Document of The World Bank FOR OmCIAL USE ONLY Report Nh 12248 PROJECT COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE SECOND FORESTRY PROJECT (LOAN 2496-IVC) AUGUST 13, 1993 MICROGRAPHICS Report No: 12248 Type: PCR Agriculture Operations Division Occidental and Central Africa Department Africa Regional Office This document has a resrieted diibution and may be used by recipients only in de performance of their official duties. Its contets may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Currency Unit = CFA Franc (CFAF)a/ CFAF 435 = US$1.00b/ CFAF 1000 = US$2.30b/ AVERAGE ANNUAL EXCHANGE RATES YEAR CFAF USS 1985 449 1.00 1986 346 1.00 1987 301 1.00 1988 298 1.00 1989 319 1.00 1990 308 1.00 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CAA Caisse Autonome d'Amortissement CAISSTAB Caisse de Stabilisation et de Soutien des Prix des Produits Agricoles (Agricultural Price Stabilization Fund) CCCE Caisse Centrale de Coop6ration Economique CTFT Centre Technique Forestier Tropical (Research Center for Tropical Forestry) CDC Commonwealth Development Corporation EPA Etablissement Public A caractere Administratif (Public Enterprise of an Administrative Nature) EPIC Etablissement Public a caract6re Industriel et Commercial (Public Enterprise of an Industrial Nature) MINAGRA Ministere de l'Agriculture et des Ressources Animales MINAGREF Ministere de l'Agriculture et des Eaux et Forets (Ministry of Agriculture and Forestry) SODE A State Development Company SODEFOR Soci6t6 pour le Developpement des Plantations Forestieres (Forestry Plantation Development Company) FISCAL YEARS Government and SODEFOR: January 1 to December 31 a/ The exchange rate for the CFAF Franc is fixed at a ratio of 50:1 with the French Franc, which is free floating currency. b/ This is the exchange rate quoted in the Staff Appraisal Report and it refers to the parity on November 5, 1984, at the start of negotiations. FOR OFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. NO" Of Dfret_eGen,d OpseUsn Evdualn August 13, 1993 MEMORANDUM TO THE EXECUTIVE DIRECIORS AND THE PRESIDEN Subject. Project Completion Report on Cote d'Ivoire Second Forestry Proiect (Ln. 2496-WC? Attached is the Project Completion Report of the Cote dIvoire Second Forestry Project (Loan 249E WVC) prepared by the Africa Regional Office. The Borrower has not prepared a Part I1, nor is one expected. Implementation experience has not been satisfactory. This project and its immediate predecessor (Loan 1735-IVC) were "old style" forestry enclave projects. Natural forest was to be replaced by plantations, managed by public agencies for commercial purposes, and protected from encroachment by policing. Virtually none of this has worked because of illconceived designs and weaknesses in implementation. Concern for the underlying causes of deforestation in Cote dIvoire-rapid population growth, rural poverty, farmers in the forests, and pricing policies which favored agricultural crops over forest products-were not addressed, and performance was constrained from the outset. Implementation was marked by shortfalls in counterpart funding, weak management of finances and accounts, and the failure of a large and costly technical assistance component. The unsatisfactory experience has, however, provided valuable lessons for Cote dlvoire's third forestry project, the Forestry Sector Loan (Loan 3816-IVC). This new project is innovative and progressive, and should mark a turning point in management of Cote dIlvoire's forests. The Second Forestry Project is rated unsatisfactory, and project sustainability judged unlikel. The Project Completion Report, while lacking some numerical data and Part IL, is candid and well prepared. The project may be audited together with the ongoing Forestry Sector Loan. Robert Picciotto by H. Eberhard KOpp Attachment This documnent has a mstrieted distribution and may be used by recipients only in the performnance*f their offioZl duties. Its contents may not otherwise be disclosed without World Bank authorization.7 BOR OMCIAL USE ONLY PROJECT COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE SECOND FORESTRY PROJECT (LOAN 2496-ZVC) TABLE OF CONTENTS Pace No. PRL'-ACE . . . . ... . . . . . . . . .i EVALUATION SUMMARY .................. iil PART Is PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . .. . . 1 1. Project Identity 1. . ..... . .1 2. Background . . . . . . . . . . . . . . . 1 3. Project Objectives and Description . . . . . . . . . . . . . 1 4. Project Design and Organization . . . . . . . . . . . . . . 2 5. Project Implementation 4.. . .4 6. Project Results 6....6 7. Project Sustainability 9. . . ..... 9 8. Bank's Performance .....10 9. Borrower's Performance . . . . . . .. . . . . . . 12 10. Project Relationship . . . . . . . . . . . . . 12 11. Consulting Services and Studies . . . . . . . . . . . . . 13 12. Project Documentation and Data . . . . . . . . . . . . . 13 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . . . . . . . PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . 14 1. Related Bank Loans and Credits . . . . . . . . . . . . . . 14 2. Project Timetable ... . . . . . . . . . . ..... . . 14 3. Loan Disbursements ... . . . . . . . . . ...... . . 15 4. Project Implementation ... . . . . . . . ...... . . 16 5. Project Costs and Financing ... . . . . . . ..... . . 16 6. Project Results . . . .... ....... . .. 18 7. Status of Covenants ... . . . . . . . . . ...... . . 21 8. Use of Bank Resources . . . . . . . . . . . . 25 MAP IBRD 18136R1 This document has a estricted distribution and may be used by recipients only in the petformance | of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization. PRCJECT COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE SE901IJPQRESTRY PROJECT (LOAN 2496-IVC) PREFACE This is the Project Completion Report (PCR) for the Second Forestry Prc'ject in Cote d'Ivoire, for which Loan 2496-IVC in the amount of US$31.3 million was approved on February 26, 1985. The Loan Agreement became effective on December 18, 1985. The Loan closed on December 31, 1990, six months behind schedule. The Special Account recovered 14 months later, in February 1992, and the undisbursed amount of US$684,479 (2% of total loan amount), canceled. Parts I and III of the PCR were prepared by the Abidjan-based Agriculture Section of the Agriculture Operations Division of the Occidentr;l and Central Africa Department. Neither the Borrower nor the project implementing agencies (SODEFOR, CTFT) have prepared a contribution to the PCR (Part II). However, their comments on Parts I and III of this report have been taken into consideration. The draft PCR was submitted to the project's cofinancing agency, the Commonwealth Development Corporation (CDC), which agreed with its findings and recommendations and had no comments. The PCR is based, inter alia, on the Staff Appraisal Report; the Loan and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memorania. - iii - PROJECT COMPLETION REPORT REPUBLIC OF COTE D'IVOIRE SECOND FORESTRY PROJECT (LOAN 2496-IVC) EVALUATION SUMMARY Obiectives 1. The project was a continuation of the Bank-financed First Forestry Project (Loan 1735-IVC) which was completed on December 1985. The principal objectives of the project were (a) to assist rovernment in meeting the country's domestic and export needs for timber; and (b) to strengthen forestry sector policies and institutional performance. The project was to be executed over a five-year period, on the same four sites as the first project. The project aimed to: establish 22,000 ha of timber plantations on logged over forest reserves; maintain all new and existing plantations, over an area of 57,300 ha; and provide technical assistance to SODEFOR (for plantation works) and the Ministry of Agriculture (in the areas of policy formulation, sector development, monitoring and evaluation). Proiect Design 2. With the benefit of hindsight it is clear that the project was too narrowly conceived, failing to address the broader environmental and social issues associated with the rapid depletion of Cote d'Ivoire's natural forests. Because of very severe financial and managerial constraints, the project did not fully meet its physical targets for planting and maintaining trees. There was no significant institutional strengthening; the economic return was low and the environmental impact was globally negative. ImDlementation Experience 3. Implemenitation was hindered by five principal factors. First, Government failed to provide counterpart funds on time and there was a significant shortfall in project financing, partly owing to dollar devaluation. Second, SODEFOR's financial management and accounting was inadequate. Third, there was a shortfall in the technical assi6tance provided and the quality of this assistance was severely impeded by recruitment delays, turn over and sometime incompetent personnel. Fourth, training was only partially successful, particularly since there was no opportunity for national counterparts to learn from expatriate experts. Fifth, SODEFOR's managerial capacities were severely restricted by financial difficulties and lack of operational autonomy resulting from its dependent relationship to Government; although the Bank made a change in the agency's legal status a condition of loan effectiveness, this was not enough by itself to ensure satisfactory performance. Results 4. Because of these problems SODEFOR was only able to establish 16,703 ha of new plantations (76% appraisal targets) and maintenance of new and existing plantations was mediocre. Although yields projected at appraisal are expected to be met, only approximately 80% of the newly established plantations are projected to be fully productive because of losses due to fire and pests, and delayed maintenance. The completion economic and financial rates of return are respectively 6% and -1.3%, well below appraisal forecasts. Higher-value species formed a smaller proportion of the trees planted than initially envisaged. Returns may have been higher if cheaper, manual methods of land clearance had been used; but initial shortage of local contract labor encouraged mechanization. Proper accounting of the salvage value of logs removed prior to planting might boost final returns. - iv - 5. Owing to the inadequacies of the training and technical assistance package and SODEFOR's continuing operational difficulties, no gignificant contribution was made to institutional strengthening. However, lessons derived from the project undoubtedly fed into preparation of the 1988 Forestry Master Plan which marked a significant evolution in Government's approach to sector issues. 