 523,369 1,085,377 1,128,510 3,269,526 Subtotal Supplies 1,256,537 820,710 1,944,135 1,459,324 5,480,707 o C. Incremental Staff 239,940 197,402 259,933 271,125 968,400 D. Personnel 5,868,727 5,868,727 5,868,727 5,868,727 23,474,908 Total Recurrent Costs 11,894,344 11,724,894 13,140,510 12,750,550 49,510,298 Total PROJECT COSTS 24,235,329 23,270,584 22,064,808 20,945,586 90,516,308 -23- ANNEX 1-C GUINEA Page 6 of 9 Ntiono Agrura Seices Prpc It (Filename: AGSERV2 (exd. Iaxesy'12-21-95) ExpendNure Accounts by Components - Totri Including Contingencies (SL) IwInUT AL SUPPORT TO MINISTRY OF AGRICULTURE Support to Regional Dirdion Directorates Agricultural Naidonalde Prefectoral Pokly rAgriculture Lel Rural Coordiatin PNAU Deveiopment Regional National Level Bureau (Including DIrectorabt Inspectors Conakry. HO (BCPA) INSA) (DPDRE) (IRAEF) Extension Kindba Boke 1. Investment Costa A. Civil Works - - 242,420 - 184,991 11,909 11.909 B. Vehicles 29,635 79,981 24,894 113,800 301,674 605,005 408,768 C. Equlpment and Suppies 1. Agricultural Equipment - - - - - - - 3. Office Suppiies 4. Office Equipment 41,828 737,364 40,897 54,529 127,194 24,139 26,866 5. Office Fumiture - - - - 10,112 2,974 2,974 6. Other Equipment - - 10,707 14,276 - - SubtotalEqulpment andSupplbs 41,828 737,364 51,604 68,805 137,306 27.113 29,840 D. TRAINING 1. Training - Overseas 169,992 - - 302,659 75,251 72,071 2. Training - Local 57,015 146,278 - - - 182,665 161,773 Subtotal TRAINING 227,007 146,278 - - 302,659 257,916 233,844 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatriale 806,355 140,402 - - 713,712 - - Consultant Services - Local - - - 107,271 Stucies _____ Subtotal CONSULTANT SERVICES AND STUD 806,355 140,402 - - 820,982 F. Technical Assistance - G. Incenlive Scheme H. PPF_Refin _ Total lnvestment Costs 1,104,825 1,104,026 318,918 182,605 1,747,613 901,944 684,360 II. Recurrent Costs A. Operation and Maintenance 1. Buildngs/Roads Maintenance - - - - - - 2. VehicleandMotorcycle 45,551 48,441 96,882 159,856 339,088 344,129 311,383 3. Office/Scientitic Equipment O&M - 290,647 - - - - 4. Misc. Operating Costs - - - - 179,716 32,809 31,821 5. Technical Assist.-Related Operating Costs - - - - - Subtotal Operatdon and MaIntenance 45,551 339.088 96,882 159,856 518,804 376,937 343,203 B. Supplies 1. Agricultural liputs - - - - - 18,629 14,746 2. Office Supplies 96,178 96,882 252,454 70,945 36,331 16,276 12,207 3. Other Supplies 9,793 - - - - 181.719 145,383 4. Travel Allowance 28,469 193,764 314,867 208,297 271,505 124,723 108,091 Subtotal Supplies 134,441 290,647 567.322 279,242 307,835 341,347 280,428 C. Incrementa Staff D. Personnel 257,669 858,896 - - 14,601,227 Total Recurrent Costs 437,661 1,488,630 664,204 439,097 15,427,867 718,284 623,631 Total PROJECT COSTS 1,542.486 2,592,656 983,121 621,702 17,175,479 1,620,228 1,307,992 Taxes Foreign Exchange 1,079,873 1,143.835 400,445 308,426 1,740,624 927,703 707,321 - 24 - ANNEX 1-C Page 7 of 9 GUINEA National Agricultural Services Project II (Filename: AGSERV2 (excl. taxes)t12-21-95) Expenditure Accounts by Components . Totals Including Contingencies (USS) EXTENSION Support to RESEARCH Farmers Labe Faranah Kankan Nzerekore Organizations Bareng Seredou Koba I. Investment Costs A. Civil Works 11,909 11,909 11,909 11,909 - - B. Vehicles 280,026 263,001 218,506 660,433 - 104,658 104,658 120.295 C. Equipment and Supplies 1. Agricultural Equipment 1- II 23,750 135,882 66.383 3. Office Supplies 4. Office Equipment 28,881 28,881 35,401 36,807 - 46,057 46,057 45,046 5. Office Fumilure 2,974 2,974 2,974 2,974 - 15,017 15,517 11,012 6. Other Equipment - 112,877 74,275 38,879 Subtotal Equlpmentand Supplies 31,855 31,855 38,375 39,781 - 297,699 271,731 161,320 D. TRAINING 1. Training -Overseas 54,046 61,478 55,147 76,181 468,008 85,122 60,517 78,269 2. Training - Local 145,483 154,395 135,864 197,847 1,950,374 50,877 53,421 28,533 SubtotalTRAINING 199,530 215,872 191,011 274,028 2,418,382 135,999 113,938 106,802 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatnate - - - - - 143,293 99.551 43,329 Consuhant Services - Local Studies Subtotal CONSULTANT SERVICES AND STUD - - - - - 143,293 99,551 43,329 F. Technical Assistance - - - 936,015 1,407,696 1,407,696 1,407,696 G. Incentive Scheme H. PPF_Refin _ _ _ _ _ _ __ _ _ __ _ Total Investment Costs 523,319 522,637 459,801 986,151 3,354,398 2,089,345 1,997,573 1,839,441 II. Recurrent Costs A. Operation and Maintenance 1. Buildings/Roads Maintenance - - - - - 143,063 101,228 60,043 2. Vehicle and Motorcycle 255,755 258,071 183,328 838,876 - 364,886 341,164 263,588 3. Office/Scienlific Equipment O&M - - - - - 9,688 7,266 8,719 4. Misc. Operating Costs 22,263 22,263 23,495 39,474 2,389,003 12,110 12,110 12,110 5. Technical Assist.-Related Operating Cosis - - - - 484,411 484,411 484,411 Subtotal Operation and Maintenance 278,018 280,335 206,823 878,350 2,389,003 1,014,158 946,179 828,871 B. Supplies 1. Agricultural Inputs 10,319 12,201 7,786 22,893 - 59,579 80,962 73,316 2. Office Supplies 8,521 9,766 6,510 18,718 14,048 15,501 8,235 3. Other Supplies 95,998 122,532 82,276 221,178 - 4. Travel Allowance 71,386 72,582 961,413 145,644 - 48,926 39,237 23,736 Subtotal Supplies 186,224 217,080 1,057.985 408,432 - 122,552 135,701 105,287 C. Incremental Staff - - - 143,870 196,186 148,230 D. Personnel Total Recurrent Costs 464,243 497,415 1,264,808 1,286,782 2,389,003 1,280,580 1,278,066 1,082,388 Total PROJECT COSTS 987,562 1,020,053 1,724,609 2,272,933 5,743,401 3,369,925 3,275,639 2,921.829 Taxes Foreign Exchange 518,861 521,507 716,215 1,177,303 3,182,453 2,296,825 2,222,833 2,038,088 - 25 - ANNEX IC Page 8 of 9 GUINEA Nalional Agricultural Services Project II (Filename: AGSERV2 (excl. taxes)/12-21-95) Expenditure Accounts by Components - Totals Including Contingencies (USS) LIVESTOCK Animal Health and Subsector RESEARCH (cont. Livestock Slaughtering Studis Conakry - HO Development and Marketing and Foulaya Bordo KIlissI Research Programs Infrastructure Surveys I. Investment Costs A. Civil Works - - - 127,833 - 2,708,826 - B. Vehides 109,870 104,658 19,095 246,386 - 35,562 59,271 C. Equipment and Supplies 1. Agricultural Equipment 135,882 123,750 - - 3. Office Supplies - - - 4. Office Equipment 46,057 46,057 15,410 - 829,921 45,046 37,933 5. Office Furndure 12,013 15,517 - 1,811 - - 7,138 6. Other Equipment 202,103 67,717 - 102,547 - - - Subtotal Equipment and Supplies 396,055 253,041 15,410 104,358 829,921 45,046 45,071 D. TRAINING i. Training - Overseas 90,265 75,550 29,268 - - 189,162 2. Training - Local 38,794 42,504 12,287 508,978 2,499,213 36,765 Subtotal TRAINING 129,059 118,055 41,556 508,978 2,499,213 225,926 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatriate 262,779 114,752 91,415 191,557 - 90,476 Consultant Sevces - Local Studes - - - - - - 374,406 Subtotal CONSULTANT SERVICES AND STUDIES 262,779 114,752 91,415 191,557 - 90,476 374,406 F. Technical Assistance 1,407,696 1,407,696 - 1,407,696 971,310 - G. Incentive Scheme H. PPF_Refin ___ Total Investment Costs 2,305,459 1,998,200 167,476 2,586,808 4,300,445 3,105.836 478,748 II. Recurrent Costs A. Operation and Maintenance 1. Buildings/Roads Maintenance 227,600 107,934 64,340 - - - 2. Vehicle and Motorcycle 401,372 306,437 153,074 334,510 - 104,633 109,477 3. Office/Scientfic Equipment O&M 10,173 8,719 12,110 29,065 150,167 - - 4. Misc. Operating Costs 12,110 12,110 5,813 12,110 5,294,296 217,215 5. Technical Assist.-Related Operating Costs 484,411 484,411 - 242,205 - - Subtotal Operation and Maainbnance 1,135,666 919,612 235,337 617,890 5,444,463 321,848 109,477 B. Supplies 1. Agricultural Inrputs 139,157 36,668 25,432 - - - - 2. Office Supplies 9,204 12,595 4,844 - - 9,688 9,688 3. Other Supplies - - - - - - 9,688 4. Travel Allowance 45,535 51,832 19,071 242,205 - 7,266 58,129 Subtotal Supplies 193,895 101,094 49,346 242,205 - 16,954 77,506 C. Incremental Staff 161,372 174,388 - 121,103 - - 23,252 D. Personnel - - 27,055 2,576,687 - - Total Recurrent Costs 1,490,933 1,195,094 31 1,739 3,557,886 5,444,463 338,802 210,234 Total PROJECT COSTS 3,796,392 3,193,294 479,214 6,144,694 9,744,908 3,444,638 688.982 Taxes Foreign Exchange 2,551,961 2,206,211 240,482 2,289,927 3,532,296 1,758,786 537,995 - 26 - ANNEX IC Page 9 of 9 GUINEA National Agricultural Services Project II (Filename: AGSERV2 (excd. taxes)/12-21-95) Expenditure Accounts by Components - Totals Including Contingencies (USS) LIVESTOCK (cont.) Support to Training and INCENTIVE Decentralized Program GENDER IN SCHEME FOR PPF Services Coordination DEVELOPMENT MAEF Refinancing Total 1. Investment Cost A. Civil Works 422,778 - - 3,770,212 B. Vehicles 922,250 136,322 194,805 - 5,613,261 C. Equipment and Supplies 1. Agricultural Equipment - - 585,646 3. Office Supplies - 15,017 - 15,017 4. Office Equipment 39,119 42,675 8,298 - - 2,457,325 5. Office Fumiture 44,019 - - - - 152,977 6. Other Equipment 101,719 17,845 - - - 742,947 Subtotal Equipment and Supplies 184,857 75,537 8,298 - 3,953,911 D. TRAINING 1. Training - Overseas - - - - - 2,004,579 2. Training - Local 266,226 355,943 1,075,632 - - 8,247,627 Subtotal TRAINING 266,226 355,943 1,075,632 - - 10,252,206 E. CONSULTANT SERVICES AND STUDIES Consultant Services - Expatriate - 140,402 - - - 2,838,023 Consultant Services - Local - - 438,834 - - 546,105 Studies - - 282,736 - - 657,142 Subtobl CONSULTANT SERVICES AND STUDIES - 140,402 721,570 - - 4,041,270 F. Technical Assislance - - - - - 10,353,499 G. Incentive Scheme - - - 2,021,651 - 2,021,651 H. PPF-Refin - - - 1000,000 1,000,000 Total Investment Costs 1,796,111 708,205 2,000,305 2,021,651 1,000,000 41,006,010 11. Recurrent Costs A. Operation and Maintenance 1. Buildings/Roads Maintenance - - - - - 704,207 2. Vehicle and Motorcycle 1,495,376 209,266 121,103 - - 7,328,025 3. Office/Scientific Equipment O&M - - - - - 526,555 4. Misc. Operating Costs 10,107 - - - - 8,363,236 5. Technical Assist.-Related Operating Costs - - - - - 2,664,260 Subtotal Operation and Maintenance 1,505,483 209,266 121,103 - - 19,586,283 B. Supplies 1. Agricultural Inputs - - - - - 512,938 2. Office Supplies 1,938 - 1,453 - - 721,748 3. Other Supplies - - - - - 976,495 4. Travel Allowance 138,057 7,266 16,954 - - 3,269,526 Subtobl Supplies 139,995 7,266 18,408 - - 5,480,707 C. Incremental Staff - - - - - 968,400 D. Personnel - 5,153,374 - - - 23,474,908 TotalRecurrnntCosts 1,645,478 5,369,906 139,510 - - 49,510,298 3,441,588 6,078,111 2,139,815 2,021,651 1,000,000 90,516,308 Taxes Foreign Exchange 1,786,030 457,215 810,462 790,869 - 36,657,678 - 27 - ANNEX 2 Page 1 of 6 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT PROCUREMENT, DISBURSEMENT AND AUDITING ARRANGEMENTS A. Procurement Estimated project costs by disbursement category and procurement methods are summarized in Table I below. Table 1: Summary of Proposed Procurement Arrangements (US$ million equivalent including contingencies, net of taxes and duties) US$ million Project Element ICB NCB f Other j N.B.F. a j Total 1. Civil Works _ 1.0 2.8 3.8 _ (0.7) (- (-) (0.7) 2. Goods 2. 1 Equipment, Supplies and Furnitutre 9.1 0.3 0.2 0.1 9.6 (9. 