Upper Volta - Livestock Development Project

DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1594a-UV REPORT AND RECOMMENDATIONS OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF UPPER VOLTA FOR A LIVESTOCK DEVELOPMENT PROJECT MAY 9, 1975 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS US$ 1.00 = CFAF 225.00 CFAF 100 = US$ 0.44 WEIGHTS AND MEASURES Metric System 1 hectare (ha) = 10,000 m2 = 2.46 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (km2) = 0.39 sq. miles = 100 ha 1 kilogram (kg) = 2.20 Pounds 1 liter (1) = 0.26 gallons 1,000 kg =1 metric ton = 0.98 long ton ABBREVIATIONS BND Banque Nationale de De'veloppement CBPP Contagions Bovine Pleuropneumonia CCCE Caisse Centrale de Cooperation Economique CEBEV Communaute Economique du Betail et de la Viande FAC Fonds d'Aide et de Cooperation FED Fonds Europe'en de Developpement HAER Hydraulique et Amenagement des, Espaces Rurales IEMVT Institut de l'Elevage et de Medecine Veterinaire des Pays Tropicaux IRAT Institut de Recherches Agronomiques Tropicales et des Cultures Vivrieres ONERA Office National de l'Exploitation des Resources Animales. ORD Organisme Regional de Developpement ORSTOM Office de la Recherche Scientifique et Technique Outre Mer PU Project Unit RMWA Resident Mission in Western Africa of the World Bank SCET Societe Centrale d'Equipement du Territoire SVCP Societe'Voltaique des Cuirs et Peaux UDEAO Union Douaniere des Etats de l'Afrique de l'Ouest USAID United States Agency for International Development Fiscal Year: January 1 - December 31  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMNMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF UPPER VOLTA FOR A LIVESTOCK PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Upper Volta for the equivalent of US$9.0 million on standard IDA terms to help finance a livestock development project. PART I: THE ECONOMY 2. The basic problems of economic development in Upper Volta were set out in a report entitled "The Economic Development of Upper Volta" dated November 27, 1970 (R70-237 and R71-2). An updating memorandum of January 13, 1972, was distributed to the Executive Directors on March 2, 1972 (R72-41). An economic mission visited Upper Volta in March/April 1974; its draft report was discussed with Government for comments and will be distributed to the Executive Directors shortly. The mission's main findings are incorporated in this report. Background 3. With a GDP per capita of about US$70 in 1972, Upper Volta is one of the 25 "least developed countries" identified by the United Nations. The country's economic structure is typical of a situation of extreme under- development: agriculture and livestock provide a living for over 90 percent of the population, but, with very low productivity, account directly for less than 50 percent of GDP; manufacturing, closely linked to agriculture, provides only 10 percent of GDP; the remainder comes from the service sector, which includes the Government; exports, usually a dominant growth factor in most African countries, represent only between 7 and 9 percent of GDP; despite modest investment rates (8 to 10 percent), the resource gap was about 8 per- cent of GDP until 1971, nearly doubled in 1972, and reached an unusually high level of 20 percent of GDP in 1973. 4. A number of years of mediocre rainfall since 1968 culminating in a severe drought in 1973 have resulted in a serious setback in agricultural production and overall economic stagnation. This is all the more serious be- cause in the years since 1960 growth had been very limited, probably not exceeding one percent per year per head. Compared to 1969/70 agricultural production declined by 15 percent in 1970/71 and by 17 percent in 1972/73. The most serious crop failures and livestock losses occurred in the northern  - 2 - and central parts of the country, thus accentuating existing income dispari- ties between regions. Emergency food imports were about 40,000 tons in 1971/72, 60,000 tons in 1972/73, and over 100,000 tons in 1973/74. Climatic conditions in 1974 were normal, and crop production for 1974/75 should regain the levels achieved in 1969/70. The drought has brought out more clearly than ever the basic problem facing Upper Volta's rural sector: excessive population pressure in the central region (the Mossi Plateau), resulting from the very uneven population distribution throughout the country with respect to available land resources: about 61 percent of the total population, or 3.5 million people, live in this region which comprises only 32 percent of the total area and is much less favorably endowed than the south and southwestern regions from the view-point of both rainfall and soil quality. This explains why the bulk of the migrants to other parts of the country and to neighboring countries come from this region. Financial Developments 5. Despite the persistently large trade deficit, the overall balance of payments has been in surplus over the six years, 1968-73. Even in 1974, the Central bank's provisional figures show a surplus of US$10 million. Net foreign assets tripled between 1968 and the middle of 1974 to reach over US$70 million or about 8 months worth of imports of goods and non-factor services. This was made possible by the increasing flows of both external aid and private transfers, mainly Voltaic workers' remittances from the Ivory Coast. In February 1974, the prices of refined petroleum products doubled at delivery point in Upper Volta. Though consumption of petroleum products is small, representing 6 percent of total imports (1972) and a very low percentage of all the inputs used in the economy, they are the only source of modern energy in the country and, therefore, little room exists for reducing consumption. The hydroelectric potential is under study, but seems to be very limited. Higher petroleum prices, combined with other rises, particularly in import prices and in local wages (which were raised by 30 percent on April 1, 1974), have set the economy on an inflationary path, which is in sharp contrast with the past. As a result if these developments, effective April 1, 1974 most workers received wage increases ranging from 3 percent to as much as 38 percent. 