Guinea - Livestock Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2959a-GUI REVOLUTIONARY PEOPLE'S REPUBLIC OF GUINEA LIVESTOCK DEVELOPMENT PROJECT STAFF APPRAISAL REPORT August 19, 1980 This documient has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Syli US$1.00 = 19 Syli Syli 1.00 = US$0.0526 WEIGHTS AND MEASURES Metric System LIST OF ABBREVIATIONS BGCE - Banque Guineenne du Commerce Exterieur BMP - Brigade Mechanisee de Production BNDA - Banque Nationale pour le Developpement Agricole BDE - Bureau d'Etudes (Research and Planning Office) CBPP - Contagious bovine pleuropneumonia CGR - Commissariats Generaux de la Revolution COTRA - Compagnie de Transports DGE - Direction Generale d'Elevage (General Directorate of Livestock) DREP - Direction Regional de l'Elevage et de la Peche (Regional Livestock Services) ENCOBE - Entreprise de Commercialisation du Betail (A regional authority for the collection of animals) FAPA - Ferme Agro Pastorale d'Arrondissement IRBANC - Institut de Recherches et de Biologie Appliquee - Nenenkhaly Condetto (Central Vaccine Production and Diagnostic Laboratory) MCE - Ministere de Controle d'Etat MEP - Ministere de l'Elevage et de la Peche (Ministry of Livestpock and Fisheries) ,OBETAIL - Office de Commercialisation du Betail (The Government supply enterprise for meat to Conakry) ONAH - National Fuels Office PRL - Pouvoir Revolutionnaire Local RMWA - Regiornal Mission (World Bank) West Africa GOVERNMENT FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY REVOLUTIONARY PEOPLE'S REPUBLIC OF GUINEA LIVESTOCK DEVELOPMENT PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. I. BACKGROUND A. Introduction ............... - 1 B. Trhe Economy 1.. C. The Agricultural Sector .. 2 D. The Livestock Sub-Sector: Livestock Numbers and Distribution ..* .................... 3 : Breed ............................... 4 : Management Systems ................. . 4 : Herd Composition and Productivity ... 5 : Animal Health ....... ............... . 5 i Institutional Structure ........... 6 D The Livestock Service ........... 6 : Livestock Education and Recruitment 7 Sector Financing and Taxation ....... 8 : Sector Strategy and Investiment Programs .......... ................. 9 II. THE ]?ROJECT AREA ...................................... 10 III. THE P?ROJECT ...................................... 12 A. Objectives and Summary Description ............. ................ 12 B. Detailed Features: Strengthening of Regional Livestock Services .................................. 13 : Vaccination Program ........... ............. 15 : Vaccination Production and Disease Diagnosis ............. .. .................. 17 Staff Training . ....... ...... ... .......... . 17 * : Institution Strengthening ........ .......... 19 Pilot Credit Program .......... .. ........... 20 Other Activities ............ ............... 21 This report is based on the findings of an appraisal mission wTLich visited Guinea in October/November 1979, comprising Messrs. K. Oblitas, R. Crown and N. Nissen supported by Ms. P. Brennan (Programs Department) and Mr. P. Blanc (advice on veterinary specialities). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Iu contents may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS (continued) Page No. IV. ORGANIZATION AND MANAGEMENT ........... ................. ... . ...... . ... 23 Organizational Structure ......... ................... .. .. .. ... . 23 Staffing ....................................................... 23 Technical Assistance ....... ................................ ..... 24 Implementation .............. .... 25 Preparation of a Possible Follow-up Project ..................... 25 Data Collation and Analysis . .................................... 25 Operation and Maintenance of Vehicles ...................... . 26 Project Buildings ............................... .. .... 26 V. PROJECT COSTS AND FINANCING ............ 26 Project Costs . ................................................. 26 Proposed Financing ............................................. 27 Project Preparation Facility ................................... 29 Procurement .................................................... 29 Disbursements .................................................. 30 Financing Procedures and Revolving Funds ....................... 31 Reporting Requirements, Accounts and Auditing ................ .. 31 Charges for Veterinary Services ....... ......................... 32 Financial Implications for Government .......................... 33 VI. MARKETING, PRICES, PRODUCTION AND INCOMES ...................... 34 A. Marketing and Pricing Policies ...... ........................ 34 B. Economic Values of Meat and Milk ........................... 36 C. Production ................................................. 37 D. Herdsmen Incomes and Incentives ...... ..................... 38 E. Credit Program Incentives ..................... ............. 40 F. Revenues from Export of Breeding Stock ..................... 40 VII. BENEFITS, ECONOMIC ANALYSIS AND RISKS ..... ..................... 41 A. Project Benefits ........................................... 41 B. Economic Analysis ..... .......................... ........... 42 C. Risks ...................................................... 43 VIII. AGREEMENTS AND RECOMMENDATION ....... ........................... 44 LIST OF TABLES IN THE MAIN TEXT Table No. 1. Project Cost Estimates ......................... ................. 28 2. Financing Plan ................................................. 29 3. Effect on Herdsmen Incomes ...... ............................... 38 4. Summary of Economic Analysis ................................... 43  - iii - TABLE OF CONTENTS (continued) Page No. ANNEXES ANNEX 1 1. Project Costs by Year ...... ......................... 47 2. Disbursement Schedule o ............................. 48 3. Herd Development and Production ................... .. 49 4. Projections of Costs for Financial and Economic Analysis ............................. 50 5. Summary of Economic Costs and Benefits ........... ... 51 6. Government Cash Flow ...... .......................... 52 7. Beneficiaries Cash Flow ........................ 53 8. Pilot Credit Program Cash Flow ................... ... 54 ANNEX 2 Contents of Project File ....................... ....... 55 Figures 1: Project Organizational Structure .... ......... 56 Figure 2: Project Implementation Schedule .... .......... 57 MAP IBRD 14977 GUINEA LIVESTOCK DEVELOPMENT PROJECT   GUINEA APPRAISAL OF A LIVESTOCK DEVELOPMENT PROJECT I. BACKGROUND A. Introduction 1.01 The Government of Guinea has requested IDA assistance in financing a livestock development project that would increase the productivity of the national cattle herd. Sector analysis and project identification were conducted in 1977 by consultants financed through a study component included under IDA's first credit to Guinea's rural sector, the Daboya Pineapple Project (Credit 569-GUI, FY75). Project preparation was undertaken by RMWA irk 1978 and 1979. Appraisal took place in October/November 1979. B. The Economy 1.02 Guinea has an area of 246,000 km2 and a population of about 5.3 million growing at 2.9% per annum. The country's varied and fertile natural conditions (paras 2.01 to 2.07) provide potential for a diversified agricul- ture and animal husbandry, while its substantial water resources are suitable for irrigated agriculture and hydroelectric power. Mineral deposits include bauxite, of which the country is estimated to possess the largest reserve in the world, and considerable quantities of high-grade iron ore. 1.03 Economic performance during the 1960's and early 1970's was disappointing. After independence (1958), the Government placed emphasis on reorganizing economic and social activities towards a socialist economy with trade, banking and manufacturing handled almost exclusively by state enterprises. Inadequate planning, managerial inexperience and shortages of skilled manpower limited productivity, and public enterprises absorbed increasing amounts of Government resources to the detriment of agricultural investment which received negligible funding. The capital costs and recurrent deficits; of public investment soon exceeded budgetary savings resulting in heavy foreign borrowing, increasingly unmanageable debt obligations, and expansion of the money supply. Galloping inflation, overvaluation of the local currency, sharp curtailments on imports of raw materials and consumer goods, and development of an active parallel market with prices substantially higher than official levels resulted. The economy thus stagnated in a vicious circle of foreign exchange shortages, poor incentives, and declining investments, output and exports. 1.04 From 1974, after the start of two large bauxite mines, the eco- nomy picked up and per capita GDP has since grown at an average of 3.2% per annum in real terms to reach US$290 in 1979. Recent Government measures have further contributed towards reducing monetary imbalances and stimulating productivity. Future economic prospects are good although, in the medium term, meeting foreign debt obligations will remain a critical problem. Per  - 2 - capita GDP is expected to grow steadily led on by a projected rapid growth in mining exports. Government intends to use its increasing financial resources to develop the rural sector and rehabilitate the manufacturing industry and public utilities. C. The Agricultural Sector 1.05 The agricultural sector provides a livelihood for about 80% of Guinea's population and contributes about 40% of GDP. Rice is the staple food occupying about half the cultivated area. Other important food crops are maize, fonio (Dijiteria), plantain, root crops (primarily cassava), groundnuts, coconut and fruits (mangoes, citrus, pineapple). Nearly one third of Guinea-s rural families own cattle (para 1.12). 1.06 Despite the potential offered by Guinea's diverse and fertile natural resources, agricultural performance, in line with performance elsewhere in the economy (para 1.03), has been disappointing during the past two decades. In 1958, Guinea was the largest exporter of bananas in West Africa (about 100,000 t annually) and was also an exporter of other agricultural commodities, primarily pineapple, coffee and palm kernels. Subsequently, officially traded agricultural exports declined to negligible quantities: from US$22 million in 1960 to US$11 million in 1970 and virtually zero by the late 1970s. Meanwhile, food imports (primarily rice, also wheat flour and sugar) increased from US$6 million in 1957 to about US$18 million annually in the early 1970s and amounted to US$27 million in 1978. 1.07 Principal factors instrumental in Guinea's disappointing rural sector performance are: (i) lack of appropriately trained manpower at all levels and of institutions capable of designing and effecting appropriate rural development policies; (ii) a distorted pricing system (paras 1.09 and 6.01 to 6.07) providing farmers with minimal incentives to produce for the market and, in particular, to sell to Government; (iii) low past invest- ment levels in the sector; and, (iv) the virtual absence at the farm level of crucial inputs such as improved seed, fertilizers, and medicaments and vaccines for domestic animals, particularly cattle. As a result, crop yields and livestock productivity are generally low and farmers usually produce only for family subsistence or sales on the parallel market. 1.08 Government now places very high priority on development of its rural sector and, from the mid 1970's, stepped up investment levels consider- ably. To date, the primary focus of Government's investment program has been on mechanized collective agriculture. This began as an attempt to establish over 2,000 small village cooperatives known as "Brigades Me- chanisees de Production (BMPs)," each equipped with a tractor, a plough and a disc harrow supplied through an interest free loan. Inexperience with such machinery, lack of spare parts, the absence of accompanying inputs such as improved seed and fertilizer, and inadequate incentives for participants due to low yields, and, in particular the low official prices offered for output produced by the cooperatives, produced disappointing results. As a result, most of the BMPs are no longer functioning. In 1979 a new approachi was embarked upon which would involve the eventual provision to most of Guinea's  - 3 - 320 Arrondissements (para 1.21) of a more sophisticated set of equipment and inputs and the organization of an arrondissement farm (Ferme Agro Pastorale d'Arrondissement, FAPA) to be operated principally by surplus graduates from Guinea-s agricultural education system (para 1.27). This revised strategy also contains some disquieting potential pitfalls, although it would be premature to prejudge the outcome of the FAPAs at this stage. Nevertheless, in spite of Government-s initial orientation towards mechanized collective agriculture, Government is becoming increasingly receptive towaLrds possibili- ties for the development of smallholder farming through basic agronomic improvements such as use of fertilizer, improved seed and upgraded crop husbandry practices. This type of approach is being aided in the context of the Rice Development Project (Credit 952-GUI, FY80) which also provides for institutio,nal strengthening of the ministry involved and an agricultural pricing study to assist Government in assessing means to augment rural incentives and productivity. 