1) (0.2) (0.2) ( ) (9.4) 3. Consultancies 3.1 Consultant Services -- 4.0 4.0 (4.0) (--) (4.0) 3.2 Training _ 4.9 5.3 10.2 (4 .9) (-) (4 .9) 3.3 Technical Assistance 10.3 10.3 (--) (-) 3.4 Entrepreneurship Capacity Building _ _ 2.0 2.0 Scheme (b) (2.0) -- (2.0) 4. Miscellaneous 4.1 Operating costs _ 15.1 10.0 25.1 (12.1) (--) (12.1) 4.2 Salaries (including incremiiental) 1.0 23.5 (c) 24.5 - (0.8) (--) (0.8) 4.3 PPF refinancing 1.0 1.0 (1.0) (1.0) Total Costs 9.1 1.3 j 28.2 51.9 90.5 Total Financed by the IDA credit* (9.1) (0.9) | (25.0) _ (35.0) Note: (a) N.B.F.: Not Bank-Financed. (b) Listed under consultant services (disbursement category (4Xe)). (c) Entirely financed by Govenunent. * Figures in parentheses are the respective amounits financed by the IDA credit. * Figures may not add up due to rouiding - 28 - ANNEX 2 Page 2 of 6 2. Procurement of works and goods financed by the IDA Credit will be carried out in accordance with IDA Guidelines for Procurement under IBRD Loans and IDA Credits (January 1995). Consultant contracts will be undertaken in accordance with the Bank's Guidelines for the Use of Consultants (August 1981). When National Competitive Bidding (NCB) will be permitted, it will be carried out in accordance with procedures acceptable to IDA with precautions such as: (a) any bidders are given sufficient time to submit bids (about four weeks for contracts exceeding US$20,000 equivalent); (b) bid evaluation and bidder qualification are clearly specified; (c) no margin of preference is granted to domestic contractors or manufacturers; (d) eligible foreign firms are not precluded from participation; (e) contracts provide for security in an amount sufficient to protect the Borrower in case of breach of contract (without distinction or exception); (f) prior to issuing the first call for bids, draft standard bidding documents are submitted to IDA and found acceptable; and (g) award will be made to the lowest evaluated bidder. 3. Procurement of civil works, goods and consulting services. Procurement arrangements for works, goods and services to be financed by the IDA Credit will be as follows: (a) Civil works for small office facilities (totaling about US$1.0 million equivalent - IDA financing US$0.7 million) with an average contract value of under US$250,000, will be contracted into about 10 contracts and procured through NCB procedures acceptable to IDA. Local firms can offer competitive prices, and due to the nature, size of works (mainly minor renovation and small rural facilities) and their geographical dispersion, civil works are unlikely to attract the interest of foreign bidders. However, any changes made in the contract packaging which would result in civil works contracts exceeding US$0.5 million each would require procurement througlh ICB. (b) Goods including vehicles, agricultural materials, office furniture, equipment and supplies (totaling US$9.1 million equivalent) will be procured through ICB in accordance with the Bank's Guidelines for Procurement under IBRD Loans and IDA Credits (January 1995). Goods costing more than US$25,000 equivalent but less than US$100,000 will be procured through NCB procedures acceptable to IDA, provided the aggregate amount of such procurement does not exceed US$0.3 million equivalent. Goods costing US$25,000 or less can be procured through international and national shopping, based on price quotations obtained from at least three reliable suppliers, provided that the aggregate amount of such procurement does not exceed US$200,000 equivalent (international shopping - US$100,000 and national shopping - US$100,000). (c) Consulting services (totaling US$10.9 million equivalent) will be awarded in accordance with the Bank's Guidelines for the Use of Consultants (August 1981). These services include: (i) technical specialist services in support of extension and research, and financial management and auditing (US$4.0 million), and (ii) training of project related staff in- country and abroad (US$4.9 million) delivered by specialized training and research institutions, individual trainers, and NGOs. The entrepreneurial capacity building scheme would be handled by VITA/PRIDE for which selection will be on a sole source basis found acceptable to both parties. Each executing agency will maintain a roster of consultants for the establishment of short-lists. - 29 - ANNEX 2 Page 3 of 6 (d) Incremental Operating Costs (totaling US$16.1 million) financed by IDA include: (i) operation and maintenance costs of office equipment, vehicles and motorcycles, spare parts, office and laboratory supplies, building maintenance totaling US$11.9 million; (ii) in-country travel allowance for supervision staff, instructors and trainees in the amount of US$3.2 million; and (iii) salaries for incremental staff in the amount of US$1.0 million. Items which cannot be grouped into packages of at least US$25,000 equivalent, aggregating not more than US$100,000 equivalent, would be procured through international and/or national shopping on the basis of quotations obtained from at least three reliable suppliers or at official unit rates for items which are not subject to price comparison. 4. Review by IDA. For ICB, the Bank's Standard Bidding documents for goods and civil works will be used. Draft standard bidding documents for NBC will be reviewed by and agreed upon with IDA. IDA-financed contracts for works above a threshold value of US$250,000 equivalent, and for goods above US$100,000 equivalent will be subject to IDA's prior review procedures which would cover about 88 percent of the total value of the arnount contracted. Documentation for contracts under this threshold will be maintained for ex-post review by Bank staff and auditors. In addition, for all contracts for which there are less than three bidders or for any decision not to select the lowest evaluated bid, the executing agency will submit its proposal to IDA for approval prior to notifying the winning bidder. Prior IDA review will not apply to consultant contracts with firms or individuals selected from a short list estimated to cost less than US$50,000 equivalent for individuals and US$100,000 equivalent for firms. However, the exception to prior review of consultant contracts will not apply to the terms of reference (or standard terms of reference) for such contracts, to single-source hiring of firms and individuals, to assignment of a critical nature (as determined by IDA), and to amendments to contracts raising their value above the US$50,000 and US$100,000 thresholds respectively. 5. Procurement Arrangements. A detailed implementation schedule for works, goods and services to be procured under the project was prepared and will be updated on a regular basis. During implementation, all bid evaluation reports transmitted to IDA for review will contain an updated copy of the procurement schedule. The Government will take the necessary measures to ensure that procurement phases do not exceed the following target time periods: Maximum number of weeks * Preparation of bidding documents 4 * Preparation of bids by bidders 4 (6-8 for ICB) * Bid evaluation and contract award 3 * Signature of contracts 2-4 * Payments 3 6. Each implementing agency will be responsible for procurement with support for bulk procurement from BCPA or ACGP on a case by case basis. Implementation staff have acquired experience under the on-going operation and have be trained in IDA procurement procedures. They will receive continued updating courses and guidance from the Departmental Implementation Unit and from procurement analysts based in resident missions. - 30 - ANNEX 2 Page 4 of 6 B. Disbursements 7. Disbursements will be in accordance with procedures outlined in the World Bank Disbursement handbook. The borrower possesses the ability to process and maintain Statements of Expenditures (SOE) documentation in a manner satisfactory to the Bank. Appropriate accounting and control systems are in place. Therefore, disbursements for expenditures related to contracts for goods of less than US$ 100,000 would be made on the basis of SOEs. Disbursements for operating costs would also be made on the basis of SOEs. The SOEs and all records such as contracts, orders, invoices and payroll vouchers will be retained by BCPA, which will be responsible for maintaining this information in a manner that would facilitate inspection by supervision missions and for review by the external audit. Disbursements related to contracts above the SOE limit would be fully documented. The estimated quarterly schedule of disbursements is shown below. 8. Special Account and Project Account. To expedite disbursements and ensure that project funds will be available when needed, the Government will open one Special Account for each executing agency (total of 4 Special Accounts) in a conunercial bank acceptable to IDA. The authorized allocation of Special Account "A" for BCPA, Special Account "B" for Extension, Special Account "C" for Research and Special Account "D" for Livestock will be US$300,000 for each one, representing IDA's anticipated share of eligible expenditures for 4 months. IDA would make an initial deposit of $150,000 in each special account upon credit effectiveness and once SDR (-check figure-) is disbursed for each component, the balance of the authorized allocation would be advanced to the Special Account. Replenishment of the Special Accounts would be made on the basis of monthly applications supported by full documentation of SOEs as required. 9. Initially, all expenditures of less than US$30,000 would be financed directly from the Special Accounts and for any expenditure above US$30,000, IDA would accept direct payments. Once the full allocation is advanced, this threshold would rise to US$60,000. The Government will open in a financial institution a Project Account to cover its counterpart contribution to the project, to be used exclusively to meet expenditures under the Program. The Borrower will deposit into the Project Account: (a) an initial amount of US$300,000 equivalent in Guinean Francs and (b) the remaining amount of its counterpart contributions, US$2.9 million equivalent according to a schedule of payments agreed upon between the Borrower and IDA (para. 15). The establishment of this Project Account with an initial deposit of US$300,000 equivalent in Guinean Francs will be a condition of credit effectiveness (para. 23). Table 2: Estimated IDA Disbursements IBRD fiscal year 1996 1997 1998 1999 2000 ------------------------------------- US $ million ------------------- Annual 3.5 7.0 7.0 10.5 7.0 Cumulative 3.5 10.5 17.5 28.0 35.0 - 31 - ANNEX 2 Page 5 of 6 Table 3: Disbursement Categories Expenditure Category Proposed IDA % of Expenditures Financed Allocation (US$ by IDA .~milion), 1. Civil Works 70% a. Institutional Capacity Building (MAEF/BCPA) 100,000 b. Agricultural Extension Services (SNPRV) 160,000 c. Livestock and Animal Husbandry (DNE) 250,000 d Agricultural Research (IRAG) 90,000 2. Materials, Equipment and Vehicles 100% of foreign expenditures a. Institutional Capacity Building (MAEF/BCPA) 900,000 95% of local expenditures b. Agricultural Extension Services (SNPRV) 3,200,000 c. Livestock and Animal Husbandry (DNE) 2,200,000 d. Agricultural Research (IRAG) 1,800,000 3. Training 100% a. Institutional Capacity Building (MAEF/BCPA) 350,000 b. Agricultural Extension Services (SNPRV) 2,300,000 c. Livestock and Animal Husbandry (DNE) 850,000 d. Agricultural Research (IRAG) 1,000,000 4. Consultant Services and Studies 100% a. Institutional Capacity Building (MAEF/BCPA) 800,000 b. Agricultural Extension Services (SNPRV) 1,100,000 c. Livestock and Animal Husbandry (DNE) 700,000 d. Agricultural Research (IRAG) 900,000 e. Entrepreneurship Capacity Bldg. 1,800,000 (MAEF/BCPA) 5. Operating Costs 80% a. Institutional Capacity Building (MAEF/BCPA) 2,000,000 b. Agricultural Extension Services (SNPRV) 4,500,000 c. Livestock and Animal Husbandry (DNE) 3,500,000 d. Agricultural Research (IRAG) 2,000,000 6. Refinancing of PPF 1,000,000 7. Unallocated 3,500,000 TOTAL 35,000,000 - 32 - ANNEX 2 Page 6 of 6 C. Accounts and Auditing 10. Consolidated project accounts will be established and maintained by each of the executing agencies, which have developed the required experience under on-going operations. As soon as possible after the end of the financial year, but not later than nine months after its completion, the Government will present audit reports of the special accounts and the project accounts with a special opinion on the use of the special account and SOEs. The audits will be carried out by an independent auditing firm with qualifications and under ternms of reference acceptable to IDA. The audit reports will furnish as part of the management letter an opinion on the use of, and procurement methods for IDA-financed incremental operating costs. The Government's performance in auditing project accounts has generally been acceptable and the Government is in full compliance on other projects, and the quality of the audits has also been satisfactory. The contracting of auditors, on multi-year contract, acceptable to IDA, and certification by auditors that each project entity's accounting system is operational, is a condition of credit effectiveness. - 33 - ANNEX 3 Page 1 of 5 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT MONITORING AND EVALUATION PLAN AND PROJECT PERFORMANCE INDICATORS A. Monitoring and Evaluation Plan 1. The M&E system would have three components: (a) management information systems (MIS) by each executing agency, focusing on annual measurement of outputs in terms of physical accomplishments; (b) impact evaluations and beneficiary assessment/feedback; and (c) agricultural sector performance analyses. Type (b) and (c) evaluations would be carried out before the midterm review (March 1998) and at the end of the project, and would be done through technical assistance contracts with local university-based or other qualified research groups, and supported under the agricultural policy and institutional improvement component. BCPA, in consultation with the other executing agencies, would be responsible for initiating and coordinating these evaluations. 