6. Over the past six years the Treasury's liquidity position has re- mained comfortable as a result of three factors: a policy of strict budget- ary austerity applied since 1967 by the military regime, the continuation of French budget subsidies, surpluses accruing from autonomous public institu- tions, especially the Price Stabilization Fund for Agricultural Products and special aid received in connection with the drought. The Government's current budget turned from a deficit of CFAF 200 million in 1966 into a sur- plus of CFAF 300 million in 1967, and since then a surplus of between CFAF 300 and 900 million has been generated every year. The Government was thus able to liquidate the stock of unpaid bills by 1969, and the public sector as a whole has been able to gradually build up substantial reserves with the Central Bank. These were negative in 1966 and close to CFAF 10 billion or 4-5 months of imports in mid-1974.  - 3 - 7. This remarkable financial performance has been achieved at a cost, however, with undesirable consequences that have, to some degree, hindered economic development in three related ways: first, by excessively cutting back operating funds of the Government's economic services; second, by limiting the Government's capacity to participate in the financing of new development projects; third, by making more difficult the needed follow-up on a number of projects financed largely by external aid. Thus, while it is essential for a country like Upper Volta to control carefully current expen- ditures, it would seem nevertheless that the time is opportune now for a more aggressive and development-oriented expenditure policy. The first manifest example of this new orientation is the establishment of a new entity, the Caisse Nationale de Depots et d'Investissements, which is designed to mobilize savings from both public and private bodies and channel them into economically and financially profitable undertakings. This institution started operations in January, 1975 and has already committed CFAF 2.5 billion for development projects mainly in the industrial and public utilities sectors and the roads sector. Foreign Aid 8. Over the 12 years from 1960 to 1972, foreign aid disbursements totalled about CFAF 91 billion ($360 million) or an annual average of $30 million. About 90 percent of total aid disbursements have been grants and the remainder loans, of which 90 percent on concessionary terms. Capi- tal aid has constituted the largest component accounting for about 65 per- cent of total aid, followed by technical assistance (20 percent). 9. Foreign sources have financed more than two-thirds of total actual investment expenditures under the first Development Plan (1967-70), and are expected to finance about four-fifths of total estimated investment (CFAF 63.2 billion) under the second Development Plan (1972-76). The major sources of aid have been the "Fonds d'Aide et de Cooperation" (FAC) of France, and the "Fonds Europeen de Developpement" (FED) of the European Economic Community. These two agencies together have provided between 1960 and 1972 about 75 per- cent of all foreign aid to Upper Volta, principally in the form of grants. French aid has been quite diversified; for example for the period 1969-73, about half the total was capital aid for specific projects; one fourth, technical assistance; the remainder, "equipment grants" to the Government's budget. French capital aid in 1972 was distributed as follows: infrastruc- ture (65 percent), production development, i.e., agriculture (26 percent), general studies (16 percent), and social equipment (15 percent). FED aid has been entirely grant, mainly for capital projects. Highest priority was given to agriculture (52 percent) and social sectors (42 percent) in the first FED (1958-1963); to road construction (about half) in the second FED (1964-68); to some large agro-industrial projects, such as the sugar plant at Banfora in the third FED (1969-74). IDA is gradually becoming one of the main sources of aid with total commitments as of December 31, 1974, of $30.7 million (not including this project). Other aid agencies and countries with sizeable programs now include UNDP, USAID, and the Federal Republic of Germany.  - 4 - 10. Outstanding external public debt at the end of 1973 was US$120 million, including an undisbursed amount of US$89 million. This figure includes a loan of $44.5 million from the People's Republic of China. The status and terms of this loan are not known as yet. The ratio of debt service payments tc exports of goods and non-factor services was about 6 percent in 1973, and is not expected to vary much in the near future. Development Policies and Prospects 11. The three plans, 1966-1970, 1971 (interim), and 1972-76 undertaken so far have generally been well conceived, well oriented documents taking a realistic view of the country's meager resource base. As the First Plan, the current Plan (1972-76) is essentially a set of sectoral projects, and its target is very moderate, i.e., an annual real growth rate of GDP of 3.5 percent. The Plan correctly assigns highest priority to rural development and in this sector, specific attention is paid to a program for the development of the river valleys following the Riverblindness eradication campaign that effectively started at the end of 1974. The Government also attaches high priority to the exploitation of manganese deposits in the northern regions, an undertaking that would require construction of a rail link of 350 Km. between Ouagadougou and the prospective mine at Tambao. For the first two years of the Plan, 1972 and 1973, financing commitments reached almost 100 percent of targets, while projects execution met about three-fourths of the objective, which should be considered as a relatively good performance. Ex- ternal financing of capital expenditure has apparently not been the major obstacle in carrying out the Plan so far; on the other hand, lack of operat- ing funds, limited administration capacity, inadequate preparation of pro- jects, and most recently adverse external factors as diverse as drought, world inflation, and delays in deliveries of material and equipment from overseas, are very real obstacles to the smooth execution of projects. 