1.09 The study on agricultural prices and rural incentives involves a two man team of specialist agricultural economists with previous W. African experience in such work, supported by additional specialist inputs as required in macro-economics and marketing. Work began in April 1980, an interim report is expected in early 1981 and a final report by early 1982. The consultants will work in liaison with a committee consisting of senior representatives from key ministries connected with the economy, finance, planning and rural development. In view of the importance of the study for the future develop- ment of Guinea's rural sector, it was agreed during negotiations for the Rice Development Project that IDA staff should provide specialist assistance to the committee and that Government would regularly discuss with IDA the interim findings and progress of the study and would hold further discussions upon completion of the study. The study will provide Government with a technical basis upon which to evaluate its rural pricing and marketing systems and to instigate changes where it deems appropriate. Such an assessment is much needed in order to adjust for the very low producer incentives that have to date been characteristic of Guinea's rural sector. While official prices offered to producers by Government may compare well with prices in neighboring countries when measured at the official exchange rate, the actual purchasing power of the syli in relation to the goods that it can buy is substantially less than that implied by this rate which is estimated to be overvalued by about two times. The pricing and marketing situation as it specifically affects the livestock sector is discussed in detail in paras 6.01 to 6.08. D. The Livestock Sub-Sector 1.10 Livestock Numbers and Distribution. Livestock and in particular cattle are an important element of Guinea's rural economy. Livestock resources comprise about 1,250,000 cattle, 250,000 sheep, 300,000 goats, 60,000 pigs and five million chickens. Of the total cattle population, about 45% is kept in Middle Guinea, 27% in Upper Guinea, 18% in Maritime  - 4 - Guinea and about 10% in the Forest Region (see map). The regional distribu- tion of sheep and goats is similar to that of cattle. Pigs, on the other hand, are concentrated mainly in the Forest Region. Poultry are reared throughout the country. 1.11 Breed. The cattle population consists almost entirely of the N'Dama breed, the only significant exceptions being along the border with Mali where some crossbreeds between N'Dama and Zebu are found. The N'Dama is a small humpless breed with relatively high fertility and moderate milk production, and with a high overall productivity even under ecological hardship. The N'Dama's most outstanding characteristic is its relative trypanosomiasis tolerance. Trypanosomiasis, a disease transmitted by the tsetse fly, can be found in most humid parts of Africa which represent about one-third of the continent. The N'Dama breed, which is thought to originate from Guinea's upland plateau, the Fouta Djalon, has therefore become much sought after by countries that wish to introduce N'Damas so as to utilize the untapped forrage resources in humid tropical regions. However, while the demand for the breed is high, the supply of heifers is extremely short re- sulting in high prices for N'Dama breeding stock. As rising costs and environ- mental considerations increasingly question the traditional chemical tsetse fly eradication, demand for N'Damas is expected to increase further, providing an attractive market outlook for Guinean live cattle, a potential that would be explored and developed under the project (para 3.25). 1.12 Management Systems. The ownership of cattle is well distributed involving an estimated 160,000 families or 30% of Guinea's rural population, and with herd sizes which are typically (for over 80% of owners) less than ten animals. Thus, while a few cattle owning families with larger herds tend to have higher than average incomes, for most cattle owners' family incomes are about the average or slightly above the average for the rural sector. The small size of the typical herd means that practically all cattle owning families also grow crops which are usually their primary source of income. Herdsmen are generally sedentary; animals are grazed in the bush or on crop residues during the day and are tethered near the homestead at night. Some transhumance is practiced in the western part of the Fouta Djalon where forage resources are limited during the dry season (para 2.03). Cattle are reared for milk, meat and draft purposes with the importance of each function being partly dependent on locality. Thus, in the Fouta Djalon, milk is a particularly important product as is meat, but usage of work oxen is less prevalent. In Upper Guinea keeping cattle for draft purposes may be the primary motive. Throughout the country, livestock rearing is a means of storing capital for use in emergencies or for gifts at weddings and other occasions. Cattle are, therefore, highly prized possessions and, within the constraints posed by the general lack of adequate veterinary and animal husbandry support services, are generally carefully tended by their owners. 1.13 Guinea is one of the few countries in West Africa where animal husbandry has been substantially integrated into the agricultural production system. Such integration includes the usage of cattle for draft purposes and for manure, while cultivation provides crop residues and by- products as feed. These interchanges, which although limited could be further developed in the future, are beneficial to both systems.  1.14 Herd Composition and Productivity. Herd composition for a 10 animal herd would typically be as follows: 4 cows, 2 calves, 2 heifers and 2 males (steers, bulls or oxen). Productivity is low. Calving for heifers does not generally occur until four years of age and the subsequent calving rate is only 54% with a calf mortality of 34% resulting in a weaning rate of less than 40%. The mortality rate among young stock aged 1 to 2 years is about 10% and the mortality rate among reproducing cows is about 5%. As a result of internal parasites, the lack of mineral supplements and generally poor disease control services, the population of the country-s herd is estimated to be abotut static and annual liveweight gains for young stock aged 1 to 3 years usually do not exceed 40 kg per animal with herd offtake estimated at about 11%. 1.15 Animal Health. The poor status of animal health is the main constraint to productivity and herd growth. Major disease hazards are contagious bovine pleuropneumonia (CBPP), anthrax, blackleg, pasteurellosis and rinderpest, while internal and external parasites can result in serious debilitation and trypanosomiasis is a particular threat to already weakened animals. Furthermore, an inadequate mineral content in the diet reduces absorption of nutrients during digestion, and overmilking of cows reduces calf growth rates and increases calf mortality. 1.16 CBPP was endemic in Guinea until very recently causing an estimated 4,000 deaths annually, mainly in the eastern half of the country (Upper Guinea and Forest Region). Further spread of the disease to M4iddle Guinea and Maritime Guinea was prevented by control of animal movements. Since 1975, when an UrNDP/FAO assisted vaccination program in the eastern half of the country started (para 1.31), no further outbreaks have been reported from Upper Guinea and the Forest Region. A few cases of CBPP have, however, been reported recently in the western half of the country along the northern and southern borders. 1.17 Anthrax, blackleg and pasteurellosis occur throughout Guinea al- though their incidence is lower in the Forest Region. The UNDP/FAO assisted vaccination campaign, reduced mortality as a result of these diseases to less than 1,000 head (recorded) during 1978, mostly in the western half of the country. Based on available records, mortality in previous years is thought to have been several times higher than that. Rinderpest outbreaks have not been reported in Guinea since the end of the UNDP/EEC sponsored "PC 15" campaign in the 1960s. The possibility of renewed outbreaks must, however, be continually guarded against. 1.18 Internal and external parasites, probably cause the most serious overall economic losses to the livestock sector. The high calf mortality and heavy losses of young stock are primarily caused by these parasites. Sub- sequently, such parasites cause low liveweight gains, reduced fertility, low milk production and reduced draft animal efficiency. 1.19 Trypanosomiasis infested tsetse flies are found alL over Guinea. However, the disease itself is only a problem for weak animals for which the inherited trypanosomiasis tolerance of the N-Dama becomes insufficient. As a result, liveweight gains and milk production are reduced and draft oxen become weak and unable to perform satisfactorily.  - 6 - 1.20 Institutional Structure. Responsibility for development of Guinea's livestock sector lies with the Ministry of Livestock and Fisheries ("Ministere de l'Elevage et de la Peche-MEP"), which was created as a separate Ministry in 1979. The Ministry supervises the Livestock Service (para 1.22) which is the implementing agency for field activities connected with livestock produc- tion. The Fisheries Service, the state meat marketing agency OBETAIL (para 6.01), and the livestock disease diagnosis and vaccine production laboratory (para 3.13) also come under the Ministry-s supervision. Responsibility for training of veterinary and livestock production personnel (paras 1.24 to 1.27) is shared with the Ministry of Higher Education and Scientific Research. Responsibility for sectoral analysis, planning and evaluation of investment proposals in the livestock sector has up till now been handled by a research and planning office within the Minister of Livestock and Fisheries' cabinet. Under the proposed project the functions of this office as they specifically relate to the livestock sector would be largely taken over by a new unit to be created within the General Directorate of Livestock (paras. 4.01 and 4.02). 1.21 The Ministry of Livestock and Fisheries (MEP), as do other minis- tries, operates within a territorial country administration. Guinea is divided into 33 Administrative Regions grouped under seven "Commissariats". Each Administrative Region is subdivided into "Arrondissements" of which there are about 320 in the country. The Arrondissements are, in turn, subdivided into "Pouvoirs Revolutionnaires Locaux" (PRLs) which typically consist of a village or several small villages containing about 200 families. The local administrations hold general mandates of local Government while the central ministries hold specific responsibilities for their technical specialty. Thus, the MEP's regionally based livestock service (para 1.22) comes under the general political and administrative umbrella of each regional Governor, but for technical matters and specific supervision is under the Minister of Livestock. Providing the local administrations are awa-re of the development strategy of the central ministries, the system works quite well and the regional administrations can provide a strong local base for supporting field activities of regional staff under the central ministries. However, while the active cooperation of the regional authorities would be an important positive influence upon the success of the project, there is also a possible danger of inappropriate intervention by the local administrations. This was drawn to Government's attention during negotiations and procedures to minimize this possibility were reviewed. 