2. Management Information Systems (MIS). The MIS would be established within SNPRV, IRAG and DNE and would be the overall responsibility of the BCPA. These MIS would embody data on financial, physical and personnel inputs, as well as on sub-program outputs, which would be evaluated against pre-defined performance indicators. MIS reports would be provided regularly to the BCPA, which would disseminate them to the NASP Steering Committee and participating donors, and interpret their results for decision makers. The NASP Steering Committee will also be responsible for identifying corrective actions required and ensuring that these are implemented by sub-program managers. 3. Impact Evaluations and Feedback. The impact of extension and livestock services on the intended beneficiaries would be assessed every two years. The main source of information will be from a random samnple survey of about 3,000 farm households. The survey, which covers all districts, is conducted annually by the Agricultural Statistics Office of MAEF (SNSA). The results of this survey would provide the main source of data for quantitative evaluations. Additional questions would be added to this survey's questionnaire to elicit mostly qualitative feedback from farmers on their satisfaction of NASP services, and constraints they are facing. The data collected will be analyzed by gender and income categories. Supplementary impact evaluation surveys will be conducted by experienced investigators to verify and supplement the qualitative evaluations. The in-depth analysis of the quantitative survey and the impact evaluation will be conducted by independent, local, university-based, qualified research groups supported by international consultants. Results of both the quantitative and qualitative evaluations will be used to identify improvements that would increase the impact of NASP activities. - 34 - ANNEX 3 Page 2 of 5 4. Sector Performance Analysis (see Section B below). As NASP encompasses an important part of the agricultural sector, its impact would be best evaluated though an analysis of the overall performance of the sector (Table 1). Thus, a sector performance analysis would be undertaken before the mid-term review and at the end of the first phase by the independent research group mentioned above. This analysis would consider the impact on the sector of such factors as policy reforms, international trade and inflation, besides conventional inputs and weather variables. Furthermore, it would assess the relative contributions of different NASP sub-programs to overall sector performance (Tables 2 to 4). The BCPA and SNSA would be responsible for reviewing methodologies of both the above surveys and the sector performance analysis to ensure that they conform with high international standards. Special Studies 5. Provision is being made for special M&E studies for which need may arise during the course of implementation. Inasmuch as these studies may require special data collection efforts such as rapid rural surveys, they can be undertaken by the enumerators of SNSA. Bank Supervision Input 6. Table 5 (Section B) summarizes field supervision needs. These inputs are in addition to regular supervision needs for the review of progress reports, procurement actions, supervision report preparation and correspondence (which are estimated at 20 staff weeks per year throughout project implementation). 7. Each Bank supervision mission would: (i) require at least two weeks in the field; (ii) require the services of a specialist in project management and implementation and, at least once a year, specialists in research, extension and livestock; and (iii) review progress of procurement and civil works, financial statements and disbursements, loan covenants, and the implementation of technical assistance and training activities. Specialized skill requirements would be added to the missions according to needs identified by previous supervision missions and would concentrate on the following: specific technical issues in research, extension and livestock; monitoring and evaluation; and agricultural policy analysis and special needs of women farmers. 8. BCPA would be responsible for coordinating arrangements for supervision missions by the Bank and cofinanciers and providing information required by missions. Mission briefings upon arrival and wrap-up meetings would be presided by the Secretary General of MAEF or a designated representative. - 35 - ANNEX 3 Page 3 of 5 B. Project Performance Indicators Table 1: Sector -: :::firdlallto: - - : : -- zActual Estimated NASP (Proected -:--:191 j192 1993 1 1995 1996 1997 1998 ; 999 200 Agricultural GDP (1988 constant GNF billion) 303 317 333 350 366 384 403 423 447 471 Total Value of agricultural exports (US$ million) 28 23 31 43 62 75 90 100 130 156 Food production index (1988 = 100 113 121 127 134 142 151 160 170 180 192 Land productivity (cereal yield index: 94 100 94 95 98 103 108 i13 119 125 1988=100) Forest cover ('000 ha) 14520 14460 14400 14340 14279 14219 14159 14100 14041 13982 Fertilizer Use on Arable Land (Kg/ba) 3.17 0.82 2.5 3.0 3.0 3.5 4.0 4.0 4.5 5.0 Table 2: Agricultural Extension Indicators 1996 998 2000 (a) Project Inputs 1. No. of Agricultural Districts/Field Extension Agents 1080 1180 1300 2. No. of Contact Groups (CG) 10,800 14,000 20,000 3. No. of Demonstration Plots 15,000 22,000 34,000 (b) Project Outputs 1. No. of farmer families contacted through 100,000 120,000 160,000 CG (% of total) (15%) (18%) (24%) 2. % of farmers contacted who are women 5% 20% 40% (c) Project Impact* Adoption rate 30% 35% 50% * = Based on surveys - 36 - ANNEX 3 Page 4 of 5 Table 3: Livestock .:... ....:-. :::.:::re................. M id-T it .: u :ai D::: C rre M id r :-:........................ . . ........ . . ..... : : 199 20 1 . Serology analyses performed 10,000/yr 15,000/yr 20,000/yr 2. Number of vaccinations: (a) CBPP 470,000/yr 700,000/yr 500,000/yr (b) PPR 200,000/yr 700,000/yr 300,000/yr 3. No. of private veterinary offices established 20 30 40 4. No. of vaccinations given by private _ 300,000 500,000 veterinarians 5. Consumption of veterinary pharmaceuticals per 450 600 900 head of cattle in GNF 6. No. of herders associations in operation 200 300 500 7. National census of livestoc;: by categories 8. Officially recorded slaughters, sales on the hoof, im prts and expots .. Table 4: Agricultural Research I|l:0100:t ;: ; I - ldicat-ors ] -: 71 : 1996 |: 1998j T:| 2000 Mo. of completed on-station trials per researcher 4 6_ |O. of completed on-farm trials per researcher 3 5 7 So. of joint field visits wvith extension per program 5 15 21 (No. of days) L . .. .I.. . . . . . . . . . . . . - 37 - ANNEX 3 Page 5 of 5 Table 5: Bank Mission Schedule Approximate Activity Staff hiput Dates (staffweeks) 05/96 Project launch/initial supervision 10 10/96 Annual review mission with donors 8 05/97 Semi-annual review mission 6 10/97 Annual review mission with donors 8 03/98 Mid-term review with donors 20 10/98 Semi-annual review mission 6 05/99 Semi-annual review mission 6 10/99 Annual review mission with donors 8 05/00 Final supervision/ICR mission 20 Note: ICR = Implementation Completion Report - 38 - ANNEX 4 Page 1 of 13 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT ECONOMIC ANALYSIS Background 1. Guinea achieved one of the highest growth rates in agricultural GDP in Sub-Saharan Africa during the past decade. This was essentially due to the liberalization of prices and markets, which fbllowed three decades of excessive government control, and improved rural infrastructure. Several indicators point to the fact that future growth would be less potent unless concerted efforts are taken now to put enhanced agricultural knowledge in the hands of farmers. First, output growth was essentially the result of expansion of cultivated area; crop yield remained, at best, constant. As more land is put into cultivation at the extensive margin, crop yields will decline further, thereby requiring even more land to sustain output growth and exacerbating deforestation concems. Second, the level of awareness and adoption of improved cultural practices by Guinea farmers is low as a combined result of low productivity of agronomic research and the limited coverage of the national agricultural extension system. (See Figure 1 for an illustration of the expected effect of the current project on the aggregate agricultural supply response). 2. Recent economic and sector reviews have highlighted the need for agricultural intensification as the most desirable avenue for sustainable agricultural output growth and broad based poverty alleviation in Guinea. This entails generation and diffusion of improved crop and animal husbandry practices. Thus, the current Country Assistance Strategy (1994) recognizes the need for rationalizing the considerable donor assistance to Guinea's agriculture, including restructuring of the IDA financed project portfolio, and for a broad review of growth constraints and potentials. More specifically, the Policy Framework Paper (1995) calls for support to agricultural services including agronomic research, agricultural extension, and animal health services. 3. The current project takes due account of the above and fits within the sectoral priorities outlined in the Borrower's stated sectoral development strategy contained in the Letter of Agricultural Development Policy (LPDA, 1991) and the Agricultural Development Note (NDA, 1995). 4. A recent review of public expenditures highlighted the need for reducing the size of the public investment program and the scope of the activities of MAEF. Generic problems related to counterpart financing are being addressed. - 39 - ANNEX 4 Page 2 of 13 Figure 1: Guinea Agricultural Supply Response' Price A = f(P) Pi P0 A,o A, Area X ~A A~ Q*~~ Q '.