Mali - Integrated Rural Development Project

f CIRCULTNG COPY LJ E RETURNED TO REPrnPT( nrn DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1398a-MLI REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR AN INTEGRATED RURAL DEVELOPMENT PROJECT May 24, 1974  Currency Unit: Mali Franc (MF) US$1 - MF500 MFl a US$0.002 MF1,000 - US$2.00 MFl,000,000 - US$2,000.00 Fiscal Year - January 1 through December 31  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALI FOR AN INTEGRATED RURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Mali for the equivalent of US$8.0 million on standard IDA terms to help finance an Integrated Rural Develop- ment Project. The French Fonds d'Aide et de Cooperation (FAC) would make a grant of US$2.5 million in support of the project. PART I: THE ECONOMY Background 2. A report on "Recent Economic Developments in Mali" (233a-MLI) was distributed to the Executive Directors on September 27, 1973. Country data sheets are attached as Annex I. 3. With a per capita GDP of less than US$70, Mali is one of the poorest countries in Africa, and one of the 25 "least developed" countries identified by the United Nations. Agriculture, livestock and fisheries contribute 43% of GDP and are the main-stays of the economy and the principal sources of foreign exchange. Manufacturing accounts for only about 7 percent of GDP. Real growth of GDP during the 1960s was about 2.8 percent a year compared with a population growth rate of 2.1 percent. In 1968-72 GDP growth averaged 3.3 percent a year; in 1973, however, GDP is estimated to have declined by about 2 percent because of the severe drought which Mali suffered in the 1972/73 season. This apparently moderate setback conceals a very serious decline in the standards of living of the rural population and especially of the nomadic people, tens of thousands of which have fled the pastoral zone to find refuge in the Southern part of the country. There is likely to be a further drop in national output in 1974, as a result of another poor rainy season, with consequences for public finances and the balance of payments which cannot yet be predicted with accuracy. 4. Reports on previous credits to Mali have drawn attention to t1he legacy of difficult economic problems inherited from the regime overthrown by the military in November 1968. Many of these problems persist, in spite of the efforts made by the present government to correct the most serious distortions in the economy by raising agricultural producer prices, removing some of the restrictions on trade, stimulating the inflow of private capital, and increasing tax revenues. To be sure, Government policy of hiring all graduates of secondary and higher schools unable to find employment in the  private sector has been a factor exerting constant upward pressure on public expenditure. Most state enterprises, the majority of which were created under the previous regime, appear to be still operating at a loss. They are the main beneficiaries of the 70% expansion of bank credit to the economy between 1968 and 1973. 5. There are nevertheless a number of encouraging developments. Pro- *l-ction of cotton and groundnuts, the two principal export crops, appears to nave been fairly well maintained in spite of recurring drought, though they remain about 10 percent below the 1970-72 plan target. Substantial investments are being made in programs for expanding cotton and rice output, including the H4opti rice project financed by IDA (277-MLI). River fisheries, for which the European Development Fund (FEE) has provided assistance, have also been making good progress, and exports to neighboring countries are on the increase. 6. The balance of payments improved between 1968 and 1972, despite a continued current deficit, as a result of a sharp reduction in private capital outflow from US$13.5 million to a mere US$1.5 million, and an increase in external aid from US$26 million to US$33 million. Furthermore, the proportion of grants in 1972 was close to two-thirds of total aid against one-third in 1968. Because of the drought and despite higher world prices, exports in 1973 have stagnated while imimports increased sharply (21 percent). The current deficit in 1973 has thus reached an all time high of US$67 million. The situa- tion in this respect is unlikely to improve much in 1974. Foreign assets at the end of 1973 were minus MF 44 billion (US$96 million), again an absolute record, a siLuation tenable only because of the French guarantee of the con- vertibility of the Malian franc. 7. Public savings have remained negative despite some improvement in tax collection in recent years. Government current expenditures have been rising at the rate of 9.6 percent annually. In spite of this, the overall deficit (including extrabudgetary operations, but excluding investment expendi- tures financed out of foreign aid) was reduced from MF 6.3 billion in 1969 to MF 3.5 billion in 1971. However it increased to MF 4 billion in 1972 and close to MF 7 billion in 1973, as a result of stagnating revenues which is in turn mainly attributable to the drought. The shortfall in tax receipts in 1973 was MF 1.3 billion. The 1974 budget will be a very problematic one, the cattle tax will not be levied altogether to help drought-striken farmers. Also, total personnel emoluments have continued to increase, though they account already for over 60 percent of Government current expenditure, in part as a result of a small general salary increase with effect from January 1, 1973. 