1.22 The Livestock Service. Implementation of field activities under the MEP is the responsibility of the General Directorate of Livestock ("Direc- tion General d'Elevage, DGE") which is headed by a Director who controls a territorially based Livestock Service from a headquarters building and staff based in Conakry. The DGE's function is to continually survey the state of animal health, diagnose diseases and give medicines and treatment when these occur, provide advice on animal husbandry and give vaccinations. The service also undertakes an annual census of livestock. A Regional Directorate of Livestock and Fisheries ("Direction Regional de 1'Elevage et de la Peche, DREP") headed by a regional director is found in each of Guinea-s 33 Administrative Regions. Under each DREP, field services are organized by arrondissement which  typically cover about 20,000 ha and include a number of villages containing in total about 1,500 families. Staffing in a DREP would usually consist of the Director, one or two "controllers" (middle level staff) and a "monitor" (junior level staff) at the DREP headquarters and, for each of t'he region's arrondissemerts (usually about 10), a controller and one or two monitors. 1.23 Infrastructure and equipment for the livestock services are very inadequate at present. The DGE is based in a delapidated house in a residen- tial area of Conakry 12 km from the Ministry, and is deficient in transport facilities and most basic furnishings and equipment. Similarly, regional headquarters for each DREP are in need of repair or in many cases, resiting and rebuilding. Arrondissements generally do not have specifically constructed offices; the equipment, materials and medicines being kept in thLe houses of the field staff concerned. Particularly critical is the shortage of equip- ment and materials for diagnosis and treatment at both DREP headquarters and in the arrondissements. Drugs, medicaments and mineral salts are virtually unobtainable. Furthermore, lack of transportation hampers mobiliLty of field services which are generally limited to one or two bicycles and a motorcycle per DREP (including the arrondissements), while the distance between a DREP headquarters and an arrondissement center frequently exceeds 30 km. 1.24 Livestock Education and Recruitment. Guinea has two intermediate level livestock training colleges -- Mamou and Famoyla -- and tlhree higher level faculties at Foulayah, Kankan and Faranah. Some senior staff have also studied abroad, although the content of such studies has frequently been insufficiently adapted towards tropical livestock needs. Guinea's intermediate livestock colleges provide two year courses after which about half go on to three year courses at the higher level faculties and eventually become senior level staff. The rest enter the service immediately as con- trollers or assistants. Cadres with secondary school education can also be employed directly into the service as monitors and are expected to gain experience while on the job. 1.25 The quality of livestock education is, however, inadequate. All of these institutions lack even the most basic library, laboratory and practical training facilities and most of the teaching staff are recent graduates from the same system. The subject matter of courses lacks practical orientation and they frequently cover topics which are only marginally rele- vant to Guinean livestock sector needs. 1.26 While significant improvements might be made to these institutions, approprial:e rationalization of manpower needs and training targets would have to be established first. The Livestock Service currently employs about 600 middle and upper level staff (controller rank and above) and with its currenit resources and level of training, is fully staffed at these levels. However, current enrollment at Guinea's livestock colleges would lead to an annual output of over 200 graduates at the middle rank assistant/con- troller level by 1981 and an annual output of over 150 senior level staff by 1985. Since Government has up till now guaranteed jobs to all graduates from its education system, staffing of the Livestock Service and Ministry could  - 8 - double in three years and triple in five years, creating considerable redund- ancy and frustrating the attempts proposed in this project to increase effi- ciency. The implications for the Ministry budget would be equally negative. The gross wage bill of the livestock service in 1976 was about sylis 11 million (US$ 0.6 million), by 1978 it had grown to sylis 33 million (US$ 1.7 million), and is estimated to be sylis 50 million (US$ 2.6 million) in 1980. If the present rate of growth were maintained, the annual wage bill would reach over sylis 160 million (US$ 8.4 million) per annum by 1985. 1.27 The problems described above -- inadequate alignment of manpower requirements with educational objectives, and guaranteed employment of graduates from the system -- is endemic to other sectors and has similar consequences; over-crowding and inadequate training in many of the colleges, redundancy in Government services, and a growing financial burden on the state due to support of essentially unproductive cadres. These problems are recog- nized by Government and have been dealt with in depth by a report of a UNESCO educational survey mission which visited Guinea in February/March 1980 and which concentrated on the rural sector. Further analytical assistance will be provided under IDA's First Education Project (Credit 849-GUI, FY 78) which provides for three consultant years to study educational problems and priorities. 1.28 During negotiations the general problem as it affected the livestock sector was discussed in detail and an assurance was obtained that by December 31, 1981 Government would take measures to initiate a system of manpower planning, education and recruitment for staff of the livestock sector in accordance with staff needs and budgetary constraints. It was agreed that the Research and Planning Office ("Bureau d-Etudes," BDE) to be established under the project in the General Directorate of Livestock would have overall res- ponsibility for making recommendations on staff requirements and hence educa- tional needs for the sector. An internationally recruited economist in the BDE would be charged with co-ordinating these activities and technical liaison with other ministries involved with education and finance. A first priority would be the establishment of manpower requirements over the forthcoming ten years based on criteria to be established in consultation with IDA. It was also agreed that BDE recommendations would be continually adapted and dis- cussed by Government with IDA in order to facilitate a rapid resolution of the imbalances noted in para 1.26 above. No funding would be provided under the proposed project for any improvements to livestock colleges that are training new staff as this would be premature until a full strategy constraining staff numbers is being implemented. However, the project does include a small recycling training center for the upgrading through short intensive courses of existing livestock service staff (para. 3.16). 1.29 Sector Financing and Taxation. Funding of the livestock sector is made primarily through a central Government account, the "Budget Nationale", which finances an estimated 80% of sector expenses. This source is supple- mented by the regional budgets which finance some low level staff positions from the general budgets provided to them by Government. In 1977 these two sources provided an estimated sylis 31 million (US$1.6 million) towards  sector related expenses of which over 80%--about sylis 27 million (US$ 1.4 million)--went towards salaries leaving, for the entire sector, only sylis 4 million (US$200,000), for the purchase of equipment, materials, veterinary products and maintenance of buildings (fuel was financed sepa- rately). Receipts from the sector stem primarily from the ",raccination tax" which provided sylis 5.7 million (US$0.3 million) in 1977. Theoreti- cally, otlher forms of taxation also exist (for instance, the slaughtering tax) but collection against these has been largely suspended; total revenues in 1977 amounting to only sylis 0.1 million (US$5,000). The vaccination tax is a tax of 15 sylis (US$0.80) per adult animal which is supposed to be collected from all animals that have been vaccinated. Revenues from the tax go to the regional budgets but are not specifically earmarked to go back into the sector. Collection is done by local officials based on a census conducted by the local administration which is also the basis for estab:Lishing the annual quota for cattle sales through the official marketing r,ystem (para. 6.01). While not formally linked to the annual census done by the livestock service (para. 1.22), the two sets of census figures in any given region are often very similar inducing suspicion by herdsmen of livestock service staff. Currently, the magnitude of the funds collected from the tax (although incomplete due to census evasion and incomplete collection), hardly justify the efforts made to collect it, particularly as it risks jeopardizing the relationship between the herdsmen and livestock service staff. Moreover, the margins ithat would be made under the project through the sale to herdsmen at cost plus of veterinary products and mineral licks (para 5.14), would be substantially greater than the revenues collected through the tax. An assurance was therefore obtained from Government during negotiations that the vaccination tax would be phased out by December 31, 1981. 1.30 Sector Strategy and Investment Programs. Government's primary objective in the sector is to increase national meat producti.on, in particular for urban consumers. In addition, Government recognizes the nutritional value of the national cattle herd's milk production, the significance of livestock rearing on the livelihoods of a substantial portion of Guinea's population, and the current and potential benefits from animal traction. The potential to further these objectives is good since a large proportion of the population are experienced in keeping cattle and other forms of livestock. Furthermiore, the N'Dama breed is highly suited to prevailing environmental and husbandry conditions, and in most areas there are sufficient pasture resources. A major constraint, however, is the lack of adequate veteri- nary andl animal husbandry support services. 1.31 Efforts to improve the animal health situation in Guinea have to date concentrated on vaccination programs against the prevalent cattle diseases in eastern Guinea (Upper Guinea and the Forest Region). These measures have been introduced through two UNDP/FAO assisted projects: a vaccination program using mobile teams based at Kankan in Upper Guinea (Project GUI/78/012, para 3.08) and a project to upgrade thEl vaccine produc- tion and disease diagnosis laboratory at Kindia (Project GUI/78/013, para 3.13). Both projects are operating successfully. As UNDP funding in each case is due to end in December 1981, the proposed project would, inter alia, continue these two activities and also extend the vaccination prograra to the western half of the country. Another priority requirement for the sector is for  - 10 - facilities and materials with which to provide treatments against internal and external parasites, a matter that would also be tackled under the proposed project. Other programs in the sector include a pilot genetic improvement exercise in the Boke area sponsored by UNDP (Project GUI/79/007), and a proposal to establish a ranch at Beyla in the Forest Region. An agreement concerning the ranch proposal has recently been signed between Government and SOCFINCO-VAN LANKER, a group that has had previous ranching experience in West Africa and which would operate the ranch as an autonomous commercial venture. II. THE PROJECT AREA 2.01 The proposed project would have a countrywide coverage although the extent of its focus and hence of its impact would bear a relationship to the number of cattle in each locality. The country can be divided into four main natural regions (see map) with principal characteristics described in paras 2.02 to 2.06 below. 