Morocco - Pilot Fisheries Development Project

Document of The World Bank Report No: 19038-MOR PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF USD 5.0 MILLION TO THE KINGDOM OF MOROCCO FOR A PILOT FISHERIES DEVELOPMENT PROJECT April 13, 1999 Rural Development, Water and Environment Group Middle East & North Africa Region  CURRENCY EQUIVALENTS Currency Unit = MAD MAD = US$0.108 US$1 = MAD 9.23 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS ADB African Development Bank/Banque africaine de developpement AFD French Development AgencylAgencefran,aise de d6veloppement CAPI Industrial Fish Quality Counter/Comptoir d 'agr6age du poisson industriel CCGC Joint Management Commitee/Comite consultatif de gestion conjointe CIDA Canadian International Development Agency/Agence canadienne de developpement international CLP Local Fisheries Committees/Comites locaux de pgche DANIDA Denmark Ministry of Foreign AffairslMinistere des affaires etrangeres du Danemark DFC Financial and Accounting Division/Division.financiere et comptable DFMPSP Training Department/Direction de laformation maritime et de la promotion socio-professionnelle DIP/FID Fisheries Industry Departnent/Direction des industries de la peche DPMA/MFAD Marine Fisheries and Aquaculture Department/Direction des peches maritimes et de I 'aquaculture DRHAG Human Resources and Administration Department/Direction ressources humaines et affaires generales EEZ Exclusive Economic Zone/Zone economique exclusive EU European Union/Union europeene FAO Food and Agriculture Organization/Organisation des nations unies pour I 'alimentation et l 'agriculture FENIP National Fisheries Industry Federation/Federation nationale des industries des produits de la pgche HACCP Hazard Analysis Critical Control Point/Methode d 'analyse du risque et contr6le des points critiques IG General Inspectorate/7nspection generale INRH National Research Institute for FisherieslInstitut national des recherches halieutiques JICA Japan International Cooperation AgencylAgence japonaise de cooperation internationale MOA Ministry of Agriculture/Ministere de I 'agriculture, du developpement rural et des peches maritimes MOF Ministry of Finance/Ministere de I 'economie et desfinances MOMF Ministry of Marine Fisheries/MinistWre charge des peches maritimes MOPW Ministry of Public Work/Ministere de I '6quipement ODEP Port Management Authority/Office d 'exploitation des ports- ONP National Fisheries Authority/Office national des peches PPU Planning and Policy UnitlCellule de planification sectorielle SG General Secretariat/Secretariat g6nral UNDP United Nations Development Program/Programme de developpement des nations unies Vice President: Kemal Dervis Country Director: Christian Delvoie Sector Director: Doris Koehn Task Leader: Laurent Msellati  KINGDOM OF MOROCCO PILOT FISHERIES DEVELOPMENT PROJECT TABLE OF CONTENTS PROJECT DATA SHEET A. Project Development Objective ........................................................ 2 1. Project development objective and key performance indicators ......................................................... 2 B. Strategic Context ............................................2........ 2 1. Sector-related CAS goal supported by the project .................2.......................................2 2. Main sector issues and Government strategy . ........................................................ 2 3. Sector issues to be addressed by the project and strategic choices .........................................................3 C. Project Description Summary .........................................................4 1. Project components .........................................................4 2. Key policy and institutional reforms supported by the project ......................................................... 4 3. Benefits and target population ........................................................4 4. Institutional and implementation arrangements .........................................................5 D. Project Rationale ........................................................ .6 1. Project alternatives considered and reasons for rejection .........................................................6 2. Major related projects financed by the Bank and/or other development agencies .....................6....I .......6 3. Lessons learned and reflected in proposed project design .........................................................7 4. Indications of borrower commitment and ownership ................... ......................................7 5. Value added of Bank support in this project .........................................................8 E. Summary Project Analyses .........................................................8 1. Economic ........................................................ 8 2. Financial ......................8 3. Fiscal .. . . . . . . . . . . . . . . . . . . ... 9 4. Technical ......................9 5. Institutional ...................... 9 6. Social ...................... 9 7. Environmental ...................... 9 8. Participatory approach ..................... 10 9. Other key stakeholders ..................... 10 F. Sustainability and Risks ...................... I1 1. Sustainability ..................... 11 2. Critical risks ..................... -11 3. Possible controversial aspects .................... I 11 G. Main Loan Conditions ...................... 12 1. Negotiations Conditions ...................... 12 2. Condition of Board Presentation ...................... 12 3. Effectiveness conditions .12,,...................................................,, .. 12 4. Other .......................... ..12 H. Readiness for Implementation ,..,,..,....., 12 1. Compliance with Bank Policies ...................... 