--------- 0 -----____. ---_----\ * w Q* ithoutproject QI ----------. ------------- Q =f(A) Output ,"f Outu v with project AQ* > AQ Intensification and general improvement in crop husbandry as a result of technology generation and its diffusion to a large number of farmers under the current project would lead to a downward shift in the aggregate supply schedule (Q=f(A)), from the solid to the dotted line. Under this circumstance, the price elasticity of supply would be larger since the incremental output with project (AQ*) is larger that the one without (AQ) for the same incremental area put to cultivation (AA). (See S. Ghatak and Ingersent: Agriculture and Economic DeveloDment (1984), Johns Hopkins, p. 173, for a theoretical treatment). Net actual gains from the project are larger than AQ* because the mitigation of environmental cost to the society of moving along the "without project" aggregate supply schedule via area expansion alone, without the mitigation activities included in the project, is not accounted for. - 40 - ANNEX 4 Page 3 of 13 Alternative Provision of Agricultural Services 5. None of the alternative channels through which agricultural services have been delivered in Guinea in the past have yielded satisfactory results in terms of broad based productivity increase and financial sUstainability. Agricultural extension and applied research undertaken within the context of commodity development (filiere) projects traditionally have a high overhead, reach too few farmers, and are mono-crop specific. When undertaken within the context of area development projects, the delivery of these services loses in professionalism and creates parallel structures with conflicting approaches (a source of confusion to farmers). In addition, area development projects, by internally undertaking activities that could best be delivered by other (public or private) operators are often sources of inefficiencies due to scope diseconomies. The shortcomings of area development projects have been highlighted by OED2; and IDA has discontinued financing such projects in Guinea since completion of the Gueckedou Agricultural Development Project in 1989. Private extension in Guinea currently does not seem feasible. Economic Benefits and Rate of Return. 6. Direct economic benefits from this project derive from increased productivity and production of a wide range of crops and livestock products. The major food crops are rice (occupying about 360,000 ha, or about 45 percent of cultivated land), groundnuts (15 percent) and maize (10 percent). Given the large size and composite nature of the current project, the overall assessment of its economic viability is based on several criteria: (a) traditional cost-benefit analysis for the livestock component, (b) cost-benefit and cost-effectiveness for the extension and research components, and (c) fiscal impact analysis of the whole project. 7. Livestock Component. Beef and cow milk production make up about 60 percent of the total quantifiable benefits of the livestock component. Under the assumption that: (a) the current cattle population (1.8 million heads) would grow at a rate of about 1.0 percent in 1996 and 1.35 percent by 2009, due to (i) a decline in adult mortality rate from 0.05 in 1996 to 0.04 in 2009, and (ii) an increase in fertility rate from 0.55 in 1996 to 0.60 in 2009 based on experience with similar projects; and (b) cow milk production would increase by 33 percent between 1996 and 2009; the ERR estimated by DNE would be about 30 percent3. An ex-post estimate of the recently completed Livestock Services Rehabilitation Project suggests 18 percent4. 8. Research and Extension Component. Concerning extension, current crop yields are low and over the past five years, 50 percent of farmners have adopted one or more technical messages extended by SNPRV. The agricultural extension component will contribute to increasing the adoption of the stock of 2 Operations Evaluations Department Report No. 98003, September 1, 1993. 3 See Annex 7 - Documents available in the project file, item 3: "Ministere de I'Agrictilture, de I'Elevage et des Forets : Projet de Services Agricoles II; Composante Elevage; Direction Nationale de l'Elevage; Juin 1995, annex titled "Analyse Economique de la Composante Elevage du PSA2". 4 See Implementation Completion Report for Credit 1725-GUI -- Guinea: Livestock Services Rehabilitation Project; 1996 (draft). - 41 - ANNEX 4 Page 4 of 13 improved crop and animal husbandry practices and to developing and disseminating new agricultural technology. Monitoring and evaluation surveys by SNPRV indicate that with existing technology crop yields have increased by about 30 percent for farmers having direct contact with the national extension service. Ex-post and independent measures of the economic impact of agricultural extension in countries with lower agricultural potential than Guinea suggest returns ranging from 70 to 100 percent. Fiscal Impact and Cost Recovery 9. The key question to address is whether or not the Borrower can afford the incremental costs generated by the current project. Our analysis indicates that: (i) the pattern of expenditures on agricultural services in Guinea is adequate, and (ii) based on current projections of revenue collection and overall GDP growth, the current project fits within the country's public expenditure program. In comparing the levels of annual expenditure for services covered under the project and their shares as a percentage of the agricultural GDP, one finds that the expenditures pattern is adequate by intemational standards. Annual expenditures for the services covered under the project as a percentage of the agricultural GDP in 1994 (US$750 million) are as follows: research - 0.7 percent; extension - 0.8 percent; and livestock services - 0.9 percent. These percentages are well within international norms for these kinds of public expenditures. All three components were carefully tailored to the absorptive capacity of the respective executing agencies, and the proposed investments constitute least-cost solutions. The project support to institutional strengthening, including a much needed restructuring of MAEF and improved public expenditure programming and monitoring, would have positive impact on public finances and can be expected over time to lower the salary bill. The average annual budget of the agricultural ministry for the period 1988-94, in constant 1989 prices, amount to GNF 40 billion, of which GNF 30 billion (75 percent) are investment expenditures and GNF 10 billion are recurrent expenditures. Wages expenditures typically make up the bulk (97 percent) of recurrent expenditures. In 1994, MAEF spent GNF 17 billion on wages and only GNF 300 million for non-wage recurrent expenditures (at current prices). The counterpart contribution from Government to the project amounts to about US$44 million, consisting of forgone taxes and salaries (in US$ million equivalent) of IRAG (2.6), SNPRV (14.6), DNE (5.2), and BCPA (1.1). Based on: (a) latest projections of overall GDP; (b) derived central government revenues and expenditure patterns as projected in the recent public expenditure review; (c) constant inter-sectoral shares of public expenditures; and (d) constant agricultural services share of total agricultural sector budget; the government would have spent about US$92 million during the four-year period 1996-1999. This is slightly higher than the cost of the current project over the same time span (see Table 1 for historical and projected allocation of public expenditures in the agricultural sector). Thus, the expenditure pattern induced by the proposed project not only compares favorably with international norms but its induced recurrent expenditures are also likely to be sustained beyond project life. 10. There is a downside risk of a shift in inter-sectoral allocation of public expenditures, should another sector or civil service salaries receive a more than warranted share of total expenditures. Under this scenario there is only a slight margin for decreasing the allocation to agricultural services without sacrificing project activities. To mitigate this risk, the agreed annual reviews of the sectoral public expenditures would result in rationalization of the PIP and limit waste. The number of projects on the PIP has already been reduced by one-half from 133 projects in 1993 level to about 60 projects by end-1995. - 42 - ANNEX 4 Page 5 of 13 With an increasing tendency to focus more on public services activities and selectively recovering the costs of their provision, the sectoral demand for public funds would be reduced. 11. Further cost savings would be obtained, in terms of unit cost of provision, by integrating current and future investments in research, extension, and livestock services. The levels of anticipated expenditures on these under the proposed project compare favorably by historical and international standards. For agricultural extension, the average capital and current expenditure per-farm family under the ongoing operation is estimated at US$18. Under the proposed project, it would be decreasing to US$9, owing to extension of the geographical coverage and to the right-sizing of MAEF. Assumptions for the Economic Analysis 12. Yields: Incremental yields due to the adoption of simple improved crop husbandry methods by farmers in direct contact with the extension is about 30 percent higher than the average crop yield obtained by farmers who are not in direct contact with the service. This result is fairly consistent with the Burkina Faso extension impact studys. 12. Extension coverage: The extension service is currently reaching about 30 percent of farm families. It is expected to reach about 50 percent by the year 2000 under the current project. 5 Bindlish, Evenson & Gbetibouo: Evaluation of T&V-based Extension in Burkina Faso (1993), The World Bank. Table 1: Central Government Revenues and Agricultural Sector Expenditures (in GNF billions) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 1996-99 1 Nominal GDP 1860.5 2248.0 2682.7 3036.3 3315.6 3641.5 3965.2 4321.7 4714.8 5148.6 5622.3 2 Total Revenues 293.9 330.0 361.1 351.4 343.3 389.1 419.9 461.2 493.1 560.3 603.6 3 Total Expenditures 458.4 515.2 571.2 579.6 580.6 637.0 735.4 829.5 917.2 1001.4 1091.0 3a Current 230.0 280.3 302.7 293.5 311.8 316.6 358.1 415.5 447.5 487.4 530.2 3a.1 Wages and salaries 74.7 98.8 127.6 134.2 148.0 154.9 172.6 198.1 216.2 236.3 258.2 3a.2 O&Mandothernon-salary 155.3 181.5 175.1 159.3 163.8 68.5 89.5 113.9 125.5 139.0 152.5 3b Capital 228.4 234.9 265.7 286.1 268.8 320.4 377.3 418.0 469.7 514.0 560.8 3b.1 Foreign financed 187.4 195.0 234.0 240.5 230.0 265.4 309.3 337.1 381.9 401.6 421.7 3b.2 Domesticcontribution 41.0 39.9 31.7 45.6 38.8 55.0 68.0 80.9 87.8 112.4 139.2 4 Nominal Agricultural GDP 626.0 770.0 639.0 725.0 761.0 5 Agriculture budget 46.3 53.0 92.2 88.7 90.0 98.8 114.0 128.6 142.2 155.3 169.2 5a Current 6.7 11.8 16.5 16.7 18.0 15.8 17.9 20.8 22.4 24.4 26.5 5a.1 Wagesandsalaries 5.7 10.9 15.1 15.7 17.3 18.6 20.7 23.8 25.9 28.4 31.0 5a.2 Operating and maintenance 1.0 1.0 1.3 1.0 0.8 0.3 0.4 0.5 0.6 0.6 0.7 5b Capital 39.6 41.2 75.7 72.0 72.0 83.3 98.1 108.7 122.1 133.6 145.8 5b.1 Foreignfinanced 36.8 37.3 68.7 62.9 64.1 71.7 83.5 91.0 103.1 108.4 113.9 5b.2 Domestic contribution 2.8 3.9 7.0 9.1 7.9 11.0 13.6 16.2 17.6 22.5 27.8 6 Agricultural services 8.6 9.5 10.9 7.8 11.5 16.6 19.4 21.7 24.1 26.4 28.8 91.6 expenditures 6a Curmnt 3.0 3.4 4.7 4.3 4.3 4.1 4.7 5.4 5.8 6.3 6.9 22.2 6a.1 Wages and salaries 2.4 2.8 3.7 3.7 3.8 4.3 4.8 5.5 6.0 6.5 7.1 29.8 6a.2 Operating and maintenance 0.6 0.6 1.0 0.6 0.5 -* - - 6b Capital 5.6 6.1 6.2 3.5 7.2 12.5 14.7 16.3 18.3 20.0 21.9 69.4 6b.1 Foreign financed 5.0 5.5 5.2 2.9 6.7 10.7 12.5 13.7 15.5 16.3 17.1 57.9 6b.2 Domestic contribution 0.6 0.6 1.0 0.6 0.5 0.8 1.0 1.1 1.2 1.6 1.9 4.9 Source: Projected figures are from staff estimates: AF5CO for 1 to 3 and AF5AE for 5 and 6 Note: * =0 & M expenditures are under 6b.2. - 44 - ANNEX 4 Page 7 of 13 13. Adoption rate: Overall awareness of simple messages is low, except for farmers who have been exposed to the extension service. Within the latter group, it is estimated that about 50 percent have fully adopted the technical messages extended by SNPRV. The adoption rate varies by theme and by crop, ranging from more than 70 percent for such messages as setting up nurseries for low-land rice and introduction of new maize varieties, to about 20 percent or less for plant spacing in oilseed cultivation. (See Table 2 for the summary of adoption of extension messages by crops and messages.) Table 2: Summary of Adoption of Extension Messages by Crop and Message Crop Message ~~~~~~~~~~~~~Number of Farm A opti:n Households: Rate No Adopted (%) trained j by Groundnuts Inter-row cultivation 5039 3062 61 Sowing in rows 11574 2980 26 Sowing after plowing 3112 1691 54 Plant spacing 145 30 21 ._____________ Ridge planting 691 28 41 Maize Sowing in rows 4589 2588 56 Introduction of new varieties 176 127 72 Use of manure 2956 1200 41 Plant density 3492 1702 49 Use of traction animal for 4540 2703 60 row sowing Rainfed Rice Weeding 1631 767 47 Hill sowing 3573 1144 32 Seed rate 1253 543 43 Sowing date 479 226 47 Lowland Rice Transplanting 28247 14739 52 Setting up nurseries 15272 11575 76 Introducing new varieties 810 400 49 Leveling 694 355 51 Water management 275 153 56 Weeding 7017 3792 54 Cassava Ridge planting 4586 2146 47 Introduction of new varieties 667 372 56 Vegetable Crops Setting up nurseries 2159 1064 49 |Coffee Pruning, 8121 3921 48 IBananas/Plantain Plant spacing 7951 255 32 Oil Palms Plant spacing 701 2 3 TOTAL | 111341 57566 52 Source: Monitoring and Evaluation Unit, SNPRV - 45 - ANNEX 4 Page 8 of 13 15. Major crops: The area planted with rice, small millet, groundnut, maize, and cassava accounts for nearly ninety percent of the total cultivated area of Guinea. Coffee cultivation is confined to the forest region, Guinee Forestiere. 