2.02 Middle Guinea which includes the 600-1,500 m plateau known as the Fouta Djalon is the most important livestock region. It encompasses about 20% of the country-s land area and just under a third of the country's popula- tion but holds 45% of Guinea's cattle herd and 51% of all small stock. While natural conditions are favorable for cattle raising (rainfall is between 1,600 and 2,200 mm, the dry season lasts for only six months and the climate is cooler than in other parts of the country), the main factor responsible for the concentration of livestock in the Fouta Djalon rests in the history of the local people,, predominantly of Peuhl origin, who were formerly nomadic or semi nomadic herders but who have now settled to become mixed farmers. Cattle are reared primarily for milk and meat although draft oxen are sometimes used where topography and soils are suitable. 2.03 Cattle density in the Fouta Djalon varies averaging 9 head/lOO ha, a density twice as high as in Maritime Guinea and three times that in Upper Guinea. Such a density is, however, still judged to be within the global pasture resources available in the Fouta Djalon, although in certain of the more densely populated administrative regions such as Labe and Pita, feed shortages are encountered during the dry season necessitating transhumance to the more plentiful resources of nearby Maritime Guinea. While Guinea's fodder resources would be studied under the project (para 3.25), lack of pasture is not considered to be a significant constraint to cattle productivity in most parts of Middle Guinea. The major constraint there, as elsewhere in Guinea, lies in poor animal health services, a matter that would be tackled under the project. 2.04 Lower Guinea or Maritime Guinea is a predominately forested coastal lowland plain with a hot, humid climate, a short dry season (5 months) and a high rainfall ranging from 2,600 mm in Boke to 4,400 mm in Conakry. It comprises 18% of Guinea-s land area and has a similar proportion of the country's cattle population. The generally abundant pasture resources have induced increasing permanent settlement of traditional cattle owning families from the Fouta Djalon, a trend which is likely to stimulate substantial future growth of Maritime Guinea's cattle population.  - 11 - 2.05 Upper Guinea in the north-east comprises 40% of the country's land' area and 27% of the cattle population. It consists predominately of undulating tree savaninah traversed by a number of rivers bordered in many cases by fertile plains. Rainfall varies between 1,200 and 1,700 mm and there is a six month dry season Cattle density averages only 3 head per 100 ha but on a per capita basis is second only to the Fouta Djalon with nearly 1 head per 3 inhabitants. Pasture resources are plentiful resulting in heavier animals than in the Fouta Djalon. Cattle are kept primarily for draft purposes for which the soils and topography are ideally suited. The rate of expansion of ox drawn cultiva- tion is however limited by the relatively heavy investment cost of a pair of oxen and implements. Nevertheless, families who only possess one draft animal frequently pair with other families, and contracting the services of an ox traction team is quite common. The evident interest in ownership and usage of draft animals could be further stimulated by the provision of credit. This would alleviate the current financial bottleneck inhibiting the further expansion of ox traction in this high potential area. 2.06 The Forest Region in the southeast comprises about 22% of the country' area and has an equatorial forest climate with a long (8 to 9 months) rainy season with precipitation ranging from 3,000 mm in the south to 1,700 mm in the northern transition zone with the tree savanniahs of Upper Guinea. Cattle are of less significance in the Forest Region which contains only 10% of the national herd and averages only 2.5 head per 100 ha and one head per 10 inhabitants. Cattle are concentrated nearer the transition zone where they are kept mainly for draft purposes. Meat is supplied primarily from sheep, goats, poultry and pigs. While cattle production is not a tradi- tional activity for most of the people in this area, the main constraints to increasing cattle production result from parasitic diseases characteristic of the humid climate. The Forest Region's extensive borders with Sierra Leone, Liberia and Ivory Coast also present a continual danger from outbreaks of infectious diseases. 2.07 Communications Guineas road transportation system consists of about 14,000 km of classified primary, secondary, and feeder roads of which about 1,000 km are paved. The principal artery roads are shown on the map. The country's traditional east-west transport artery is the Conakry-Mamou- Kankan road. This road, which would be particularly significant for the project, is paved as far as Mamou and is thereafter of all weather gravel standard. Parallel to the road is a railway which could also be used for the transportation of bulk supplies such as mineral salts to staging posts along the way. Other roads that would be of major importance for the project are the paved Mamou-Labe road providing access to the Fouta Djalon, the paved Mamou-Faranah-Gueckedou and Kankan-Gueckedou roads providing access through Upper Guinea to the Forest Region, and the all weather gravel Conakry-Boke road along the Maritime Region. A major highway rehabilitation (mostly to all weather gravel) and maintenance program is currently underway through the IDA assisted Second Highway Project (Credit 953-GUI, FY80) and would affect most of the principal roads shown in the map. Access to most regional centers would therefore not be a major problem under the project, although travel along minor roads during certain periods in the wet season would not always be possible. In order to facilitate bush travel, key field personnel and the vaccination teams would be equipped with four-wheel-^drive vehicles.  - 12 - Regular commercial air passenger services between 10 regional centers and Conakry also provide a useful means of transportation that could be used when necessary under the project for rapid access to critical areas by key staff and for the air transportation to Conakry (subsequently by road to Kindia) of samples for laboratory diagnosis. Communication by telephone between most regional capitals and Conakry is also possible although the service is heavily used and can be slow. III. THE PROJECT A. Objectives and Summary Description 3.01 Objectives. The major objective of the project would be to increase the productivity of the Guinean cattle herd thereby augmenting national meat and milk production and improving nutrition, and also, raising the standard of living of cattle herding families. This would be achieved through simple measures: vaccinations against common cattle diseases; provision of drugs, medicaments and mineral licks; and upgrading of the livestock husbandry and veterinary support service. These measures would require institutional strengthening and training of existing livestock service staff. 3.02 While not the primary focus of the project, the measures to be undertaken would also benefit other forms of livestock . Additionally, the General Directorate of Livestock's technical capacity to plan and imple- ment future activities under its charge would be augmented. Finally, re- sources would be provided under the project to investigate areas of high potential or of concern relating to the sector. Such matters include the increased usage of cattle for draft purposes, export possibilities for N'Dama breeding stock, effective utilization of Guinea's grazing resources, livestock marketing and pricing policy, and forward planning of recruitment and educa- tion needs for the sector. 3.03 Summary Description. The proposed project would be implemented over four years and would include: (a) Institutional strengthening through: (i) upgrading (provision of a new headquarters building, equipment and technical assistance) of the General Directorate of Livestock - "Direction Generale de l'Elevage, DGE" - so as to provide a central capacity for the day-to-day implementation of the project; and (ii) establishment (provision of equipment and technical assistance) within the DGE of a Research and Planning Office - "Bureau d-Etudes, BDE" - to undertake sectoral planning, special studies, preparation of a possible follow-up project and monitoring of ongoing operations.  - 13 - (b) Support for animal health and husbandry services through: (i) upgrading of regional livestock services through reconstruction or refurbishing of regional headquarter buildings, and provision of basic equipment and materials; (ii) sales to herdsmen through the intermediary of the upgraded regional services of drugs, medicaments and mineral licks; (iii) a national vaccination campaign against common cattle diseases through mobile teams organised under two field headlquarters; (iv) reinforcement of the central laboratory for vaccine production and diagnosis of diseases; and (v) a pilot credit program to encourage the spread of cattle owner- ship and the usage of draft animals in a mixed farming system. (c) Staff training through: (i) establishment of a 40-person capacity training center for short-term intensive recycling courses for existing livestock service staff at various levels; and (ii) provision of fellowships for short to medium duration overseas training and visits for senior project staff. Items (b)(iii) (vaccination campaign) and (b)(iv) (vaccine production and diagnostic laboratory) would involve taking over from and expanding upon the activities of two ongoing UNDP/FAO assisted projects (paras 3.08 and 3.13). Technical assistance services (para. 4.04) for carrying out the project would amount to six resident staff involving a total of 19 consultant years, plus provision for the hiring of about 30 months of short term consualtant services and also the services of an architect for design and supervision of project constructions. B. Detailed Features Strengthening of Regional Livestock Services 3.04 Under the project the regional livestock services--"'Directions Regionales d'Elevage et de la Peche, DREPs", (paras 1.22 and 1.23)--would be provided with the resources necessary to conduct their work. Sixteen new DREP headquarter buildings would be constructed and 11 existirng centers would be renovated. The new buildings would be similar to existing ones consisting of a treatment room and entrance foyer with two rooms on either side plus storage space (in all about 70m2). They would be provided with running water and have electricity and a telephone installed wherever such services  - 14 - are available. A full set of basic furnishings and equipment would be provided to each new building, and supplementary furnishings and equipment would be provided to existing centers. Equipment would include a combined refrigerator/ freezer (kerosene operated if necessary), a mobile icebox, a simple diagnostic set (including microscope and centrifuge), a steriliser and the basic instrumentation for treatment of animals. At the arrondissement level, (para 1.22) a simpler set of equipment (thermometer, syringes, castra- tor, drencher, spray pump, plus basic materials, a notebook and a rucksack) would be provided together with a lockable storage box to be kept in the field staff's house. Transportation for the DREP headquarters and the field services would be provided in the form of an average of two motorcycles and 12 bicycles per DREP (the actual distribution between DREPs depending upon the livestock population in each DREP and the distances involved). Drugs, medicaments and materials for the treatment of common livestock ailments, and salt licks would also be provided (para 3.06). 3.05 The main role of the DREP headquarters would be to support field activities at the arrondissement level. Each regional director would provide administrative support and professional guidance to arrondissement staff and would be responsible for the ordering, storage, distribution and accounting of the veterinary supplies channelled through his field staff to farmers. The improved diagnostic capability of the DREPs would cater to the increased needs of the arrondissement services. All diagnostic problems that could not be solved with a DREP's own staff and facilities would be forwarded to the central laboratory at Kindia (para 3.13). Additionally, the treatment clinic at each DREP would provide a slightly wider range of veterinary services than those possible in the field. The DREPs would also provide support services for the vaccination program (paras 3.08 to 3.12). DREP directors would be answerable to the DGE in Conakry but would also maintain informal working linkages with the two vaccination program field coordinators (para 3.11) and with the disease diagnosis and vaccine production laboratory (para 3.13). The extension efforts of the regional services would be supported by regular radio broadcasts on the national radio system in the three main languages used by livestock owners, Pular, Maninka and Susu. These broadcasts would aim at familiarising herdsmen with livestock service activities and at providing information about the benefits from using veterinary products, from receiving vaccinations and from improved cattle husbandry. Several months of specialist assistance in design of effective radio extension broadcasts and in other "extension aids" techniques (e.g. posters, leaflets, etc.), would be provided under the project's consultant budget. 