13  ii Annexes Annex 1: Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Cost-Benefit Analysis Summary Annex 5: Financial Summary Annex 6: Procurement and Disbursement Arrangements -Table A.: Project Costs by Procurement Arrangements -Table B: Thresholds for Procurement Methods and Prior Review -Table C: Allocation of Loan Proceeds Annex 7: Project Processing Budget and Schedule Annex 8: Documents in Project File Annex 9: Environmental Impacts and Mitigation Plan Annex 10: Sectoral Policy Note Annex 11: Statement of Bank Group Operations in Morocco Annex 12: Morocco at a Glance Maps: Proposed Sites for Fish Auction Halls (IBRD 29372) Fishing Areas (IBRD 29373)  Kingdom of Morocco Pilot Fisheries Development Project Project Appraisal Document Date: April 13, 1999 Task Leader: L. Msellati Country Director: C. Delvoie Sector Director: D. Koehn Project ID: MA-PE-52247 Sector Fisheries Project Objective Category: Environmentally Sustainable Development. Lending Instrument: Specific Investment Loan Program of Targeted Intervention: Yes I X] No Project Financing Data [XI Loan [ I Credit ( I Guarantee [1 Other [Specify] For Loans/Credits/Others: A m o u n t (U S $ M ) . ............ ............ ...... ..... . ........__ - ... - - - - ........... ................ ................. ... ........... .. ..........._........... Proposed Terms: 1 Multicurrency [X 1 Single currency, specify: US$ Grace period (years): 5 [1 Standard Variable [ I Fixed [XI LIBOR-based Years to maturity: 20 Commitment fee: 0.75% Service charge: N/A Front-end fee: 1.0% Financing Plan (USSM): Source Local Foreign Total Government 0.9 - 0.9 IBRD 3.0 2.0 5.0 ONP 5.0 2.0 7.0 Total 8.9 4.0 12.9 Borrower: Kingdom of Morocco Guarantor: N/A Responsible Agencies: Ministry of Marine Fisheries (Minzsisre des pOches maritimes, MOMF) Estimated Disbursements (Bank FY/USSM): 2000 2001 2002 2003 Annual 1.0 1.5 1.5 1.0 Cumulative 1.0 2.5 4,0 5.0 Expe.ted effectiveness date: October 15,1999 Closing date:..December 31,2002............. ......... .. ....................... ........ _ _ __ _..._......................._ _ Expected effectiveness date: October 15, 1999 Closing date: December 31, 2002  Project Appraisal Docunent Page 2 Kingdom of Morocco Pilot Fisheries Development Project A. Project Development Objective 1. Project development objectives and key performance indicators (see Annex 1): The proposed project has been designed as a vehicle for furthering the Bank's policy dialogue with MOMF while trying out ways to enhance value added and competitiveness of the fisheries sector. More specifically, the project aims to: * strengthen MOMF capacity to manage and develop the fishing sector, mainly by improving sector planning and information systems; and * test on a pilot basis new approaches to improve fish product quality, upgrade landing infrastructures. and consolidate dialogue with the industry at the local level. Indicators of performance will be: * the preparation of a medium-term investment program reflecting Government priorities and ministerial strategy; and * an increase in the ex-vessel price of some targeted fish species. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): CAS document number: 16219 - MOR Date of latest CAS discussion: 01/30/1997 The proposed project will contribute to the following CAS objectives: * to support private sector development by encouraging faster growth and increasing competitiveness in the fisheries sector; * to support public sector reform, through decentralization and encouragement of private sector initiatives; and * to strengthen social and rural development, through expansion of labor intensive "small-scale" and "coastal" fisheries development, thereby reducing poverty and the rural-urban gap. 2. Main sector issues and Government strategy Background. The fisheries sector plays a key role in Morocco's economy. Morocco is Africa's second largest fish producer and the world's leading producer and exporter of sardines. With a long coastline, the waters of the Exclusive Economic Zone (EEZ) in the Eastern Central Atlantic Ocean and in the Mediterranean Sea are among the richest in the world, holding large stocks of schooling surface-swimming pelagic, or blue fish (European sardine, anchovy, mackerel and tuna), and of demersal, or bottom-dwelling fish and cephalopods (various white fish, squid, octopus and cuttlefish). Annual fish catches from Moroccan waters are estimated to have increased steadily reaching about I million tons in 1996. An active private sector developed at the beginning of the century. In 1918, the private fishing fleet numbered 20 motor boats and around a hundred smaller boats with an annual capacity of 350 tons of fish. In 1998, the fleet consists of some 3,068 vessels, of which 2,609 for inshore fishing, 459 for deep-sea fishing and 12,000 small boats for small-scale fisheries. In addition, some 400 foreign vessels are operating in Moroccan watcrs under international fisheries agreements. The fisheries sector is socially and economically important. The annual catch has increased by an estimated 15 percent during the last five years. Current estimates suggest a sustainable average annual yield of about 1.5 million tons, of which 700,000 tons of sardines and 100,000 tons of cephalopods under prcsent environmental conditions. Fisheries contributes roughly 19 percent of total exports (200,000 tons in 1997 for a total value of US$710 million), 60 percent of agricultural exports, and employs about 75,000 full time and 20-30,000 part-time persons. The sector has also assumed political importance, as evidenced by the latest Fisheries Agreement with the European Union (EU), signed in November 1995. This aims to: (a) achieve a sustainable level of resource exploitation for white fish and cephalopods over a period of four years, mainly by reducing fishing rights for EU registered vessels; (b) provide Morocco with about US$750 million in compensation paymnents over a four year period; and (c) phase-out tariff based quotas for canned fish imports (sardines, mackerel and anchovy) from Morocco into the EU by 1999. The Agreement is expected to have a major impact on Morocco's external trade, sector investment funding and sustainability of fish resources.  