16. Prices: Producer prices for all crops are converted into their import parity equivalents. International prices are derived from Bank's projections by the Commodity Policy and Analysis Unit. 17. Markets: All crops are assumed to be domestically consumed. The impact of the project on export crops (in Guinee Maritime, for fruits and vegetable, and Guin6e Forestiere, for coffee) would be relatively minor, given that most technical messages extended to farmers pertain to food crops. 18. Net incremental margins: Under the assumptions made above, net incremental returns at the end of PY4 are anticipated to amount to about US$38 million. 19. Economic costs: The economic cost of transferring the technical messages to farners under the current project includes not only extension but also agronomic research. The latter cost is lagged by four years to account for the time it takes for a research result to translate into a technical message to be extended. Project costs are net of taxes. Economic Rate of Return 20. Several ex-post and quantitative studies show that research and extension projects are highly profitable, with economic rate of return (ERR) in excess of 40 percent. (Evenson). More recently, two such studies found ex-post ERR, based on primary survey data, in excess of 100 percent for Kenya6 and 70 percent for Burkina Faso7. 21. The estimated economic internal rate of return is 46 percent; it is in the range of similar estimates found elsewhere for research and extension operations. Table 3 below summarizes the stream and benefits and costs; detailed derivations of these streams are included in Annex Table 1. 6 Bindlish & Evenson: Evaluation of T & V-Based Extension in Kenya (1993), The World Bank. 7 Op. cit. 5. - 46 - ANNEX 4 Page 9 of 13 Table 3: Summary of Quantitative Economic Costs and Benefits of Research and Extension Components PYIO to Unit PYI PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9 PY20 1. Incremental Costs (GNF 9.0 18.0 17.0 17.0 16.0 8.0 8.0 11.0 10.0 10.0 millions) 2. Incremental (GNF 5.0 10.0 25.0 38.3 38.3 38.3 38.3 38.3 38.3 Benefits billions) 3. Net Benefits (GNF -9.0 -13.0 -7.0 8.0 30.3 30.3 30.3 27.3 28.3 28.3 billions) 4. Economic Internal (°/6) 46.0 Rate of Return Sensitivity Analysis 22. The economic rate of return is tested against several scenarios of variations in the levels of key variables affecting benefits and costs. From the benefits side, crop yields and producers' prices were made to increase and decrease from 10 to 50 percent. The same variations are applied to the cost stream. The results included in Table 3b show that the ERR is fairly robust. In effect, the ERR would fall below 10 percent only in the event of a concomitant 50 percent decline in revenue and 20 percent increase in cost. 23. Estimated switching values (at an opportunity cost of capital of 12 percent) suggest that to break even, benefits would have to decrease by 53 percent or costs to increase by 115 percent. The likelihood of each occurrence is small, based on experience with the recently completed predecessor projects in Guinea and with similar projects in other Sub-Saharan African countries. The basket of commodities on which the benefits are based is diversified and declines in prices of major magnitude for the commodities concerned, during the past four decades were infrequent (see para 24). - 47 - ANNEX 4 Page 10 of 13 Table 4: Economic Return and Sensitivity Analysis Table 4a: Switchin2 Values of Costs and Benefits at 12.0% Appraisal Switching Percentage Stream Value Value Change Incremental Benefits 197 92 -53 Incremental Costs 92 197 115 NPV 12.0%= 105.2 IRR= 46.3% Table 4b: Internal Rates of Return of Net Streams Incremental UP UP UP DOWN DOWN DOWN LAG I LAG 2 LAG 3 benefit 10% 20% 50% 1(% 20% 50% YEAR YEARS YEARS Incremental cost 46 52 58 74 41 35 15 32 25 20 UIP 10% 41 46 51 66 36 30 11 29 22 18 UP 20% 37 41 46 60 31 26 8 26 20 17 UP 50% 26 30 35 46 22 17 -1 19 15 12 DOWN 10% 53 59 65 82 46 40 19 36 27 22 DOWN 20% 60 67 74 93 53 46 24 40 31 25 DOWN 50% 100 110 120 150 89 79 46 60 44 35 LAG I YEAR - - - - - - - 46 32 25 LAG 2 YEARS - - - - - - - - 46 32 LAG 3 YEARS - - - - - - - - - 46 24. Probabilities of occurrence of each scenario are used to weigh the expected streams of benefits. The same weighing is applied to the costs and delays in project start. Probabilities of occurrence are based on the historical frequencies of major variations in benefit or cost factors. For instance, during the period 1950-91, the price of rice declined, from one year to the next 21 times and increased 20 times. Major yearly declines of at least 10 percent occurred nine times and those of at least 20 percent occurred four times during the same period. The maximum year-to-year decline was 39 percent in 1982. Probabilities for the delays in implementation are based on Africa-wide experience of Bank financed projects and Guinea's recent experience in providing counterpart financing and timely fulfilling of effectiveness conditions. From this experience, delays in counterpart funds are likely and will lead to lags in implementation. Under this scenario, the ERR is still robust at 20 percent with a three-year lag in project benefits. - 48 - ANNEX 4 Page 11 of 13 25. Four commodities make up the bulk of the prospective benefits: rice, 35 percent; cassava, 31 percent; groundnut, 23 percent; and maize, 11 percent. Project benefits will depend on the projected variations in the prices of these commnodities. According to the Bank's projections, there is a 70 percent probability that the price of rice will fall within the range 40 percent to +30 percent around the baseline forecast of US$255/t in 1997; for groundnut, the lower and upper bounds are -33 percent and +40 percent; and for maize, -31 percent and +25 percent around the respective baseline forecasts. (There is no similar probability forecast for cassava). Combining the benefit share and the price risks associated with each commodity, one can conclude that there is a 70 percent probability that project total benefits would fall within the range -14 percent (i.e, 0.40 times -0.33) to + 10.5 percent (i.e, 0.35 times 0.30) around the base line total benefits as a result of rice price; 8 percent around the base line as a result of groundnut price and only 3 percent as a result of maize price. Even under this conservative scenario (since, actually, the joint probability of the simultaneous decrease in the price of all the commodities, is much less than 15 percent -- the lower tail of the 70 percent probability distribution) the ERR will be no less than 30 percent (in the range 35 to 41 percent in Table 4b). Yield and Incremental Net Return Without Project Region/Crop Yield Area Production Area covered Adoption rate Price GR VPC NR Guinee Maritime Rice 1.23 129175 158937 0.30 0.05 160000 3.81 E+08 1.74E+08 2.07E+08 Small Millet 0.35 20385 7049 0.30 0.01 , 5000 3489321 1834650 1654671 Groundnut 0.88 43746 38514 0.30 0.02 3X000 69325689 7874340 61451349 Maize 0.98 8908 8751 0.30 0.03 170000 13389365 2405160 10984205 Cassava 6.12 9063 55469 0.30 0.02 110000 36609512 1631280 34978232 Movenne Guin6e Rice 1.11 33000 36650 0.30 0.05 160000 87959520 44550000 43409520 Small Millet 0.68 52000 35454 0.30 0.01 165000 17549532 4680000 12869532 Groundnut 0.84 23000 19223 0.30 0.02 300000 34602120 4140000 30462120 Maize 1.26 32000 40243 0.30 0.03 170000 61572096 8640000 52932096 Cassava 6.40 11000 70354 0.30 0.02 110000 46433508 1980000 44453508 Haute Guin6e Rice 1.35 83000 112266 0.30 0.05 160000 2.69E+08 1.12E+08 1.57E+08 Small Millet 0.64 45000 28827 0.30 0.01 165000 14269365 4050000 10219365 Groundnut 0.73 47000 34094 0.30 0.02 300000 61368840 8460000 52908840 Maize 0.71 34000 24167 0.30 0.03 170000 36975816 9180000 27795816 Cassava 7.34 27000 198164 0.30 0.02 110000 1.31 E+08 4860000 1.26E+08 Guinee Forestiere Rice 1.47 113923 167991 0.30 0.05 160000 4.03E+08 1.03E+08 3.01 E+08 Small Millet 0.88 7237 6357 0.30 0.01 165000 3146561 651300 2495261 Groundnut 0.95 6150 5820 0.30 0.02 300000 10476080 1106940 9369140 Maize 1.34 3556 4760 0.30 0.03 170000 7282489 960210 6322279 Coffee 0.30 Cassava 9.42 12854 121110 0.30 0.02 110000 79932480 2313660 77618820 Note: GR - Gross Return; VPC - Variable Production Costs; NR - Net Return. - 49 - ANNEX 4 Page 12 of 13 GUINEA Agriculural SMrvices PrOJcOt Yield and ncrmental Net Return Wih Projec Potenti R*gonlCrap Yied Amea PrAducbon Ae cmemd Adbon rt Prie NR Gu4n" MAritrn Rie 2.07 129175 1.02E+14 0.6 0.9 160000 8.81E+18 nmeN WIk 0.95 20385 6.757E.10 0.6 0.4 165000 2.68E+15 Groundrns 1.35 43746 4.084E+12 0.6 0.7 300000 5.16E+17 Meke 2.05 6OM 2.445E+.1 0.6 0.8 170000 2E+16 Cmeavn 7.00 9063 2.322E+12 0.6 0.8 110000 1.23E+17 iovwm Quin" GU0.6 Rie 2.18 33000 6.328E+12 0.6 0.6 10S0 4.86E+17 Omen wMo 0.92 52000 8.36E+.11 0.6 0.4 165000 3.32E+16 GroundrKb 1.35 23000 1.074E.12 0.8 0.7 300000 1.35E*17 LUIiz 2.40 32000 4.729E*12 0.6 0.8 170000 3.86E+17 Cem 7.00 11000 3.575E+12 0.6 0.5 110000 1.13E+17 HoutO Guh40 0.6 Rioe 1.9 830 4.249E+13 0.6 0.8 160000 3.26E+18 SOme Mle 0.90 45000 5.779E11 0.6 0.4 16500o 2.2ME+16 Grundn#A 1.20 47000 3.461E+12 0.6 0.7 300000 4.36E*17 Mabe 1.60 3400o 2.O1IE12 0.6 0.6 17o00 1.64E+17 Caaam 9.80 27000 3.461E+13 0.6 0.5 11OD0 1.14E+1S Guhi. Fgre l 0.6 Rioe 1.77 113923 8.13E.13 0.6 0.6 1600 6.24E+18 Sma ll et 1.20 7237 2.732E+10 0.6 0.4 165000 106E+15 GkmuDUej 1.50 6150 9.064E+10 0.6 0.7 300000 1.22E+16 Mube 2.00 3556 5.18E*10 0.6 0.6 170000 423E+15 Cofee 0.e Caaaa 12 12854 1.233E013 0.6 0.5 110000 4.07E.17 GUINEA Agricultural Services ProJect Yield and Incremental Net Retum With Projet Tochnooy Development Incremetl_ NR RegloeCrop Yield Are Production Aree covered Adoption rat Price Gr TPVC NR Yield Area Production Retur Rice 1.54 129175 198930.01 0.5 0.7 16OO 1.111E+10 6.78E+09 4.36E+09 0.31 129175 39903 4.151,312,854 Smell M"it 0.55 20385 11211.75 0.5 0.02 165000 18499388 10192500 8306888 0.20 20385 4163 6,652,217 Groundnut 1.15 43746 50308.283 0.5 0.6 300000 4.53E+09 6.56E+08 3.87E+09 0.27 43746 11794 3,810,099,151 Make 1.04 8908 9264.32 0.5 0.7 170000 5.51 E+40 1.56E+06 3.95E+08 0.06 8908 513 384,352,835 Cmeeva 6.15 9063 56735.4 0.5 0.6 1100oo 1.84E+00 1.36E+08 1.7E+09 0.03 9063 266 1,668,349,968 10,020,767,024 Movwl Guilnle Rice 1.74 33000 57420 0.5 0.7 160000 3.22E+09 1.73E+09 1.48E+09 0.63 33000 20770 1.439,610.480 Small Malt 0.63 52000 43160 0.5 0.02 165000 71214000 26000000 45214000 0.15 52000 7706 32,344.468 Gn>undniA 1.09 23000 25070 0.5 0.6 300000 2.26E+0 3.45E+08 1.91E+09 0.25 23000 5847 1,88.837880 Miae 1.56 