6. The issue of farmer encroachment on the forest reserves was not addressed by the project. However, the planting program did not lead to significant evictions. From an environmental standpoint, establishment of the plantations was probably preferable to the likely "no project" option under which these degraded forest reserves could well have been clandestinely cleared for cropping. Compared to (food) crops, the plantations will eventually provide better protection from erosion and leaching and will help to enhance rainfall retention. Nevertheless, notwithstanding the conduciveness of this habitat to certain species of bushbucks, the establishment of plantations has resulted in a significant los1 of biodiversity by comparison with natural forest. This loss would have been less marked if, before planting, the land had been cleared manually rather than by machine, mechanized clearing also facilitated the spread of weeds, aggravating fire hazard. Sustainahbilitv 7. Although there was soime carry-over of senior management and technical assistance, the project did not leave a strong institutional legacy. Protection and maintenance of the plantations is being sustained under the follow-up Forestry Sector Project which was approved by the Bank's Board in April 1990. The scope of this project is much broader than the first two foree._y projects, addressing a range of social and environmental issues in the context of the total forest patrimony, not just industrial plantations. Priority will be given to conserving the country's remaining natural forests. Findinas and Lessons Learned 8. There are three lessons to be derived from this project. First, industrial plantations have a part to play in a balanced strategy for the development of the sector but their establishment and maintenance will not be enough to address the full gamut of social and environmental issues that are implicated in forest depletion: forestry projects need to be broader in conception, addressing such issues as land rights and the protection of biodiversity. 9. Second, the private sector should be involved in the sustainable management of logging concessions. Adequate forestry pricing and fiscal policies are an important pre-condition of the success of a commercial plantation operation. Productive "commercial" plantations are unlikely to be viable if undertaken by public entities because these entities often ignore cost effectiveness criteria. Plantations financed by public funds should be limited to areas where the returns from the "productive" aspects of the operations are supplemented by positive exter'ialities derived from the protection of watersheds and natural forests. 10. Third, in designing plantation projects every attempt should be made to ensure that funding arrangements will permit adequate maintenance and fire protection. To this end the financing of recurrent ccsts should be based on a share of the proceeds from timber sales, minimizing dependence on funding from the government's general budget. REPUBLIC OF COTE D'IVOIRE SECOND FORESTRY PROJECT (LOAN 2496-IVC) PART Is PROJECT REVIEW FROM 8ANK'S PERSPECTIVE 1. Protect Identity Name : Second Forestry Project Loan Number 3 2496-IVC RVP Unit Africa Region Country : Republic of C6te d'Ivoire sector : Agriculture Sub-Sector s Forestry 2. Backaround 2.01 The project was a continuation of the First Forestry Project (Loan 1735-IVC), co-financed by the Bank and the Commonwealth Development Corporation (CDC), which was completed in December 1985 after establishing 20,000 ha of industrial plantations on four different sites. Its objectives were consistent with the strategy outlined in the National Development Plans of 1976-80 and 1981-85. According to these Plans, the Government sought (i) to manage 3.0 million ha of permanent forest reserve on a sustainable yield basis; and (ii) to create 0.5 million ha of short- rotation timber plar.tations, located on the more degraded parts of the forest reserve. The overall objective was to help meet the country's estimated long-term needs for timber and relieve pressure on natural forests. 2.02 When the project was appraised timber exports were Cote d'Xvoire's third largest export earner after cocoa and coffee. The project's prime rationale was to enhance the sustainability of the country's timber production, as timber output was dwindling. Indeed, Cote d'Ivoire has had the highest rate of forest depletion in Africa, with dense forest cover declining from 12 million ha in 1960 to under 3 million ha today. This devastation has been partly a consequence of commercial logging. But it also has much to do with the spread of extensive agriculture in the forest zone, fuelled by the high growth rate of the indigenous population and the influx of migrant labor from the savanna of Cote d'Ivoire and from the poorer Sahelian countries. Government's promotion of export crops also contributed to deforestation. 2.03 The Project was identified during the implementation of the First Forestry Project and prepared by the Government in 1982-83. It was jointly appraised by the Bank and the Commonwealth Development Corporation (CDC) in October 1983. Negotiations took place in November 1984 and the Board approved a loan of U$31.3 million on February 26, 1985. The Bank loan was signed on March 18, 1985 and became effective on December 18, 1985. CDC, which was also cofinancier of the First Forestry Project, signed a loan of $10.0 on November 18, 1985. 3. ProJect Obiectives and Description 3.01 The project's principal objective was to meet the country's domestic and export needs for timber by complementing supplies from industrial plantations by those from natural forest. This was to be achieved, first, by maintaining and enlarging the plantations established under the First Forestry Project; second, by reinforcing the management capacity of SODEFOR, the forestry parastatal; and, third, by improving sector planning and policy-making. -2- 3.02 This was to be a five-year project, centered on the same four plantation sites as the first project', aiming tos (a) Mechanically clear and plant with high value species in short and medium rotation, 20,000 ha of logged-over forest reserve and replant 2,0G0 ha of plantations established under the First Forestry Project which had been destroyed by fire; (b) SThin and prune 17,800 ha of immature trees planted under the first project, and 17,500 ha of trees planted before this project; and maintain and protect the whole plantation area (57,300 ha); (c) Construct and maintain 1,760 km of forest tracks at the four plantation sites; (d) Provide 264 man-months of technical assistaace to the Agriculture Ministry (MINAGREF) for studies in support of policy reform and for smallholder forestry programming, and for project's financial control; (e) Provide to SODEFOR 240 man-months of long-term technical assistance to assist in executing the planting and maintenance programs; and 50 man-months of short-term consultant services in marxeting, organizational reform, fire control, and training; and (f) Support production-oriented research in vegetative propagation and small diameter wood utilization; provide in-service training for SODEFOR staff, including local and foreign study tours. 3.03 The cost of the project was estimated at U$S1.6 million, with foreign exchange costs of U$29.S million (57%). The project was to be financed by a Bank loan of U$31.3 million and a CDC loan of US 10.0 million equivalent, with Government providing the equivalent of US10.3 million. 4. Proiect Design and Orcanization. 4.01 The project had a very narrow focus: its objective was the establishment and maintenance of industrial plantations on degraded natural forests. The main design efforts were in the area of institutional strengthening, aimed at increasing SODEFOR's effectiveness and enhancing Government's capacity for policy-making, planning and monitoring in the forestry sector. Environmental and social considerations had no impact on project design; in this respect, the lessons learned from the First Forestry Project were not properly assimilated. 4.02 Environmental Issues. An awareness of environmental issues was reflected in the section of the Staff Appraisal Report dealing with sectoral issues and risks. However, this awareness did not affect the design of the project. In particular, it was recognized that the "logged/degraded" forest to be cleared for establishing industrial plantations had an environmental value as forest cover. Because the forest had been logged several times, it was assumed to have only limited salvage value. Little consideration was given to its potential as a functioning and regenerating ecosystem which could be managed for sustainable timber production while continuing to provide valuable environmental services. As a result, potential returns from the management of the degraded natural forests were not examined as an alternative project design and the opportunity cost of land to be planted under the project taken to be nil. The four plantation sites were established on degraded natural forest reserves (for6ts classees) which had already been logged over. The four sites (Tene, Sangoue, Mopri and Irobo) are located between 120 and 290 km north-west of Abidjan (Map, IBRD 18136R). 4.03 The project supported the continuation of mechanized land clearing methods introduced under the First Project. It was assumed that, given labor shortages in forest areas, mechanization was the only way to meet the planting targets set under the project. This assumption was unsubstantiated--before the First Forestry Project, SODEFOR had been able to establish up to 3,000 ha/year on sites prepared by hand. Also, although there is much evidence of the poverty and fragile nature of tropical soils, there was no discusaion of the potential adverse impact of mechanized clearing on soil structure and dynamics. Nor wao any consideration given to the fire risk created by weed invasion following land clearances fires on industrial plantations in 1982-83 appear to have followed the introduction of mechanized clearing in 1980. 