12. Foreign capital and technical assistance will continue to play a decisive role in the development of Upper Volta. The economic mission's estimates show that a moderate increase in the real value of foreign aid, relative to the 1972 level, should occur over the next six years (1975-1980), and that this should be sufficient to meet the costs of economic expansion at a rate -- about 2 percent per annum of GDP growth per capita in real terms -- which is considered consistent with the country's absorptive capacity in the medium run. However, if this aid is to be truly effective, there will be need for better coordination within the Government and for some relaxation of present budgetary limits over development expenditures. On the other hand, foreign aid should continue to be provided on concessionary terms, in view of the present level of poverty of the country and its limited growth poten- tial. External debt service at present absorbs about 6 percent of Upper Volta's export earnings, and although this figure is fairly low in absolute terms, it is high in relation to the country's very limited savings capacity. Although Upper Volta should be expected to make a more significant contribu- tion to the financing of public investment, this will necessarily remain modest, and external lending agencies must continue to finance a high pro- portion of total costs, including local costs of development projects.  - 5 - PART II: BANK GROUP OPERATIONS 13. To date the Bank Group's contribution to Upper Volta's development has consisted of seven IDA projects totaling $30.7 million on which a little over US$7.25 million has so far been disbursed (Annex II). The first tele- communications project, for which a credit of US$0.8 million was made in 1969, was completed in September of 1974. The West Volta Cotton project, for which a credit of US$6.2 million was made in 1970, has not proceeded as well as planned mainly because of drought conditions which led farmers to favor food crops over cotton growing. Linked with this was a credit of US$2.8 million approved in 1972 for upgrading to gravelled surface two roads in the project area; an increase of US$1.35 million in the amount of this credit was approved by the Executive Directors in March 1974 to take into account increases in project cost due to currency realignments and to cost overruns on the road construction component. The rural development fund project, for which a credit of US$2.2 million was approved in 1972, is now making some progress after a slow start resulting from delays over project prefinancing and staff appointments; a similar project for Drought Relief (US$2.0 million) was approved in December of 1972. Further credits of US$2.85 million for an education project and US$4.5 million for a second telecommunications project were approved in June 1973, and the projects are now getting underway. Finally the Bougouriba rural development project (US$8 million credit approved in June 1974) has been delayed by difficulties in recruiting expatriate staff, but these are being overcome, and the project should be started satisfactorily in the near future. 14. The Bank Group's strategy in Upper Volta is dictated by the extreme poverty of the country and the need to raise productivity in agriculture and livestock on which the bulk of the population depend for a livelihood. Some basic infrastructure is required for the operation of the economy, and the IDA projects for telecommunications, and road construction and road better- ment are designed to help in providing this. For the rest, IDA lending is directed primarily to projects in agriculture, education and rural village improvements with special emphasis on operations which will favor movements of people away from the overpopulated central plateau with poor soils to the southwest where ecological conditions are much better. Within this broad strategy, the campaign for the control of riverblindness in the Volta River Basin, for which the Bank has been mobilizing the necessary external financing, should open up new opportunities for investment in land settlement and agricultural development, and the Bank Group stands ready to assist in the identification, preparation and eventual financing of suitable projects in this field. Meanwhile, a special unit has been created with the assist- ance of the French Government to prepare schemes for the development of some of the river valleys.  15. In addition to the proposed project, a number of projects are under consideration for IDA financing. A feeder road project has been appraised and is scheduled for presentation to the Board in July 1975. Consultants are currently preparing and evaluating the West Volta Cotton Project with a view to the preparation of a follow-up project which, would probably take the form of an integrated rural development project. A second Rural Development Fund operation and additional highway financing based on studies carried out under the earlier project (Credit 316 UV) are further possibilities for the next two years. PART III: LIVESTOCK SECTOR General 16. The livestock population represents a major national resource in Upper Volta and is estimated at about 2.5 million cattle, about 4 million sheep and goats, 200,000 donkeys, 60,000 horses, 5,000 camels and about 150,000 pigs; poultry numbers are about 10 million. Historically, the national herd has grown by about 2 percent annually, however, due to drought it has decreased since 1967. About 275,000 head of cattle are sold or slaughtered annually, a total offtake of about 11 percent, but only about 6.6 percent (165,000 head) pass through public markets and slaughterhouses. 17. In recent years, livestock's share of GDP has amounted to about 11%. Total meat production is estimated at 54,000 tons, including 28,000 tons from cattle. Milk production for human consumption -- from cattle, sheep and goats -- is estimated at 100 million liters. In 1972, livestock exports (US$10.9 million), mainly live animals, accounted for about 25 per- cent of livestock production and 50 percent of all recorded exports. The main customers are Ivory Coast and Ghana, though exports to the latter have decreased considerably due to import and currency restrictions. The Traditional Producer 18. About 70 percent of Upper Volta cattle are owned by Peulh pastor- alists who constitute about 6 percent of the population. The remaining 30 percent is owned by crop farmers who entrust the management and herding of a large portion of their cattle to the Peulh who receive payment in kind, usu- ally milk. About three-quarters of the Peulh live outside the Sahel. They are generally settled in one location or practice limited thanshumance. In the dry season, those that live in the Sahel move their cattle out to the Sudanian and Guinean zones where grazing and water are relativelv abundant, and return to the Sahel at the beginning of the wet season. The average herd size is 70 head and 30 smallstock for Peulh herds and about five head and 10 smallstock for the crop farmers' herd. Herds are grazed by day on communal land and confined to thorn enclosures by night.  