8. Petroleum imports are only 10 percent of total imports (1972). However, their price to Mali has roughly doubled between September 1973 and early 1974, thus adding another unfavorable factor to a basically difficult situatioin. Petroleum consumption could not be compressed without affecting the produictive sectors since consumption for leisure or tourism represents a very marginal proportion of total uses. The development of hydro-electric potential will take several years.  -3- Foreign Aid 9. The greater part of public investment is financed from external sources. During the period 1966/67-1970, Mali received an annual average of US$30 million of external aid, including technical assistance of about US$3.0 million. Nearly half of this aid was provided by the U.S.S.R. and the People's Republic of China in the form of long-term concessionary loans; close to 40 percent of the total came from France and FED in the form of grants. In 1971 Mali received foreign aid disbursements of US$30.5 million of which 57 percent were grants. In 1972 the level of disbursement increased sharply to US$65 million of which 62 percent was grants. 10. The present drought has prompted special aid to Mali from the inter- national community. Food aid - the most essential element - amounted to over 133,000 tons (grain) in 1972/73 worth US$5 million, and close to 150,000 tons have been pledged for 1973/74 worth US$17 million. The EEC, individual member countries, FAO and the United States are the main donors. In addition these same sources as well as other agencies, notably the Association with credit 443-MlI of US$2.5 million, have committed funds for rehabilitation and drought control projects of about US$15-20 million. 11. Mali's total external public debt outstanding at the end of 1971 was US$318 million equivalent (including US$56 million undisbursed). IDA's share in external public debt outstanding at the beginning of 1972, excluding the US$56 million undisbursed, was 3.6%. Total repayments of principal and interest due in 1971 would have claimed about 12 percent of the year's foreign exchange earnings (8 percent in 1970); however, actual debt service payments were small (1 percent in 1971) owing to the 1970 re-scheduling of Chinese and Russian debts on short- to medium-term arrangements. Mali has received several stand-by credits from IMF of which US$6 million are outstanding. The Fund recently agreed to a rescheduling of US$2.5 million of payments due in 1974 and 1975. 12. Mali's prospects for accelerating economic progress depend primarily on raising farm and livestock production, and on improving its infrastructure with investments geared to the needs of the productive sectors. The five-year plan 1974-78 makes the achievement of these goals its first priority. For this, the plan calls for investments of NF 248 billion (US$484 million), of which external sources are expected to contribute nearly 90 percent, or an average of US$85 million per year. The Government is confident that new partners -- namely oil producing countries with which Mali maintains friendly relations -- will join forces with the "traditional" sources of aid to help in achieving these very ambitious targets. Achievement of the GDP growth target in the plan of 5.5 percent annually will no doubt depend on the availability of financing means - though not in any rigid manner. Clearly, as in the past, exogeneous factors will be important: first of all the weather, but also the trend of import and export prices.  -4- Mali's capacity to raise public savings in the short- and medium-run is strictly limited by a variety of factors: the much reduced capacity of arge sections of the nation to pay more taxes because of the drought, the existence of sizeable arrears resulting from past budgetary deficits, the 1'Lifficulties in reforming the public enterprises, and inflation, Though the monetary system significantly alleviates the foreign exchange constraint, the heavily debtor position of the "operations account" with France clearly -oints to the need for the Government to be extremely cautious in its borrow- -.rLg policy. These reasons, added to the country's sheer poverty, strongly suggest that external assistance should be on the most concessionary terms nossible, and should cover a high proportion of total project costs, includ- :~ng substantial amounts of local expenditures. PART II: BANK GROUP OPERATIONS IN MALI 14. The proposed credit would be IDA's ninth operation in Mali, bringing the total of IDA funds committed to US$59.0 million. Of the presently out- standing amount (US$51.0 million), US$20.5 million had been disbursed as of April 30, 1974. 