Mali - Second Forestry Project

Doxument of The World Bank FOR OmCIAL USE ONLY Rput No. P-4208-MLI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT OF SDR 5.9 MILLION TO THE REPUBLIC OF MALI FOR A SECOND FORESTRY PROJECT December 17, 1985 Ths dacomet h a ribEi dubIea i w be an by reciab ealy Is the pevf.n.ce if dmraElAal jules lb esluinen my ma otherwise be dbdcandwiwtbeut Wld Buuk auhdwrzrinlIn  CURRENCY EQUIVALENTS Currency Unit : CFA Franc (CFAF) US$1.00 CFAF 434 CFAF 1 million : US$2,304.00 WEIGHTS AND MEASURES 1 stere of fuelvood from natural forest = 0.50 m3 or 225 Kg of dried wood 1 m3 of fuelwood from natural forest = 2 steres or 450 Kg of dried wood 1 stare of fuelvood from plantation (Gmelina variety) 5 0.60 m or 350 Kg of dried wood 1 m3 of fuelvood from plantation (Gmelina variety) = 1.67 steres or 583 Kg of dried wood ABBREVIATIONS AND ACRONYMS CCCE Caisse Centrale de Cooperation Economique (French Aid Agency) DNEF Direction Nationale des Eaux et Forets (National Directorate of Water and Forests) DPP Division des Projets et des Programmes (Programs and Projects Directorate) FAC Fonds d'Aide et Cooperation (French Grant Aid Agency) IER Institut d'Economie Rurale (Rural Economics Institute) MRE/CD Ministare des Relations ExtErieuresICoopEration et Developpement (Ministry of External Relations/Cooperation and Development, France) NRNE Ministere charge des Ressources Naturelles et de l'Elevage (Ministry of Natural Resources and Livestock) OAPF Operation Ameinagement et Productions Forestieres (Forestry Management and Production Operation) OPNBB Operation Parc National de la Boucle de Baoule (Boucle du Baoule National Park Operation) FISCAL YEAR IDA : July 1 - June 30 Government : January 1 - December 31 OAPF : January 1 - December 31  FOR OMCIAL USE ONLY REPUBLIC OF NALI SECOND FORESTRY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of Mali Beneficiary: National Directorate of Water and Forests (DkEF) Amount: SDR 5.9 million (US$6.3 million equivalent). Terms: Standard IDA Terms. Flow of Credit Proceeds: Borrower to DNEF (US$5.3 million): grant Project Description: The project addresses the increasingly real threat of deforestation in many parts of Mali through a combination of urban and rural initiatives. For the urban market, tax reforms will influence demand by increasing the consumer price of wood in Bamako and elsewhere while wood supply will be improved through the plantation component. In rural areas market interventions are inappropriate and technical solutions are scarce. Accordingly, the project will finance two pilot schemes aimed at developing guidelines for managing the national forest. The project would also provide technical assistance to the Forestry Department and finance studies to improve knowledge of the sector. IIi doaIt hs a rstikddi tibution and mny be ued by reipients oly in the performan of thder oirc duies Its wotents may not otherwise be disclsed witbout Wod Bank autrimtion.  - ii - Estimated Costs: (Net of identifiable taxes and duties) Local Foreign Total US$ nillion- Support to DNEF 0.7 1.2 1.9 Rural Forestry Activities 0.5 1.0 1.5 Semi Industrial Plantations 1.0 2.3 3.3 Other OAPF Activities 1.8 3.3 5.1 Project Financial Management Unit 0.2 0.6 0.8 National Park Support - 0.3 0.3 Total Base Costs 4.2 8.7 12.9 Physical Contingencies 0.5 0.6 1.1 Price Contingencies 1.0 1.7 2.7 Total Project Costss/ 5.7 11.0 16.7 Financing Plan: IDA 1.9 4.4 6.3 CCCE 1.7 3.7 5.4 1HRE/CD/FAC 0.1 2.8 2.9 Government/OAPF 2.0 0.1 2.1 Total 5.7 11.0 16.7 at Includes US$1.0 million PPF advance. Estimated Disbursements from IDA Credit: FY86 FY87 FY88 FY89 FY90 FY91 US$ million Annual 1.23 1.36 1.01 0.81 1.21 0.68 Cumulative 1.23 2.59 3.60 4.41 5.62 6.30 Economic Rate of Return: 10% (calculated on 40Z of project costs).  - iii - Benefits and Risks: The most iz2mediate and easily quantifiable benefit is the increased wood production from the semi-industrial plantations which, given the experience acquired under the first project, have low associated technical risks. Much more important, although much more difficult to quantify, are the potential benefits from the pilot rural forestry schemes (supported by efforts to strengthen the forestry department) in arresting the process of deforestation and soil degradation. Since these are pilot operations they have a relatively high risk which will be minimized by ensuring village participation and through close supervision. Staff Appraisal Report: No. 5787-MLI, dated December 6, 1985. MapE: IBRD 18886 WAPAC December 1985  INTERNTATIONAL DEVELOPMENT ASSOCIATION IEPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF MALI FOR A SECOND FORESTRY PROJECT 1. I submit the following report and recommendation on a proposed development credit for the equivalent of SDR 5.9 million (US$6.3 million equivalent) on standard IDA terms to the Republic of Mali to help finance a proposed Second Forestry Project. Additional external financing for the project would be provided by loans from France (through the Caisse Centrale de Cooperation Economique, CCCE) in the amount of US$5.4 million equivalent and by grants and technical assistance from France (through the Minist4re des Relations Ext6rieures/Cooperation et Developpement, MRE/CD, and the Fonds d'Aide et Cooperation, FAC) amounting to US$2.9 equivalent. The CCCE loan would be for a term of 30 years, at 2.5% interest with a grace period of ten years. PART I - THE ECONOMY 1/ 2. Two reports, entitled "Economic Memorandum on Mali" (3200-MLI) and 'Kali-Special Economic Study-Planning Institutions and the 1974-78 Plan" (3333-MLI), were distributed to the Executive Directors on June 30, 1981. The following paragraphs are based on these reports and the findings of recent World Bank and IHF economic missions. Annex I gives country data. Background 3. Landlocked in Africa's Sahelian belt, most of Mali's 1.2 million square kilometers is desert; only one-fourth is arable, and even this is subject to the climatic vagaries of the semi-arid tropics. Over the last 15 years, average rainfall and length of growing season have significantly diminished. Soils are shallow, lateritic, poor in phosphates, and easily eroded. Agricultural technology is rudimentary, with low crop yields and livestock offtake. Thus, Mali's 7 million people are among the poorest in the world, with 1984 per capita income of only US$140 and life expectancy at birth of only 45 years. Overall, the country's potential for long term growth is severely limited by harsh resource constraints. 1/ Parts I and II are substantially the same as those contained inthe President's Report for the Fifth Highway Project (P-3941-MLI) which was approved by the Executive Directors on September 19,1985.  - 2- Developments in the 1960s and 1970s 4. The first post-colonial Government (1960-68) intervened extensively in the economy in an attempt to promote growth and alleviate poverty. It established numerous public enterprises and instituted widespread price and trade controls. Relatively favorable climatic conditions allowed a modest growth in CDP per capita during the 1960s, but fiscal and external account deficits increased sharply. 5. The present Government, which came to power in 1968, gradually began to introduce a series of modest economic reforms aimed at restoring financial and economic equilibrium through liberalizing trade, restruc- turing public enterprises and promoting agriculture. These efforts were frustrated in the early 1970s by severe drought conditions and the oil price increases. Conditions improved somewhat in the late 1970s. Good rains and newly built irrigation networks raised grain output by 50% from 1972/73 to 1978/79. Cotton cultivation expanded by approximately 80% over the same period. Both consumption and investment were, moreover, sustained by inflows of official development assistance vhich quintupled between 1972 and 1980. The combined impact of these factors resulted in a 2.2% annual. increase in GDP per capita between 1970 and 1980. 6. Despite these improved conditions, Government's budgetary posi- tion continued to deteriorate through the late 1970s. Restrictions on civil service recruitment were relaxed, and the roster of public employees increased by almost 50Z between 1975 and 1980. Between 1976 and 1980, scholarship payments for higher education doubled. A number of costly public investment projects with dubious justification and several equally questionable new public enterprises were launched. Public enterprises were forced to operate with low or negative profit margins in an effort to insulate the population from inflation. As a result, the sector's deficits rose significantly. The combined effect of these policies was reflected in dramatic increases in the consolidated budgetary deficit, and, in turn, in foreign indebtedness. By 1980, total medium and long term external public debt equalled 75% of GDP. Progress Since the Early 1980s 7. Since the early 1980s, the Government has undertaken a program of gradual structural reform to counteract the mounting disequilibria arising from excess consumption and uneconomic investments. A number of measures have been introduced aimed at reducing budgetary deficits, operating losses of public enterprises, and public sectoiL arrears (both foreign and domes- tic). In addition, reforms have been introduced to improve resource allocation. These include market liberalization, improved price incen- tives, greater emphasis on rehabilitation and maintenance, and more effi- cient public investments. The Government's progress in these policy areas has occurred despite the adverse effects of recent drought conditions on production and incomes: much, however, remains to be done. 8. Mali's commitment to structural reform has been met with commen- surate support from the donor community. Mali has successfully implemented  -3- two IMP Standby Arrangements and a third Standby was approved by the Fund in November 1985. In close cooperation with the IMF, IDA has also actively supported Mali's restructuring efforts. In 1982, IDA approved the Economic Management and Training project which provides technical assistance and training to improve Mali's ecor 3mic management and policy formulation capabilities. This has provided a basis for subsequent policy reforms addressing cotton pricing and revenues, educational expenditures, cereals marketing, public enterprises, and cost recovery for roads maintenance. Many of these sectoral reforms are being supported by IDA lending opera- tions. An informal consortium of food aid donors has been assisting a Cereals Marketing Reform Project since 1981. It has supported various reform measures with the provision of some 250,000 tons of grain over the past five years. Finally, Mali's entry into the West African Monetary Union in June 1984, included substantial financial aid and debt consolidation from France. 