32000 49920 0.5 0.7 170000 2.97E+08 5.6E+08 2.41E+09 0.30 32000 9677 2,357.307,904 C .va 7.40 11000 81400 0.5 0.6 110o00 2.69E+09 1.65E+08 2.52E+09 1.00 11ooo 11046 2.476.746,492 Haute G 8,186,847,224 o Rice 1.83 83000 135290 0.5 0.7 160000 7.58E+09 4.36E+09 3.22E+09 0.28 83000 23024 3,061,352,O08 Snmll Mit 0.65 45000 29250 0.5 0.02 165000 48262500 22500000 25762500 0.01 45000 423 15,543,135 Gnourdnut 1.15 47000 54050 0.5 0.6 300000 4.86E+09 7.OSE+08 4.16E+09 0.42 47000 19956 4.106,591,160 Milke 1.34 34000 45560 0.5 0.7 170000 2.71E+00 5.95E+08 2.12E+09 0.63 34000 21383 2,088,024.184 C*Aevn 7.39 27000 199530 0.5 0.6 110000 6.58E+09 4.OSE+08 6.18E+09 0.05 27000 1366 6,053,561,892 Gubn Fonnt reir 16,326,072,451 Rice 1.75 113923 198366.83 0.5 0.7 160000 1.12E+10 3.59E+09 7.58E+09 0.28 113923 31374 7,275,253,433 Ell M4lt 1.03 7237 7453.7667 0.5 0.02 165000 12296715 2171000 10127715 0.15 7237 1097 7,632,454 Groundnmt 1.33 6150 8179.0567 0.5 0.6 300000 7.36E+08 55347000 6.81E+08 0.38 6150 2359 671,398,960 hhke 1.47 3556 5227.81 0.5 0.7 170000 3.11E+0B 37341500 2.74E+05 0.13 3556 468 267,390,916 Cofee 0.5 Ceenave 9.56 1284 122881.05 0.5 0.6 110000 4.06E+09 1.16E408 3.94E+*0 0.14 12854 1771 3,861,772,940 4,806,1s6,271 31,340,111,970 .i2 - 51 - ANNEX 5 Page I of 9 UNOFFICIAL TRANSLATION REPUBLIC OF GUINEA MINISTRY OF AGRICULTURE LIVESTOCK AND FORESTS AGRICULTURAL SECTOR POLICY NOTE The agricultural policy pursued by the Ministry of Agriculture, Livestock and Forestry constitutes the sectoral application of the speech delivered on December 22, 1985 by the Chief of State, which laid out the broad economic outlines of post-revolutionary Guinea. Guinea officially rallied at that time to the cause of market-based economics and launched an economic and financial recovery program (the Programme de Redressement Economique et Financier, or PREF) based on the State's withdrawal from production and marketing activities and the promotion of private initiative. These guidelines served as the basis for a policy document prepared in close collaboration with the international commnunity and adopted in December 1991. The objective was to revitalize a sector affecting 80% of the Guinean population and to turn it into one of the motors of economic growth in a country whose great productive potential was widely recognized. This document, the Policy Letter on Agricultural Development (Lettre de politque de developpement agricole - LPDA) emphasized four priorities: -- promotion of food security; = rehabilitation of export crops; = natural resource conservation in order to preserve the productive base; -- creation of conditions conducive to the emergence of a private sector. Four years after the adoption of this policy, it is time to take stock , to reflect on its application and its weaknesses, and to develop some perspective. Such an exercise is all the more opportune since the global context has changed markedly, macroeconomic imbalances persist at the national level, and a certain number of development operations initiated in the late 1980s are drawing to a close. Guinea needs to redefine, vis-a-vis its development partners, the framework within which it intends to implement its public investment program in support of sustainable development. This exercise has caused the government to ask itself, in particular, whether its strategies are relevant and whether its institutional set-up is geared to the goals that the country has set for itself. Overall, the results of this first decade of rehabilitation of Guinean agriculture have been quite positive. Since 1991, growth in the agricultural sector has exceeded that of the gross domestic product (GDP): 2.9% in 1991; 4.7% in 1992, 5.0% in 1993 and 5.1% in 1994. This acceleration in the sector's growth indicates the validity of the policy and investment program being pursued to support this growth. - 52 - ANNEX 5 Page 2 of 9 These growth rates, which are higher than those of many African countries, were accentuated by the previous lag accumulated by Guinea under the first republic. Henceforth, this growth will need to be supported through a more systematic identification of pockets of growth, and producers and economic actors will need to be mobilized around such pockets. Redefining the role of the State Tailoring the State's role to the demands of the LPDA is one of the primary concems of the department in charge of agriculture. The task will be to transform the managerial administration of a bloated public sector under the first republic into a development-oriented administration capable of defining subsectoral priorities, defining and implementing support programs and keeping pace with the growing power of a private sector that efficiently seizes upon development opportunities offered by the agricultural sector, in domestic as well as export markets. At the administrative level within the Ministry, a wide-ranging restructuring effort has been undertaken with outside help, most notably from the World Bank. A certain number of national directorates and their decentralized services are now operational, and have the appropriate mandates and staffing levels. The directorates in question are the National Livestock Directorate (Direction Nationale de 1'elevage - DNE), the National Rural Promotion and Extension Services (Service national de promotion rurale et de vulgarisation - SNPRV), the Guinean Agronomic Research Institute (Institut de recherche agronomique de Guinge- INAG), the Bureau for Coordination of Agricultural Policy (Bureau de coordination de la politique agricole - BCPA). The fact that these directorates have been restructured does no preclude a quest for greater efficiency, through training efforts and eventual adjustments at the managerial level. The National Water Supply Service (Service national d 'amenagement des points d 'eau - SNAPE) is considered one of the most effective village water supply entities in Africa. This assessment was recently confirmed by a joint evaluation commissioned last June by the European Union and the French Cooperation. Village water supply programs are ahead of schedule: the 1995 goal of 6,500 water points was achieved in mid-1994. The SNAPE has gradually withdrawn from force account works and now oversees, as implementing and executing ag-,ncy, works delegated to contractors. This divestiture will continue through the creation of small and medium enterprises (SMEs) specialized in well-digging and the improvement of springs, which should make it possible to reduce SNAPE's contractual staff by half. The process is not as far along for other structures, which are, however, no less important for the success of actions undertaken by the directorate. Indeed, the debate is ongoing regarding the organization of our services in a number of areas. Our reflection will continue, especially in the following areas: -- the direction our efforts should take to promote food security and revitalize exports. Experience indicates that our teams need strengthening in this area in order to foster a more sustained production dynamic; -- coordination of field interventions (i.e., roles to be played by the prefecture-level directors for rural development and environment (DPDRE) and by the regional inspection services) in a context of greater decentralization of government intervention; - 53 - ANNEX 5 Page 3 of 9 -- protection of food consumers (i.e., development and implementation of consumer fraud regulations). This is an interministerial matter, since it concerns consumers' health as well as the trade sector; -- implementation of a policy on plant disease prevention geared to the demands of a liberal economy through the creation of a network of private operators and specialized groups; --management of protected forests and national parks, and protection and conservation of natural resources that do not enjoy official protected status. The results of pilot projects in village land management, reforestation and brush fire prevention will be used to update our policy concerning the rational management of our natural resources. We already know that the State and decentralized local authorities will need to play a primary role in an area where individual initiative and the desire for immediate gain are often at odds with medium and long-term environmental interests. The example of the mangrove area, which is under strong demographic pressure, is one indication that excessive liberalization of access to a resource can have irreversible consequences; *- implementation of the land tenure code which recognizes land ownership and which will have to make allowances for the traditional laws that still prevail on almost all rural lands. The development of a rural land tenure plan, begun with the support of the World Bank, will be the MAEF's preferred tool in this area; -- development and implementation of a sustainable policy on rural roads maintenance, which can be progressively transferred to local communities and user associations. In this connection, we intend to tie the implementation of new investment tranches in a given region to the beneficiaries' capacity to assume responsibility for all or part of the maintenance; -- promotion of private operators in areas were investment opportunities exist: i.e., in modem commercial agriculture and stockraising, input distribution, small and medium-sized contractors, service provision (topography, consulting, training, accounting, etc.); --training of managers in the department and in the private sector. Indeed, these structures are only as good as the people staffing them and the programs that they implement. In all these areas of government intervention, we will continue to weigh the best means of achieving our objectives. The department is already planning to reassign some of the staff of the five directorates for community rural development and environment for Conakry to the interior of the country, and particularly those agents charged with livestock and agroprocessing. The redeployments resulting from this restructuring will need to be accompanied by human resource training programs to enable staff to take on the new tasks entrusted to them. However, the posts that will be subject to redefinition as regards their location, mandates and skill requirements will not necessarily correspond to the profiles of the agents already in post, nor will they necessarily be in line with their professional and personal objectives. The management of the ministry's staff is inseparable from the national policy on the management of administrative personnel, for which the Ministries of Reform, Plan and Finance and of the department concerned are primarily responsible. MAEF's initiatives in this area will therefore be pursued in close cooperation with these ministerial departments. - 54 - ANNEX 5 Page 4 of 9 In this connection, the MAEF has drawn up an inventory and computerized roster of personnel.. The MAEF is practically the only ministry in the country to have such a high-tech tool. This mechanism will make it possible to better know and evaluate the capacities of departmental personnel. It will also improve the management of personnel assignments and ensure that positions are indeed filled. In addition, given the concem with streamlining staff and minimizing the social consequences, the ministry estimates that a certain proportion of the department's employees could be inclined to leave civil service if the conditions of their departure and insertion into the private sector were sufficiently attractive. For this reason, the MAEF will carry out a study, starting in early 1996, with the following objectives: - identify, by means of a survey, the target population of candidates for voluntary departure; - detem-ine how the administration can facilitate these departures; - examine the financial feasibility of the operation; - set up a two-year pilot project ( 1997-98) which, subject to an evaluation, could be