19. Traditional production coefficients are low: only about 50 percent of calves born reach maturity and are used for breeding or sold for slaughter. Milk yields are 150 kg/lactation. It takes 4-8 years for a steer to attain a slaughter weight of 300-350 kg. The annual production of a typical Peulh cattle herd is estimated at US$1,260, or 21 percent of the herd value (US$6,000). Per capita income of Peulh pastoralists is estimated at US$109, including US$24 worth of milk consumption; crop farmers derive about US$5 per capita from livestock in addition to the US$36 per capita earned from crops. Animal Health 20. Rinderpest and contagious bovine pleuropneumonia (CBPP) have been contained reasonably well as a consequence of an immunization campaign in 1964-67, financed by FED and USAID. They remain a constant threat, however, until a more comprehensive vaccination service is provided. Anthrax and blackleg are widespread because of inadequate vaccination. Trypanosomiasis occurs in the Guinean and Southern part of the Sudanian zones. The prevailing challenge of the tsetse fly, the vector for transmitting this disease, can be controlled by prophylactic or curative treatment which is becoming increasingly popular among the livestock owners. However, in the dense bush areas of the South, the heavy tsetse challenge allows cattle production only with trypano- tolerant breeds. Internal parasites are prevalent, and few control measures are taken. All the diseases responsible for high mortality and low calving rates are controllable by modern techniques, but the veterinary vaccination service reaches only about 40 percent of the cattle population because of inadequate facilities, staffing and funding. Thus the proposed project would place considerable emphasis on vaccination services. Livestock Marketing and Meat Processing 21. Livestock marketing is a complex traditional system and subject to limited government control. The system, although reasonably adequate, needs improvements to cater for projected increases in output. Livestock producers sell surplus stock either directly or through 40 secondary and 20 principal markets to traders or their agents; these middlemen then move the animals on foot to consumption ceaters or, in the case of live animal exports to Abidjan, use the railroad. A few traders export carcass meat from Bobo-Dioulasso using refrigerated railway trucks. Large slaughterhouses exist in Ouagadougou and Bobo-Dioulasso, and together handle about 40,000 cattle and 53,000 sheep and goats per year. Slaughter slabs with simple facilities are normally found in communities with more than 2,000 people. Meat retailing is handled by private butchers, without cooling facilities, and meat is sold on the day of slaughter. SVCP (Societe Voltaique des Cuirs et Peaux), a parastatal company, is the principal buyer and exporter of hides and skins.  -8- Taxation 22. Presently Government levies a tax of CFAF 200 per head on adult cattle. Marketing and slaughter taxes vary from place to place. In the Bobo-Dioulasso region, the charge per head is CFAF 100 for marketing and CFAF 200 for slaughtering. Export taxes amount to CFAF 1,600 per head of live cattle. Although export taxes are unpopular, and probably less than half are collected, they constitute the only proven way of collecting revenue from livestock. They account for about 4 percent of public revenue. Government Services 23. The Department of Livestock and Animal Industry of the Ministry of Plan is concerned with livestock development policy and services such as animal health, livestock marketing, meat inspection and animal production. 24. At the local level responsibility for administration of these ser- vices is vested in Regional Development Agencies (Organismes Regionaux de Developpement -- ORDs) which were first created in 1965 as fully independent entities to promote rural development in their areas but within the frame- work of an integrated national rural development policy. Eleven ORDs cover the country. Of these three are entirely financed by the Government, while the investment and operating expenses of the others are largely financed by FAC, FED, USAID and IDA (Bougouriba). The majority of ORDs employ foreign devel- opment companies as management agents. Each ORD is administered by its own Board of Directors comprising appointed government officials and representa- tives of local authorities and farmers. Government is represented by a "Commissaire du Gouvernement" who exercises considerable controlling powers. ORDs are, in particular, responsible for providing agricultural extension, training, credit and crop marketing services, and rural infrastructure (roads, wells, warehouses, training centers, dams) in collaboration with and under the supervision of the Ministry of Plan's Agriculture's Division of Water Development and Rural Engineering (HAER). Effective January 1975, veterinary field services have been transferred to the ORDs. Utilization of Pastoral Resources 25. Approximately 80 percent of Upper Volta's land resources are avail- able for livestock grazing. Under the present traditional system involving uncontrolled burning and minimal herd management, this resource is grossly underutilized. Pasture based livestock production can be increased several fold because, unlike most of West Africa's Sahelian countries, 85 percent of Upper Volta lies outside the Sahelian zone and has average rainfall which favors pasture production. For the large and favorably endowed pastures of the Sudanian and Guinean zones, the carrying capacity under traditional management is about 7-8 hectare per animal unit (ha/AU) versus present stocking rates of about 10-14 ha/AU. With improved grazing management and controlled burning, the carrying capacity can be doubled to about 4 ha/AU. By planting the subtropical legume stylosanthes (stylo), the carrying capacity can be increased to about six times the present level. 