4.04 Social Aspects. Like the First Project, the project design contained no immediate social goal. The SAR shows a growing awareness of the importance of socLal factors in forest policy and operations, emphasizing the need for a broader view in managing the sector. The problem of agricultural encroachment on gazetted forests was recognized in the SAR but given only cursory treatment in project design and social/economic appraisal. The project design was that of a typical enclave project and agricultural encroachment was seen as a "risk" to be contained through active investment in reforestation and through strengthened police action. Indeed, one of the main justifications of the project was that the alternative would have been complete degradation and conversion to agriculture, with the underlying assumption that it would have detrimental ecological consequences. While this would be true for food crops, it is not clear that forest plantations are superior to tree crop plantations for trapping C02, producing 02 and protecting soils, water tables and biodiversity. Strong police action by the State was unlikely because the government had consistently encouraged the growth of commercial agriculture, implicitly encouraging forest depletion. This contradiction in the government's position made it unlikely to take a strong line against indigenous populations in the vicinity of gazetted forest who continued to assert their customary claim to these lands. 4.05 Institutional Strenothenina. The project's emphasis on institutional strengthening was a response to SODEFOR's management difficulties during the First Project. These difficulties were attributed mostly to its transformation, in 1980, into an Administrative Agency (Etablissement Public a Caract&re Administratif - EPA) with bureaucratic procedures ill-suited to an institution with decentralized operations and a production-oriented mandate. Much hope was placed at appraisal on the positive impact of: (i) a change in SODEFOR's legal status to that of a somewhat more autonomous entity (Etabliesement Public a Caractere industriel et Commercial - EPIC) with greater flexibility to manage its own budget and implement its work plan (approval by Government of SODEFOR's new statutes was a condition of Bank Loan effectiveness); (ii) continued technical assistance in critical areas; and (iii) training of SODEFOR staff. However, these changes did not tackle the real weaknesses and constraints in SODEFOR's management. Indeed, SODEFOR remained, in spite of its changed statutes, totally dependant on budgetary funds for its operations and continued to be subjected to administrative procedures and controls for the management of its human and financial resources. 4.06 Surprisingly, project design did not include any monitoring and evaluation component, except for the strengthening of the Ministry of Agriculture's capability (through the provision of a specific technical assistance) to exert a stricter control over SODEFOR and project's financial management. Only scant attention was paid to strengthening SODEFOR's internal technical follow-up and cost-accounting systems to closely monitor the effectiveness of field operations at each of the four planting sites and take remedial action if necessary. Moreover, no attempt was made to obtain baseline data and set up the monitoring mechanisms for assessing the project's impact either on the environment or on the various population groups affected by the project. -4- S. Pro2sct Imolementation S.01 The project's achievements fell significantly short of the objectives set at appraisal, both in terms of physical targets and of economic and institutional impact. This poor performance was the result of (i) weaknesses in project design and (ii) financial, management and institutional problems that plagued SODEFOR throughout the project period. 5.02 Inadecuate Proiect Fundina. During the entire project period, SODEPOR suffered from increasingly acute financial problems due to Government's inability to provide the expected counterpart funds. For a while, SODEFOR managed to keep operations going by runnlng down ISRD's special account, withholding taxea and payroll deductions due to the State and running suppliers credit up to unsustainable limits. Bank supervision missions discovered that Bank's funds were sometimes diverted to non- project (although legitimate) activities. As a result, the Bank requested that each withdrawal application be separately audited. Although this procedure was necessary, it also lengthened disbursements delays and aggravated the liquidity position of SODEFOR. By 1989, the latter's financial situation was critical, suppliers stopped delivery and operations came to a virtual standstill. Planting was continued at a very slow rate maintenance was drastically reduced (all pruning and thinning stopped) and the fire protect'on system virtually collapsed. 5.03 SODEFOR's Statutes. Contrary to expectations, the change in SODEFOR's legal status did little to enhance its operating efficiency. In its new form (EPIC), SODEFOR was to have considerable autonomy over day-to- day running and financial management, with major strategy decisions being left to Board of Directors (Conseil Consultatif de Gestion). However, this Board did not convene once during the life of the project. Consistent with SODEFOR's new statutes, Government appointed an Agent Comptable to SODEFOR to be the its chief accountant. However, this person reported solely to the Finance Ministry and soon came into direct conflict with SODEFOR's (expatriate) Director of Resources, a conflict that aggravated SODEFOR financial management difficulties. SODEFOR's budget and operations was to * be defined by an annual contract to be negotiated with Government but since counterpart funds were so slow to materialize, the contract counted for little and negotiations were meaningless. 5.04 SODEFOR's Management. Problems arising from the lack of counterpart funds and the difficulties in dealing with the "Agent Comptable" were exacerbated by SODEFOR's poor accounting and financial management. Improper reconciliation of accounts and lack of internal controls were the subject of repeated qualifications of annual audit reports; these reports were produced with considerable delays and their recommendations mostly went unheeded. SODEFOR's internal management information system remained very weak, and a low priority, until the end of the project. A cost accounting system was set up but mostly used to budget for next year's operations and not as a management tool. Forest operations data were collected but not presented in a form which could enable managers to understand and control operations fully. Only towards the end of the project was SODEFOR able to produce (partial) comparative studies on the returns to different species and establishment costs at different project sites. Comparisons of the cost-effectiveness and relative performance of mechanized and manual clearing methods are still to be completed. By the project's end, owing to the lack of an effective management information system, SODEFOR was able to provide only incomplete information on project costs, technical performance and environmental and social impact. 5.05 Technical Assistance. Two of the seven technical assistance positions (Financial Controller at Ministry of Agriculture and Civil Engineer at SODEFOR) were never filled. The village plantation specialist at the Ministry left after one year and was never replaced. Th.-re were long delays in hiring the project's remaining technical assistants, due to bureaucratic procedures and a Government-imposed cap on TA positions. The Ministry's forestry planner and SODEFOR's marketing specialist were hired only in 1988, two and a half years after effectiveness. In total, 219 man- months of long-term technical assistance were provided under the project instead of the 550 envisaged. These delays, the lack of proper monitoring of TA performance, including by the Bank, and the absence of Ivorian - 5 - counterparts to be systematically trained oeverely limited the institutional impact of the project's technical assistance component. In addition, Government's decision (in 1983) to take over from the Bank the management of technical assistance experts resulted in a substantial increase in its costs--the average monthly cost of TA was $13,000, compared to $5,000 during the First Project. This was because experts were contracted through consulting firms instead of being hired individually. 5.06 Technical. Environmental and Social Issues. Effective implementation was limited by weaknesses in technical management at chantier level where much data was collected but not used, management and motivation of staff were poor and internal control systems inadequate. There is evidence that inadequate maintenance and poor timing of operations has reduced the expected performance of the plantations. A number of environmental problems were not properly dealt with: loss of top soil, soil compaction, loss of biodiversity and weed infestation, all of which were exacerbated by mechanized land clearing, a procedure which also increases fire risk. However, there was no serious attempt to reassess clearing methods. The few attempts to deal with the problems tackled the symptoms (increased weeding) rather than the causes. 5.07 Throughout implementation, illegal settlers continued to be perceived as the main project risk. SODEFOR--assisted by the World Food Program--tried to encourage settlers to leave the chantiers. These efforts were largely unsuc-essful (possibly counterproductive in certain cases because the distribution of free food may have encouraged people to move into the chantiers). Where settlers were successfully expelled, there was no attempt by SODEFOR at proper resettlement. Throughout the project there was no serious attempt to understand the attitudes of the rural population towards forests or the complex relationships between indigenous groups and migrants; no consideration was given to involving local populations in the management of forest resources. S.08 Training and-Research. Although generally effective, SODEFOR's in-service training program was slow to start. Study tours could have been more relevant and better organized. Accurate records of these activities were not kept. A major opportunity for in-service training was missed as no attempt was made to appoint counterpart staff for working closely with technical assistance experts. The research contract with the Forestry Research Institute (CTFT) was not signed until May 1988, two and a half years after loin effectiveness. The delay resulted from a combination of poor communications between SODEFOR and CTFT and diverging views over what legal form the contract should take. Even the reduced program (CFAF440 million over two years instead of CFAF870 million over five years) could not be comoleted because of SODEFOR's financial difficulties. 