15. Bank Group lending during the 1960s was handicapped by the country's poor economic performance and the lack of well-prepared and economically justi- fied projects. However, in 1966, a US$9.1 million IDA Credit (95-MLI) was made for improvement of the Malian section of the Bamako-Dakar (Senegal) rail- way. Since the end of the 1960s, project preparation has been sharply stepped up. The Bank's 1969 economic mission and other reconnaissance and preparation missicns as well as Government's demonstrated competence in preparing projects itself, provided the basis for formulating a substantially expanded and di- versified Bank Group lending program, and the initial results of these efforts have already materialized. An IDA Credit (197-MLI) of US$7.7 million helped finance a first highway maintenance project in 1970. Credits of $6.9 million on the one hand for the Mopti rice project (277-MLI) and $3.6 million on the other for a telecommunications project (321-MLI), were approved in 1972. Further credits for a US$6.7 million second railway project (384-MLI) and a US$9.5 million second highway project (383-MLI) as well as a US$5.0 million first education project (420-MLI) and a US$2.5 million drought relief project (443-MLI) were signed in 1973. Annex II contains a summary statement of IDA credits as of April 30, 1974, as well as notes on the execution of current projects. Experience with ongoing projects has generally been good, although the extreme shortage of rainfall and reduced flooding of the Niger River have seriously hindered production where the Mopti rice project is concerned. 16. Mali has considerable potential for agricultural and livestock development. And, in fact, most of the operations envisaged by the Bank Group in the near future are related in some measure to the rural sector.  -5- They include cotton and livestock projects in FY75, the former providing cotton processing and storage facilities, the latter calling for the con- struction of wells, cattle markets and a slaughterhouse and for improved extension and veterinary services. An integrated rural development project southwest of the capital as well as a follow-on to the Mopti rice project are scheduled in FY76. In addition, a third highways project, which would include a component for up-grading feeder roads, should be ready for Board presentation in calendar year 1975. PART III: THE AGRICULTURAL SECTOR 17. The agricultural sector accounts for about 43 percent of the country's GDP, and for virtually all of its foreign exchange earnings (US$54 million equivalent in 1972). Rural activities provide a livelihood for about 85 percent of the total population. About 85 percent of the 2 million hectares under cultivation is devoted to food crops, principally millet, sorghum, and, in the river valleys, rice. Cotton and groundnuts are the principal cash crops. 18. The performance of the sector has been significantly affected by the severe drought which has so seriously affected all the Sahelian countries. Nevertheless, while there has been a decline in food crop production for dom- estic consumption, there has also been a rapid development of production for export, despite the unfavorable weather conditions. For example, during the period 1967-1971, the production of seed-cotton rose steeply from 39,000 tons to 74,000 tons, and that of shelled groundnuts from 81,000 tons to 152,000 tons. Both these products have benefited from well-coordinated development programs carried out by adequately organized and staffed "Operations de Developpement", which have supplied extension assistance and modern inputs. Together with these efforts, efficient marketing channels have been set up and producer prices established that have provided good incentives for farmers. 19. By contrast, the production of foodstuffs for domestic consumption is clearly on the decline. For example, the production of millet and sorghum peaked in 1967, and since then has been decreasing steadily; average production for the period 1968--1972 has been estimated at about 600,000 tons annually. Supplies of foodstuffs handled by official marketing channels decreased sharply in the same period, from 60,000 tons in 1967 to an average of about 15,000 tons in the last two or three years. Rice production also fluctuated during the same period, but showed a slightly upward trend, probably as a consequence of substantial investments in programs such as the IDA- financed Mopti rice project, until a shortage of rainfall reduced flooding of the Niger and consequently hindered production.  - 6 - 2(i. Apart from the drought, the major constraints to increasing cereal production are most likely the prevailing marketing and pricing mechanisms. 'nhe official producer price for millet/sorghum of MF20/Kg is far too low in relation to actual prices for cereals in unofficial trade, to prices paid poroducers in neighboring countries, and to producer prices for export crops In Mali itself. There is little doubt that restrictive Government marketing controls have hindered the expansion of cereal and other food crop production. 