extended. In order the ensure the greatest chance of success and avoid the errors committed in the past, operations carried out in support of privatization by the Bureau d'aide a la reconversion des fonctionnaires (BARAF), the Projet integre de developpement des entreprises (PRIDE) and the OIC will be analyzed in the framework of this study with a view to deriving the relevant lessons. The following calendar is proposed for this operation: -January 1996 : drafting of terms of reference (first draft to be presented at negotiations) -February 1996: choice of survey team members and establishment of the team - March-August 1996: implementation of the survey - September 1996: drawing up dossier on feasibility - October-December 1996: setting up logistics for implementation of pilot project and choice of candidates for same -January 1997: start-up of two-year project -November-December 1998: evaluation of project with a view to its extension. Improving project effectiveness The quest for efficiency in the department's interventions is behind an important effort aimed at reformulating and reorganizing regional development projects. This work began with the projects launched towards the end of the first republic and at the beginning of the second republic. At issue were the Projet Agricole de Gueckedou (PAG), the Projet d'amenagement de la plaine de Monchon, the Operation de developpement rural integre de Kouroussa (ODRIK), the Projet de rehabilitation agricole dans le Foutah Djallon (PRAFD), the Projet agricole de Kolente (PAK) and the Projet de developpement rural de Siguiri - 55 - ANNEX 5 Page 5 of 9 2 (PSRS2). The project management units had been handling the following activities directly: extension, infrastructure work, input supply and distribution, credit distribution, seed production, research, and agricultural water supply. These units have been streamlined and the implementation of the various components has been handed over to specialized operators (SNPRV for extension, IRAG for research, SMEs and ONGs.) It was in this context that the SMEs were set up and staffed with managers and employees who had previously been working within the projects. The SMEs include the following: la Guineenne de maintenance et de travaux publics (GMTP), la Guin&enne de travaux et d 'entretien routier (GUITER) and the Societe de production et de commercialisation d'intrants agricoles (SPCIA). Over two hundred people were reassigned in the wake of these restructurings. As for the new rural development projects, they are henceforth managed by streamlined structures that offer support to public, private or professional operators (depending on the type of activity) who will then be able to ensure the sustainability of results achieved under those projects. Public expenditure in the agricultural sector This issue was discussed extensively in a 1995 World Bank study of public expenditures in Guinea's agricultural sector. The MAEF is grateful for the study's contribution to the Government's reflections in this area. The study notes that the portion of the investment budget devoted to the agricultural sector (13.0% for the 1988-94 period) is one of the highest among developing countries undergoing an adjustment process (the average being 7.0% for the 1984-88 period). This is in keeping with government priorities. The study also notes the great weight (over 20% of expenditures) given in the budget to rural infrastructures and especially to rural roads, whereas in other countries these activities often come under the heading of public works. This situation is the result of a deliberate desire on the part of the Guinean government to closely link the programming and implementation of rural roads to other agricultural development priorities. According to our calculations, the impact of rural roads in terms of transport costs for goods and passengers (a 30 to 70% drop in costs) and increased traffic (an increase of up to 1,000%) is considerable. The MAEF shares certain concerns expressed in the study, especially regarding the need to boost the performance of the public investment program, cost recovery and the inclusion of recurrent expenditures. Improving the guality of the Public Investment Program (PIP) The improvement of the MAEF's project portfolio implies the continuation of efforts already begun at the programming and evaluation level. The Bureau de coordination de la politique Agricole (BCPA) now possesses a computerized data base on all the projects implemented under the Ministry's supervision. Selection criteria will be progressively refined in order to ensure that action undertaken are in keeping with agreed-upon sectoral objectives and priorities. The "tools" of evaluation will be progressively refined. It should be noted in this regard that the BCPA has been involved with the SIRPAO program (Simulation interregionale des politiques agricoles en Afrique de I 'Ouest), and that it should soon be able to exploit the program's possibilities for its own use. Special attention will need to be given to a realistic evaluation of recurrent costs engendered by activities undertaken in the framework of the PIP, and to the assumption of those costs by beneficiaries, the - 56 - ANNEX 5 Page 6 of 9 State or local authorities. The constraints weighing on public finances are causing the departmnent to concern itself more with this question. Interministerial cooperation would be required to deal with the issue. Cost recovery and the financing of recurrent costs Maintenance costs for watering holes are now entirely borne by the management committees created and monitored by the SNAPE in conjunction with the implementation of investment programs. A similar procedure will be used for rural roads programs. This will require that such roads first be classified as "belonging" to the local authorities that will be entrusted with their maintenance. The maintenance costs of the network, which are estimated at about US$ 10 million at full development, will be assumed jointly by the State (in the form of a roads fund), prefecture budgets (for the regional network), rural development communities (for community road networks) and residents' groups (in the case of terminal roads.) In subsectors that generate significant value-added (fruits and vegetables, industrial crops), we are seeing a gradual increase in the degree of autonomous financing of the cost of services (such as supply, collection and technical support) that are performed collectively by professional organizations (coffee, onions and potatoes, cotton). In the case of industrial crops (cotton, rubber, palm oil), the objective (already partially achieved) would be for operating costs to be completely supported by production and processing activities. Concerning agricultural and veterinary inputs, cost recovery has become the rule, and this has allowed the emergence of private operators or associations. Subsidies are ad hoc and limited in time: they consist either of investment incentives (agricultural water supply installations, storage facilities, animal traction equipment, creation of permanent plantations), incentives to use certain inputs during the learning phase (insecticides for cotton, fertilizers for vegetable crops), or subsidies linked to public health measures (obligatory vaccinations against certain diseases). Studies will be carried out with a view to broadening the range of MAEF services likely to generate revenues. As an example, one can cite the implementation of the rural land tenure plan. Given the interest manifested by land owners affected by the Pilot Rural Land Tenure Operation, we are inclined to give favorable consideration to the possibility of helping to finance its expansion. This assumes the standardization of intervention costs (land tenure surveys, topographic mapping). Other services (meteorology, documentation) could also be offered on a charge-back basis, at least in part. The studies will include negotiations with the Ministry of Finance to determine how to proceed in accordance with the rules of public finance. Conceming the State budget, one is forced to acknowledge that the MAEF's budget under Title II (i.e., operations) is, at 533 million Guinean francs for 1996, abnorrnally small. Such a budgetary envelope seems absurd considering the department's activities. One should note, however, that the operating costs of certain services directly involved in the implementation of agricultural projects are incorporated into the investment budget under the category of the State's contribution. Tlis anomaly will need to be progressively corrected once we have recovered a greater capacity for self-financing of our activities. This issue is outside the purview of the MAEF, however, and will need to be examined in the context of the - 57 - ANNEX 5 Page 7 of 9 periodic consultations that Guinea has maintained with the international institutions since it has been undergoing structural adjustment. The department also noted with pleasure the World Bank's efforts to cover a substantial portion of the operating costs of services considered essential for the rehabilitation of agricultural production (e.g., extension, livestock services and agronomic research.) Distribution of inputs and seeds The department aims to establish an efficient network of private and associative importers and distributors of inputs who are capable of satisfying the growing demand on the part of producers. However, since the demand among creditworthy takers (6,000 - 7,000 tons of fertilizers per year) is still weak, it is difficult to develop a critical mass of activity that could interest the private sector. Regarding food crop inputs (in this case 2,000 tons of fertilizer per year) financed by the Japanese Cooperation under the GATT agreements (KR2) , the department (DNA) is currently in charge of their distribution. DNA is concerned with the judicious use of these inputs for the benefit of small farmers. It has progressively withdrawn from retail distribution because of the logistical problems that that created, and now relies on such intermediaries as the cotton projects and the RC2 project (Coffee Rehabilitation), professional organizations and, increasingly, on specialized private distributors who are willing to commit themselves on a long term basis to the creation of a network of sales outlets. From now on, DNA will serve as an interface between distributors and outside suppliers, seeking at the same time to ensure good geographic coverage of input distribution and negotiating sales agreements so that retail prices remain compatible with the objectives of agricultural intensification. DNA will centralize information on the input market and its spatial distribution and will spearhead a pro-active policy of developing private and associative operators. In the area of seed production, the World Bank-supported National Seed Project did not achieve the objective of creating a viable private sector for seed production and distribution. The use of improved seed increased significantly, however, during the phase of preparation for privatization (1993-95) and now stands at over 200 tons of cereal and groundnut seed. Studies will be pursued so that seed processing centers can continue to develop and be progressively privatized, and so that seed producers can organize themselves into cooperatives. We will endeavor to encourage synergy among the structures involved in input distribution. This reflection will be broadened to include livestock inputs, which are still largely dependent upon public operators such as the Centrale d'approvisionnement vetc1rinaire (CAVET) and the Atelier de pierres a lcher (APILEC). Updating the Agricultural Development Policy Letter (LPDA) An update of the LPDA is planned in the course of 1996 to take into account the desired changes in development priorities that are required by the shifting national and international situation and the resulting