5.09 The Ministry of Agriculture failed to guide or monitor SODEFOR's activity, either directly or through SODEFOR's Board (which never met). The financial controller charged with monitoring the project's implementation and financial management was never recruited. The smallholder forestry specialist stayed only one year and was never replaced. The only positive development of the project at the level of the ministry was the development of a long-term National Forestry Plan and Action Program. The preparation of the National Plan, started in 1984 under the First Forestry Project, permitted a very critical assessment of the country's dwindling forest reserves, the government's forestry policy and the exploitative attitudes of farmers and the forestry industry. This analysis provided the basis for a much broader approach to sector issues, shifting the emphasis from industrial plantations to the conservation of the country's remaining natural forest for the sustainable production of timber and environmental protection. -6- 6. Proiect Results 6.01 Neither physical nor institutional objectives were fully met under the project. Physical achievements were as follows: New Area Planned Actual Area Productive Mean Incremental Mean Inc. Yfeld Plantations (ha) the) (ha) Yield (n3ihaiyre Final Cut (01halvr) Teak 7,500 6,050 4,800 9.1 11.4 2.8 3.8 Frake/Framire 5S500 6.350 5.200 11.9 11.1 5.8 5.2 Gmetina 5,200 2,400 2,100 13.3 15.2 8.5 7.3 Cedrelda 1,100 800 650 17.9 14.0 4.5 4.2 Santa 1,100 400 350 12.3 11.3 3.5 4.6 Pine 1.600 700 500 19.2 9.8 12.0 4.0 Total 22.000 16,700 13,600 100X 76% 622 Maintenance 57,300 40,000 100X 70X 6.02 The nlantina taroets were met at 76% and the maintenance targets at 70%. This shortfall in planting appears proportional to that of the CFAF value of external project funds owing to the depreciation of the dollar during the project period (US$l = CFAF435 at appraisal and CFAF308 on average for actual IBRD loan disbursements). However, actual plantation establishment costs were substantially higher, in CFAF terms, than estimated at appraisal. There was a significant shortfall in other project components (Technical Assistance, Research, Training) and the corresponding savings were used to finance planting operations. The total CFAP cost of plantations established under the project was in line with appraisal estimates (CFAF9.5 billion), even though the area actually planted was significantly less than projected. The unit cost of establishment and maintenance operations, was, in CFAF terms, about 20-25% higher than appraisal estimates. The non-attainment of maintenance objectives reflects the priority that SODEFOR gave to achieving planting targets. Poor maintenance had a negative impact on the project's output. Of the 16,700 ha of new plantations, it is estimated that only 81% (13,600 ha) will be really productive owing to the effect of fire, pests and losses from poor maintenance. 6.03 Siecies selection was geared towards the general climatic conditions of each of the four "chantiers" in accordance with lenders' recommendations. However, the results of soil surveys carried out before land preparation were not used to match species with site conditions. With the exception of pine plantations, expected yields from the productive plantations are in line with appraisal estimates (both for total yields and for yields in final marketable cuts). As envisaged at appraisal, teak was planted over 36% of the area. However, there was some reduction in the overall value of the species mix as the higher-value Gmelina was planted on 15% of the area (down from 24%) while the lower-value Framire/Frake covered 36% (instead of 25%). The collapse of SODEFOR pruning and thinning operations in 1988/89, if not quickly corrected, will have a negative impact on timber quality and the fire protection system should be strengthened to reduce the very real danger of catastrophic fire damage. 6.04 The rates of return estimated at appraisal have not been achieved. The financial rate of return (FRR) of the project, not computed at appraisal, is estimated to be a negative - 1.3%, and the re-estimated overall economic rate of return (ERR) over the period 1986/2038 stands at 6% compared to 12% predicted at appraisal. In line with the methodology used at appraisal, the re-estimated ERR does not consider an opportunity cost for land nor does it include the social and environmiiental costs of the project. This is indefensible. The potential value of forest land, either under sustainable management of the degraded natural forest or through conversion to cropping represents an opportunity cost that should have been included in the economic analysis. Taking these costs into consideration would clearly further reduce the project's overall ERR. -7- 6.05 There are several reasons for this shortfall in project's net benefits. They include overoptimistic assumptions at appraisal about wood utilization and prices, and underestimation of risks due to pests and fire. However, a large part of the shortfall appears to be due to cost overruns, the non-realization of projected revenues from salvage and thinning as well as the negative impact of poor maintenance on wood quality, all of which were within SODEFOR's management control. A better selection of species according tow commercial criteria, increased attention to the cost effectiveness of different land clearing and planting techniques, tighter cost control at chantier level and better sylvicultural and maintenance operations would have made a significant difference in the financial and economic viability of plantations. 6.06 The short-term soclal and environmental imnact of the project was mixed. The project has created a forest cover which serves to preserve hydrological functions, particularly rain infiltration and ground water recharge, protects the soil from erosion and allows organic material and nutrient cycling to develop. These are positive impacts if set against a "no project" option of agricultural development (with a large share of annual food crops through slash and burn techniques). However, if set against the natural forest that was cleared and which performs these functions better, the ecological impact of the project is clearly negative. The soil has been visibly degraded by erosion and the top soil damaged during mechanical site clearance. Mechanical preparation and complete clearance also encouraged invasion by dominating Eupatorium weed which created a serious fire risk and reduced the level of floral diversity. One of the project's significant negative impacts has been a loss of biodiversity. Although plantations support moderate densities of some mammals locally valued as game (bushbucks for example) the number of species of plants, birds and mammals found in plantations is greatly reduced compared to natural forest, manually prepared plantations and even old fallow land. 6.07 The project did have some positive social effects, mostly on the standard of living of SODEFOR's employees. It also created jobs in the chantiers for temporary workers. It supplied certain social services (primary education, health care, water supply) and infrastructure (roads) to the local population. Although the project did not develop a sustainable policy to deal with agricultural encroachment, there was at least no forceful eviction of farmers. On balance, there is no evidence of an adverse impact on population's welfare. 6.08 The impact of instLitutional strengtheninga measures was also much less than expected at appraisal. Although project design took account of the problems encountered during the First Forestry Project, the corrective measures introduced (essentially a change in SODEFOR's statutes and a continuation of technical assistance) did little to remove the constraints on SODEFOR's operating flexibility and did not contribute to a real change in its management philosophy. Cumbersome financial systems, problems of internal control and low staff morale continued to plague operations. 6.09 The impact of technical assistance on operations and transfer of know-how was very limited. None of the TA provided the training of counterparts necessary to ensure sustainability. Finally, research activities were severely curtailed and did not lead to better plantation performance. Research programs started late and were left unfinished because of SODEFOR's financial difficulties. There were also poor linkages between SODEFOR and CTFT and the latter's emphasis on academic/long-term research was of less value to SODEFOR than applied research, focusing on the practical problems of plantation establishment and maintenance. 6.10 The project had one (indirect) positive impact. SODEFOR's acute financial and management difficulties raised awareness of the need for tighter planning and controls, emphasizing the importance of cost minimization, choice of tree species and choice of plantation techniques. The continuing difficulties with farmer encroachment also drew attention to the need to address the social dimension of forestry. This sounder approach to forest conservation, environmental protection and sector management, derived in large part from the Second Project's operations and difficulties, has been embodied in the country's National Forestry Plan and is being supported under the Bank-financed Forestry Sector Loan. 7. Proiset Sustainabilitv 7.01 Little is known about the long-term sustainability of tropical hardwood plantations in Africa using mechanical land clearance techniques. The damage to the soil and the loss of biodiversity appear to recover to some extent folllowing site clearance. There is no indication that the plantations will not grow successfully until harvesting. However, even if this proves to be the case, the expected financial and economic rates of return are low and the prospects for sustainability are poor. Moreover, even these low rates of return will not be attained unless SODEFOR's performance improves. Substantial efforts are needed to make SODEFOR cost- conscious and responsive to market signals. Management of the chantiers has to be strengthened, internal controls tightened and monitoring and evaluation mechanisms set up. Valuable technical experience has been acquired during the project which could reduce costs and improve sylvicultural practices and yields. It is imperative to reform the financial relationship between SODEFOR and Government, ensuring that SODEFOR receives adequate and timely funding for maintenance and forestry protection. 