21, Owing, however, to the shortage in the supply of cereals and consequent large imports during recent years, the Government seems to have ccen concerned with the need for measures to increase domestic food produc- tion, and has in fact now set an objective of attaining self-sufficiency in cereals by 1978/79. To achieve this will require increasing the produc- tion of millet, sorghum, and maize by 200,000 tons, and the output of paddy by 100,000 tons. The Government is, therefore, planning to concentrate on improving food crop production within the framework of existing "Operations de Developpement", and to create new "Operations" specifically for millet and sorghum production. Ultimately, however, the success of Government's plan to expand food production will depend largely on its ability to provide adequate financial incentives to producers, as well as on efficient market- ing services (see para. 37). The proposed project would help to meet both these requirements, and would benefit the economic as well as the social interests of the agricultural sector. PART IV. THE PROJECT 22. A report entitled "Appraisal of Integrated Rural Development Project" (No. 340a-MLI) is being circulated separately. A Credit and Project Summary, including a breakdown of costs, is attached in Annex III. 23, The project would be a second phase of "Operation Arachide"' (OA), an undertaking initiated by the Government in June 1967 to rehabilitate the groundnut industry. The first phase of the program, which was financed partially by the French Fonds d'Aide et de Cooperation (FAC), and to which technical assistance was supplied by the Bureau pour le Developpement de la Production Agricole (BDPA, France), was directed to the reorganization of marketing, since deficiencies in this area were the principal reason for the farmers' loss of confidence in groundnuts as a cash crop and the consequent decline of the industry in the 1960s. 24. OA's subsequent successes with marketing were complemented in 1969 by a 25 percent increase in the producer prire for groundnuts. OA then proceeded to promote improved farming methods and modern inputs. Additionally, attention was given to educating farmers, particularly through functional literacy programs. In the five years since the start of OA operations, yields ihave increased from 500 Kg/ha in 1968 to 814 Kg/ha in 1971, and the area under the supervision of OA has doubled.  - 7 - 25 Overall, therefore, OA's achievements have been excellent in spite of adverse weather conditions. Its farmer support services are efficient, and most key positions are now filled by local staff, although some expatriates still remain as advisors. Nevertheless, OA administration needs improvement, particularly in the areas of accounting and credit control. 26. The second phase of "Operation Arachide," which is scheduled to cover the period April 1973 to March 1978, is already under way with financial assistance from FAC, and disbursement of the proposed IDA credit would cover the four year period 1974/75 through 1977/78 and would not commence before October 1, 1974. 27. The objectives of the second phase of "Operation Arachide" include: (a) intensifying OA activities in areas now served by the program to cover not only groundnuts but all principal farming activities, especially the productioa of basic cereals and livestock; the name "Operation Arachide" (OA) would therefore be changed to "Operation Arachide et Cultures Vivrieres" (OACV), stressing the importance of foodcrop production in the project; (b) expanding OACV services into new areas; and (c) expanding the supply of farm inputs and equipment, on cash or credit, to participating farmers. Project Description 28. The principal components of the project include: (a) staffing, equipping and operating OA for the expansion of agricultural extension, credit and marketing services in the project area; constructing and furnishing housing, office, storage, garage and workshop facilities; and providing technical assistance for project management. (b) a road improvement program under which spot repairs would be made on a network of about 1,500 Km of rural tracks; (c) a functional literacy program; (d) a program of agricultural research to supplement the current national program; (e) improving medical facilities in the project area; (f) improving veterinary services in the project area; and (g) establishing a project evaluation unit.  -8- The project area is situated in the west part of Mali, covering about 125,000 Km2 (10 percent of the country's total area and 20 percent )f its populated area). It comprises parts of the administrative districts of Segou, Bamako, and Kayes, and would be divided into nine sectors, each of which would have two to five sub-sectors. 'O. With the assistance of 308 extension agents to be employed under ILe project, participating farmers would move through stages of improved practices; the pace at which they do so would depend upon current cultivation maeti.ods and their receptiveness to advice, as well as their creditworthiness in so far as this would govern their access to improvement inputs. Regarding the latter point, about 20% of all loans made to groundnut farmers since 1968 is overdue. Government has agreed that more legal pressure may be put on defaulting farmers. All participants would grow millet and/or sorghum in rotation with their groundnuts, and would receive technical advice on how to maximize yields. A range of improved practices, tested over the past five years by OA, would be promoted in the project zone, including early and dense sowing, timely weeding, fungicidal seed dressing and fertilizing, as well as the use of ox-drawn equipment. 