26. The principal  - 9 - 26. The principal problem facing the development of the pastoral re- source is to find a way to overcome the major constraints associated with the prevailing system of utilization. Even though under the present land tenure system all land is owned by Government and usufructuary rights are given to individuals, the crop farmers are the traditional owners of all land and in practice still regard themselves as such. Thus, although the law ex- tends to pastoralists equal rights to communal grazing land, village leaders who allocate usufructuary rights to land also decide which areas will be utilized for cropping and which for grazing. As the Peulh pastoralists are "foreigners" in these areas, the tendency is for them to be at the mercy of the agriculturalists. More serious, land use conflicts are becoming more prevalent in areas where population pressure is heavy and increasing the de- mand for crop land. Although difficulty arises from the fact that livestock are individually owned, there is no incentive for the individual to improve the communally used grazing resource. Clearly there is a need to develop group structures that will enable traditional producers to invest and reap the benefits of modern ranching technology. Ranching structures developed must therefore (a) provide security of land tenure in traditional producers; (b) restrict livestock numbers to the carrying capacity of the land; (c) enable producers to continue obtaining milk for subsistance while concurrently increasing cash sales; (d) enable traditional producers to borrow and repay development loans; and (e) ensure good ranch and rangeland management which is the key to profitability. Government fully supports the development of such ranching structures. Livestock Development Strategy 27. The basic objective of the Government's development strategy is to increase the productivity of the livestock and pasture resources. These resources are among the country's most valuable assets, and at present con- tribute US$42 million to GDP (11 percent). Rough estimates indicate that current levels of production could be increased by six times, offering pros- pects for substantially increased incomes and exports. Government proposes to achieve this through: (a) providing improved vaccination services; (b) helping traditional producers to adopt modern livestock production methods; and (c) providing improved livestock marketing and meat processing services. The proposed project would pursue these objectives in an area comprising over one-fifth of the country. 28. A livestock development strategy in Upper Volta must be formulated in the context of a sound overall agricultural development policy. This is important because in the Sudano Guinean climatic zones (most of the country) both crop and livestock can be produced and thus compete for the use of land; under such conditions livestock have a residual claim on land. This is so because cropping is the most intensive form of production and results in more human food per unit of land. Thus, there is a distinct danger that in the long term the livestock industry may be relegated to insignificant propor- tions unless the cropping sector can be made to evolve from the present  - 10 - wasteful system of shifting cultivation to one based on crop rotation and ultimately mixed crop - livestock farming. The group ranch components of the project involving the simultaneous development of traditional group farming and animal husbandry would be an attempt to implement this strategy. PART IV: THE PROJECT 29. A report entitled "Appraisal of a Livestock Development Project" (No. 674a-UV) is being circulated separately. A credit and project summary, including a breakdown of costs, is contained in Annex III, and the project area is shown on the attached map (IBRD 11456). The Regional Mission in Western Africa (RMWA) identified the project in June 1971, and subsequently prepared it with the help of studies carried out by SCET (a French consulting firm) financed by the Fonds d'Aide et de Cooperation (FAC). A field appraisal took place in October - November 1974, and negotiations were held in Washington from April 21 through April 29. The Voltaic delegation was led by the Secret- ary of State for the Plan, M. Leonard Kalmogo. The Project Area 30. The project area would consist of the Dedougou and Bob? -Dioulasso Development Agencies (ORD's) covering an area of about 58,000 km in the Sudanian and Guinean climatic zones. The population in the area is about 0.9 million people of whom about 93 percent are cultivators and the remain- der are Peulh pastoralists. In the 300,000 ha group ranch development sub-project area surrounding the village of Samorogouan, 84 percent of the about 20,000 people are croppers and 16 percent are Peulh pastoralists. The project area carries about 20 percent of the country's cattle (490,000 head) and about 20 percent of the sheep and goats (750,000 head). The Samorogouan subproject area carries about 23,000 cattle and 8,000 sheep and goats. Only about 8 percent of the project area and 3 percent of the Samorogouan subproject area is being cultivated, and allowing for crop fal- lows, over 80 percent of the land is available for livestock production on pasture. Project Description 31. The project would be a broadly based program to assist cattle production in Dedougou and Bobo-Dioulasso Regional Development Agencies (Organisme Regional de Developpement - ORDs) through ranch development and the improvement of livestock marketing, meat processing and veterinary services. It would help about 300,000 traditional cattle produce-s and, in addition, would introduce commercial ranching to the traditional sector. The project, carried out over five years, 1976-80, would comprise:  - 11 - (a) establishing nine group ranches and a ranch development center; (b) providing improved veterinary services throughout Dedougou and Bobo-Dioulasso ORDs; (c) constructing a livestock market and holding ground at Bobo- Dioulasso as well as improving 730 km of stock routes; (d) renovating a slaughterhouse at Bobo-Dioulasso; and (e) providing for training, field trials, project evaluation and monitoring, and future project preparation. Project Execution 32. The core of the project consists of the formation of nine group ranches, responsibility for which will be vested in the Bobo-Dioulasso ORD. To implement the Group Ranch component of the project the ORD will establish, as a separate division, a livestock development center which will be run by an expatriate manager to be recruited. The Project is also designed to provide improved veterinary services to livestock owners in the area covered by the two ORDs of Bobo-Dioulasso and Dedougou. Here again it is the ORD which will be primarily responsible through its existing veterinary services, for supply- ing the services in question. Both ORDs are going concerns with Voltaic General Managers. It is one of the Bank's objectives to build the ORDs up as Government agencies primarily responsible for the execution of rural devel- opment schemes in Upper Volta. The third component of the project is concerned with improving livestock marketing and meat processing. This part would be implemented by the Project Unit (PU) on behalf of ONERA, an autonomous agency responsible to the Minister of Plan which would operate these facilities. 