9. In spite of the policy improvements and the significant level of donor assistance in recent years, many macroeconomic indicators have remained depressed since 1980. Average annual GDP growth in constant prices has been stagnant and, recently, negative. Consecutive years of severe drought from 1982-84 led to a 25X decline in cereals production. As a result, total cereal imports in 1984 reached a record 320,000 tons or almost 50 kilograms per capita. Moreover, significant livestock losses and destocking occurred in 1984. Despite buoyant cotton export revenues resulting from unusually high international cotton prices, rising imports of foodstuffs necessitated by the drought caused the 1984 current account deficit to remain at some 19% of GDP (6.2Z of GDP including grants). Moreover, in 1985, cereal imports have remained at their 1984 levels, while export revenues have fallen due to a marked decline in international cotton prices. GDP is projected to grow by 1.7% for 1985. Economic and Financial Policy Issues 10. If the Malian economy is to achieve its financial and economic stabilization objectives, policy reforms must be broadened and deepened in three priority areas: public finances, economic regulation and incentives, and the efficient allocation of investment resources. 11. Public Finances. Although the budgetary situation in Mali has improved considerably in recent years, largely in the context of three successive IMF standbys, there remains considerable scope for improvement. Public finances remain weak and recurrent expenditures must still be supported by external budgetary assistance. To safeguard the progress already achieved, Government must make a concerted effort to continue to cut subsidies and excessive personnel outlays. Cost recovery measures should be instituted to finance operation and maintenance costs wherever beneficiaries can be clearly identified, and public debt service payments should be reduced. In addition to containing future expenditures, efforts to increase revenues will also have to be intensified. 12. Regulation and Incentives. As indicated above, the Government has recently begun to reduce its intervention in economic affairs,  - 4 - especially in the areas of price controls and trade restrictions. Perhaps most notably, full liberalization of paddy marketing is planned for the 1986/87 growing season. This process has been assisted by the recent Mopti Area Development Project and will also be supported by the forthcoming Office du Niger Project. However, in the agricultural sector, additional measures are necessary to allow private traders a greater role in the delivery of agricultural services and inputs. Moreover, in the public enterprise sector, the Government is committed to a major reform program that will reduce the overall size of the sector, while permitting individual enterprises a greater degree of autonomy in managing their internal operations. Import monopolies have already been eliminated for the bulk of products handled by the state trading company as well as for pharmaceuticals and medical supplies. IDA is supporting this effort through the preparation of a Public Enterprise Sector Reform Project. The project focuses on policy and institutional reform, physical rehabilitation o' viable enterprises and technical support for liquidating nonviable ones. This program has been closely coordinated with the third IMF Standby, especially with respect to-eliminating the financial losses of Air Mali and the continued reduction in the size and scope of the state trading corpora- tion, SOMIEX. 13. Efficient Allocation of Investment Resources. Promoting more efficient use of investment resources, both foreign and domestic, and public and private, is among the most important issues to be addressed. As in much of sub-Saharan Africa, investment as a proportion of GDP has been high (over 15% of GDP during the 1970s, the bulk of which was public investment), but it has not yielded commensurate growth in output. Public resources have not been used optimally and excessive regulation has encouraged inefficient allocation of private investments. Together, these have contributed to recurrent financial disequilibria, including levels of debt servicing and Government subsidies which the economy is incapable of sustaining. Remedial measures are urgently required. Investment resources need to be channelled toward rehabilitating and maintaining existing facilities before undertaking new investments. More stringent economic and financial criteria for project selection should be devised and applied rigorously. Issues Affecting Long Term Growth 14. Even with substantial improvements in resource reallocation and financial policy reforms, concerted action will be required to redress the long term resource constraints facing the economy. Three areas of high priority are: (a) human resource development; (b) agricultural development; and (c) consolidation of economic infrastructure. 15. Human Resource Development. Population growth is the overriding issue in the area of human resource development. Unless it can be slowed  -5- from its projected rate of 2.8% per year, population growth will negate even the most substantial development efforts. Population growth is already weighing heavily on the country's scarce resources. Population pressure has contributed to the degradation of spils caused by shorter fallow periods, deforestation to supply increased demand for fuelwood, and overgrazing by larger cattle herds. Moreover, the rate of population growth will be a major factor in improving the provision of basic needs, including primary health care, clean water, and primary education. The Government needs to focus on the interrelationship of population with Its overall objectives for economic growth and development and should begin to formulate a population strategy. In addition, education policy needs to be redefined to provide broader access to better quality primary education, to lower unit costs, and to promote greater participant financing. Literacy and primary school enrollment are presently far too low to provide an adequate foundation for strengthening human capital, Mali's primary resource. Third, primary health services, including rural water supplies, must be improved. Otherwise, low life expectancies and high child mortality will continue to sap the productive capacity of the population, while fueling the demand for more children. Donor assistance will be required to expand public health programs, but these must be based on affordable, replicable project designs, improved cost recovery, and greater involvement by beneficiaries. 16. Agricultural Development. Agriculture is the country's dominant sector, accounting for over 40Z of GDP. Cotton and livestock alone account for 75% of exports. With no significant mineral deposits, overall future growth will depend primarily on raising agricultural production, and, relatedly, on improved agricultu:al practices and technology. Although there is some scope to expand the area under cultivation, the greater potential lies in increased yields, which in turn, are most likely where rainfall is highest or where irrigation facilities exist. Equally impor- tant to the sector's future development will be: (a) better delivery of agricultural services, especially extension and inputs; (b) adequate maintenance of irrigation structures and access roads; and (c) addressing the twin problems of deforestation and soil erosion degradation which are posing an increasing threat to many are., of Mali. In addition to consolidating agricultural infrastructure and strengthening essential public institutions, measures are required to increase cost recovery, expand beneficiary participation in operation and maintenance, improve producer incentives, and liberalize input and output markets. At the same time, more resources should be channelled into agricultural resea-:ch to: (a) improve crop varieties, with a particular focus on the needs of rainfed agriculture on which the bulk of the population depends;  -6- (b) develop new export crops; and (c) further integrate livestock with crop cultivation. 17. Consolidation of Economic Infrastructure. Mali needs to devote greater attention to better utilization of existing economic infra- structure. Given a scarcity of investment resources, macro and sectoral priorities need to emphasize efficient operation and improved maintenance of existing facilities before undertaking new investments. Decisions regarding transport sector investments must be taken with particular care, given Mali's vast internal distances, and its low population density. Although roads in the western part of the country are poor, priority must be first given to rehabilitating and maintaining existing roads in the productive central and southern areas of the country. Similarly, in the irrigation sector, existing capacity is often idle or deteriorating. The rehabilitation of such facilities should be given priority in the alloca- tion of investment funds. In addition, local resource mobilization and cost recovery need to be improved to enable adequate maintenance. Foreign Assistance and Its Implications for External Debt 18. In recent years, Mali has benefitted from considerable foreign assistance, which has, in fact, financed virtually all development invest- ments. Following the 1972-73 drought, there was a rapid increase in foreign assistance, mostly grants and highly concessional loans. However, even with a high degree of concessionality, a dramatic increase in debt service obligations is now coming due on past borrowings which will have a major impact on public finances. Service on external public debt is expected to reach about 27% of Government revenues in 1985. The debt service ratio, which was some 13% in 1984 (9.8Z excluding IMF repurchases), will increase sharply to 19% in 1985 (13.8Z excluding IMF repurchases) and increase further in 1986. The rise in external debt service obligations has several implications. Most fundamentally, it points to the need to exercise gre.-t caution in contracting future public debt. Recourse to nonconcessional borrowing will have to be avoided. Public sector invest- ments will have to be strictly controlled to ensure that scarce investment resources are used solely for priority projects which meet rigorous selec- tion standards based on stringent economic criteria. With external debt cl'arges already at a level which strains the country's servicing capa- bility, Mali will need to make every effort to mobilize additional domestic resources. With this in mind, electricity tariffs, petroleum taxes and road user fees have recently been raised to help service the sizeable foreign loans of these sectors. Despite these actions, external debt rescheduling may be necessary in 1986. 