31. The rural track improvement program would be carried out over three years starting in 1974. The tracks, situated in the western and cen tral sectors of the project area, are essential for efficient crop collection, general trade, and for extension, medical and veterinary personnel. The track program would complement other road programs in the project area financed by IDA, FAC, and other bilateral aid. 32. The functional literacy program, by providing out-of-school courses conducted in the native language, would assist individuals in increasing their productivity by teaching them the elements of reading, writing and arithmetic. Thus, farmers would understand better and apply more efficiently the technical innovations recommended by extension workers. By the end of 1973, some 30,000 farmers in OACV areas were expected to have completed functional literacy courses. However, no formal or detailed evaluation has been made of the impact of these programs in Mali generally and with regard to OACV in particular. Therefore, the sub-project proposed for financing would include evaluating past and ongoing functional literacy programs carried out by "Operation Arachide". On the basis of preliminary evaluations, the establishing, staffing and equipping of an additional 500 functional literacy centers seem reasonable and are provided for under the project. If, as expected, the formal evaluation confirms this program's effectiveness, a further 200 centers would be established. 33. The agricultural research program would encompass the following activities: (i) applied studies on diversifying agricultural production in the project area by the introduction of crops such as cotton, maize, cowpeas, and fodder; (ii) continuation of work on groundnut production, with particular regard to improved varieties, pesticides, and fertilizers; and (iii) soil surveys.  -9 - 34. The sub-project for impro-ement of medical facilities would consist of a modest program to expand the activities and better the quality of exist- ing health services in the remotest parts of the project area. The improve- ment of these facilites would enable more efficient detection and control -~ of outbreaks of infectious diseases. The program would also provide for training farm families in basic hygiene. The project would provide for additional staff, dispensaries, vehicles, equipment, and medicines, and for operating costs required for the above purposes. 35. Existing veterinary services, which generally lack funds for equip- ment and medicines, would also be strengthened. This is a vital element, considering the planned development of ox-drawn cultivation methods in the project area. In addition to improved veterinary care for work oxen, farmers would be trained in animal husbandry. Additional staff, vehicles, equipment, veterinary medicines, and operating costs would be provided. 36. The eIfects of the proposed project on the population in OACV areas and on the economy of Mali would be studied by an autonomous Evaluation Unit which is to work in close cooperation with the Institut d'Economie Rurale, a department in the Ministry of Production, and to be established by the end of 1974 and financed under the project. This unit would measure, among other things, the impact of the project on the incomes and well-being of participating farmers, and would assess pertinent changes in economic and social indicators. Prices and Marketing of Cereals 37 Producer prices for cereals are fixed by Government, and were MF 20/Kg in 1972/73. This was about half the average price paid by unofficial dealers and half to one-third the world price; at times, in fact, cereals unofficially traded in Mali have fetched as much as MF 90/Kg. The high prices ruling in unofficial trade make it difficult for "Office des Produits Agricoles du Mali" (OPAM) to exert efficiently its cereal marketing monopoly. As a first step towards remedying this situation, it was agreed that: (i) sorghum and millet producer prices would be increased from MF 20 per Kg to a minimum of MF 25 per Kg effective from November 1974, (Section 4.07 (a) of the Development Credit Agreement); and (ii) a study on millet and sorghum producer prices and marketing arrangements, to be completed by April 30, 1975, would be carried out by the Government with the assistance of consultants and under terms of reference acceptable to IDA. This study is intended to provide a reasonable basis for further decisions on both producer prices and marketing arrangements which should be satisfactory to IDA (Sections 4.07 (b) and 3.05 of the Development Credit Agreement). Clearly, larger price increases will eventually be needed, but as pricing policy is an integral part of Government's generai policy to seek at all times an optimum balance between prices, revenues and salaries in the Malian economy, too sudden an increase now could have a serious and dramatic impact on urban living costs and add to pressures for higher wages and create additional budgetary dif- ficulties.  - 10 - Credit Arrangements and Supply of Inputs -3?,. Credit operations in OA areas have suffered in the past from the following problems: (i) inadequate coordination between OA and the Societe de Credit Agricole et d'Equipement Rural (SCAER). Since its reorgani- zation three years ago, SCAER has acted primarily as a central supply agency for operations such as OA, which deliver inputs to farmers, collect cash payments and credit repayments, and hold stocks of inputs on behalf of SCAER; (ii) overdue debts averaging 20 percent of all loans made to groundnut farmers since 1968, compared with 2 percent for cotton farmers in "Operation Coton" areas; and (iii) continuing controversy between SCAER and OA over the financing of credit for groundnut seed. Over the objections of SCAER, OA has retained funds from repayment of other loans to finance credit for seed. Recently, however, improvements have occurred. First, a "reciprocal service agreement" has been prepared and accepted in principle by OA and SCAER. In addition, an improved system of input ordering and stock management is being implemented. Second, Government has indicated as noted (see para. 30) that more legal pressure may be put on defaulting farmers. A condiuion of credit effectiveness requires that a "reciprocal service agreement," satisfactory to IDA and defining the responsibilities and obligations of both OACV and SCAER, be signed by the two parties (Sections 3.02 and 8.01 (a) of the Develop- ment Credit Agreement). 