33. To coordinate the various components of the project and to super- vise its implementation, the Government would establish a Project Unit in the Ministry of Plan with headquarters at Bobo-Dioulasso (section 3.02a of the Credit Agreement). PU would have responsibilities for implementing the livestock marketing arid MCAT processing components and for evaluating the results achieved by the project now proposed and for the preparation of future livestock projects. This unit would include a Project Director, an Assistant Director (agricultural economist), a civil engineer through year 3, an account- ant, and after year 3, a livestock specialist. 34. The BND primarily a disbursing agent for this project, would be the credit channel for livestock marketing, meat processing and group ranch lending. Cost Estimates and Financial Arrangements 35. The project cost for the five-year period, net of taxes and import duties but including contingencies is estimated at US$10.8 million. Taxes account for an addi.tional USSO.7 million. It is proposed that an IDA Credit of US$9 million be made to Government on standard terms, covering 83% of the project costs excluding taxes and duties. The Credit would finance the project  - 12 - foreign exchange costs (US$4.8 million) and US$4.2 million of local currency costs. The remaining local costs would be met from Government's budgetary allocations (US$1.3 million) and from the National Development Bank (Banque National de Developpement-BND) (US$1.2 million). 36. Funds for the veterinary service would be channelled as a grant to the Dedougou and Bobo-Dioulasso ORDs. Funds for the Group Ranch Development Center would be on-lent to the Bobo-Dioulasso ORD by Government without interest, for a term of 20 years with a five-year grace period. Funds for group ranches would be channelled through BTD to final beneficiaries at 10 percent annually, for a term of 13 years with a six-year grace period. Gov- ernment would lend funds to BND at 5.5 percent annually, for a term of 18 years with a six-year grace period. The spread accruing to BND is sufficient to cover administrative expenses and risks. Government would on-lend funds for livestock marketing and meat processing to ONERA at 10 percent annually, for a term of 15 years including a five-year grace period; ONERA would make available funds required for the investment program to PU, which would develop the facilities. As part of the Ministry of Plan, PU would obtain funds for its other operations and for technical services directly. Procurement and Disbursements 37. Vehicles and equipment (US$0.9 million) would be procured through international competitive bidding in accordance with IDA guidelines. Domes- tically manufactured goods would be allowed a preference of 15 percent (or the level of applicable import duty whichever is lower). Contracts for (a) building and construction (US$1.7 million), (b) the installation of 88 wells along stock routes and for ranch development (US$0.7 million), and (c) the rehabilitation of the Bobo-Dioulasso slaughterhouse (US$0.1 million), in- cluding construction works and the purchase of equipment, involve numerous operations scattered over the project area and, phased over three years, would be awarded on the basis of competitive bidding advertised locally and in accordance with local procedures which are acceptable to IDA. These con- tracts are not large enough to make international tendering appropriate. Draft tender documents for all contracts exceeding US$100,000 would be sub- mitted to IDA for approval before invitations were issued. A major part of project costs (US$3.5 million) would be for cattle purchase, on-farm devel- opments, purchase of seeds and vaccines, staff salaries and operating costs; none of these would be suitable for competitive bidding. The services of expatriate staff and consultants (US$1.0 million) would be obtained accord- ing to procedures acceptable to IDA. 38. The IDA Credit would be disbursed over five years to cover: (a) 75 percent of total expenditures for civil works -- US$2.1 mil- lion;  - 13 - (b) 85 percent of total cost or 100 percent of foreign expenditure (CIF) costs for vehicles and other equipment-- US$0.9 million; (c) 60 percent of cattle purchases for group ranches and for the Group Ranch Development Center -- US$1.1 million; (d) 100 percent of foreign expenditures for expatriate personnel and foreign training, and for consultants for the Bobo-Dioulasso slaughterhouse -- US1.0 million; (e) 75 percent of the incremental working capital and project operating costs of group ranches, the Group Ranch Development Center, and PU during the disbursement period, excluding cattle purchases and foreign expenditures for personnel and train- ing -- US$0.7 million; and (f) 45 percent of the total operating costs of the veterinary services component during the first three years -- US$0.3 million. US$2.9 million would be unallocated. Markets 39. The market outlook for meat is very favorable in West Africa. Meat is increasingly scarce due to the recent drought, rapid population growth and urbanization; the strength of demand is shown by rapidly rising prices. Since the incremental production of the project at full development would not exceed about 11 percent of current domestic output, it should find a ready market. The hides and skins can easily be exported or bought by the state agency, SVCP; the milk would improve the nutrition of rural families and any surplus would find a ready local market. 40. Livestock marketing in the country is reasonably efficient, and the project would improve the marketing infrastructure in Dedougou and Bobo-Dioulasso ORDs. Slaughtering facilities would be made adequate by the reconstruction under this project of a slaughterhouse to cover the needs of Bobo-Dioulasso, the only large town in the project area. 