19. In the future, Mali will continue to require substantial donor assistance to maintain a minimum level of output during the implementation of its program of economic reform and structural adjustment. In particu- lar, donor support is required for:  - 7 - (a) significantly higher levels of grant or IDA-type concessional financing to improve the structure of the external debt in the medium and long term; (b) financing a major portion of local costs of projects, including both investment and operation and maintenance, to reduce budgetary presst&res; and Cc) increased levels of non-project lending in order to refinance existing debt and reduce current, unmanageable debt service payments. PART II - WORLD BANK GROUP OPERATIONS IN MALI 20. The proposed credit would be the Association's thirty-fifth credit extended to Mali (including two supplementary credits), which would bring total commitments of IDA funds to $395.6 million equivalent (in- cluding IDA Special Funds totalling US$11.2 million equivalent). Of the 34 operations already approved, 12 have been for agriculture and related activities; nine for transport; three for education; two for telecommunica- tions; two for energy; and one each for small scale industries, urban development, power and water supply, technical assistance, rural water supply, and health. Agriculture and transportation represent the largest share of past commitments, accounting for 32Z and 33Z, respectively. In addition, the International Finance Corporation has made two investments, totalling US$3.2 million, one for a bleach and plastic products factory and the other for a shea nut processing plant. Annex II gives a summary statement of these credits as of Septeiber 30, 1985. 21. In support of the Government's progress on policy issues, the average level of IDA commitments to Mali has risen significantly in recent years. The annual average for FY84-85 was $45 million, compared to an annual average for FY82-83 of $27 million. In FT86, in addition to the $48.6 million credit (the largest single credit to Mali to date) for the Fifth Highway Project already approved by the Board, we intend to submit several other projects with notable policy reform components for Board approval in FY86. These include the proposed Forestry Project and the Public Enterprise Sector Reform Project. Project implementation in Mali has been generally satisfactory. Despite difficulties and delays caused by inadequate Government counterpart financing, the rate of IDA's disbursements to Mali through 1984 was roughly the same as for other West African countries. More Importantly, project performance appears to have improved, pari passu, in line with Government's attempts to solve its financial problems and strengthen its economic management. 22. IDA's lending strategy in Mali has two objectives: (a) to nurture and support structural adjustment; and (b) to lay the founlation for sound long term growth.  - 8 - In support of needed policy reforms, the Association has financed a tech- nical assistance project (Economic Management and Training Project, Cr. 1307-MLI), designed in close collaboration with the IMF, to strengthen management of the Malian economy by improving financial and economic policies and public institutions and by providing training to Malian civil servants. This has been followed by a series of sectoral adjustment projects which are addressing important reforms in specific sectors. For example, the Second Mali-Sud Rural Development Project (Cr. 1415-MLI) is supporting a comprehensive reform of the cotton sector while the Third Education Project (Cr. 1442-MLI/SF10) and the recently approved Fifth Highway Project (Cr. 1629-MLI) are designed to improve planning and resource mobilization and allocation in their respective sectors. 23. Building on these reforms, there is, over the next few years, a solid project pipeline for Mali which will continue to address structural issues. Moreover, in recognition of its commitment to a program of macro policy reform, Mali is eligible for assistance under the Special African Facility. Among the operations currently under preparation, two projects, each with important policy reform components, are provisionally programmed for such assistance. The first of these. the Public Enterprise Sector Reform Project, is designed to introduce an appropriate policy framework for the public enterprise sector and to put it on a sound financial footing. Second, the Office du Niger Rehabilitation Project will consolidate the pricing and marketing reform in the rice subsector initiated under the recently approved Mopti Area Development Project (Cr. 1597-MLI) and will also address the financial restructuring of this important irrigation authority. When these sectoral policy reforms are underway, IDA will begin discussions aimed at formulating a medium term structural adjustment program to address macroeconomic issues of an intersectoral nature which cannot be resolved in the context of sectoral operations. 24. Assuming the successful outcome over the medium term of these reform programs, Mali's long term growth prospects will depend on the full realization of its natural and human potential. The Associ2tion has accordingly financed a wide range of projects designed to exploit and augment that potential. Most projects in the agriculture and rural devel- opment sector include research components aimed at developing appropriate farming/cropping systems. The proposed Second Forestry Project has been designed to combat the urgent problem of deforestation with a combination of: (a) fiscal and pricing measures appropriate for urban areas; and (b) pilot schemes for managing rural forest resources. Future infrastructure projects to be chosen on a very selective basis will attempt to ensure that the benefits of past investments are fully realized and that Mali's future growth is not constrained by inadequate capacity in its transport, telecommunications or energy sectors. To maximize IDA's imp2ct whenever possible, these projects will reflect a sectoral  -9- orientation in order to better focus on the issues of investment strategy and institutional development. 25. Previous operations in the health, water supply, shelter and education sectors have been designed to develop Mali's human resources by expanding the population's access to basic education and improving their health and productivity. Future operations in each of these sectors are planned. Finally, the Association will attempt to broaden its dialogue with Government concerning the linkages between Mali's presently high population growth rate, deterioration of its fragile resource base and budgetary constraints which hinder the provision of basic needs. In addition to highlighting family planning efforts in the ongoing health project, this dialogue will be pursued in economic and sector work with a view to developing a future health/population project. PART III - THE RURAL SECTOR 26. Mali has a population of over 7 million inhabitants in an area of 1.24 million km2 in the middle of sub-Saharan Africa. Over 80% of the population lives in the rural areas and the country depends for its food supply mainly on the wetter southern zones (800-1.200 mm rainfall) which cover roughly 3 million hectares. Of these, some 2 million are cultivated. A large portion of the country (58Z) lies in the Saharan zone (less than 200 mm rainfall); the rest is divided between the Sahelian (200-350 mm): 14%, Sudanian (600-800mm): 22%, and transitional zones: 61. The prin- cipal crops are millet, sorghum, cotton, groundnuts and rice. Livestock plays an important role in the agricultural system and in the national economy. The country has suffered from declining and increasingly erratic rainfall over the last decade, culminating in three years of severe drought which have exacerbated the difficult economic conditions. The overall potential for agricultural production is generally limited by low and uncertain rainfall (with the exception of the southern zone), fragile soils prone to exhaustion and erosion, and low yielding traditional crop and livestock technologies with little scope for intensification. Nonetheless, Malian farmers are among the most proficient in West Africa and there is scope for further development in the south, especially in maize production. In addition, with the Inner Delta of the Niger River, Mali has the largest physical scope for expanding irrigation of all the Sahelian countries. Major issues in the rural sector include the balance of investment between irrigation and rainfed agriculture, reform of the cumbersome and over- staffed Rural Development Operations (ODRs - Operations de Developpement Rural), establishment of an effective agricultural research program, and increased beneficiary contribution to costs and activities. The Forestry Subsector 27. Official statistics, which impute less than 2% of .GDP to the forestry subsector, do not adequately reflect the important role it plays in providing fuelvood, building poles,and other products. Fuelvood (fire- wood and charcoal) accounts for a high proportion of both rural and urban  - 10 - energy resources (about 95%) supplying basic needs for cooking and heating. The forest cover is a significant dry weather grazing reserve and supplies much of the fodder required for sustaining livestock. Subsidiary products such ad gum, shea nuts, various fruits and nuts, as well as thatching and weaving materials, are widely used by the rural population. In addition to providing a habitat for a wide range of animals and plants, the forest cover has a profound ecological impact. Trees, shrubs and bushes fix the soil, protecting it against wind and rain erosion, and serve to regenerate soil fertility, in the form of bush fallow, under the traditional system of shifting cultivation. 28. Natural forest vegetation covers some 17.4 million ha, 14X of Mali's area, of which 12.9 million as natural forest stands, and 4.5 million as man-induced forests (bush fallows: 2.5 million, and forest parks: 2 million). Natural growth rates average 0.4 m3/ha/year and range from 0.75 m3/ha/year in the well-watered Sudano-Guinean zone, to only 0.05 m3/ha/year in the northern desertic zones. Total growth is over 7 million m3/year, but only some 30% of this is currently accessible and exploiitable, given population distribution, marketing conditions, and endemic disease problems. The accessible proportion can and will increase with the pressure of demand and resulting higher prices over time. 29. Areas classified by Government and legally protected against encroachment include forest and fauna reserves, national parks and controlled forestry areas, and cover 25Z of the forested area, but owing to limited government resources and growing population pressure, much of these are "'reserved" only in name, and have no management plan. There are some 5,000 ha of dense tree plantations (mostly planted under the First Project), and some village woodlots in the southern region of the country. 30. For a population estimated at 7.4 million inhabitants in 1982, total annual fuelwood consumption was some 6.7 million m3 (3,000,000 tons) of dried wood, compared to an accessible supply estimated at 2.7 million M3. Of this, about 80% was consumed in the rural area and 20% in the urban areas. Wood is a traded commodity only in the urban areas: in the rural areas each family collects directly what it needs for its own consumption and, in some cases, for sale to the towns. By far the greater part of fuelwood consumption is in the form of firewood, charcoal being used only for ironing and making tea. Building poles and local timber amount to an additional 5-10% of total wood consumption. Most demand for industrial and construction wood is met by imports. 