7.02 Available evidence shows that, in mechanized plantations, the level of biodiversity will remain low, even if species adapted to the simplified ecosystem can be sustained. Manual "understory" plantation methods are far superior to mechanized plantations in terms of protecting biodiversity, conserving soil fertility and reducing fire risks; these methods perform at least as well in terms of timber productivity and are less expensive. They should therefore be favored if plantations are to make an economically and ecologically sustainable contribution to the supply of timber for the country's future needs. 7.03 The other major risk to project sustainability stems from demographic pressure from land-hungry farmers. SODEFOR has so far shown little ability to control agricultural encroachment. In the future, these pressures will increase, as the population of Cote d'tvoire is growing at close to 4% p.a., and will interfere with the management of existing plantations as well as severely reduce the scope for further plantation development. It is unclear whether the government will be able to devise and implement effective and socially acceptable measures to relieve plantations and gazetted forests from these pressures. 7.04 Concerns raised by, and lessons learned from, the Second Forestry Project have been taken into consideration in the formulation of the government's National Forestry Plan and the design of the Bank-financed Forestry Sector Loan (3186-IVC). Under this project, SODEFOR has switched back to manual land clearance and planting methods and is implementing a strengthened program to catch up with three years of neglected plantation maintenance and improve its fire prevention system. SODEFOR management structure is being decentralized while effective internal control systems are being set up. The government has granted SODEFOR a reasonable leve-l of financial security by allowing it to retain part of the proceeds from log exports to finance its operations. A reform of forestry fiscal policies has been implemented, substantially increasing the stumpage price of timber. Finally, an innovative mechanism has been initiated (Commissions Paysans/Forets) to associate local populations in the management and conservation of natural forests and plantations. These measures have improved markedly the prospect for long-term sustainability of the plantations established under the (First and) Second Forestry Project. 8. Bank's Performance 8.01 Strengths and Weaknesses. The Bank's overall performance was poor. Several concerns were identified at preparation and appraisal, on the basis of experience from the First Forestry Project: SODEFOR's management weaknesses, illegal intrusions in forest reserves, ecological issues. However, project design did little to address these issues. The measures taken to correct SODEFOR institutional weaknesses were essentially cosmetic; they did not entail the structural reforms -9 needed to ensure adequate flexibility and autonomy in management and sustained improvement in the technical efficiency and cost effectiveness of operations. Also, the choice of mechanized clearing and planting was never questioned, although its adverse ecological impact was already visible at appraisal, essentially because manual clearing was judged impractical for a project of the size envisaged. There was no consideration of alternative use of land. There was no consideration of alternative methods of plantation establishment. Social issues were overlooked, even though farmer encroachment was considered a serious problem and in spite of a growing recognition within the Bank of the importance of social factors in forestry project design and implementation. Finally, the appraisal did not envisage any mechanism to monitor the technical, environmental and social aspects of the project. 8.02 The Bank's performance during implementation was also weak: reactive rather than pro-active. When issues were identified, recommendations were aimed more at treating symptoms than causes. Admittedly, project management was constrained by factors beyond SODEFOR's or Bank's control: exchange rate changes and the government's budgetary difficulties. However, the Bank should have made more forceful attempts to rectify internal management problems, the weaknesses of the technical assistance program and the lack of coordination and complementarity between SODEFOR's activities and the project's research component. Also, as ecological and environmental issues became more pressing, and Government's forestry sector policies focused more on forest conservation through the preparation of the National Forestry Plan, Bank supervisions should have tried to reorient the project toward more environmentally-friendly techniques of plantation establishment. However, the ecological and social impacts of the project were hardly discussed during implementation nor was specialized expertise requested for supervision. There was no mention during the project period of the need to set up a research or monitoring program to guide management on environmental or social issues. 8.03 Lessons Learned. The project demonstrated the limit of "enclave" plantation operations in addressing structural problems in forestry sector development. It also drew attention to the importance of the policy environment in ensuring sustainability. The main lessons from the project are as follows: - The project did not make a major contribution to decreasing the rate of forest depletion and/or reproducing forest assets. Clearing secondary natural forests (providing multipurpose uses) to establish artificial plantations should be avoided. Although it can be argued that plantations helped in preserving areas that would otherwise be depleted today, they provide only some of the environmental benefits derived from "degraded" forests. Also, given the high establishment and maintenance costs, planting rates are small in comparison to existing depletion rate (a rate of 1/50) and cannot make a dent in the depletion problem. - Productive "commercial" plantations are unlikely to be viable if undertaken by public entities. If the implementing agency is insulated from commercial pressures, there is a real danger that critical decisions (species choices, planting techniques, marketing arrangements) will not be related to cost effectiveness or commercial considerations. - Plantations financed by public funds should be limited to areas where the returns from the "productive" aspects of the operations are supplemented by positive externalities due to a clear protective role (watershed management, protection of natural forests). Purely productive plantations should be considered as one of several land-use alternatives. The latter choice is best left to private operators in the context of an adequate institutional policy and incentive framework. - The promotion of private interests in commercial plantations, and their sustainability, is crucially dependent upon the policy context in the sector. If commercial logging of natural - 10 - forests is allowed and forestry taxes are much less than the real stumpage value of timber, the financial viability of plantations will be undermined. Adequate forestry pricing and fiscal policies are an important pre-condition of the success of a commerclal plantation operation. - Specialized input at appraisal and during implementation of the plantation project is necessary for a proper perception of ecologlcal issues (soil degradation, hydrology, biodiversity, fire risk) and is therefore an Lmportant element in the success and ultimate sustainability of the project. - Plantation projects cannot be viewed in isolation from their social context. Given thelr long gestation perlod, severe conflicts ,ver access to land are likely to arise. These can only be mitigated by proper land tenure and agrlcultural sedentarization policles; and by full particlpatLon of the local population Ln the management of resources and derived ben. f its. - The sustainability of plantations critically depends on proper maintenance and fire protection. The instltutional appraisal should therefore pay particular attention not only to the cost effectiveness of plantation establishment and maLntenance but also to ensuring financing of current costs. Direct finance from Government general budget should be avoided lf possible with minimum funding based on a share of timber sale proceeds or other revenues generated by the sector. 9. Borrower's Performance 9.01 Borrower's performance was mixed at best. The government's inability to provide counterpart funds constantly undermined project implementatLon and flnally brought the project to a stand-still. It also indicated that the project was not a high priority in the government's investment program. The policy environment of the project was not favorable to sustainability. The government's promotion of commercial agriculture led to competition over land use; yet local officials and politLcal figures were reluctant to tackle the associated issue of encroachment. The Ministry of Agriculture provided no guidance or monitoring. SODEFOR's Board of Directors never met. Weaknesses in SODEFOR's financial management and long delays in the production of audits--all heavily qualified--elicited no response from Government. To date, neither SODEFOR nor Government has made an effort to prepare a completion report. Government's only achievement under the project, albeit a major one, was the preparation of Natlonal Forestry Plan. 10. Proiect Relationshin 10.01 On technical matters, a good rapport was established between SODEFOR and Bank staff. SODEFOR implemented technical recommendations made during Bank and CDC supervision missions. However, the project's severe institutional and counterpart funding problems sometimes placed a strain on relations with Government. Research cooperation between SODEFOR and CTPT was not as productive as expected. CTFT programs were hampered by SODEFOR's financial difficulties and CTFT was not truly responsive to SODEFOR's requirements for applied research. Relations between the Bank and CDC were excellent. CDC mostly relLed on Bank staff for information about institutional and financial issues while the Bank relied on CDC's expertise in technical forestry matters. 