'Meat is retailed by an adequate network of butcher stalls. Benefits and Justification 41. The direct benefits from the project would be incremental annual livestock production worth CFAF 758 million (US$3.4 million) in 1974 terms, yielding net foreign exchange earnings of the order of CFAF 359 million (US$1.6 million). About 50,000 pastoralists, benefitting from the improved veterinary service would increase their cash income from livestock produc- tion from about US$85 to US$105 and about 3,000 participating in group ranches would increase their cash incomes to about US$200. About 220,000 farmers benefitting from livestock production would increase their average  - 14 - per capita cash income from US$5 to US$7 and about 14,000 farmers partici- pating in group ranches would increase their cash incomes from livestock to US$56 in addition to the US$36 they derive from crops. 42. The economic rate of return of the project is estimated at 28 percent. Because of the high rate of return the project would absorb a substantial amount of the risks which exist. The project would substantially increase the productivity of the traditional herd (490,000): offtake would be increased from about 11 percent to 13 percent and sales would be increased by about 30 percent. The organization of traditional producers into group ranches which tackles basic and sensitive development issues -- social, cul- tural and land use, would be a pioneering venture for Upper Volta. The institution-building, training and technical assistance aspects of this component are of major significance and should provide guidelines for future development. If successful they could set the stage for widespread develop- ment of Upper Volta's vast pasture and livestock resources. 43. The main risks of the project are found in the group ranch com- ponent and are associated with the prevailing system of land utilization. They revolve around the difficulty in assessing the degree to which crop farmers will agree to give up their usufructuary rights over a portion of the land in the Samorogouan area and join together with the pastoralists as members of the group ranches and whether pastoralists would be willing to form a joint operation with the crop farmers. Even though under the present land tenure system all land is owned by Government and usufructuary rights are given to individuals, the crop farmers are the traditional owners of all land, and the chefs de terre, elected by the villagers, play a key role in allocating land to crop farmers and pastoralists for temporary use. The Peulh pastoralists who have lived in the area for 20 years, are still re- garded as foreigners and are at the mercy of the chefs de terre for their land allocation. In implementing the group ranch component the Samorogouan Development Center would come to grips with the problems and uncertainty which will surely exist by explaining and interpreting the nature of group ranches as well as by helping to resolve conflicts and difficulties as they arise. Furthermore, the potential benefits from participating which are substantial, should constitute a strong incentive to cooperate with the cen- ter. Funds for the group ranches are to be disbursed in phases and should the concept of group ranches not take hold, disbursements would cease. If this should happen, it would be most regrettable but it would not jeopardize the remainder of the project. In sum, although the project does involve risks, the potential benefits are so important relative to them that the risks are worth taking.  - 15 - PART V: LEGAL INSTRUMENTS AND AUTHORITY 44. The draft Development Credit Agreement between the Association and the Republic of Upper Volta, the recommendation of the Committee provided for in Article V, section 1(d) of the Articles of Agreement of the Associa- tion and the text of a Resolution approving the proposed Development Credit, are being distributed to the Executive Directors separately. 45. The draft Development Credit Agreement conforms to the normal pattern for credits for livestock projects. 46. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association. PART VI: RECOM24ENDATION 47. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments May 14, 1975  ANN EX I Page 1 of 3 ppges ONDlIRU DATA - UPPER VOLTA ARIA PMSATION IeUiTT 7,200 1m2 5.61 sillion (aid-l972) 57 Per klo2f erable lend SOCIAL INDICATORS Refemac Countriao Upper Volta I h enia --a" CI PER CAPTA USt (ATS BASIS) /. 70 / 70 a 180 ^ 260 i DEKORAPHIC Crude birth rate (per thouersd) 49 1 49 /cd S0 /cd 44 /e.d L4 Crude death rate (per thousand) 31 7_. 29 7 27 7Z 23 Z 22 Infect eortality rate (per thousand live births) 182 .. . 156 Ls. Lifen eapecta-y at birth (years) 32 335 /cd 37 /e.d 41 Lc_d L2 Oroes rpmoduction rate /2 3 2 c d 33 /4 2 9 3 0 Pnp.lation growth rate t 1 9 2.1 2.1 L 1.9 2f 1 Pop.letion growth rate - urban LI. i Age atructure (percent) 0-14 42 43 49 44 42 15-61 5S 54 49 51 95l 65 and oer 3 3 2 59/, 4 Age dependency ratio A 0.8 0.9 1.0 1.0 0.9 EcoCoOIC dapeodency ratio /4 0. ' 0.9 1.0 1.6 1.2 Urban population as peroent of total 5 ,R_, 11 / p 10 /iI 29 /L Frnily planeingl N. of 4Ccptors cosuleti-v (thous,) No. of users (% oa e,ried vwsen) RllLOYKSSt Tota1 labr farce (thousends) 2,500 3,000 9 2,800 530 1,600 /d.e Perecentage emeployed in agriculture 92 89 eg /e 73 Percentage unemployed 3 jg INCOUS DISTRIBUTION Percent of ratiooal incoCe received by highest S% Percet of nationael incose received by higheet 20% Percent of n tio-el ince received by loesot 20% Perent Of national incoce received by lojeet 40% MDSTRIRWTION OF LAND OWRSIPIP % owed by top 1 o% of owners % owned by msallest 10% of owners HEALTH AND NUTRITION Populatio. per physician 61,000 i 92,760 41,190 17,210 14,910 Populetion per nureing perso4 14UO 97I " 1,230 3,860 4,320 2,110 Population per hospital bed 1,810 t 1,670 v 1,380 y 2,790 /v 730 LI Per .epit. calorie supply as % of requireoente /5 85 /k S2 92 09 97 Per capita protein supply, total (grass per deyY6 66 7ik 66 69 75 61 Of thich, animal nd puolse 22 23 4L4 2O L Death rat. 1-4 years /7 EDUCATION Adjusted /8 prtnary school enrollcent ratio 8 13 20 15/e 4 Adjusted Z!hsecondery school enrollment ratio 1 1 2 2I 7 Tear, of schooling provided, first sod second level 13 12 12 IL 13 Vocational enrollnent as 8 of se. school enrollent 21 15 40 5 s 12 Adult literacy rate % . S /.,..as 10 /e zs 10 7 HOUSISO Average No. of persons per rtoo (urba.) Percent of o=cupted colts without piped actor Ac.see to electricity (as S of total populti-on) Percent of