Project Appraisal Document Page 3 Kingdom of Morocco Pilot Fisheries Development Project Sector Issues. Despite the pro-active policy of MOMF, fisheries sector development faces four critical issues: * improving fish resources management to reduce pressure on several species: demersal fish and cephalopods are overfished, while the situation for small pelagic is more complex due to stock mobility and related annual fluctuations in the biomass. It is estimated that the northern and central stocks (Zones A and B) are heavily exploited, while the stocks in the South (Zone C) are under-utilized; * delivering cost-effective fisheries services by strengthening public sector capacity in strategic planning, fishing port design and management, and fish product quality management, and supporting the private sector in assuming sectoral responsibilities for service delivery; * increasing sectoral competitiveness to effectively adjust to ongoing liberalization, including reduced trade tariffs on imported fishmeal, fish oil and related substitutes and eased price controls on small pelagics; and * creating alternative sources of employment by exploring labor intensive development opportunities in coastal and small- scale fisheries and improving the competitiveness of the labor intensive, export oriented canning industry. Governnent Strateg . The long-terrn objective of the Government is to ensure sustainable use of fish resources by the national fleet and to promote social and economic development of the sector by improving competitiveness and efficiency along the marketing chains. Since its creation in 1982, MOMF has developed its sector strategy to address these issues through four specific activities: - improving knowledge of fish stocks and pursuing sustainable resource management, while increasing the share of Moroccan vessels fishing in its EEZ; * improving existing port infrastructure and expanding infrastructure available for small-scale fisheries while promoting institutional reform by targeting and strengthening the public role in areas such as technology development, training and policy analysis; - reducing direct public intervention (prices, tariffs) in coastal fisheries and the processing industry while promoting private investment and restructuring; and - supporting private sector empowerment by establishing Maritime Chambers and launching joint activities such as the fleet modernization programs and the insurance scheme Addamane Al-Bahri. Regarding employment, MOFM, in light of the difficulties of reconciling the conflicting objectives of improving the competitiveness of the traditional canning industry and protecting employment, recognizes the need to prepare a thorough and comprehensive strategy for the development of the sector. Overall employment levels in the sector can be increased by limiting the introduction of modem seiners to what is incrementally needed to fully supply the canning industry and actively promoting small-scale fisheries expansion, including by reallocating fish resources from coastal and industrial exploitation to small-scale fisheries. A Sector Policy Note, dated February 26, 1999, was submitted to the Bank and discussed at negotiations. It describes a set of objectives and measures which define the main directions of the Government's strategy for the development of the fisheries sector. 3. Sector issues to be addressed by the project and strategic choices: Within its limited means, the project would be a vehicle to maintain a policy dialogue on fish resource management issues and liaise with the technical assistance program supported by FAO (UTFIMOR/ 1I 7/MOR) which is already working on stock assessment and fisheries management. It would support MOMF efforts to prepare a sector development strategy and investment programn, notably by strengthening planning capacity within the Ministry. The strategy comes at an opportune time, since the new Government is preparing the Economic and Social Development Plan (1999-2003) and because international fisheries agreements, notably with the EU, will terminate at the end of 1999. On service delivery and public sector performance, the project would help the Ministry to refocus itself on policy analysis and design and sectoral planning. Through studies, the project would also assist the National Fisheries Authority (ONP) and National Research Institute for Fisheries (INRH) to restructure to achieve greater financial viability, and develop a comprehensive information system to support MOMF decentralization.  Project Appraisal Document Page 4 Kingdom of Morocco Pilot Fisheries Development Project The project would also try out, on a pilot basis in three fishing ports, new ways of increasing sector competitiveness and efficiency, by developing landing point facilities (fixed and mobile) for small-scale fisheries, by improving the management and operation of fishing ports, by strengthening local dialogue with the fishing industry, by upgrading marketing and processing facilities for fisheries products, and by redefining public and private financing mechanisms for port services. A successful pilot would provide the basis for extension to other fishing ports. C. Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown): The proposed project is a pilot which will be implemented over a period of three years. Though limited in size compared to other donors' activities, it would assist the Government to prepare and implement its medium term strategy to enhance sector value added and competitiveness. The project would therefore aim to address the most pressing sector issues through two main components: * institutional development to strengthen the ability of MOMF to manage and develop the fishing sector; and