31. Without a major shift in demand and supply patterns, Mali will face a crisis in fuelwood supply in the next two decades. Already, in areas of concentrated demand (around the towns), the effects of the deficit are highly visible. While the bulk of the deficit is in rural areas, the effects are spread over vast areas, and are not so obvious. The FAO has estimated the current demand-supply situation, comparing consumption to accessible (i.e., easily exploitable) natural production by ecological zones. Not surprisingly, the balance is worst in the northern, arid areas, where demand far outstrips natural growth, and where there is little that can be done to improve the situation. The balance improves as one goes  - 11 - south, but only in the well-watered Sudano-Guinean zone is there a satis- factory ratio. For the country as a whole, annual consumption is over twice the annual accessible natural growth. Given the current overall population increase of 2.8% p.a., and urban population increases of About 7% p.a., Mali's already depleted accessible forestry resources could be irremediably disrupted within the next two decades. By 2000 annual demand will reach 7.9 million m3 of fuelwood, compared with an accessible annual supply of 2.7 million m 3. This assumes that there will be no increase in accessibility, a pessimistic assumption since it can be expected. that scarcity and higher prices will induce greater efforts to exploit wood currently classified as inaccessible: what the impact on supply might be is impossible to predict. By the year 2000, if current urbanization and consumption patterns continue, annual fuelwood consumption in Bamako, estimated at 0.330 million m3 in 1982, may reach 1.5 million mi3. 32. Wood is currently viewed by the population as a free good, a perception both reflected in, and encouraged by, the very low level of permit fees for cutting (stumpage fees). Current prices do not encourage individuals to plant trees for wood sales. The problem of wood capital depletion is, by its very nature, a self-accelerating one. The ecological impact of severe droughts encourages the spread of eroded and degraded areas to engulf and obliterate what are often marginal environments of limited productivity 2/. If, at a minimum, the process is at least to be arrested, attention and resources must be focussed on the management of renewable resources to give sustained yields. 33. Policy Options. In order to achieve a long term resolution of the problem both sides of the demand/supply equation must be tackled. However, a distinction must be made between the options available, and policies to be pursued in the urban and rural areas, respectively. For the urban areas, where wood is traded, the pricing mechanism offers the possi- bility that raising prices by ta;ation will encourage more efficient use and substitution by other non-wood fuels, as well as providing resources for increased investment. This option is not available in the rural areas, where wood is not a traded commodity. Here demand can be influenced only through self-regulation, itself the result of education concerning the very real threat at hand, and part of the broader movement to place responsi- bility for environmental management in the hands of the population living in the area. The alternative of externally imposed controls, i.e., strict enforcement in every village of a stringent Forestry Code, has been demon- strated in many countr-ifes as unfeasible, being neither affordable nor implementable. On the supply side, it is the rural population that offers the only long term hope: wood supply can be increased by planting, whether 2/ The process and possible remedies have been the subject of a recent Bank report entitled "Desertification in the Sahelian and Sudanian Zones of West Africa" (Report No. 5210), and a Staff Working Paper (No.704) "Fuelwoor! Consumption and Deforestation in African Countries" (Anderson and Fishwick).  - 12 - in state-managed schemes or privately at the rural level, but the costs of industrial plantations makes them, at best, a very partial solution to the problem. Supply can be increased in the short term by increasing acces- sibility to existing forest, but this needs to be done after careful planning (this will be studied under the proposed project). Much can be done in the area of management of the existing natural forest, and there is a need for a major effort in adaptive research.The impending crisis regarding urban demand for energy is not capable of resolution by planting alone: a combination of increased supply, reduced demand and fuel substi- tution is the only answer. These actions all imply an immediate response as well as long term commitment from the Government in addition to the critical participation of the population as a whole. Institutions 34. The Forestry Department (Direction Nationale des Eaux et Fore^ts - DNEF) is one of the technical departments of the Ministry of Natural Resources and Livestock (Ministare charge des Ressources Naturelles et de l'Elevage - MRNE). It has seven divisions at its Bamako headquarters, responsible for: (a) environment; (b) projects and programs; (c) water and soil conservation; (d) natural forest management and reforestation; (e) hunting and national parks; (f) inland fishing; and (g) personnel and equipment. Mali is organized into seven forestry "Regions" and the Department also oversees five semi-autonomous "operations" (or parastatal agencies), of which the Forestry Management and Production Operaticn (Operation Amenagement et Productions Forestieres - OAPF) and the 'Boucle du Baoule" National Park ("Operation Parc Nlational de la Boucle du Baoule" - OPNBB) are the two affected by the proposed project. In addition, the FAC/CCCE-assisted Rural Forestry Project in the Fana-Dioila-Koulikoro area has recently started operating as a quasi-autonomous agency. This agency would receive continued support and reinforcement as a component of the proposed project. 35. Unlike other Sahelian countries, Mali has a relatively large forestry staff, mostly trained at the Polytechnic Institute of Katibougou and at the field training center of Tabacoro. In 1983, total staff con- sisted of 761 agents, an appropriate number for the country. However, given the magnitude of the forestry problems, the Forestry Department faces huge difficulties, made worse by inadequate funding of operations. There  - 13 - is little planning or monitoring of projects, and inventory control 3/ and management of field operations are generally weak. The Forestry Department is unable to provide the necessary surveillance and protection of the forest cover against poaching, overgrazing, overclearing, and bushfires; nor can it carry out the necessary reforestation, management of natural forest cover and erosion control programs on a significant scale. The Department is supported by the national Budget, supplemented by the receipts from stumpage fees and "transaction" payments, which are fines imposed on illegal cutting. The latter have become far more important than stumpage fees in recent years. The receipts replenish the Forestry Fund,' which finances the bulk of the Forestry Department's investment program. The overall level of funding must be increased if any sustained and meaningful actions are to be undertaken. Extra resources can only come from within the sector itself in view of the overall constraints on govern- ment spending, implying a much greater degree of cost recovery and benefi- ciary contribution: this is sought under the proposed project. 36. Forestry research is the responsibility of the National Institute for Zoological, Forestry, and Hydrobiological Research (Institut National de la Recherche Zootechnique, Foresti5re, et Hydrobiologique) located at Sotuba but formally linked to the Rural Economic Institute (Institut d'Economie Rurale). Due to the lack of personnel and funding, forestry research is presently limited to small scale trials (with the exception of promising Canadian-financed trials in the swamps of the Office du Niger area). There is currently a grave lack of knowledge concerning species and techniques suitable for arid and semi-arid zones throughout the region. The effort required to put in place an appropriate research program lies well beyond the resources of any individual country, and is now being tackled at a regionwide level. Pending the development of such a program the proposed project would limit its research support to providing funds to carry out, within OAPF, applied research specifically oriented to identifying and developing better planting stock for exotic and local species, using already proven techniques. 37. Government Policy and Experience. Starting with the severe drought of 1972-1973 and throughout the subsequent dry decade, there has been growing awareness on the part of both Government and donors of the importance of an effective forestry program. In 1982, the Forestry Depart- ment issued both a "Forestry Policy" document and an "Action Program", within the context of its overall objectives for the rural sector. The goals are broad and unobjectionable and form the foundation for the proposed Government development program to be funded through both internal and external financing. The main program elements include: (a) institution building in the forestry subsector; (b) forestry research; 3/ A FAC-financed project, recently started, is going to take an inventory of existing NFC and would build up an inventory control unit within the Forestry Department.  - 14 - (c) implementation of state-managed and rural forestry projects on a large scale; and (d) adoption of appropriate legislation (policy reform). 38. Apart from the IDA/CCCE/FAC FLrst Forestry Project (para 41). a number of other donors (Swiss, German, French, American, Canadian and Dutch) have financed projects of various kinds throughout the country. The overall results of this first generation of forestry projects have not been encouraging: technical constraints in the Sahelian region are legion. A major problem is the lack of technical packages well adapted to arid and semi-arid conditions. Experience with semi-industrial plantation has shown this to be an expensive method of reforestation, though technically feasible; with time, unit costs will fall, and production will increase as improved species are introduced. Natural forest management has proved elusive, as not enough is known of the natural growth patterns on which to base a management plan. Rural reforestation has been even less successful wherever the classic village woodlot approach has been tried. Farmers are more interested in planting traditional species, including fruit trees, and demand is high for such seedlings from nurseries. The Swiss-financed project in the Sikasso region has been quite successful, however, benefit- ting from the high rainfall in the zone, but the replicability of the technical approach (in the drier areas) and of its administrative set-up (top-down) is limited. A FAC/CCCE-financed rural forestry project in the Fana-Dioila-Koulikoro region has been badly affected by the most recent drought. The lack of success should not be surprising - these are first attempts at finding solutions in a very difficult sector, and village level interventions in particular confront all kinds of institutional, political and traditional obstacles. Because of this, OAPF/Forestry Department recently carried out a comprehensive study (financed under the first IDA project), the conclusions of which are partially reflected in the proposed project, to make proposals for more effective integration of forestry into the rural sector. There are no instant panaceas, and progress can only be gradual given Government's limited absorptive capacity. Forestry projects must therefore be seen as long term investments: the proposed project represents part of a long term program spanning many years and several projects. 