3.06 At the arrondissement level, field staff would operate as general livestock extension officers covering not only the treatment of sick animals but also general husbandry practices, nutrition and genetic improvement (para 3.25). To begin with, however, the main emphasis would be placed on the development of a clearly defined veterinary service that could quickly gain the confidence of livestock owners. The project's veterinary services would be aimed at eliminating the most serious causes of economic losses to farmers and would include, depending on prevailing circumstances, the selling of  - 15 - treatments against ticks and other external parasites (manges) and of treat- ments against internal parasites (most importantly, against blood and liver flukes, coccidiosis and drenches) and diarrhea. These services would also include treatment against wounds. The charges levied on veterinary treatments and mineral licks (para 5.12) would provide for the recovery of associated costs (para 5.14) while still entailing attractive incentives for herdsmen (paras 6.11 to 6.14). 3.07 Individual livestock service staff would be responsible for maintain- ing small stocks of materials, drugs and medicaments for such treatments and also for keeping field records of treatments given, payments received and stocks. DREP headquarters staff would be responsible for replenishing the stocks of field staff and collecting payments which would be done on a weekly basis. These monies, together with those received from the sale of mineral salts, would be deposited in the regional bank for transfer to a central account earmarked for veterinary products in the BNDA at Conakry (paras 5.07 and 5.12). Chemicals and materials for veterinary treatments would be transported from Conakry to the DREP headquarters by means of three covered 3-ton trucks under the authority of the DGE-s supplies department. To the extent possible, these trucks would also handle delivery of mineral supple- ments, although the expected quantities involved (5,000 t per annum by PY4), would necessitate the bulk of these being transported through a contract with Guinea-s truck transportation agency, COTRA, and project costJing has been based on this assumption. Rail transportation to staging posts such as Mamou and Kankan would also be used where possible. Due to their weight, mineral licks would be sold only at the DREP headquarters where they could be picked up by herdsmen and brought back to the village by bus, taxi or other means. In view of the large quantity of materials, personnel and transactions involved, and the logistical problems inherent in supplying such a country- wide regional network, a carefully designed and controlled system of record keeping, stock taking and accounting would be needed at all levels in the above system. Procedures to handle this were discussed and agreed during negotiations. The internationally recruited financial management specialist (para 4.04) would be responsible for the administration, accounting and internal monitoring of the above system. VaccinatJion Program 3.08 Background. The project's vaccination program would aim at provid- ing countrywide prophylactic coverage against the major cattle health hazards posed by diseases such as contagious bovine pleuropneumonia (CBPP), rinderpest, pasteureLlosis, anthrax and blackleg (paras 1.15 to 1.17). The UNDP/FAO project (para 1.31), is currently covering the eastern part of the country (Upper Guinea and the Forest Region) encompassing about one third of Guinea's cattle population. Eastern Guinea was a particularly high priority in the 1970s due to its extensive borders with known disease foyers in Mali, Ivory Coast, LLberia and Sierra Leone. As a result, a number of CBPP and other cattle disease outbreaks occurred during the early 1970s but have been brought under control by the vaccination program. For instance, no CBPP outbreak in eastern Guinea has been recorded since 1978. Upon completion, of the UNDP/FAO project at the end of 1981, coverage of eastern Guinea would be continued  - 16 - under the proposed project which would also establish a similar program to cover the western half of the country (Middle and Maritime Guinea). Diseases such as pasteurellosis, anthrax and blackleg have occurred throughout western Guinea and outbreaks of CBPP near the borders with Sierra Leone and Senegal were reported in 1978 and 1979. Expansion of the program to western Guinea is therefore justified. 3.09 Strategy. The overall strategy of the vaccination program would be the same as that successfully used under the UNDP/FAO project with only minior changes to reflect the lessons of experience. The program would consist of two separately supervised motorised campaigns under the overall direction of the DGE. The western campaign would get underway in PY1. The project would take over the financing of the eastern campaign at the end of PY1 when the UNDP/FAO project is due to end. Costing for the proposed project has only allowed for estimated necessary replacements of worn out UNDP financed vehicles and equipment as all functioning vehicles and equipment would continue to be made available for usage under the project. An assurance to this effect was obtained from Government during negotiations. It was also agreed during negotiations that an inventory of UNDP financed vehicles and equipment would be made during PY1 in collaboration with the UNDP Resident Representative and IDA so as to make a final assessment of the new vehicles and equipment that would be needed to continue the eastern campaign. 3.10 Field Headquarters. As currently under the UNDP/FAO project, the eastern campaign would be coordinated from a field headquarters at Kankan. The new western campaign would have its field headquarters at Mamou which was chosen as the best strategic location to respond quickly to any possible out- break of a contagious disease in the endangered border zone to Sierra Leone. Mamou also offers good road communications with the vaccine production labora- tory at Kindia and with the center of the Fouta Djalon, and is a staging post along the road to Kankan. Further, it serves as a telecommunications center for the area enabling quick communication with the regional services (DREPs). At Mamou, finance would be provided for the construction of a small building and fenced yard to protect the vehicles. The building would have offices and storage space to keep vaccines, supplies and spare parts and the vehicle yard would include a repair pit. At Kankan, the existing building would be upgraded and partly reequipped and a fenced vehicle yard and a repair pit would be added. 3.11 Field Work. Each campaign would be headed by a Field Coordina- tor who would have full field responsibility for the day-to-day operations of his teams, the supply and storage of vaccines and, liaison with the diagnos- tic and vaccine production laboratory at Kindia. The General Director of Livestock would be responsible for overall coordination of the work programs of the two Vaccination Campaigns with those of the vaccine production labora- tory and the regional services (Annex II, Figure 2). There would be six mobile teams for each campaign. Each team would consist of a veterinary officer and a driver and would be equipped with a four-wheel-drive vehicle, a mobile refrigerator, an icebox, veterinary equipment and materials, and camping equipment. Vaccination visits to each area would be on a schedule advertised ahead of time. As the team visited an area, it would be joined by the resident livestock field staff who would assist in explaining the program  - 17 - to farmers and in giving vaccines. Whenever possible, a vaccination team would arrive in a village the day before vaccination begins so as to gain the confidence of local leaders and cattle owners. The purpose of the upcoming treatment would be explained and reassurances would be provided that the campaign had no cattle tax implications (para 1.29) and would be conducted free of charge (para 5.12). 3.12 Vaccination Coverage. Annual vaccinations would always include CBPP and rinderpest for animals less than 3 years old and, depending on the area and prevailing circumstances, would also include vaccinations against pasteurellosis, anthrax and blackleg. The total number of annual vaccina- tions is expected to increase gradually over the four year project period. The eastern campaign began with 118,000 vaccinations in 1975 and reached 322,000 in 1979 or 70% of the estimated 460,000 cattle in eastern Guinea (Upper Guinea and the Forest Region). Assuming a similar 70% acceptance rate for the western campaign, about 550,000 animals out of Middle and Maritime Guinea's estimated 790,000 cattle population would be vaccinated by PY4. This would mean, if the acceptance rate in the eastern campaign increased still further, that close to a million animals or 80% of the national cattle herd could be receiving annual vaccinations by PY4. Vaccine Production and Disease Diagnosis 3.13 lBackground. With UNDP/FAO assistance, the IRBANC ("L'Institut de Recherches et de Biologie Appliquee - Nenenkhaly Condetto") laboratory near Kindia has been upgraded to a modern facility capable of handling both the vaccine production and disease diagnosis requirements of the proposed project. During 1979, one million doses of vaccine--two thirds of which were for cattle--were produced, and included all common animal vaccines used in Guinea with the exception of CBPP and rinderpest vaccines which were imported. Additionally, a diagnostic section of the laboratory was opened in 1979. By December 1981, the end of the current UNDP/FAO project, the capacity of the laboratory is expected to have been upgraded to produce vaccines for the following diseases; CBPP, anthrax, blackleg, pasteurellosis, Newcastle disease, fowl pox, fowl cholera, fowl typhus and rabies. 3.14 Project Activities. The proposed project would finance continued operation and expansion as appropriate of the IRBANC laboratory's activities. This would essentially consist of funding necessary replacement equipment and vehicles, an internationally recruited veterinary specialist, and the costs of materials, chemicals and vaccine containers. Furthermore, suffi- cient funds would be made available for production of new vaccines such as rinderpest. As with the eastern vaccination campaign (para 3.09), an as- surance was obtained during negotiations that all plant, vehicles and equipment previously financed by UNDP would be made available for usage under the proposed project. An inventory to be conducted in liaison with UNDP and IDA during PY1 would determine the resources available. Staff Training 3.15 The emphasis that would be put on staff training under the project is necessary in order to upgrade the professional knowledge and practical skills of all staff levels within the livestock sector (para 1.25) and also to provide specific instruction as and when needed concerning project field  - 18 - activities. Training would be undertaken primarily through the recycling training center supplemented, for more senior staff, by training fellowships. Additional training would be provided through on-the-job association with the project's internationally recruited specialists (para 4.04). 3.16 Recycling Training. The training center would be located at Kindia on the same site as the IRBANC diagnostic and vaccine production laboratory. It would thereby be readily accessible by road from all parts of the country (para 2.07) and would be able to make use of the laboratory's facilities for demonstrations. The center would have a capacity of up to 40 trainees and would consist of a dormitory and a demonstration block, each built to simple and proven specifications. The demonstration block would consist of two lecture/demonstration rooms and a simple laboratory. Equip- ment would include slide and film projectors, a tape recorder, a copying machine and three minibuses for transport to field demonstrations. 