11. Consulting Services and Studies 11.01 There were considerable delays in recruiting technical assistants and the quality of their work was poor. Neither Government nor the donors properly supervised technical assistance activities. Work on smallholder forestry and the establishment of an efficient cost accounting system did not yield any tangible results. Work on the marketing of plantation timber yielded lLmited results only at the end of the project. Short term consultants were hired in 1986 and 1987 to (i) study the - 11 - management of SODEFOR's human resources; and (ii) make soil surveys and train the soil survey team. However, the National Forestry Plan--which was strongly influenced by the lessons learned from project implementation--is a major strategic document providing the framework for reforms undertaken in the sector under the Agricultural Sector Adjustment Program supported by the Bank (Ln 3127-IVC) and the Forestry Sector Loan. 12. Proiect Documentation and Data 12.01 SODEFOR regularly prepared project implementation reports which, although of a general nature, were of adequate content and quality. However, detailed technical and cost data, even when collected in the field, were not analyzed or used by management. Financial reporting and accounting was poor and annual audits systematically late. SODEFOR has not prepared a completion report. An invaluable source for the analysis of the project's achievements and shortcomings is the CDC-ODA Joint Evaluation Study (1991) which contains sound analysis of the technical, institutional, environmental and social issues pertaining to the project. - 12 - PART I X. Not yet received from the Borrower. - 13 - PARW RIII IZIX lZ i4NFO IEl 1. Related Bank Loans and Credits Year of Loan/Credit_T&1 &Mroal Pur=ot Status Forestry Project 1979 Plantation of 20,000 ha of Completed (Loan 1735-rVC) forest plantations and strengthening forestry management and planning capabilities in SODEFOR and Government. Forestry Sector 1990 Protection and sustainable On-going Project management of 1.S million ha (Loan 3186-IVC) of natural forest establishment of 9,000 ha of new plantations and maintenance of 60,OOO ha of existing ones, applied research and sector policy reforms. - 14 - 2. PX2leet TiAetable Date Date Stm Planned tevied Date Actual - Identification 1986 - Preparation 03/82-02/83 - Project Brief (UPS) 01/83 01/27/83 08/26/83 - Preparation 11/83 11/18/83 09/1S/83 - Appraisal Mission 03/84 09/22/83 09/22/83 - Loan Negotiations 06/84 01/15/84 11/05/84 - Board Approval 09/84 10/25/84 02/26/85 - Loan Signature N.S. 03/18/85 03/18/85 - Loa& Bffectiveness 10/84 12/18/85 12/18/85 - Loan Completion .S. 12/31/89 06/30/90 - Loan Closing 10/89 06/30/90 12/31/90 om2nMnts Policy issues raLsed at last stage curtailed substantial revisions at Yellow and Green Covers. The time lapse between Board and Effectiveness is due to a much weaker institutional environment than at appraisal. - 15 - 3, Loan Dib-ngurae nts Disbursements (In US$ '000) Loan 2496-IVC Bank F1ical Year Estimated Actual Actual as X Actual as X of and ouarter Cumut1tve SumuQtivo of Es-timt2d Lgffl Amant 19E5 3 0 1,545 0 5 4 0 2.253 0 ? 1986 1 0 3,669 0 12 2 4,400 5,515 125 18 3 5,450 6,941 127 22 4 6,500 11,280 174 36 1987 I 7,750 11,425 147 37 2 9,050 13,560 150 43 3 10,450 15,896 152 S1 4 11,850 19,004 160 61 1988 1 13,100 20,267 15S 65 2 14.350 21,845 152 70 3 15.750 22,133 141 71 4 17.150 23,592 138 75 1989 1 18,700 25.354 136 81 2 20,250 26,193 129 84 3 21.550 26,91S 125 86 4 22.850 27,734 121 89 1990 1 25,150 28,169 112 90 2 27.450 28,419 104 91 3 28,650 29,09B 102 93 4 29,650 29372 99 94 1991 1 30,550 30,616 100 98 2 31.300 30,616 98 98 3 31,300 30,616 98 98 4 31,300 30,616 98 98 Effective Dates 12/18/85; Closing Date: 12/31/90; Date of final Disbursements 01/14/92 Sources LOA1071 Disbursement Report - 16 - 4. Ztq.asa t.1anak Appraisal Actual HA PlAntednted lbv ice.) Ilaiv Teak 7,500 6,050 4,800 Gmelina 5,300 2,400 2,100 Pine/other 1,500 700 500 Framire/Frake 5,500 6,350 5,200 Samba 1,100 400 350 Cedrella 1,100 800 650 22,000 16,700 13,600 NA Maintained 57:300 40,000 Technical Assistance (Man-Months) MINAGRA 264 37 SODEFOR 2 in S54 219 i, Prolect costs and Pinancina A. Project Csts Appraisal Estimates Agtual (CPA m) (US$ m) (CA m) (UsS a) / Vehleles & Equipment 6,090 14.0 3,434 11.1 land clearlng and plantatlon costs 9,483 21.8 9,445 30.7 Consultants & Tech. Assistance 1,305 3.0 770 2.5 Research & Testing 1,174 2.7 296 1.0 Study tours 391 0.9 5 - Operating costs 4,002 92i 3.230 10. 22,446 51.6 17,180 55.8 ..=== wa . ...$s 0 .........=.......... a.n.= A/ At US$l a CPAF) 435 as per SAR estimates. k/ At US$l - CPAF 308, ayraee rate actually realized on IBRD loan disbursements. - 17 - S. Proieot Finanoina Original lot Amninant 2nd Amendment Actual Allocation 03/02/88 07/03/90 Di eursements jUrN E nitU re Caeory .JUL.... ...UL... UIL... ...411L.. (1) Vehcles end eVWapuont 7,440,000 4.600,000 6,100,000 6,334.403 (2) Lwad cleering, soft 12,100,000 16,300,000 18,300.000 17,504,118 preparation, planting. mlntenanc. and protection of forest plantations under Part A of the Project (3) Consutants and mnpmanmt 3.200,000 2,800.000 2,400,000 2,387,829 staff recruited for Parts R, C and 0 of the Project (4) Research under Part 3.1 of 1,000,000 800,000 800,000 721,719 the Project (5) Testing undr Part 1.2 of the 100,000 100,000 0 0 Project (6) Study to"rs under Part C.4 of 200,000 200,000 10,000 7,190 the Project (7) Local staff costs, office suplles, fuel and lubfecants for Parts A, C.3 and C.A of the Projects (a) until June 30, 198? 1,000,000 1,000,000 1,508,463 1,604,805 (b) until ay 31, 1990 1,600,000 3,000,000 1,420,000 1,906,919 (C) after Nay 31, 1990 760,537 640,962 (8) Calf Ing Special Acount 1,540,000 2,500,000 0 (492,430) (9) Unallocated 31100000 a 0 a Total 31,300,000 31,300,000 31,300,000 30,615,522 Canceled 0 0 0 84,478 SndiabursedW Q TOTAL 31,000,000 31,000,000 31,000,000 31,000,000 Source: LOA1071 Disbusaent Report and Nonthly Disbursemnt Swmrles. 2. Proje ct Financiga Plan Planned Actual (% (CPA m) (USS m) 1 (CPA m) (US$ m) 12/ IBRD 13,616 31.3 9,441 30.6 CDC 4,350 10.0 4,141 13.4 £/ Government ,4.A48. 2 1I0I .3,S98 I 22,446 51.6 17,180 55.7 a, At US$1 - CFAF 435 as per SAR estimates. k/ At US$ - CFAF 308 exchange rate actually realized on IBRD loan disbursements. S/ The CDC loan was disbursed in Pound Sterling. The wexcessw (of US$ 3.4 m). probably reflects the differences in exchange rates. - 18 - 6. Progict Results A. 2irect Benefita 1. limber Production. The main direct benefits of the project will be the timber, fuelwood and thinning from th. project plantations. These benefits are expected to commence in about 1992/93, peak with final cute of the plantations between the year. 2034-38 for teak and 2014-20 for other species. (These have been taken into account in calculation of rates of return for the project). Total production for maln species will amount to about 2.9 million m3 of which 606,000 m3 of thinning and fuelwood and 2,300,000 m3 (final cut) timber as follow8s ThinningiFuelwgod Final Cu Total Yexas ------------…(m3)----------------- Teak 432,000 86.,000 1,296,000 1998-2038 Frake/rramire 96,600 821,600 918,200 1998-2020 Omelina 46,200 411,600 457,800 1992-2018 Cedrella 13,000 81,900 94,900 1996-2020 samba 7,700 49,000 56,700 1996-2018 Other 11,000 68,500 79,500 1996-2020 606,500 2,296,600 2,903,100 2. Jobs createq. Jobs created by the project is indicated by the following data of employment as of March 30, 1992 at the four project plantationes SODEFOR _ Ha ZRO}O HPQUI SANlItOUI MM ZTA& Permanent Staff 149 67 81 76 72 445 Seasonal - 213 302 323 326 1,164 Sub-contractors (tAcherons) - 350 50 = d,4SO 149 480 733 899 798 3,059 =m. m i= . .. i..umin - 19 - S. Economig Imoact Appraisal Actual gstimake (AT end of Xmplementatlon) Economic R&Rg of Return 12.0 6.0 Teak 7.2 Omel"na 7.6 Framlre 7.0 Frake 3.5 Samba 2.5 Cedrella 2.5 Underlying Agoumptignis The analysis was based on the following assumptiones Costs. Establishment and maLntenance costs were based on actual costs during project implementation as recorded by SODEFOR for now plantings and the maintenance and protection of exLsting plantatLons, and malntenance norms provided by SODEFOR. Benef ts. They were eatimated as follows: - growth rate' and yields (total and fLnal cuts) based on data from SODEFOR's plantations and mlssion estimates. - Estimates of losses due to fire or pests (Lit is assumed that 1% of plantings will be lost each year during the first 10 years). = Re-estimated stumpage values of products for the different species. It has been assumed that teak price would increase by 2% p.a. in real terms and those of other specLes would increase at 1 p.a. The treatment of the economic value of salvage logging and of non-wood production (essentially bushmeat) under the project critically depends on the assumed "non-project situation". If slash and burn agriculture had destroyed the standing timber, the economic value of salvage logging should be a benefit of the project. if the trees had been logged (either before agriculture or through sustainable management of natural forests) then salvage logging is not a benefit of the project. given the uncertainty about the "non-project* situation, no additional benefits has been ascribed to the project from salvage logging. Also, although it was assumed ln keeping wlth appraisal assumption that the opportunity cost of land was zero. This is most probably not correct. Since benefits could have been derLved elther from sustalnable management of the degraded forests (wood and non-wood products) or lts conversion to agriculture. Including a positlve opportunity cost of land in the