39. The overall strategy followed thus far by IDA in the forestry subsector, falls into three main categories, broadly defined as follows: (a) To reduce the gap between consumption and supply of forestry products (both fuelwood and others). This is to be attempted through increased supply (management of natural forests, better access, forestry plantations both state-managed and rural, cultivation of fast growing species) while reducing demand through the pricing mechanism, thereby inducing more efficient use of wood (improved stoves, efficiency in harvesting) and substitution (principally by commercial fuels). (b) To improve overall knowledge of the sector. This includes further research into the role that forestry products play in  - 15 - production systems, as well as research into improved traditional species and adaptive techniques. (c) To improve the policy environment. Given the limited impact of direct demand and supply measures (see below), any large scale intervention will, of necessity, involve the participation of the rural population. To achieve such participation, the incentives with regard to forestry and land utilization need to be improved and made explicit; this involves questions of the forestry code as well as price/taxation policy. 40. It must be recognized that the scope for anything more than marginal gains in all these areas remains very small in the medium term. The technical constraints have already been discussed (para 38); to these must be added the fact that pricing policy can only affect the small portion of consumption that is commercially traded, and the major shift in consciousness that has to take place not only on the part of the farmer/consumer, but also by the forestry agent as well. Should rainfall continue at recent levels, and population growth remain unchanged, it will be difficult to arrest the process of degradation. Industrial plantation offers at least some alleviation of the problem in the area of Bamako where it is most critical. 41. Experience with Past Lending. The First Forestry Project (Cr. 883-MLI) (at a total cost of US$9.4 million, of which US$4.0 million came from IDA) had as its objectives: Ca) the creation and management of 3,400 ha of semi-industrial plantations and the improvement of 1,000 ha of natural forest reserves to improve the supply of fuelvood and building poles in the Bamako area; (b) an experimental component of 60 ha of plantations and 200 ha managed national forest reserve in the Segou Region; (c) an experimental irrigated plantation at Mopti (70 ha); (d) creation and management of rural tree nurseries at Bamako, Segou, and Mopti, as well as the rehabilitation and management of a nursery of San; and (e) complementary studies of rural forestry and wood utilization. 42. There were delays in implementing the natural forest components, and the irrigated forestry component at Mopti was dropped because of the difficulty of managing an experimental activity so far from project head- quarters. For all other components, however, the project performed well, despite higher than foreseen costs due to the oil price increases. As planned, 2,700 ha of semi-industrial rainfed tree plantations were estab- lished, another 1,000 ha prepared for future plantings, and over 500,000 seedlings distributed to the rural population, although there was little monitoring of the subsequent fate of the trees. The project has provided  - 16 - on-the-job training for field and management staff, as well as developed an impressive cost accounting, inventory control and fuelwood marketing system. 43. Major lessons learned, and reflected in the design of the proposed project, concern: (a) the necessity of restricting the project area to that which can be easily supervised by the project entity (para 48); (b) practical experience in the establishment of semi-industrial tree plantations and the harvesting and marketing of wood (para 53); (c) practical experience in the management of large scale forestry projects, in particular the accounting and monitoring aspects (para 54). IV - THE PROJECT Background 44. The proposed project was identified and prepared in 1983. In July 1985 a Project Preparation Facility was granted for US$1.0 million to complete preparatory work. The project was appraised In January 1985. Negotiations were held in Washington in November 1985, with a Malian delegation led by H.E. Mady Diallo, Minister responsible for Natural Resources and Livestock. The Staff Appraisal Report (No. 5787-MI) dated December 6, 1985 contains further detailed description of the project. A supplementary project data sheet is presented in Annex III. n4e Objectives. The proposed project would be a continuation of the first IDA/FAC/CCCE project (Credit 883-MLI), and would build on the the experience of this first phase. In the light of the diagnosis of the sector's problems (para 38). this second phase project would aim to: (a) prevent further degradation/disruption of the endangered natural forest cover of the second region through implementation of pilot schemes for management of the unreserved forest cover (including bushfallows and forest parks), as well as assistance to tree/shrub/bush plantation in the rural areas and support to the "Boucle du Baoule" National Park area; (b) effect changes in the policy environment, particularly price policy; (c) strengthen the national forestry department's ability to identify, design, plan, implement and monitor its development and control activities;  - 17 - (d) improve supplies of local wood products for Bamako through the expansion of state-managed semi-industrial tree plantations and management of the forest reserves in the Bamako area; and (e) improve the knowledge of the sector through a series of national studies. 46. The project would achieve these objectives by financing the following main components: (a) pilot rural forestry activities in the Second Region; (b) assistance to the "Boucle du Baoule" National Park (OPNBB); (c) assistance to the Forestry Department Headquarters (DNEF); (d) support to the Forestry Management and Production Operation (OAPF) in the Bamako area; (e) creation of and support of a Central Administrative and Financial Management Unit, through expansion of the OAPF unit. 47. Rationale for Bank Involvement. IDA financing is justified primarily by the Association's unique position in being able to assist in policy reform. In line with the Bankts publicly stated priority accorded to forestry, the proposed project brings major new policy initiatives both in rural forestry and in influencing demand. In addition it reinforces the thrust of our dialogue with Government on the demographic pressure on resources. From our own perspective there is a clear need to increase our knowledge of techniques and gain further experience in the difficult conditions of the sector. 48. In light of the experience under the First Forestry Project, the project area has been limited to the 2nd Region around Bamako, Fans, Dioila and Koulikoro. This is a critical area owing to its proximity to Bamako, and one where pressure on the existing forest cover is very high. All OAPF activities would be located in the forest reserves of La Faya, Les Monts Mandingaes. and Soussan, the first covering 80,000 ha, 50 km from Bamako, the second 14,500 ha, situated 20 km away and the third 37,000 ha at 70 km distance; planting will be confined to the first two reserves. The rural forestry activities would be concentrated in the area of Fana-Dioila- Koulikoro (see Map No. 18886). The areas in question, along with most of the National Park (OPNBB), lie within the southern part of the Sudanian Savannah zone. The climate is characterized by a seven month dry season and a five month rainy season (June to October). with annual rainfall averaging 1,100 mm. Land in the forest reserves is relatively flat, with good access by all weather roads. Only about 30% of the surface area has soils suitable for plantation activity, however. The Koulikoro region lies further north and has lower rainfall. 600-800 mm per annum. The forest cover throughout the project area consists mainly of woodlands and tree and shrub savannahs. Productivity averages about 0.4 m3/ha/year, including bush fallows and forest parks which provide a large part of the fuelwood  - 18 - supplied to Bamako. Agricultural uses take up about 252 of the land surface, and population density is about 10 inhabitancs/km2. The areas of the forest reserves are lightly populated, however, and this has caused some problems in the supply of seasonal labor. Following the erratic and insufficient rainfall of recent years, numerous deteriorated patches have occurred in some overpopulated areas: this could trigger the erosion/degradation/desertification process if care is not exercised. 49. Rural Forestry Activities. Given the crucial need to limit the increasing uncontrolled wood logging in the Fana-Dioila-Koulikoro area in the 2nd Region and in order to build upon the ongoing FAC/CCCE rural forestry project, the proposed project would include a redesigned and expanded rural forestry component. This component would have two main elements: (a) Two pilot schemes of agrosylvopastoral management of the un- reserved forest cover, in full liaison with the rural population and the established extension services. The first scheme would be implemented in the relatively well stocked and underpopulated area of Mafeya, the second in the understocked and overpopulated area of Dioila. The pilot schemes would attempt to devise solutions to the urgent need to manage the forest cover in the rural areas (especially around urban centers) with the full participation of the rural population. They would consist, in essence, of a transfer over time of responsibility for the management of the village woodlands from the Forestry Department to the villagers themselves. There is no doubt that this new form of management would face many socio-economic and technical problems, but it is only through such an approach that the heart of the problem can be addressed. The pilot schemes will test approaches that have shown promise elsewhere. They will be carried out in accordance with a timetable agreed at negotia- tions, and a mid-term review of progress is programmed. It is a condition of disbursement for this component that arrangements satisfactory to IDA shall be made with the extension services in the project area. (b) Assistance to tree/shrub/bush plantations in the rural area of Fana-Dioila-Koulikoro through provision of plants from the three rural forestry nurseries established under the FAC/CCCE project. The proposed project would promote the planting of mainly multi- purpose trees wherever the farmer wishes to plant, with the emphasis on individuals rather than on communities. This approach has been far more successful than the traditional project community/village woodlot systems. Planting stock would first be provided from the existing state-managed tree nurseries, with the understanding that family or community-managed mini- nurseries would replace the state management in the near future. 