Aurl pePoletion connaeted to electrieity CONSUMPTION Radi re-c6i,rs per 1000 population 1 16 12 67 69 Passenger care per 1000 population 0.4 1 1 4 y 11 Sletric poer consucption (kcrh p..e) 2 A, 5 8 62 84 Nevsprint consunption p.c. kg per year 1.3 0.08 Notes: Figures refer either to the letaet periods or to account of environmental tenperature, body woighte, and the latest years. Letest periods refer in principle to dietribution by age eand ex of tional populations. the yearn 1956-60 or 1966-70; tha latest years in prin- /6 Protein standarda (requironecta) for all countries as e"tab- ciple to 1960 and 1970. liehed by USDA Eoono,oc Reesarch Service provids for a winisuc / The Per Capita GNP eotimate ir at narket prices for allowance of h0 gruse of total protein per day, aed 20 grene of yeare other than 1960,calculated by the ame conversion animal and pulse protein, of which 10 grane should be nixsl technique as the 1972 Wcrld bank ktlos. protein. Theae otandarde.are sonewhat lover than thosae Of 7 2 Average number of doughters per woonan of reproductive grais of total protein and 23 grass of anisal protein ea sn age. average for the world, proposed by FAO in the 7hird World Food Li Pbpulation growth mtie are for the deco des endig in Survey. 1960 and 1970. L7 Sone studies have euggeeted that crude death rates of children Rotio rf population under 15 and 69 and over to popula- ages 1 through 4 say be ossd as a first approxisation index of tioc of ages 15-61 for age dependency ratio end to labor nalnutrition. force of ages 15-61 for economic dependency ratio. /8 Percentage eanrolled of corresponding populati.c of achul age d FAO reference ntendard. represent physiological re- as defined for each Montry. quiresments ror corral activity and health, taking j 1972; b 1960-61; /s 1965-70; /d Retinate; /I 1968; /f 1960-72; a 1960-71; h 52 cities; Li Over 10,000 population; ,L Cap-Vert region and the cities of Saint-Louia, Thiee, Kaolick, Diourbel end Ziguinchar; A 1961; L 15-59 years; / 60 end over; Ln Ratio of population under 1S and 65 and over to total labor force; /L. Ratio of population under 1S and 59 and over ti total labor forne; LA. 1971; Ls 1959; / Six urban COaceunen and eight iocalities which can be conaidered as Urben; / 1970-71; /t 1963; Lu Including sidwives, -siotant. nurses and asistat nidoires; v Governrent hospital estobli.hmeut.; /w 1964-66; /. 1965; . 1969; 1 iS years and over; / Definition not available; /ab Eployasnt in agriculture including livestock socunto to 96 percent of lab-r force; 7 In urban area, about 20 percent. Senegal hae been selected as the objective co-ntry for Upper Volta since its GNP is about three ibmes that of Upper ocitan; they both are in the sae ge-grephicel area, Sehelian region, ehere a simi3ar uccetary aysten, and have the sBe eecono=ic groeth rate in thi period 1960-71, and the eare literacy retio 5 - 10 percent as cell. R2 PorI, l3 19!t  ANNEX I Page 2 of 3 pages ECONOMIC INDICATORS GROSS NATIONAL PRODUCT IN 1973La ANNUAL RATE OF oROdrH (%. constant prices) US$ Mln. 1950 -60 1960 -73 1965 - 73 ONP at Market Prices 425.6 100.0 3.7 2.2 2.3 Gross Dobmestic Investment 59.0 13.9 4.5 2.6 1.7 Gross National Saving -9.3 -2.2 Current Account Balance -67.9 -15.9 Exports of Goods, NFS 32.3 7.6 1.1 3.5 5.8 Imports of Goods, NFS 100.2 23.5 0.4 2.6 1.9 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1972 Value Added Labor Force V. A. Per Worker US$ Mln. f 0ooo C US-$ % Agriculture 144.4 41.3 2,792 96.4 58 45 Industry 63.3 18.1 25 0.8 2o 7 services 141.7 40.6 81 2.8 1 778 l 539 Unallocated /b .. Total7iverage 349.4 100 .0OZ,b9 O 12t. 10 . O GOVERNMNT FINANCE Oeneral Government CFAF Billion) o OfGPD - 1973 _ 1969_7 Current Receipts 12.2 12.2 11.8 Current Expenditure 10.5 10.5 9.8 Current Surplus -' 1.7 2.1 Capital Expenditures 1.3 1.3 1.2 External Assistance (net) 0.7 0.7 0.6 MONEY, CREDIT and PRICES 1955 1969 1970 1971 1972 1973 1974 (hillion CFAFoutstanding end periodF Money and Quasi Money 6.41 8.07 9.37 9.93 9.96 14.62 17.53 Bank credit to Public Sector 0.13 -2.24 -3.e4 -4.45 -5.14 -6.13 -9.27 Bank Credit to Private Sector 4.03 5.69 5.63 6.11 7.31 9.16 15.38 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 7.6 10.8 10.8 10.1 14.65 General Price Index (1963 - 100) 108.3 110.2 119.0 123 136.3 Annual percentage changes ins General Price Index 1.8 8.0 3.4 10.7 Bank credit to Public Sector . -71.1 -15.9 -15.5 -19.3 -51.2 Bank credit to Private Sdctor . -1.1 8.5 19.6 25.3 67.9 NOTE. All conversions to dollars in this table are at the average exchange rate prevailing during the period Economic data Sheet, IBRD Lb Total labor force; unemployed are allocated to sector of their normal occupation. "Unallocated" consists mainly of unemployed workers seeking their first job. not available not applicable  ANNEX I Page 3 of 3 pages TRADE PAYMENTS AND CAPITAL FLO'rS BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1969-72)/b 1970 1972 1973 US $ Mln % (M 111i on UTS $ ) Exports of Goods, NFS 32.0 43.3 52.3 Livestock and Livestock Products 7.9 43S Imports of Goods, NFS -70.6 -116.8 -148.3 1) Live Animals 6.7 37 Resource Gap (deficit = -) -TO, 7 9 2) Meat 0.1R 4 3) Hides and Skins 0.4 2 Interest Piaynents (net) 0.4 -1.6 -0.8 Cotton 4.7 26 Workers' Remittances 17.3 25.0 28.5 1) Seed n.4 p Other Factor Paynnents (net) . . . 2) Ginned 4.3 24 551:er private Transfers (net)Ia 7.6 8.2 15.3 All other cosnodities 5.6 31 Balance on Current Account -14.0 - -330 Total .2 100,0 Direct Foreign Investsment 1.5 0.8 1 EXTERNAL DEBT, DECEMBER 31, 1973 Net M,T Borrowing 1.0 2.7 l 17.4 Disbursements (2.2) (4.3) ( US $_Mln Amortization (1.2) (1.6) j Subtotal -11.5 -35.4 -75.6 Public Debt, incl. guaranteed 119.5 Capital Grants 22.3 32.8 54.8 Non-Guaranteed Private Debt Other Capital (net) 0.4 5.9 > -2.5 Total outstanding & Disbursed Other items n.e.i 2.7 -1. Increase in Reserves (+) 13.8 1.6 1t,,7 DEBT SERVICE RATIO for 1973ic Gross Reserves (end year) 36.4 47.5 62.7 Net Rescrves (end year) 31.7 39-3 55.2 Public Debt, incl. guaranteed Non-Guarantced Private Debt Fun] ard Related Materials 6.8 8.8 . Total outstanding & Disbursed 5 7' i-mports of ohich: Petroleum 3.8 5.0 brPor t s of which: PetroleuT * IBRD/IDA LENDING, ( Feb. 1975 (Mill ion IJS S): PUFF OF' EX('4GMt::, ' 1BRD IDA 19_9-71 : US$1.00 = CFAF 276.O0 Outstandling & Disbursed 9 1972 : US$1.00 = CFAF 23'J;.25 Undisbursed 24.1 1973 U5$1.00 = CYAF 235.42 Outstanding inicl. Tndisbursed /d 1974 : US$1.00-= CI'AF ?:2.2i