analysio would diminish further the economic viability of the project and of industrial plantations in general. - 20 - C. Financial Impagt Appraisal Etima Actgal Financial Rate of Return Not Estimated -1.3% Comene The decline in financial rate of return is due to the following factorss (a) a shortfall in total area cleared for new plantations (76% of appraisal targets 16,192 versus 22,000 ha; (b) losses from fire and pestilence, difficult soil conditions (bottomlands, excessive vegetatlon) and poor maintenance practices which have reduced yields to approximately 79.63% or 12,894 ha of plantations established (Annex 1 and Table 1) (ac) fLnal cuts currently estimated around 50% of forecasts as a result of mixed species planted - commercial and revenue earnings considerations were not the determining criteria in the species selected; and (d) limited awareness of the salvage value of already existing forest - CFAF 2,00/m3 maintained as an approximate value (Annex 7). D Studie Studies ftat!s Imiact of Study Plan Directeur Completed The study was proposed by MINAGREF Forestier Consultant financed under the project. It had a major lmpact ln changing the attitudes of the Government in focussing on broader sectorial issues concerning forest conservation and changes in policy framework for the sector. - 21 - 7*. Etaaun of f ani SECTION D DESCRIPTION: LOAN AGREEMENT J STATUS The Sorrower wIll: 3.01 (a) Carry out Parts C.1 and 2 and D.2 of the Project throush Full compltance NINAGREf and cause SCOEFOR to carry out Parts A, 5.1 and 2, C.3 and 4 and D.1 of the Project, all with due diligence and efficiency In conformity with appropriate administrative, financial, forestry and research practices, and provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. 3.01 (b) Cause SODEFOR to perform in accordance with the provisions Full complisnce of the Project Agreement all the obligations of SODEFOR therein set forth, take or cause to be taken all action, Including the provision of funds, facilities, services and other esources, necessary or appropriate to enable SOOEFOR to perform such obligations, nd not take or permit to be taken any action which would prevent or Interfere with such performance. 3.01 (c) Establish and maintain at the CM a revolving project Ci) Full cotplince acctunt in CfAF In the nama of SWOEFOR and (f) ake an (if) Govt's contribution touards the initial deposit therein of CFAF 225,000000; and (it) Project was irreular due to treasury thereafter replenish said account as and when required to problet. CAA took 6-8 months to ensure that, on the first day of each calendar quarter re Iiburse expenditures drawn on the during each year the project is executed, an eount equal to revolvfnr project account, inducfn at lest the initial deposit is available to SOEFOI In that WDEFOR to run heavy supplier's credit accut to finance Its estimated expenditures in CFAF for and suspension of fiteld operations under the Project during the following calendar quarter. the Project, In 1989. 3.02 Employ (1) a financial controller to control the budget and Ci) Not comliped with: the Director of penditures of SODEFOR on behaltf of the Borrower; (if) an Resorces assumd this role with the oecmist and a planner to assist the Borrowr In carryfng approval of the Bank and CDC; out Part C.1 of the Project; (ill) a Forester to assist the (Ci) responsibilities were dropped for Borrwer In carrying out Part C.2 of the Project; and fear of conftlets beten NIARUA and (iv) consultants an experts to carry out Part D.2 of the SOOEFOR. Incrient served s Project; such controller, eoomist, planner forester, Statistician Instead; consultants and experts to have qualificatfons, experience (fif) and Civ) Full compliance but with and term and conditfons of emplotyent satisfactory to the delays. Bank... 3.03 Not later than October 31 of each year, submift to the Bank Could not be complied with on a regular for Its review, the Contract Plan lor the following year. basis: Contract Plan ws sustituted by *Fiches de Projet reflecting aWproved 3- year budget in the BSIE. 3.04 (a) furnish to the Bank, for its review nd dfscussion, not Full compliance later than (f) April 30, 1985, a draft National Forestry Plan and Action Plan for the years 1986-1990; and (1i) Deceober 31, 19, said National Forestry Plan ar4 Action Plan in Its finalized form. 3.04 (b) Implent said National Forestry Plan in accordance with a Full compliance timetable established In cooperation with the Bank. 3.05 ...Define the scope and terms of reference and establish a Full coWtiance timtable, in cooperation with the Bank, for the studies to be carred out within the framework of the National Forestry Plan referred to in Section 3.04 above. 3.06 (a) ... Undertake to insure, o. make adequate provision for the Full compliace insurance of, the imported goods to be ffnacd out of the proceeds of the Loan agsinst hazards incident to the scquisition, transportatfon and delivery thereof to the of use or installation, and for such insurance any fndemnity shall be payable In a currency freely usable by the Borrower to replace or repair such goods. 3.06 (b) Cas all goods and services financed out the proceeds of Full compliance the Loan and allocated to Parts C.1 n 2, nd 0.2 of the Project to be used exclusively for such Parts. 6~~...... . - 22 - SECTION DESCRIPTION: LOAN ACREEMENT (Continued) | COMPLIANCE 3.0? (a) (1) Matntsin records and procedures adequate to record and Fult cotpliance monitor the progress of Parts C.1 and 2 and D.2 of the Project (including their cost end benefits to be derived from them), to Identify the goods and services financed out of the proceeds of the Loan, and to disclose their use in Parts C.1 and 2, and 0.2 of the Project. (1i) Enable the Bank#s representatives to exmnine the goods Full compliance financed out of the proceeds of the Loan and any relevant records and documents. (Mii) Furnish to the Bank at regular intervals all such Fully complfed mith although not on a Information as the Sank shall reasonably request concerning regular basis. Parts C.1 and 0.2 of the Project, their cost and, where appropriate, the benefits to be derived from them, the expenditure of the proceeds of the Loan allocated to Parts C.1 and 2, and D.2 of the Project nd the goods and services financed out of such proceeds. 3.0? (b) Prowptly after completion of Parts C.1 nd 2, and 0.2 of the Not cotplied with. Information to be Project, but fn any event not later than six mcnths after provided In S0EFOR's PCR not yet the closing date or such later date as may be agreed for submitted. this purpose between the Borrower and the Bank, prepare and furnish to the Bank a report, of such scope and In such detail as the Bank shall reasonably request, on the execution and initial operation of Parts C.1 and 2 and 0.1 of the Project, their cost and the benefits derived and to be derived from them, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreemnt and the accomplishment of the purposes of the Loan. 3.08 Following the cotpletion of the Project, maintain or eause The plantation program Is being to be maintained the plantations included In Part A of the maintained and supervised under the Project In conformity with sound technical practices, untit follow-up Forestry Sector Project. maturity of the timber, and shall provide promptly as needed, the funds, facilities, services and other resources required for the purpose. 4.02 (a) .... Naintain or cause to be maintained separate accounts Despite Bank efforts, NINAGRA has never adequate to reflect In accordance with consistently been able to produce separate accounts maintained approprfate accounting practices the operations, for Parts C.1 nd 2 nd D.2 of the resources and expenditures in respect of Parts C.1 and 2, Project. However, expenditures under and 0.2 of the Project, of the departments or agencies of these relate to expatriate technfcal the Borrower responsible for carrying out such parts of the assistance and studies for which Bank has Project or any pert thereof. made direct payments. 4.02 (b) Mi) Maintain or cause to be maintained separate accounts Complied with: hoever, Project account reflecting all expenditures on ccount of which withdrawals at CA was lmproperly kept. Because of are requested from the Loan Account on the basis of SOEs; treasury problems, SODEFOR used funds (if) retain, until one year after the Closing Date all from the Project account to meet Its most records ....evidencing the expenditures on account of Which urgent payments (salaries, mrl withdrawals are requested from the Loan Account on the basis suppliers) and deferred payment to major of SOEs; (fii) enable the Bank's representatives to eomine suppliers as long as possible. such records. 4.02 Cc) Ci) Nave the accounts referred to in paras (a) and (b) of No audit report for NINAGRA tas received this Section for each fiscal year audited In accordance during the life of the project see with appropriate auditing principles consistently applied, Section 4.02 (a) above. by independent auditors acceptable to the Bank; Cii) furnish to the Bank, as soon as possible, but not later than six Full copiance with delays In the case months after the end of such year, a certified copy of the of SODEFOR. report of such audit...; and (ifi) furnish such other informatfon concerning said accounts, records and xpenditures nd the audit thereof as the Bank should from time to time reasanably request. - 23 - SECTION DESCIPTION: PROJECT AGRtEENENT COMLIANCE SODEFOR wIll: 2.01 Carry out Parts A., 5.1 and 2, C.3 and 4 end 0.1 of the Not atfsfactorily complied withs Project... with due diligence and efficiency and in SODEFOR's overasl finteisal manaement, conformity with appprfiate adinistrative, financial, internal control and acowntfng were research and forestry practices. Inadequate. lag in availabflity of counterpart funds aggravated SOEFOR's cash flow. 2.02 (a) ...Eaploy an operational methods engineer, a civil engineer, Full compliance wfth delays. Noweer, a marketing expert and an accountant whose qualifteatins, Civil Engineer post was swapped for an experience and terms and conditions of employment Agro-Forestry Engineer with consent of satisfactory to the Bank... the Bank; Narketing Expert post filled only in 1988 *nd was replaced frequently. 