50. Based on the results of these pilot schemes, in which respon- sibility for the protection of their lands will be passed back to the farmers, proposals would be developed by DNEF for the reform of land use  - 19 - and tenure laws, forestry regulations and price incentives. Such reforms are a critical element in any long term, large scale development action, whether in forestry or in other agricultural and livestock subsectors. 51. Assistance to the "Boucie du Baoule" National Park (OPNBB). At the specific request of the Government, the proposed project would provide support to OPNBB in protecting the "Boucle du Baoule" National Park area which is under considerable pressure. This is a vast massif of about 1 million ha of rich and diverse Sahelo-Sudanian vegetation, which lies on the immediate outskirts of the overexploited Bamako area. This subcompo- nent would finance a radio communication network and a rural road mainte- nance unit. Commitment has been obtained from Government concerning a number of accompanying actions that need to be undertaken, including: (a) implementing the existing regional development plan for the park area (the plan is acceptable to IDA); and (b) removing hamlets/villages situated within the park boundaries over the life of the project. A plan has been drawn up for their transfer, which provides adequate land beyond the park boundaries. Transfer of the villages will be carried out in accordance with a plan to be approved by IDA. Formal assurances were obtained on these matters at negotiations. This component is independent of the rest of the proposed project, though complementary to it. Should it not be implemented, the rest of the project will not be affected. 52. Assistance to Forestry Department Headquarters. This component would assist DNEF in its development and control activities - with special emphasis on a considerably expanded rural participation in reforestation - through several subcomponents: (a) Infrastructure and equipment. The proposed project would finance the extension and equipment of additional office facilities at DNEF (700 m2 including a library, map room, meeting room), as present facilities are inadequate. (b) Studies. The proposed project would provide support to the Project and Program Division of DNEF (Division des Projets et Programmes - DPP) for four major national forestry studies: (i) a general study of the forest and fauna reserves and national parks in Mali, and development of a long term national plan for the management of these reserves; (ii) a feasibility study of the potential for expansion of irrigated tree plantations in the uncultivated areas of the "Office du Niger"; (iii) a study of the structure of the market for local  - 20 - forest products, and their prices, in the towns other than Bamako, with a view to produce recommendations on stumpage fees and fiscal policy; and (iv) a study of the potential for rational increase in access to the forest cover in the critical areas. These studies would improve the formulation of Mali's forestry policy and investment program. Outline terms of reference and a schedule for their execution were agreed with Government at the time of negotiations. (c) Assistance to the DPP. In addition to its expanded rural forestry component (para 49), the proposed project would assist the special section within the DPP, dealing with rural forestry activities in Mali on a national scale. The unit would monitor and evaluate the numerous individual actions spread throughout the country. The proposed project would finance equipment, training, consultant support and operating funds. (d) Reinforcement of forestry tax collection. The proposed project would assist the forestry department district of Bamako in setting up a more efficient control network around the urban area of Bamako, in order to render more effective the preseut tax collection system for domestic wood products. The project would finAnce six toll posts on the main access roads to Bamako, and two liaison vehicles. Staff would be provided by the forestry district of Bamako. In addition, commitment by Government to increase forestry taxes from the 1984 levels was obtained at negotiations, with a view to bringing wood prices closer to the price of substitutes (para 73). Ce) Training. The proposed project would finance supplementary training of forestry officers, visits to similar projects in neighboring countries, participation in forestry seminars, and documentation. 53. OAPF Activities. Under the proposed project, OAPF would become fully responsible for the forest reserves around Bamako (La Faya, Monts Mandingues, and Soussan). The OAPF forestry component would have four main elements: (a) General management of the forest reserves: protection, general management and development of the forest reserves of the Bamako area. This would include, inter alia, Ci) enforcement of forest policy; (ii) inventory activities and elaboration of a sound management plan; (iii) maintenanLe and development of the road/track firebreak  - 21 - network; and (iv) maintenance and exploitation of the existing tree planta- tions, totalling 4,100 hka. (b) Semi-industrial plantations. Building on the experience acquired under the First Forestry Project, OAPF would continue to estab- lish semi-industrial tree plantations. Six hundred ha of tree plantations per year would be realized over five years in the La Faya and Monts Mandingues forest reserves. These plantations, mainly of Gmelina arborea and Eucalyptus camaldulensis, would be established under the same conditions as under the first project with additional emphasis on protection from browsing and uncontrolled bushfires. Unit costs are expected to continue to fall as a result of the more efficient use of resources. (c) Improvement of plantation stock and forestry techniques. Semi- industrial tree planting is costly even under favorable soil and rainfall conditions and there is crucial need for more productive technical packages if this type of peri-urban tree plantation is to be developed further. The proposed project would finance a special unit with an expatriate technical assistant in order to improve plantation stock and forestry techniques. (d) Natural forest management. Six hundred ha per year of natural forest would be exploited in the forest reserves of the Bamako area. This activity, started under the first project, is experi- mental: little is known about feasible rotation patterns and there is a dearth of research on the species and dynamics of natural woodlands in semi-arid zones. The component should provide valuable information in this area. 54. Given the excellent administrative and financial performance of OAPF under the first project, the OAPF financial section would become a Central Unit, responsible for the financial management of the entire project. The proposed project would provide additional staff, computing equipment and operating funds. Funds would also be provided for regular and independent audits. 55. Project Implementation. Overall responsibility for implementing the project will lie with the Ministry of Natural Resources and Livestock, which will oversee the activities of the key institutions involved. DNEF will supervise the entire project, including OAPF's management of the semi-industrial plantation components. The National Park and rural forestry components will be carried out by two existing semi-autonomous entities under the tutelage of the DNEF. 56. OAPF is well managed, with a strong financial team and reasonable staffing levels. The project will continue to provide necessary external support in the form of: (a) an expatriate financial director;  - 22 - (b) an expatriate mechanic and assistant; and (c) an expert in forestry works. This existing core team will be reinforced by the addition of two volun- teers to assist with field works for the project period. In addition, there is provision for 16 man-months of short term consultants to assist with audits, monitoring, etc. The bulk of the T.A. will be financed by the French Government cooperative program. Outline terms of reference were agreed with Government at negotiations, and appointments will be made in consultation with the cofinanciers. 57. DNEF's current headquarters structure requires reinforcement: management and accounting skills are weak and with the exception of a few key lead staff, the personnel are poorly trained in management activities. The project aims to imp:ove this situation through logistical support, training, and visits by outside experts. DNEF will employ, as a condition of disbursement for their components, a trained accountant to prepare project-related financial statements for the Central Financial Management Unit. Within the DNEF, the studies will be carried out ay the Projects and Programs Directorate (DPP), supported by short term consultant visits totalling 14 man-months. DPP will monitor rural forestry activities throughout the country, and train personnel in this area. Field studies will be carried out by Malian consultants who will be trained in survey techniques during the early part of the project. The National Park compo- nent will be handled by the existing operation: the component aims specif- ically to improve the unit's capacity to carry out its responsibilities through logistical support. Mechanical repairs for OPNBB will be carried out on a cost basis, by the garage of OAPF. 58. The pilot rural forestry schemes will be the responsibility of the existing semi-autonomous Rural Forestry Unit, established under the CCCE-financed project. This is managed by the regional director of DNEF. based at Koulikoro: he will be assisted by an expatriate technical advisor ana two volunteers throughout the duration of the project. 59. Each of the executing agencies, OAPF, OPNBB, Rural Forestry Unit, and DPP, would prepare annual work programs and budgets which would be submitted to IDA for approval before the beginning of each financial year. Assurances to this effect were obtained at negotiations. 60. Present Status of Project. All implementing agencies are already in existence, and current facilities are adequate to initiate the project. Terms cf reference for the additional consultants required, and outline TOR's for the studies to be carried out under the project, have been completed. Recruitment will commence prior to project start-up in accordance with FAC procedures. Preparatory forestry works, begun under the PPF, should permit project start-up in March 1986. 61. Monitoring and Evaluation. Each of the project implementation units (OAPF, DPP, Rural Forestry Unit, OPNBB) would produce an annual report on its activities and progress, to be submitted to the Malian  - 23 - authorities and to IDA. Monitoring within OAPF is the responsibility of the Forest Works Division: this will be reinforced by outside help in the area of inventory and output quality measurement. The rural forestry section of the DPP is specifically designed to act as an M&E unit for all such activities nationwide whether under the proposed project or not. Not later than six months after the end of the project, OAPF will collaborate with DNEF in producing a detailed completion report. 