adjustments in policies and investment programns. This exercise will be based on a review of agricultural - 58 - ANNEX 5 Page 8 of 9 projects that will allow us to better evaluate their impact and contribution to sectoral objectives. It will be conducted in close collaboration with Guinea's agricultural development partners. The work thus undertaken will complement the reflection now underway on the previously mentioned restructuring of the DNA. It will also make it possible to consolidate achievements in the area of natural resource management strategies. One aim, among others, will be to carry out complementary studies aimed at evaluating the economic importance of certain resources, the cost of their degradation and the benefits associated with investing in their management and conservation. The resources in question are essentially forests (including mangrove swamps in the mangrove areas) and lands earmarked for agricultural and pastoral activities. The update of the LPDA will also be an opportunity for the Ministry to reflect on the role it must play in managing the wood subsector: regulatory control of exploitation, issuance of cutting permits, appropriateness of tax regimes, promotion of professionals, and evaluation of the impact on resources. These studies will allow us to better identify the investments needed to ensure the sustainable management of these resources and to define the mandate and organization of services entrusted with implementing this policy. It will be necessary, in particular, to reexamine the respective mandates of the DNFF, the Office Guineen du Bois (OGUIB), and of structures set up within the framework of natural resource management projects ("watershed" and "village lands" projects). Any contribution that SNPRV can make to the dissemination of technical messages linked to rational resource management (prevention of brush fires, individual and collective tree planting, agroforestry) will be incorporated into this reflection. Technical assistance During the period from 1984 to 1994, the MAEF relied to a great extent on external technical assistance for help with its own restructuring process and with implementing its investment plan. Retrospective evaluations (by BSD, PAG, etc.) have shown that this technical assistance was not always wisely recruited and utilized. Given the high cost of this technical assistance, the department will continue efforts to streamline its use. Technical assistance on a grant basis is the subject of periodic negotiations with the relevant donors. As for technical assistance in the context of loans, it will gradually be cut back. Priority will be given to short term consultancies, ad hoc missions or periodic support missions. Support to the private sector In i'mplementing its agricultural policy, the MAEF tries to rely as much as possible on private initiative. This is, of course, the case with the promotion of traditional farms, which constitute the basis of production. Even for industrial crops (cotton, rubber, oil palm), family farms play a preponderant role. This policy orientation extends into the area of help to professional organizations established by producers. As we have seen, such organizations can become veritable economic operators, especially in the area of input supply and product marketing. - 59 - ANNEX 5 Page 9 of 9 This support to the private sector also manifests itself at the level of small and medium enterprises in the rural works sector. The almost systematic execution of works by contractors has created a vein opportunity for the private sector, which has translated into the creation of 115 SMEs that have received training from MAEF through the UniIe Mobile Ecole de Mamou and that performed US$ 3 million worth of work in 1994. As regards livestock, fifteen private veterinarians have settled in as clinicians (running clinics formerly belonging to the livestock service and that have been ceded to them), in addition to eight private veterinarians who work alongside pharmacists to handle the supply of veterinary products in their zones. The plan is to have them participate in the obligatory vaccination programs and to involve them in programs promoting animal traction. In the area of rural credit, the process initiated through the rural and mutual credit networks is aimed at creating private-style federated structures. The process is already well underway with rural credit. Legislative and regulatory texts were approved by the relevant authorities in mid-1995. The structures (a foundation, a rural credit bank and local caisses) should be operational by mid-1996. The process is also moving along for mutual credit, and should be finalized before the end of 1996. The DNA also has a great stake in the promotion of modern agriculture. Tools are in place for this purpose (e.g., lines of credit for stockraising, a USAID-financed Agricultural Investment and Marketing Project and a World Bank-financed Agricultural Exports Promotion Project.) These interventions are beginning to bear fruit. Efforts made by the Guinean government and by the DNA to mobilize international investors are beginning to yield promising results. The code of economic activity, issued in late 1992, the investment code, the land tenure code published in April 1992, the liberalization of exchange rates, the democratization process, etc., are all signs attesting to the desire to attract outside investment. Many investors have shown an interest in Guinea and some have begun to undertake concrete operations. The MAEF will continue, in collaboration with other departments, to improve the general business climate in order to foster private foreign investment in agriculture. In conclusion, and as a certain number of indicators prove, Guinean agriculture is on the road to recovery. The results obtained are promising, but remain fragile. We must consolidate achievements by strengthening field teams so that they can improve their performance. We are confident that the upgrading of personnel through more appropriate training, the development of synergy between the department's various interventions, improved collaboration between ministries and with our development partners will make it possible for us to attain our objectives of food security, rehabilitation of exports and rational resource management which are the cornerstones of our agricultural policy. Signed by: Mime. Makale Camara Minister of Agriculture, Livestock and Forestry and dated November 17, 1996 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT ISSUES CONCERNING AGRICULTURAL EXTENSION (As discussed between IDA and donors in Switzerland in July 1995) Perception/lssues Reality Approach Taken by Guinea Extension "cannot do it - Countries are implementing other programs, often - Limited number of national programs Nvill be implemented under NASP to "catalyze" alone". through fragmented Programs/Projects. agriculture. T&V "single provider" from - Central funding, multiple providers (NGOs, private - Greater partnership wvith private sector, NGOs will be sought. public sector. sector, etc.) integrated under the national program. System imposed on - Countries need improved services to farmers, product - Government ownership and commitment has developed since 1 987. Governments by World Bank has shoxwn results, clients want it. System is top-down, not - System works in an integrated structure xwith - Guinea, xNitli support from CMD, seeks to strengthen farner organizations and interaction demand-driven by emphasis on diagnosis and meeting needs at the \%ith research and extension. beneficiaries. grassroots level. o - Important to develop farmer organizations as a - Surveys of farmers (beneficiary assessment) \sill be carried out. vehicle for technology adoption. Financial sustainability is - Recurrent costs wvill be large initially but with - Sector public expenditure review to eliminate waste & inefficiency from existing doubtful because of high improvement of the system, decentralization and programs was carried out. recurrent costs supporting a greater involvement of other stakeholders these costs large cadre of staff. should decline in the long term. - Strict cost criteria were applied to national programs. - Transfer of responsibilities to private sector, NGOs, will be sought over time. System presupposes existence - There are existing technologies that can be adapted at - Methodology to improve link between research/extension/farmers has been developed; of suitable technology, not the farm level, but additional improved technologies and NASP focuses on research as a full partner and essential element of technology always the case. need to be developed through research. transfer to farmers. - Farmer demand for research through farmer organizations and extension. Scarcity of human resources - Training and human resources development are being - Improve training system, especially SMS and place emphasis on human resources and required skills makes emphasized but need to be strengthened. development. system non-viable. Bilateral agencies feel that - Bilateral agencies involved, now supporting national - Guinea has coordinated donor participation. they are being left out. programs. - NASP has been developed in partnership wvith bilaterals and %vill be cofinanced. - 61 - ANNEX 7 REPUBLIC OF GUINEA NATIONAL AGRICULTURAL SERVICES PROJECT DOCUMENTS AVAILABLE IN THE PROJECT FILE 1. Ministere de l'Agriculture, de l'Elevage et des Forkts: Preparation du Second Projet des Services Agricoles (PSA Il); Rapport de Synthese; Bureau de Coordination de la Politique Agricole (BCPA); Juin 1995. 2. Ministere de l'Agriculture, de 1'Elevage et des Forets Projet des Services Agricoles II; Composante Vulgarisation; Service National de Promotion Rurale et de Vulgarisation (SNPRV); Juin 1995. 3. Ministere de I'Agriculture, de ['Elevage et des Forkts Projet des Services Agricoles II; Composante Elevage; Direction Nationale de l'Elevage; Juin 1995. 4. Ministere de l'Agriculture, de I'Elevage et des Forets Projet des Services Agricoles 11; Composante Recherche Agronomique de Guinee (IRAG); Juin 1995. 5. Ministere de I'Agriculture, de l'Elevage et des Forets - Direction Nationale de l'Elevage: Programme Quinquennal (1996-2000) de Developpement du Sous-secteur Elevage; Version definitive; 27/05/1995. 6. Rapport de la Mission de Programmation Strat&gique des Activites de Recherche de l'Institut de Recherche Agronomique de Guinee (IRAG); document provisoire - P. Rondot, M. Roesch (CIRAD), S. Beavogui, K. Camara, et B. Diallo (IRAG). 7. Bureau de Coordination de la Politique Agricole - Projet d'Appui a la Reforme Economique en Guinde (PARE) / USAID/DAC 675-0218: Quelques Informnations sur les Investissements du Secteur de Developpement Rural, Chan P. Nguyen, Amadou Oury Diallo. Camaro Backo; 26 Juin 1995. 8. La Politique Guineenne de D&veloppement Agricole: Jacques Brossier (IRAN), Amadou Oury Diallo (BCPA), Octobre 1994. 9. Ministere de I'Agriculture, de l'Elevage et des For&s: Annuaire de Statistiques Agricoles 1983 - 1993; Service Nationale des Statistiques Agricoles; Projet PNUD/FAO-GUI / 92/019; Fevrier 1995. 10. Summary and Detailed Project Cost Tables. MAP SECTION IBRD 27658 MAURITANIA 12 1 '- > r . E N E G A L GUINEA SENEGALt t MALN ALI NATIONAL AGRICULTURAL SERVICES PROJECT / `MJRKINA cut- 1 ~~~r FASO _R ~ ~ ~ ~ / ///S ( SIERRA LNE$~ ~ , WOIRE GHANA GUINEA- BISSAU X C * j eN ; X 04 Forsorh NRtra Rein Prfctr Buid r,i .; ~~~~~~~~~~~~~~~~~~'iJ; CLONAKY'+)8 PPIE R G a0 ,t N Bush CtE A N 9- 9 ResrCon rre Sav!nU EA Fouta~~~ ~ ~ ~ D-lo (hilly lotghtly foreted -pan _7oeou - \____________f__' Light Forest~i t~o Tre Savntenahoc Au p c n 20 % -0 607 Mang~~~X2rove Sams ) / s , ;4J Light Forest itohre Swvompy Area -< °z- 20 40 60., :I,, l/ g _ _G_UMo ngrove Swo r.,(a,. u.,.,vdoot.. __itoiSoyr o 40 Kola Ka @ < endorsemsnt or occrotones or such &wnd7res e Sf _ \ DKEI4ER OEE ' IMAGING Report No: 15216 GUI Type: SAR