3.17 The training center would provide short, intensive courses (generally one to three weeks) for existing Ministry or Livestock Service Staff so as to upgrade their skills in areas specifically focused towards project needs. Examples of such courses might include: a course in laboratory diagnosis for DREP directors; another in the monitoring and accounting of veterinary supplies for DREP directors and their adjoints; a course for the field staff of one or more regions on field diagnosis and treatment of a specific disease found in the area; and courses in basic animal husbandry techniques, genetic improvement and so forth. Assuming an average course duration of 1-1/2 weeks, the capacity at the training center would be sufficient to provide training to all livestock service staff at least once a year. Generally, trainee numbers at the center would be kept below 30 persons so as to provide for more direct contact between participants and teaching staff. However, the 40 person capacity of the center would allow for a larger number of staff for sessions such as seasonal briefings of all the DREP directors and central supervisory staff. Responsibility for the identification of staff training needs, the content of the training program and forward planning would rest with the DGE in liaison with the Ministry. 3.18 Detailed planning and implementation of the training program would come under the responsibility of an internationally recruited training specialist with experience in the livestock sector and who would be designated as the training center's technical director. He would be supported by a Guinean counterpart director and by a small group of teaching and demonstra- tion staff. A second internationally recruited specialist with a background in teaching and extension work in the livestock sector would also be based at the training center and would contribute to the teaching program at the center but would be oriented.primarily towards organizing and making follow- up visits to DREP teams in their field localities. He would additionally hold specific responsibility for overseeing the pilot credit program (para 3.24) and any field activities connected with export of N'Dama breeding stock (para 3.25). The veterinary specialist at the laboratory would also do a  - 19 - limited amount of teaching, and additional funds have been provided under the project for the hire of supplementary consultancy services should they be needed (para 4.05). 3.19 Fel'lowship Program The project's fellowship program would be designed to upgrade the skills of middle and upper level Guinean staff through participation in training programs outside of Guinea. Funds have been provided for about 15 medium term (one year) fellowships and 30 shorter term visits or courses (typically one to three months), and would cover all offshore costs (eg. travel expenses, accommodation, training fees, books and pocket money). The medium term fellowships would generally cover formal training courses offered by appropriate institutions or universities. Shorter periods abroad could be used for more condensed courses or for visits to livestock research centers or to relevant livestock development projects and programs in other West AfricEn countries. While most fellowships would be oriented towards animal husbandry and tropical veterinary medicine, other project needs--for instance, accounting, management techniques, credit management, economics, training techniques, monitoring and evaluation techniques and saector planning--would also be provided for. 3.20 Akdministration of the fellowship program would be handled by the DGE in liaison with the Ministry. Identification of training needs, selection of candidates and forward planning would be handled by a small committee of senior project staff which would report to the Minister. 3.21 Forward planning for the recycling training center and fellowship program would be facilitated by the preparation by this committee of an annual plan that would be presented to IDA for comment and approval at least two months befQre the start of each fiscal year. Assurances to this effect were obtained during negotiations. At the same time, the necessary flexi- bility for both the training center and fellowship programs would be retained through appropriate modification during the course of project supervision. Institution Strengthening 3.22 The General Directorate of Livestock ("Direction Generale d'Elevage", DGE) would be strengthened so as to provide the capacity to: (a) plan and supervise the project's field activities; and (b) undertake sectoral analysis and plann:ing, special studies, monitoring of ongoing operations and the preparation of a possible follow-up project. The General Director of Live- stock and his staff would be directly responsible for implementing the pro- ject's field activities. Within the DGE a Research and Planning Office ("Bureau d'Etudes," BDE) would be created with specific responsibility for undertaking activities under category (b). The project's organizational structure is described in detail in paras. 4.01 to 4.03. Funding under the project wDuld provide for a new DGE headquarters building consisting of offices, about 200 m2 of storage space for equipment and veterinary pro- ducts, a small clinic for treatment of local animals, and a fenced vehicle yard. Furnishings, office equipment (including a photocopying and a stencil machine), a small technical library of reference books and periodicals, and vehicles would also be provided. Staffing would be strengthened in specialist  - 20 - areas through the employment of three internationally recruited staff: an economist to assist the BDE in sectoral planning and evaluation and in analysis of sectoral issues; a livestock specialist to function as technical director within the DGE and who would hold line responsibilities for over- seeing all of the project's field operations; and, a financial management specialist to be the DGE's financial director and who would hold line res- ponsibilities for project accounting, procurement and management and dis- tribution of stores. Staffing at the IRBANC laboratory and the training center (paras 3.14 and 3.18) would also be strengthened. Additionally, the project's short-term consultant budget provides for the hiring of supplemen- tary specialist services should they be needed. Full details concerning the project's technical assistance arrangements are at paras 4.04 to 4.06. Pilot Credit Program 3.23 The pilot credit program would be based at Kissidougou in the transition zone between the Forest Region and Upper Guinea. An attempt would be made in this area to alleviate the financial constraints currently inhibit- ing poorer families from becoming livestock owners and users of draft oxen. Usage of draft oxen by more established families is quite common there and abundant forage is available permitting increased usage of draft animals, the spread of cattle ownership, and an increase of cattle numbers in the area. The program is anticipated to begin in PY2 with about 20 participants and to involve about 100 families by PY4. A participating family would be expected to purchase on credit one heifer and two males (one steer and one bull or two bulls) plus draft equipment (plough, yoke and chains; all of which are made locally). This combination would provide not only the draft animals and equipment required for ox traction but also the nucleus of a future herd and the additional short term benefit from milking after the female has calved. However, some flexibility to this standard model would be allowed where a participant wishes to reduce his debt service obligation by, for instance, starting with only two animals plus the draft equipment. The maximum number of animals permitted to be purchased under credit would be four. 3.24 The purchase of animals and of equipment would be financed through a special credit fund to be opened for this purpose in the Banque Nationale de Developpement Agricole (BNDA). The BNDA would act as the financing insti- tution and the bearer of risks and would manage financial transactions and keep accounts through its branch at Kissidougou. Technical supervision of participants would be handled on BNDA's behalf by the DGE which would also have primary responsibility, in liaison with the BNDA, for selection of participants and approval of prices negotiated for cattle and work oxen implements. Direct field supervision would come under a Guinean credit program officer to be located at Kissidougou and equipped with a four-wheel- drive vehicle. Overall guidance and additional support would be provided by the internationally recruited extension and training specialist located at the training center in Kindia (para 3.18) whose terms of reference would specifically cover this function. Regular visits would be made to Kissidougou by this specialist. Additionally, to assist in getting the program underway, a credit specialist would be hired for one or two visits through the project's short term consultant budget. The credit program officer would work closely with local DREP staff in the choosing of appropriate participants who would be  - 21 - selected on the basis of a reasonable investment plan and an assessment of such criteria as their responsibility, health, and current farming practices. Commitment to the scheme would also be promoted through the requirement that the participant would have to raise one fifth of the total cost of the animals and implements. For the three animal model this would be about sylis 8,000 (about US$420). Prior to purchase, the credit officer, in consultation with the extension and training specialist, would need to verLfy the appro- priateness of the prices negotiated. Credit reimbursement would involve one year of grace followed by six years of annuitized repayments according to a semi anntLal schedule. Payments would be made due after land cultivation time when revenues can be earned from contracting out ox traction services (para 6.15) and again at harvest time. Accelerated amortization of debts would also be permitted if desired by the participant at any stage during the repayment period. Interest would be based on the standard BNDA rate for long term credit which is currently eight percent. However, in order to provide a margin for BNDA to cover defaults due to unforeseen circumstances, a 12% mark-up would be applied to the credit amount prior to calculating the debt schedule. This would have the effect of raising the interest rate by about three percentage points. The above arrangements were discussed and agreed during negotiations and would form the basis of a model contract for use between participants, the DGE and the BNDA which would be prepared not later than December 31, 1981 for comment and approval by IDA. An assurance to this effect was obtained. Para 6.15 provides an assessment of participant benefits. Other Activities 3.25 While the project would focus primarily on the activities described in paras 3.01 to 3.24 above, attention would also be paid to other areas of high potential or concern within the sector. Such matters would be discussed and their priority agreed upon during the course of project supervision and during review of the annual report (para 5.10), and provision of any necessary supplementary consultant services would be funded under the project (para 4.05). These activities would include, inter alia, the following: (a) Export of N-Dama breeding stock. In view of the heavy demand for Guinean N'Dama stock (para 1.11), the DGE would be charged with investigating ways of realizing this potential and, if possible, organizing marketing arrangements. No financing of handling or transportation costs would be provided under the project as these would be more than offset by sales revenues which, moreover, would be in foreign exchange. Implementation of such a scheme would, however, require offering herdsmen an appropriate price equivalent to parallel market prices (para 6.04). Additionally, DGE staff would have to organize herding and corralling arrangements so as to be substantially better than those currently emlployed by the official meat marketing agency (para 6.02) where large weight losses are incurred. The internationally recruited extension and training specialist at the Kindia training center would be responsible for coordinating field activities (para. 4.04). The project-s short term consultant budget provides for a marketing expert to assist in establishing purchase, handling and marketing procedures. Addi-  - 22 - tionally, the project's