62. Cost Estimates and Financing. Total project costs are estimated at US$16.7 million, with a foreign exchange component of 66%. A summary of project costs is given in the Credit and Project Summary. 63. Cost estimates are based on January 1985 prices adjusted to November 1985, the date of negotiations; costs were calculated net of all identifiable taxes and duties, and include contingencies amounting to US$3.8 million, or 31X of the base cost. Physical contingencies were calculated at 15% except for those items (staff, vehicles, equipment) where quantities are clearly defined. In these cases, no physical contingencies have been estimated. Total expected price increases during the projected disbursement period amount to 16% of total project costs (21% of base costs) based on the following projected inflation rates: Assumed Local and Foreign Rates of Inflation (Z) 1986 7.0 1987 7.0 1988 7.5 1989 7.7 1990 7.6 1991 4.5 Differences between local and foreign rates of inflation are assumed to be compensated by exchange rate adjustments. 64. The proposed financing plan is based on a combination of parallel and joint financing. IDA and CCCE will jointly finance, throughout the project implementation period: (a) 90% of OAPF fieldworks and other operating costs excluding salaries (US$2.2 million for IDA) declining to 80% over the project period; and (b) 95% of the operating costs of the rural forestry component at DNEF (US$0.2 million). All other items will be financed under parallel arrangements for which detailed lists of equipment, specifying the source of financing, have been prepared (Project File, Item C.2). 65. The proposed IDA credit which is for SDR 5.9 million (US$6.3 million equivalent), will finance 38% of estimated project costs net of taxes, including US$1.9 million equivalent local costs financing. The  - 24 - remaining external financing will be by: CCCE (US$5.4 million equivalent), and MER/CD/FAC (US$2.9 million equivalent). OAPF will finance a portion of its operating costs out of wood sales, and the Malian Government will provide the remaining necessary funds including all local salaries (total of US$1.9 million equivalent). The proceeds of the IDA Credit and the CCCE loan would be passed on by Government in grant form to DNEF and OAPF under regular budgetary procedures. Since OAPF has very limited revenues, it would not be realistic to expect them to carry the burden of the credit. The fulfillment of conditions precedent to the first disbursement by CCCE is a condition of credit effectiveness. 66. Procurement and Disbursements. Procurement arrangements are summarized in the table below, with the figures in parentheses showing the respective amounts to be financed by IDA. Procurement Arrangements (US$millions) Items to be procured Procurement Method Total Costs ICB LCB a/ Other b/ N.A. Civil Works c/ ... 1.0 ... ... 1.0 (0.8) (0.8) Vehicles and Equipment d/ 1.9 ... 1.5 ... 3.4 (1.9) (1.4) Consultant Services el ... ... 3.1 ... 3.1 (0.1) (0.1) Operating support, PPF, ... ... ... 9.2 9.2 Special Accounts (3.5) (3.5) Total 1.9 1.0 4.6 9.2 16.7 (1. 9) (2.8) (0.1) (6.3) a/ Proarent will be subject to Uerui3ent reompexsn enin oal titiue bi4ding, bicih are acetable to the Bank. ItB costig less thanlS$10,COO equiva]nt will be proced byrient1 shopping. b/ Items Usted iudr Other', promt fm coriultant services, are firmnced by CCCE and will be awarded tbrc pe-drsacept able to then c/ The I'Civil WIbrs"tomstd omtat sizofm less than US$50,000 each,"W w tDrlfo d/ Velicles and euipment will e dtent possibl in padckgs of US$100,000 eq&alent or more, to alacw ICE fotg DDA QdTdeliuss. Dmtces wiond receive a preference in bid ev ti n of 5, or the mNst of castxs duie and other iixort tmas which a nemmpt r wd hae to D icever is lower. e/ The tRs for alU expatria ate lcal onmiltant staff Prwocd by the Poject will be agrWd with IDA. Ib qualficatios and exrience of cxiultnta to be fianced by IMA would be subject to prir reviw and approal, along with dthi te as and condititS Of eloyment.  - 25 - 67. Disbursements. The IDA Credit would be disbursed over 6 years under the following categories: Disbursement Categories of IDA Credit Disbursements as Category Amount Z of Expeuditures (US$ million) 1) DNEF: a) Civil works 0.50 95 b) Vehicles and equipment 0.10 100 c) Consultants' services and training 0.10 100 d) Operating costs 0.20 35 e) Rural forestry unit 0.20 30 2) OAPF: a) Civil works 0.10 95 b) Vehicles aud equipment 1.00 100 c) Consultant services and training 0.20 100 d) Operating costs (excluding 1.80 45 to Dec. 31/87 civil servants salaries) 42 to Dec. 31/89 40 thereafter 3) OPNBB a) Equipment 0.15 100 b) Rural roads maintenance 0.15 95 4) Refunding of PPF 1.00 5) Unallocated 0.80 6.30 68. Disbursements against the IDA Credit will be made against certified statements of expenditure, with the exception of major contracts for goods and services whose individual cost is more than US$20,000. Documentation (SOEs) would not be submitted to IDA, but held by OAPF and DNEF for review by IDA supervision missions and auditors. IDA will not accept any reimbursement application for a total of less than an estimated US$20,000 equivalent. A Special Account will be opened by the Central Financial Management Unit to prefinance expenditures to be reimbursed under the IDA credit. 69. The estimated disbursement period is shorter than that of the standard African profile for Forestry projects reflecting: (a) the fact that this is largely a repeater project; and (b) the favorable disbursement experience of the First Forestry Project.  - 26 - Accounts and Audit 70. OAPF currently maintains its accounting system in accordance with sound and recognized accounting principles and practices acceptable to IDA. IDA is in possession of an unqualified audit for the financial year ending December 31. 1984. The OAPF financial management team will extend their coverage to all project components and become a Central Financial Manage- ment Unit (CFMU). Assurances were obtained at negotiations that the CFMU would maintain separate accounts for all project-related activities on behalf of the DNEF, OPNBB, and the Rural Forestry Unit, and will handle all disbursement requests. An external auditor's opinion and report satisfac- tory to IDA on the financial statements would be provided within six months of the closure of each financial year. Markets and Prices 71. All wood produced by the project is expected to be absorbed by the domestic market. Even at full production, output would be less than 10X of overall demand for fuelwood on the Bamako market; accordingly, no marketing difficulties are foreseen. The timber produced will supply the construction industry, partly replacing wood now imported from the Ivory Coast. 72. OAPF presently sells fuelwood to wholesalers at an average price of 1,850 CFAF per stere of 250 kg, equivalent to 7.4 CFAF per kg. Building poles are sold at 360 CFAF per pole. In order to secure OAPF's revenue position it will continue to be free to fix their. own prices for wood products, to reflect its real costs and market conditions. Since demand will always outstrip supply throughout the project life, real price increases for fuelwood are projected to follow those experienced in the' past. (5% p.a.) until substitutes (butane, kerosene) become financially attractlve (1995). The market for building poles is expected to increase as Bamako continues to grow. For timber, prices for internationally traded tropical hardwood logs are expected increase in real terms by 14% by 1995, following IBRD projections. A similar increase has been assumed for timber produced by the project, allowing for a quality discount. 73. Despite the real increases in fuelwood retail prices in recent years, the market price, while similar to that found in neighboring coun- tries, is far from reflecting the replacement cost of wood, or the real costs of increasing deforestation to the country. Current retail prices are about 60% of those estimated to be required to encourage replanting. The stumpage fees are far below the desirable level; again, this is true of all countries in the region. Because of the extremely low effective rate of taxation of forestry production, the potential impact of raising stumpage fees in changing overall demand is very small. Nonetheless, something can be done in the urban areas, and in view of the gravity of the situation, increases in taxes and therefore prices, must be sought to the maximum tolerable levels, and with the maximum speed possible. This is all the more desirable since it serves to raise revenue to support forestry department activities, which are critical if any significant impact is to be made. Accordingly it is a condition of credit effectiveness that  - 27 - Government increase permit (stumpage) fees from their 1984 levels by 100%, and assurances were obtained at negotiations that additional increases of 1002 would be applied by June 30, 1988. These increases, while having significant revenue raising implications, will produce in themselves only a marginal rise in the consumer price of wood: to this, however, must be added the expected continued real price increase of 5X p.a. 74. In order to ensure that the new tax revenues are devoted to forestry activities, commitment was obtained from Government that all such revenues will accrue to the Forestry Fund and that the real amount of budgetary support for forestry will remain at least at present levels throughout the project period. Government will review progress with IDA not later than September 30, 1988 and should the new fees and tax collec- tion measures not result in a significant increase in revenues, or should actual prices not be moving toward the parity price of substitutes (kerosene), additional measures will be agreed to achieve the project aims. Recurrent Costs and Cost Recovery 75. The project will do little to either increase or decrease the recurrent cost burden upon Government from its present level. Increased revenues from higher stumpage fees and tax coverage should be incremental to current Goverment support which should, at the very least, be maintained at present levels. Budgetary support at present amounts to some US$550,000 equivalent annually, of which 90% goes toward salary costs. Forestry is, by its very nature, a long term investment, and Government and donors must be prepared to support the costs of plantations and forest management in order to reap the long term benefits. The costs of not supporting these efforts are incalculable. As time progresses, OAPF will be able to cover their operating costs, which will also decline wich experience, but in the medium term they will continue to be dependent on outside support for further investment planting. The components to be carried out by DNEF do not require additional staff: existing staff will be reassigned and retrained where necessary. The improved tax