39. Third, credit for seeds would be the direct responsibility of OACV and would be financed from a revolving fund set up for this purpose. It was agreed that "Office de Surveillance et de Regulation des Prix" (OSRP) would take over responsibility for all outstanding debts of OA to SCAER in respect of seed (effectively writing off past losses incurred in seed distribution operations), and that no later than six months from signature of the proposed IDA credit responsibility for supplying seed, and credit for seed, would be transferred from SCAER to OACV which is best equipped for this purpose. (Section 3.04 of the Development Credit Agreement) The project would ln- clude provision for strengthening OACV's existing credit organization and staff, including the finance to upgrade training of credit staff. All project farmers would be eligible for credit for seasonal inputs. No credit would be provided for draft animal purchase since most farmers possess such animals and, as at present, applicants for medium-term credit for farm equipment would be required to prove possession of a pair of oxen and of at least 1.5 ha of destumped land. Seeds and ox-drawn equipment are sold at subsidized prices. Total subsidies in project costs, however, are covered by Govern- ment contributions. Given the critical need for farmers to use improved  - 11 - seed, and the desirability of sponsoring ox-drawn equipment, it would be ill-advised to take any measures that would increase the cost to the farmers of these items at this time, but it was agreed that IDA would be consulted on any changes proposed by Government in policy regarding the prices of, and subsidies on, production illputs. 40. No formal interest is charged on seasonal and medium-term (two years) credit made to OA farmers, but financial costs (equal to 8.5% of cost delivered to farmers) and other charges including operating expenses, pro- vision for losses and bad debts, and an adequate spread are included in SCAER cost prices. A feature of the arrangement, however, is that as financial charges and provision for bad debts apply equally to both cash and credit sales, they discourage farmers from buying for cash. It was agreed that in the future, the prices of inputs and equipment sold for cash would be appropriately discounted to encourage cash sales. (Section 4.03(a) of the Development Credit Agreement). Such discount should reflect savings generated by cash purchases roughly estimated at 7-9% of cost delivered to farmers. Cost and Financing 41. Total project costs are estimated at US$18.9 million, including import duties and taxes totalling US$1.3 million. Farm inputs constitute the principal element, accounting for US$5.1 million or 27 percent of total project costs. Facilities and equipment for OACV (16 percent of total costs) and operating costs (11 percent) are other major elements, as are the health, literacy and other ancillary subprojects (14 percent) and technical assistance (11 percent). In addition, US$4.0 million, equivalent to 21 percent of project costs, has been set aside for contingencies. The proposed IDA credit of US$8.0 million would cover 42 percent of total project costs and 75 percent oi-- the foreign exchange component of project costs which is estimated at US$10.6 million. Remaining costs, estimated at US$10.9 million, would be covered by a FAC grant of US$2.5 million, Government contributions totalling US$4.3 million and farmers' contributions of US$4.1 million. The contribu- tions proposed for farmers and Government appear high given the tight fi- nancial situation of both. Hlowever, farmers contributions include repayment made during the IDA credit disbursement period for inputs and equipment totalling US$1.9 million equivalent; the remainder of their contribution of US$2.2 million equivalent would be allocated for down payments, purchase of inputs for cash, cost of cart bodies and contingencies. Government's contribution would include about US$0.9 million equivalent that it is con- templated SCAER would rediscount in connection with its providing farm equip- ment on medium-term credit. US$1.3 million equivalent of Government's contribution would be offset by the import duty and added value taxes com ponent of project costs; a further US$2.1 million equivalent would accrue to Government/OACV from levies on marketed groundnuts which would serve to meet the cost of extension services. Project Management and Technical Assistance 42. The project would be managed by "Operation Arachide et Cultures Vivrieres" (OACV) presently known as "Operation Arachide" (OA). As OA's  - 12 - terformance has been satisfactory up to the present, no signfic