2.02 (b) tl) Enter Into a contract with scientific institution Full complIance with delays: contract specialized In tropical forestry, satisfactory to the Sank, drafted 1985 was signed three yre later, providing for the res arch referred to in Part 5.1 of the thus, onty 6 out of 12 areas of work were ProJect; and completed. (ti) Contract with a scientific Institution specialized in Fult com'lfance tropical forestry, satisfactory to the Bank, providing for the testing referred to In Part 8.2 of the Project... 2.03 Prepare and furnish to the Bank for approval before August Full compliance with delays; Contract 31 of each year until completion of the project: (i) a work Plan was substituted by "Fiches de program for land clearing, soll preparation, planting, Projet reflecting 3 yeas budget mafntenance and protection to be carried out during the next approved in the BSIE. Fiscal Year under Part A of the project, together with a budget therefor and a Contract Plan for the Fiscal Year; and (if) a program of training and study tours to be carried out during the nxt Fiscal Year under Part C.4 of the Project, together with a budget therefor. 2.04 .... Procurement of the goods and civfl works required for Full compliance the Project and to be financed out of the proceeds of the Loan to be governed by the provfsions of Schedule I to the Project Agreement. 2.05 (a) Insure, or m"ke adequate provision for the insurance of the Full compliance imported goods to financed out of the proceeds of the Loan nd made available to it by the Borrower against hazards incident to the acquistion, installation, and for such Insurance any indemnity payable In a currency freely usable by SOOEFOR to replace or repair such goods. 2.05 (b) Cause all goods and services financed out the proceeds of Full compliance the Loan and made available to SCDEFOR by the Borrower to be used exclusively for the purposes of the Project 2.06 (a) Furnish to the Sank, promptly upon their preparation, the Full compliance plans, specffications, reports, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Sank shall reasonably request. 2.06 (b) (f) Maintafn records and procedures adequate to record and Full compliance with delays. monitor the progress of Parts A, 3.1. and 2, C.3 and 4 and 0.1 of the Project....to identify the goods and services financed out of the proceeds of the Loan and the Project. (fC) Enable the Bank's representatives to visit the Full compliance facilities and construction sites included in Parts A, 5.1 and 2, C.3 and 4 and 0.1 of the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents. 24 - SECTION I DESCRIPTION: PROJECT AGREEMENT (Continued) I COMPLIANCE 2.06 (b) (ill) Furnish to the Bank at regular lntervals all such Fully complied with although not on a information as the Sank shalt reasonably requested regular basis. concerning Parts A, 9.1. and 2. C.3 and 6 and 0.1 of the Project, their cost and, where appropriate, the benefits to be derved fro them, the expenditure of the proceeds of the Loan and the goods and services financed out of such Proceeds. 2.06 (d) Promptly after complotion of Parts A, 3.1 and 2, C.3 and 4 Not yet complied with: SCOEFOR*s PCR not and D.1 of the Project, but In any event not ltter than six yot submitted to the Bank. months after the closing date or such later date as may be areed for this purpose between SODEFOR end the Sank, prepare and furnish to the Sank a report, of such scope and in such detail as the Dank shall reasonably request, on the execution and fnitial operation of Parts A, 3.1 and 2, C.3 and 4 and 0.1 of the Project, their cost and the benefits derived and to be derived from them, the performance by SCOEFOR and the Bank of their respective obligations under the Project Agreemnt and the a4complishment of the purposes of the Loan. 2.06 (0) Enable the Dank's representatives to examine ll plants, Full compliance installations, sites, works, buildings, property and equlpmsnt of SODEFOR and any relevant records nd documents. 2.07 (a) Exchano views with the Bank with regard to the progress of Full caopliance Parts A, 1.1 and 2, C.3 end 4 and D.1 of the Project, the performance of Its obligations under thfs Agreement and other matters relating to the purposes of the Loan. 2.07 (b) Promptly inform the Sank of any condition which interferes Full compliance or threatens to Interfere with the progress of Parts A, 1.1 and 2, C.3 and 4 and 0.1 of the Project, the eccomplishment of the purpose of the Loan, or the performance by SODEFOR of its obigations under this Agreement. 4.01 (a) Naintafn records adequate to reflect In accordnc with Fully complied with: however, Bank WPU consistently maintained appropriate accounting practices the missions identified misuse of Dank funds operations and financial condition including, without to non-project operations due to delays limitation to the foregoing, separate accounting reflecting In receiving counterpart funds. Since all expenditures on account of which withdrawals are Feb. 1989, WA were therefore audited and requested from the Loan Account on the basis of SOEs. certified prior to any reibuarsement to the Special Account. 4.01 (b) Retafn, until one year after the Closing Date, all reoords Full compliance (contracts, orders, invoices, bills, recelpts and other documents) evidencing the expenditures on account of which withdrwals are requested from the Loan Account on the basis of SOEs, id shall enable the Sank's representatives to examine such records. 4.02 (a) ave Its accounts and financial statements ...for each year Full c- pliance with delays (months): audited, In accordance with appropriate auditing principles FY85 by 11.9; FY86 by 12.9; FY87 by 4.8; consistently applied, by independent auditors acceptable to FY89 by 1.9; FY90 by 6.0; Up to Jun 92 in the Sank. progress. 4.02 (b) Furnish to the Dank as soon as available, but In any case Full compliance with delays not later than six months after the end of each such year: (i) certffied copies of its financial statemnts for such year as se audited; and Cii) the report of such audit by said auditors of such scop and In such detalt as the Bank shall have reasonably requested, including, without limitatfon to the foregoing, separate opiniors by said auditors in respect of the expenditures and records referred to In Section 4.01 (b) of this Agreement, as to whether the proceeds of the Loan made available to It and withdrawn from the Loan Ascount on the basis of SO£ have been used for the purpose for which they were provided. 4.02 (e) Furnish to the lank such other information concerning safd Full compliance accounts, financial statements, records and expenditures, as well as the audit thereof, as the Dank shall from time to time reasonably ruqust. - 25 S. Vine gf ]ank Eeuggrces Planned Stan 2of Pro eat Ovlc (Ayeagg) RBuLeaQ ZLnal geMImBnl Through Appraieal 52.0 34.0 22.3 Projects 15.0 Others 7.3 Appraisal through S6.0 74.7 66.8 Projects 59.5 Board Approval Others 7.3 Board Approval through ... 0.0 13.1 Others 13.1 EffectLveness supervision ... Projectas 48.0 70.Q 5?.4 Others 9.4 TOTAL 178.7 159.6 Projects: 196.7 03inmmJJ Other 37.1 ...e Not Rva$1able Sources Mfriaa Reglon TRs Data Run 05/08/92 - 26 - 8. Nissions Number Days Performance Stage of of in Specialization Rating ProiLect Cyco Month/Year Personm Fietd R3egsented al Status b/, TiMes of Problems c/ Through Feb 15, 1983 2 1 ECU, AGR N/A Technical 1/ Appraisal Apr 25-May 6, 2 12 ECU, AGR N/A Technical, Mnagement V 1983 Appraisal Sep 22-Oct 4 27 ECN, FS, AGR, N/A Technical, Management ) through 14, 1983 FA Board Approval Oct 7-30. 2 23 CR, FA 2 Management, Technical i/ 1983 May 2-11. 3 9 AGR, FA, FS 2 Management I/ 1984 Board Approval Mar 11-09, 1 8 AGR N/A Financial t through 1985 Effectiveness Supervisfon Mar 15, 1986 2 15 AG, FA 2 Management, ffnancal LI Supervision Dec 09, 1986 1 9 SFA 2 Management lV Supervision Jure 01, 1987 1 10 SFA 3 Financial, Management 2/ Supervision Jan 16, 1988 1 12 SFA 3 Financial JR/ Supervision Jun 27. 1988 1 2 FS 3 Financial 11/ Supervision Feb 18, 1989 2 10 SFA, FS 3 Financial JII Supervision Oct 02, 1989 2 6 SFA, FS 3 Financial 1I/ Supervision May 28, 1990 3 11 SFA, AG, FS 3 Financial Jl( A/ Key to Specialization: AGR a Agronomist, FA u Financial Analyst, ECNU Economist, SFA a Senior Financial Analyst. I/ Key to Status: 1 - Project free or minor problems; 2 u Moderate problems; 3 = Major problems; N/A a Not applicable. _/ Types of problems: J/ Technical assessment of fire damage at Ten. and Sangou6 forest plantations; and farmers intrusion. jI Forest fire prevention and control measures; and SODEFOR management and operations. }/ Revision of the project. Policy issues raised at last stage curtailed substantial revisions at Yellow and Green Covers. Al Role and legal status of SODEFOR in plantation and exploitation; implementation of SODEFOR reorganization proposed by Management Audit; and forest fire risk. / lmplementation of SODEFOR reorganization; and Change of SOCEFOR statutes as a result of Ministerial reorganization in Nov 1983. Al Financial difficulties affecting project execution ard effectiveness: breakdown of SCDEFOR accounting system which resulted in failure to draw down funds from CDC and UB Ln accounts; lack of counterpart funds; land preparation, nursery operations and weeding were delayed or neglected. D/ Cooperation between Agent Coanptable and Administrative Service of SODEFOR; depreciation of the $ against the CFAF; and lack of counterparts because of salary scale imposed on SODEFOR as EPIC (Decree 85-132 of Feb 20, 1985). 3I Project Management. 2/ Availability of counterpart funds; marketing; shortcomings in accounting control. 1W Severe liquidity problems due to cessation of CDC disbursements due to non-payment of debt and CCCE copletion of its project. IV Lack of counterpart funds. R/ Funding due to lack of counterpart funds, suspension of CCCE financing and delays In processing disbursements. IBRD 18136R1 COTE D'IVOIRE SECOND FORESTRY PROJECT AI^ 501. 09MW "UT 2 K-W AMMMI SAWA. 714 - 3 140_ i~~ M~-~~' A '-~~'( O.DVAARTUVEAL £ArnALS 1 *060 (W 0I3 °NA PASr i ~~~~~~~~~~~~KORIOOO z _OTI o $ T ' \ r ~~~~~~~~~~~O ' .6 OMKOUNA~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~IOOUO -§_ / ~~~~~0 K 4. A * j I > fS r fi < > ; O _e J~~~~~~~~~~~~~~~/i - o 0. 0 j / S't ^' ''°-y / o s ,gJi,,, o OFlF o -o o , T -& > RESEIWO - / < . ---e'"'X'''-0 ' . . ' _ *W ovom ~ ~ ~ 0 *ov _~~~~~~~~~~~I ) JULY 199