collection and increased fees envisaged under the project should increase revenues from consumers and provide substantial incremental resources to support forestry investment: they will be used to provide badly needed operating funds for DNEF. Benefits and Risks 76. The direct benefits of the project consist essentially of incre- mental wood production from the semi-industrial plantations and management of the natural woodlands. These activities will result in an average annual incremental production at full development in 2016 of approximately 79,200 steres of firewood, 240,000 building poles, and 12,000 m3 of wood for manufacturing. The rural forestry activities should also result in higher productivity of the forest cover over time, and hopefully provide answers as to how to involve the rural population in the process of re- forestation. Given the pilot nature of this component, no direct benefits have been imputed in the economic calculation. Indirect benefits will also accrue as a result of employment in the rural areas, and substantial long  - 28 - term ecological gains may be expected through contributing to arresting the degradation of the environment. The institutional reinforcement of DNEF, financed under the project, is vital for the long term future of Mali, well beyond the boundaries of the project area. By improving the department's ability to coordinate, monitor and evaluate forestry projects, as well as to prepare regional development plans, the project should give major medium term benefit to the country. The studies to be carried out are fundamental to the development of a coherent and comprehensive forestry and energy policy for the years to come. 77. The calculation of an ERR has been limited to that item where reasonable estimations of future benefits are possible, namely the OAPF plantation component. The ERR is estimated at 10.1Z, based on 40% of project costs. This rate of return is consistent with those obtained in similar projects in other countries in semi-arid conditions. Should benefits fall 20%, the ERR would fall to 8%, and should costs rise 20X, the ERR would also fall to 8%. Costs include 40% of technical assistance costs directly connected to OAPF's production activities. Studies and institu- tion building related costs have not been included. 78. There are relatively few technical risks connected with the OAPF components; the entity has been performing well under the First Forestry Project, and the techniques have been mastered. However there is more of a risk that the economic benefits may not be realized since, as shown in para 77, the ERR is quite sensitive to slight changes in costs and bene- fits. Nonetheless the project represents a reasonable investment in the light of the alternative uses of capital available in Mali. The natural forestry management is a new area and there is a risk that benefits may be lower in the early years than expected. The highest risk undoubtedly lies with the rural forestry activities, in particular the pilot schemes of agrosylvopastoral management in the Second Region. These are in many ways the most critical elements of the project as regards future protection of the forest cover in Mali. They are also the most problematic, and a flexible and open approach must be maintained in the early years of implementation.  - 29 - PART V - RECOMMENDATION 79. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. A. W. Clausen President Attachments Washington, D.C. December 17, 1985  -6 - .-~~~~ ~ ~ ~ w -  ARNEX I -31- Page 1 "AIU - AL IICaOES ATA 3 WALI 1 luou l (WI c *n) I. Me (WVur Br UINAU lb LOSI IM AFtA WIDOL& L f t&9ob 19701Lk UINAtIL SOM oW S*MA AICA S. or sAua m (a1sAM SQ. n0 TOTAL 1240.0 1240.0 1240.0 - lIaILIUAL 316.3 317.5 320.6 or cua ( .. .. W 10.0 2.1 1063.8 CXu.oGanS or OtL QIUVALSIIS) 10.0 16.0 21.0 62.3 5u1.5 POPULATIO A 1 L 1r18 VOPUIATIOSIV,-R CI1OOSON) 4040.0 S162.0 7175.0 UnU. PATION C2 OF rowj 11.0 14.9 19.1 20.1 32.0 POUTION IN TEW 2000 (ILL) 11.2 STATIONARY POWUALTOU CWILL 37.0 PUAnor NNO 1.9 POPULATIM ON 66&3 . U SQ. ML 3J 4.2 5.1 33.2 65.1 PU SQ. Ol. AI. LIAN 12.0 16.3 21.9 1125 24;.8 POPULATUON AG SUCT3 CZ) 0-14 Rs 43.7 4.7 46.8 46.0 45.6 15-IS US 53. 52.3 50.8 50.5 531. 65 AM1 A30 2.4 2.5 3.5 2.9 2.7 POPLATION C6U RS (Z) -OTAL 2.1 2.5 2.5 ZA 2.9 on1." 5.2 5.4 6.8 6.4 5.1 cam Ra am Pm TOll) 30.5 50.0 48.1 47.2 47.0 UIIZ O am (PM lm) 20.8 25.0 21.0 17.5 15.0 130SS fhS0_Iou am 3.2 3.2 3.2 3.3 3.2 7DNEmX PLAMUUI ACCCFRS. ANNUAL ( C... uscas CZ ow M u .. .. I.o 3J3 .4 _m - muow uaMM OIim MoM. in camr C1949-71-100) 103.0 100.0 31.0 S3.3 82.9 U CIM .T BsUI or CAo5 (Z or amm umm_ 92.0 9.0 77.0 G17.J7 9.5 PUOtW( (C ISMMIU) 61.0 62.0 35.0 51.9 55.4 Of lilCS A1M PAMMM 16.0 17.0 14.0 1c U .7 16.3 WID (Aes 1I4) 11T RAU 511. 42.6 31.0 23.1 16.6 UzS PwECT. AT U113 (tU ) 35.7 40.2 ".9 47.8 52.0 INFANT SIT. RATS (Pm 2ss) 194.5 174.3 145.0 119.5 108. ItOL. *. .. 4.0 Jd 27.1 62.4 613M 29.0 37:0k E63.5 67.3 ]NOWL . 9. 35.8 ACW2M 0 =ClOll DISPN&M (S or IOPULazo) TOML .. 8.0 13.0 Id 26.3 283. 6RU3* .. 63.0 79.0 7 65.4 57 7 RURAL .. .. 0.1 20. 20.7 POPULATION Pm PRu!Zar 64130.0 42660.0 22100 Ii 2701.7 1171.7 POP. m 3n3o.o P13 4710.0 & 2740.0 238W0.0 4 3306a 2459.8 PO. PU OSUITAL UD- TOTAL 1390.0 1420.0 lb 1760.0 J/,!i 173.3 931.1 URSA 350.0 1260.07i 570.0 / 42R.2 363.8 UWAL 250.0 /Eb 150. 7 *- 3292.5 4372.9 ADWISSIONS Mm 5PP.L So.. 27.3 30.5 l .. 27.2 AS OMSI F HOCQ ZOTIL .,...8 ..' Rua mVuo Smoruaum RURAL 033,43 .. .. * "MvBMI ic Or PEmm/an vce USrAL . .. OIIUL .. ....-' WEl .. _  -32- ANNEX I lADL. 1 Page 2 - NOCUL IICAU M - (366? 36K T IThA E A I log=i LOW USOEB Amtick MhlI 1303 Igo&Lk in . zsrTUTk uoaR or sAAi. AFMECA s. SAMANA AUSTMD UULLW RATIOS vMaY* TOI-.L 10.0 23.0 27.o 1 7.8 95.7 WARE 14.0 30.0 33.0 7 "A 100.0 FEMLE 4.0 14.0 20.0 4 f 54.9 63.2 SKCOYDT: TOTAL 1.0 5.0 9.0 /A I3.S 17.1 MALo 1.0 4.0 13.07w 17.9 25.0 PAZ 0.3 2.0 S.O7 ; 9.1 14.3 VATICOIAL (Z OF 3CODA1T) 14. 9.4 .. 13.2 5.9 ItIPIL-TIAaI RATIO IrDUM? 43.0 30.0 41.0 IL 4.9 41.1 99colmm 17.0 5.0 .. 27VA 25.5 PASUIICRK CASITUOS PO 0.4 1.7 .. 3. 20.8 RADIO fh_ URSITUUAD Pop 2.0 11.- 14.a 55. 107.8 TV maciv= ousm 0? .. *. *- 2.4 20.4 NUSAPEI Cf"AT COWL DNTIasr) CIRCUTAXO ILAOUSANDIopLATO 0.2 oa o OA 5.0 1. ChNS ANUAL AQTINDAJJICM 1.9 0.5 .. 0.5 0.4 T - TOTAL Lll0 70a (T0AM) 2334.0 3453.0 3725.0 301. (PIRCUUZ3 46.1 47.9 49.5 14.2 3.2 AXCILI OUCEE 94.0 91.0 72.6 77.5 s4. zDOSiMs CPEICA) 3.0 4.0 11.7 f 9. 1D. PAMCIPATIIOR RA11 C Pr"n) TOTAL 57.5 55.3 51.2 39.3 3J.5 HALE !0.4 36.6 53.9 0.9 47.1 F-LE 34.5 532.0 49. 25.1 27.2 PRHIC DUBUW RATO 0OJ 0.9 1.0 1.3 1.3 . z_wu w 31- OP 36056038 .. .. .. .. . hOME 205 O 3 .. .. *..... ICEESI 205 or UUSEUOI86... LO 40 OF USO.. .. .. .. .. - - - -0f GM*- --TD(AT *36OL113013W imam LEVEL CUS PU CAPTa) 13 .. *- IC IS.5 "9.7 RURL .. .. .. 5.0 275.3 ESTIMATgD AnATI 7031W DITMU LEVEL (USS CAITTA) .. * 61.0 /c 113.1 355.4 0t3* .. .. 37.0 T7.6 201.1. EsTIOATED P. MAW A0ow1 FOWLRIT 13009 UlmE CZ) U .. .. .. 3S.6 MORA. .. .. .. 61.3 Or AVLACULL NOT APPLICASLEx 0 a /a The goup aevaca foc esc _h SIdn cate popse2lacS_-4Ubtre atr1 te sens. Cowag. of t r aeons the Iadica tor d p ndA - aweslabulty of dta Oan Mc sf at. /b Ums otharwia. soted 'Data ffO 194 vagt to my yr Ia M3 anA 1941; 'Data for 1970" bmt... 1969 ad 1971; ..d data fort "Mot macaw EatSmte botumu 1951 ad 1563. /c 1977; /d 1960; /a 1978; It 1962; Ce,ozit secnl; lb Goutmat hospital __?ab1.amt. oely. 11 1976; .1979; /1k 1972. JUVE. 1965  -33- ANNEX I - i-mu. .ini-rn Page 3 amm.. Sehees.TI l deli d.eem Urns i-re.. e.cmll %M one ~iwweheemamh WeIeliilo. II -h"l .1h. b Wed lIwss hey aer smi l ee.eee.mleallev MONAli b CO at in. I.411 eq ecWeeeLum ael ai 66 Oad em.6el Abd OF dIrliCA4: aSMdleto. Ieelammim lb dan.. *I... dM* aw e. etabae. meAel M demyli e.dft. as OInMl1. eslli.e. ofeem. We *.MM.feeie. ftnde .6W 1.6 dUd.... Oammom emml.. tbee ere jee.e.g (m feb up e"mee pa T- eq m ej.i. -wall. (lI emeScy &"C a .45 R. l NA l. i-ce I m.a mbatem.vc..e b airee a to l.6g hiM-on ft Okm eel doee.. pam.. re16m . tid . etad W e id dieb. " fo mnilm i.e MOe also .e .1s felm ...o I .6 ewtle "m lo COerl I"Al.6. ftau.mU.. ATela AAA i.e. hheeruTO mexr pe.-lamlm angl awe,lm mmt hr Oeparns-4 "ela-e e eVAr 616twiffo ulC Imy eqAAS wit emere i.W Sidl r1. el-r 31 bm-W lIeCi- C.klee.dpe i IWelallll t. WIe 4e Cle ee bele. .AWmr .1 Pme be mrmW C maml eeACCO Ite .Ade.e mA- d WOOLce lb..V i-r . eu epe.e eMmeiLe S. .6.6166 = Leem.e` eceeh a me V srher i-AmI.ca lEft (licce.edcq.b.l ~ ~ ~ ~ ~~~~~~~P2" " tM- 9616 Pl.Cl-d.d - Imb6 wAft41 pli1tmel' TimL ...=.............. a-il. .Ar kg. 1.4 a- low. VA,Olms 1 .hr1 .q.Ic.mmIIeeI Nero ied muml dee.. 41*.i5 rieCelPea - 'eeei-,dete byme q eme to.1910. d iIladate. 1* A tI6e OV 12 .t.f~ % ecie. edr cele.1 .peiamle.l (metaml no OEMiSU - p. mmicegem. em i.e.e.ew- e.-ti.p pee.- *AA.e. -tL mAVim. Ce pehima OL 6.4pelecace IVa ee epeddel1eed Ily amlel6 1 16&Iicl-cid V" m.ecem ..me.cq - b ssd e. iee w. IqCr-la hem.) ,einw . ImAmrAA i.d..I- VaeeymmIc caeablr ee .ee.eeuh ov-aie.tfm IW.lii W 46 e..ad amSem m: rldea bin"mlmor peuW"ldee, prl. Wii i-medIa IvAO A Em."144 -eI., ANbepml. .9 m . .1bhim 6 VITAL ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~.L. -i e emal el.dh heee Ie raWee IWA. MWe cue dam- ok, ulwhssm. ."At.. ~jaL MOTION W~ iit leMr me 6. dleebeaee *-M o"Atecomm t9m6 tqm dw FARM do".li hi %AA*IAVdtew .fsehr .e e beeCC . Is 1,11M AIL-BAe iiMSi.Wa Ii ilsad font.Emma Rush MoOa pob"Aa eq JCRAC OVA h"" meua twolele W7eee -?c A t Al..1 .d mieme.6. eApIr-11.. hdrerltoOwf eie.r. - a- Wee .lrowma ma m%Foenleem eq.,. 610. for Odemi.j lb kmepte . hrm VAft*d hiemmeree e.'e. wee.. ift ej.CNCAT pica-me.. r e.46k St-e 6- le . eqmc. m.ep.Lai patin. M VO 11g"AA& V, PPAAA. le a ctla meelet m geae VTam .e ptoe, iWal- CAmN1mA bAg 1I-tem A RAmms ag-2d .14A toea-Was,I Ie.iallma7CAIOcof zMPAANAF 9 VAAC -.1mOA1p e.eeLV.d am OMisIA.-f I.6I, COAL rle.rR dil-ue poe.1me.L m .-It.lm 16.16(. thalArnl Apt a-I cupit*eKle. remeell. I. ceh 6 pephm .6W. do6 bUckb rem. to mMCSm ye.ce be dIea t deihiuc bll.t et Iele.qp .ehem cm WeV ".eL me c 4h.6 rell em.. lb.. W etc...-g. k ab mom... Aed to. e.eci 6 vtPmeeaNl .demm.6 AArele..6 er -emedNA leS p.Cemm wri cof m e.me. lie emacemp"g peeam am . emAgs L.mme.e. uta lme ftq v ha_1 emommodie6eb ailei e* mi We.-INr 2=e. We lbre. ASt W ell.. 61 fi.miltr rale ma ceplaAOAAO 1ae. I. edc .m.cet.. em mm. m 1..6 1 c.edy- p~.v.c statawAto -1. g tie mw tee 9.lm e..- Alee TV COmtt. preeld. m ~.6rL.ic. OF ma-ic COALe..e.eemate me. eWe ach. 6-.cereeea rer hi re..ed Weer. Ibs A104.IFil Aetlb.I. AAACA eqf -elAAAine ma mu. Peer& A. OC-eeW - Aeaa Catt eb cm IMe.M e.re11e.. Igeme a Vecc OF eamae .mm.me dde...eme -ec.pad, m m. peeamlem mcp j m.amci mec.mCh. m.eeeiiIL,6..rdee-rm Amc mieram tm. o.Amp1-.Iece rhoermmme eeme a cOH" Ailue. le. re. ger jd.0.deetLy W .6. dtepmil eee ii e.aedel, 1ACetIe m. m.Wd. L"66 dem.Pelral.iC er,er We i. -ee., - ?..l ibm. .11 .4 1mlaie e.eIe pemae.e c-ar eea4.id 6y.m .t OOslb. p* mNme.re. m.lA1Amlaepr .leTOale &AAAtwm. (mLOW becer-el .9 olarrep6dgmes lwrI.. ea-al 14.. 1619. WeA .l. dema. abpletmr.m fam lecem2b - Ofee tiem Uchl. me .m.d dA1 erIc.) M rae -. 1. lm..re lead - m.d iee eac t-lccm. d a eee. a ammiTI Ppepalam e. 0E Is pm... Wea .lArl mIM