budget for fellowship courses and fami- liarization visits (para 3.19) would be used for travel by Guinean staff in connection with making marketing arrangements with interested countries. An indicative financial assessment of the scheme is at para 6.16. (b) Genetic Improvement. Through their normal veterinary and animal husbandry activities, extension staff would encourage herdsmen to employ a simple form of genetic selection. Cows and bulls of good stock and performance would be retained while poorer quality males would be castrated, and encouragement would be given to the earlier marketing of such animals and of lower quality heifers and cows. This form of selection is preferable to intensive schemes in artificial surroundings which do not necessarily recognise the hardiness criteria necessary for good performance under local conditions. (c) Forage Resource Management. The BDE in liaison with specialists in the DGE would be responsible for further investigation of the feed resources available throughout Guinea and their relationship to livestock distibution, grazing patterns, possible erosion problems and sources of supplementary feed. The resultant improved understanding of the country's forage resources would aid Guinea in- the planning of future investments in its livestock sector. (d) Marketing and Pricing Policy. The analysis of paras 6.01 and 6.06 indicates the need for revision of the official livestock and meat pricing policy and of the marketing system. In order to comply with the agreements reached during negotiations and the assurance provided at para. 6.06, the BDE's internationally recruited economist would be charged with undertaking analysis and making recommendations concerning these matters. A global overview of the situation would be provided by the study on agricultural prices and rural incentives financed under the Rice Development Project (para 1.09) which would have preliminary results available by PY1 of the proposed project and final results in PY2. The BDE economist would follow up on this study with specific analysis and recommendations concerning the livestock sector. If appropriate, other specialists (e.g. marketing specialists, meat processing engineers etc.) could also be hired under the project as short term consultants to assist him. (e) Livestock Service Staffing and Training. In view of the need for careful planning of livestock service staff requirements and new employment, (paras 1.24 to 1.27), and in accordance with the analytical inputs required to comply with the assurance at para 1.28, these matters would be continually assessed by the BDE. The internationally recruited economist would be charged with analyzing and reporting upon anticipated staff needs and its implication upon recruitment, educational planning and processing of cadres through the formal livestock education system.  - 23 - IV. ORGANIZATION AND MANAGEMENT 4.01 Organizational Structure. The project's organizational structure is presentier in Annex II, Figure 1. All project activities would come under the overall authority of the Minister of Livestock and Fisheries. Under the Ministry, the General Directorate of Livestock ("Direction General d'Elevage - DGE"), headed by a Guinean director, would be responsible for detailed imple- mentation of the project's field activities which would be carried out by four main operational departments responsible for: the regional livestock services; the vaccination program; the IRBANC diagnostic and vaccine produc- tion laboratory; and, the training center. Additionally, a department of financial and administrative services would handle project finances and accounting, procurement, and storage as well as distribution oi- supplies. For the vaccination program, the two field coordinators based at Mamou and Kankan would be responsible for the two western and eastern campaigns respectively (para 3.11). Their strategic locations would also be useful in handling at the field level any administration in connection with the regional services that the DGE Headquarters may require. The pilot credit program would be supervised by a credit officer based at Kissidougou. Each regional service ("Direction Regional d'Elevage et de la Peche, DREP") would be headed as at present by a regional director (para. 1.22). 4.02 For activities connected with sectoral planning, special studies, monitoring of ongoing operations, and analysis of future investment proposals in the livestock sector, including the preparation of a possible follow-up project, a Research and Planning Office ("Bureau d'Etudes, BDE") would be established within the DGE. This unit would consist of a Guinean Director and about six to eight Guinean professional staff - several livestock specialists, one or two economists, a statistician and a management (cost) accountant - supported by an internationally recruited economist. While situated within the DGE, the BDE would have autonomous responsibility for its activities. During negotiations, it was agreed that the BDE would: (i) be able to deter- mine its own work program; (ii) have direct access to the Minister of Live- stock and Fisheries; (iii) would, through the Minister have access to other Government Departments and Ministries as well as external consulting and aid agencies; (iv) be enabled to submit reports directly to the Minister; and (v) have direct access to all data and staff, including field staff, of the DGE. At the same time, in view of the complementarity of their activities, close rapport would be maintained between the Director of the BDE and the Director of the DGE. 4.03 Staffing. Key Guinean staff positions would be as f-ollows: the Director of the DGE, the Director of the BDE, the heads of the financial and administrative services department, the IRBANC laboratory, the training center and the credit program, and the two field coordinators of the vaccination program. There would be no department head for the regional :Livestock services and the vaccination program as these programs would be directLy supervised by the General Director of Livestock. An assurance was obtained during negotia- tions thaLt the above positions would be staffed at all times by appropriately qualified and experienced persons. In view of the particular importance for  - 24 - satisfactory project implementation of the posts of Director of the DGE and Director of the BDE, satisfactory appointments or confirmation of satis- factory appointments for these two posts would be a condition of Credit effectiveness. 4.04 Technical Assistance. Six internationally recruited specialists would be recruited to assist Guinean cadres in specialized activities for which local expertise is limited. In all, 19 man-years of technical assis- tance are expected to be required, distributed as shown in the implemen- tation calendar of Annex II, Figure 2. These positions are: (i) an econo- mist in the BDE; (ii) a livestock specialist with project management experi- ence to assist the Director of the DGE; (iii) an accountant with former experience as a project financial director for the financial and admini- strative services department; (iv) a veterinary specialist for disease diagnosis and vaccine production at the IRBANC laboratory; (v) a training specialist with experience in the livestock sector for the project's training center; and, (vi) an extension and training specialist with broadly based experience in the livestock sector who would be based at Kindia training center to assist in the training program, and who would also hold additional specific responsibilities for overseeing the credit program (para. 3.24) and any field activities connected with export of N'Dama breeding stock (para. 3.25). These staff would initially perform their project responsibilities as line managers (with the exception of the economist in the BDE) in their specialist roles (para 3.22) but would, towards the end of their assignments, increasingly function in an advisory role so as to provide a smooth transition of responsibilities. In view of the need to follow-up on the training and ensure adequate supervision of staff in the field, the extension and training specialist based at Kindia (para 3.18) would hold line responsibilities for managing the follow-up training and visit program and supervising on-the-job training of field level staff by middle level staff. In order to encourage the transfer of specialist expertise to Guinean cadres, expatriate TORs place strong emphasis on the capacity of expatriates to assist counterpart staff to acquire their specialist skills. Terms of reference are in the project file and were agreed during negotiations. 4.05 Provision for the employment of an architect (para 4.11) and for the hire of about 30 man months of additional specialist services on a short term basis, has also been provided for under the project. Such ser- vices would cover project needs as they materialize and are discussed and agreed during the course of project supervision. Likely areas requiring supplementary consultant assistance were agreed upon during negotiations and would include: specialist programs at the training center (para 3.17); the services of a specialist in the design of radio programs for extension work (para 3.05); a construction supervisor for the building program (para 4.11); a credit specialist for the pilot credit program (para. 3.24); and, supplementary assistance as needed for special studies (para. 3.25). The selection and appointment, including terms of reference of all technical assistance staff and of short term consultants would require IDA approval and would be through procedures satisfactory to IDA. An assurance to this effect was obtained during negotiations.  - 25 - 4.06 The recruitment of all technical assistance staff and the hiring of short term consultants would be through, if possible, a single consulting firm. Subcontracting or informal linkages by the employed firm with other consulting firms or with individuals is, however, most likely given the range of expertise required which is seldom available in anv one firm. The signing of a satisfactory contract or contracts for the project-s tech- nical assistance positions (paras 4.04 and 4.05) would be a condition of Credit effectiveness. 4.07 Implementation. The project would be implemented over four years according to the schedule at Annex 2, Figure 2. Prior to Credit effective- ness, design work for the construction program would be financed through PPF (para 5.04). Subsequently, in PY1, the main activities would be construction of buildings, procurement of equipment, and establishment of key Guinean and technical assistance staff. To the extent possible with the equipment and staff resources available, certain key activities such as the selective training of field staff, the western vaccinaion campaign and ithe distribution of some veterinary products would also get underway during PYL. Additionally, the upgra,ding of senior staff skills through the fellowship program would be initiated, during that year. From PY2 onward, field work would get further underway reaching full momentum by PYs 3 and 4. Herdsmen usage of veterinary products is expected to build up during the four year project period to a level whereby 25% of the herd would receive treatment. 4.08 Preparation of a Possible Follow-up Project. In order to provide the basis for a possible second project, detailed preparation for such an eventual:Lty would commence during PY3. This work would be the responsibility of the BDE which would receive help in specialist areas from other project staff and would also have recourse to the project's short term consultancy provisiorts should this be necessary. It was agreed during negotiations that prior to start-up of project preparation activities, terms of reference for the study would be presented to IDA for comment and approval. IDA would subsequently provide general orientations and guidance for the preparation work during the course of project supervision. 4.09 Data Collation and Analysis. The BDE would be responsible for collation of data relevant to the project and the sector and for its sub- sequent analysis. Currently, a great deal of data is collected by livestock service staff, but excessive demands for information on a census basis and lack of supervision have jeopardized the accuracy of the information. Under the BDEIs guidance, data collection would be streamlined and reduced but improved in content and quality. Census type collection of data would be substantially reduced in favor of statistically based sample surveys. These would be used to investigate key technical parameters of the Guinean herd such as population, health, deaths and offtake, and the impact of the project upon these paLrameters, together with information on marketing, farmer attitudes and other matters of interest. This information would be supplemented by an analysis of project costs and deployment of resources so as to provide a continuing assessment of project impact, shortcomings, and future objectives.  - 26 - 4.10 Operation and Maintenance of Vehicles. Project vehicles would be under the specific responsibility of the senior officer to which each vehicle is allocated. Further, in view of the need to economize on vehicle and fuel usage, a log book system would be introduced involving a form for each month on which to record journeys travelled, their purpose and the distances involved plus fuel and lubricant usage. Every month these forms would be passed on by the officer concerned to the financial and administra- tive services department in the DGE who would be responsible for monitoring vehicle usage. Fuel and lubricants would be purchased through standard Government procedures which involve a coupon system arranged with the Govern- ment supplier of oil products, ONAH. All project vehicles and equipment would be purchased with a stock of spare parts, and project costing allows for subsequent replenishment of this stock. Repairs would be handled, as currently with the UNDP vaccination campaign project, through direct hiring as and when needed of Guinean mechanics, and provision to them of necessary spare parts. The above arrangements were discussed and agreed during negotiations. 4.11 Project Buildings. Project construction works -- new buildings for the DGE headquarters, a training center, six houses for resident technical assistance staff and a guest house for visiting consultants, the western field headquarters at Mamou and 16 DREP centers; plus the refurbishing of Kankan field headquarters and 11 existing DREP centers -- would be undertaken by contractors commencing in PY1. Sites for the project-s main buildings have been identified. Construction plans would be standardized as far as possible following designs successfully used previously in Guinea or in other West African countries. Government is currently making contractual arrangements with an architect considered satisfactory for this purpose who would be financed through the project-s PPF allocation (para 5.04). The architect is expected to have bidding documents prepared by early 1981. The architect-s contract would also cover assistance in evaluating bids-, and occasional visits during the construction period. Daily supervision during the construction period would be handled by a qualified Guinean engineer, supplemented by six months of consultancy visits from an internationally hired construction supervisor. Priorities for early completion would be the training center, followed by the DGE headquarters and expatriate housing. Government has agreed to provide temporary accommodation for technical assistance staff pending completion of project housing. V. PROJECT COSTS AND FINANCING 5.01 Project Costs. The cost of the project is estimated at US$21.0 million (sylis 399 million) of which US$17.5 million (sylis 332 million) or 83% represents foreign exchange (Table 1). Project costs include an estimated US$0.6 million (sylis 12 million) of government markups in fuel and lubri- cant costs and in certain materials like cement in construction costs (about US$0.3 million in each category) which represent a tax element. All other project expenditures do not include taxes as Government intends to exempt from tax all goods and services imported directly for the project. Project costs net-of-taxes are therefore US$20.4 million (sylis 387 million) of which 86% is in foreign exchange.  - 27 - 5.02 Project costs were estimated in dollars for all imported goods and services and in sylis for locally purchased items. Conversion between dollars and sylis has been done at the official exchange rate of 19 sylis:US$. Vehicle and equipment cost estimates include allowances for an initial stock of spare parts;. Technical assistance costs, which amount to US$2.9 million or 19% of base costs (inclusive of all fees, overheads, air fares and ex- penses), have been estimated on the basis of recent consultant contracts in Guinea and average US$9,600 per month for the project's resident staff and US$13,000 per month for short term consultant services. Cost estimates do not include any local staff salaries as, in view of Government's overstaffing (para 1.26), the proposed project would not create any incremental employment. Project costs include only incremental drug, medicament and mineral salt requirements (US$4.4 million or sylis 84 million including contingencies). Base costs in Table 1 are expressed in mid-1980 terms. Physical and price contingencies were calculated as follows: A. Physical Contingencies Equipment, Materials, Vehicles, Furnishings and Spare Parts: 15% of base costs Technical Assistance and Fellowships zero All other costs 10% of base costs B. Expected Price Increases (all project costs) 1980 1981 1982 1983 1984 Annual Rates (%) 10.5 9.0 8.0 7.0 7.0 Compound Factor 1.05 1.15 1.24 1.33 1.42 Allowances for expected price increases are based on anticipated international inflation rates as most project costs are foreign expenditures and price increases for local costs are expected to be approximately in line with international rates. Physical contingencies amount to US$1.3 million (Sylis 26 million) and price contingencies to US$4.4 million (Sylis 83 million). 5.03 Proposed Financing. An IDA Credit of SDR 13.3 million (US$17.5 million) would finance the foreign exchange cost of the project representing 83% of project costs (86% of net-of-tax project costs). The local contribu- tion to project costs would be US$3.5 million while purchasing of non- incremental veterinary products would amount to a further US$8.1 million making up a total of US$11.6 million. As all veterinary products would be purchased by herdsmen who would be charged at rates designed to cover c.i.f. and transportation costs plus a margin to cover local costs, Government's net financial position would be positive (para 5.14). A proposed financing plan is at Table 2. Government would finance: (i) 35% of constructiLon costs (US$1.1 million, sylis 21 million); (ii) the costs of some locally supplied  - 28 - items such as some furnishings and equipment and food for the training center (US$1.0 million; sylis 20 million); and, (iii) provision of credit funds for the pilot credit program (US$0.3 million; sylis 6 million); and, would pre- finance and procure (i) fuel and lubricant costs (US$1.0 million; sylis 19 million); (ii) contract transportation costs for mineral salts (US$1.4 million; sylis 27 million); and, (iv) purchase of veterinary inputs, all of which would be purchased and paid for by herdsmen. In addition, Government would continue to finance local staff salaries which currently amount to about sylis 50 million (US$2.6 million). An assurance was provided by Government during negotiations that local funding of all necessary project related expenditures such as those described above would be made available in a timely manner. Table 1: PROJECT COST ESTIMATES % of Sylis 000 US$ Million Base Foreign Local Total Foreign Local Total Cost DGE H.Q. and BDE 18,035 8,774 26,809 0.9 0.5 1.4 9 Vaccine Production and Diagnostic Laboratory 16,872 1,488 18,360 0.9 0.1 1.0 6 Incremental Drugs, Medicaments and Mineral Salts 60,420 - 60,420 3.2 - 3.2 21 Reinforcement of Regional Livestock Services 57,893 20,349 78,242 3.0 1.1 4.1 27 Vaccination Campaigns 13,908 2,679 16,587 0.7 0.2 0.9 6 Training Center 14,630 10,296 24,926 0.8 0.5 1.3 9 Fellowship Program 5,415 - 5,415 0.3 - 0.3 2 Technical Assistance 54,872 - 54,872 2.9 - 2.9 19 Pilot Credit Program 545 4,133 4,678 - 0.2 0.2 1 I. TOTAL BASE COST 242,590 47,719 290,309 12.7 2.6 15.3 100 Contingencies Physical 20,615 5,035 25,650 1.1 0.2 1.3 Price Escalation 69,200 13,822 83,022 3.7 0.7 4.4 II. TOTAL CONTINGENCIES 89,815 18,857 108,672 4.8 0.9 5.7 III. TOTAL PROJECT COST 332,405 66,576 398,981 17.5 3.5 21.0 (Including Taxes) IV. TAXES - 11,590 11,590 - 0.6 0.6 V. TOTAL PROJECT COSTS 332,405 54,986 387,391 17.5 2.9 20.4 (net-of-taxes)  - 29 - Table 2: FINANCING PLAN (US$ Million) IDA Govt. Herdsmen Total Constructions 2.1 1.1 - 3.2 Equipment, Materials, Vehicles, Furnishings and Spare Parts 5.7 0.3 - 6.0 Veterinary Products /a 5.7 - 6.8 12.5 Technical Assistance 3.6 - - 3.6 Fellowships 0.4 - - 0.4 Fuel and Lubricants /b - - 1.0 1.0 Contract Transportation Costs for Mineral Salts /b - - 1.4 1.4 Miscellaneous Local Supplies - 0.7 - 0.7 Pilot Credit Program - 0.3 /c 0.3 A. Total: Including non- 17.5 2.4 9.2 29.1 increrLental veterinary products B. Total: Exclusive of non- incremental veterinary products: i) Inclusive of Taxes 17.5 2.4 1.1 21.0 ii) Exclusive of Taxes 17.5 1.8 1.1 20.4 /a US$4.4 million of the US$12.5 million (including contingencies) re- presents incremental purchases covered in the project cost estimates of Table 1, the remaining US$8.1 million representing replacement purchases. IDA would finance an additional US$1.3 million of the cost of veterinary products to cover the foreign exchange element in the costs of fuel and lubricants and contract transportation costs which, to simplify disburse- ment, would not be contributed to. /b Directly financed by Government. Herdsmen payments for the purchase of vetterinary products would cover these costs (para 5.14). /c Less than US$100,000. 5.04 Project Preparation Facility. To allow for commencement of constructions during the first year of the project, a provision of US$200,000 has been miade under the project preparation facility. This would finance the services of a consultant architect to undertake detailed design and prepara- tion of bidding documents for project buildings (para 4.11). The PPF provi- sion is included under the technical assistance category in the financing plan of Table 2. 5.05 Procurement. International competitive bidding in accordance with IDA guidelines would be used for all contracts over US$50,000 for: (i) equipment, vehicles, materials and furnishings (estimated cost US$4.0 million); (ii) veterinary products for supply to farmers (estimated total  - 30 - cost US$12.5 million of which IDA US$5.7 million); and, (iii) constructions (estimated cost US$3.2 million of which IDA US$2.1 million). About US$11.8 million of IDA financing would therefore be for items procured through international competitive bidding. Purchases would be grouped wherever practical to derive maximum advantage from bulk procurement. For civil works, materials, equipment, vehicles, furnishings and veterinary products that cannot be grouped in packages of at least US$50,000 each (US$1.4 million), procurement would be through local competitive bidding procedures acceptable to IDA or through negotiated purchase on the basis of local price quotations. Certain minor materials, furnishings and small equipment which are currently obtained through centralized Government importing agencies would continue to be purchased through this mechanism (estimated cost US$0.3 million). Arrange- ments for the hiring of internationally recruited staff and short term con- sultant services (US$3.6 million) and for the fellowship program (US$0.4 million) would be through procedures satisfactory to IDA. Bidding documents for construction contracts would be subdivided into lots arranged so as to provide the opportunity for bidding by small locally represented construction firms. In evaluating bids for constructions, local contractors would be allowed a 7.5% preference. 5.06 Disbursements. The IDA Credit would be disbursed over four and a half years to cover: (a) CATEGORY I 100% of foreign exchange costs of constructions (SDR 1.44 million - US$1.9 million); (b) CATEGORY II 100% of foreign expenditures for equipment, furnishings, spare parts and laboratory materials and chemicals (SDR 3.8 million - US$5.0 million); (c) CATERGORY III for veterinary products (drugs, medicaments and mineral salts): (i) 100% of foreign expenditures for incremental purchases (SDR 3.34 million - US$4.4 million); and (ii) 16% of foreign expenditures for replacement purchases (SDR 0.84 million - US$1.1 million); (d) CATEGORY IV 100% of foreign expenditures for technical assist- ance staff and other consultant services (SDR 2.28 million - US$3.0 million); (e) CATEGORY V 100% of foreign expenditures for the fellowship program (SDR 0.23 million - US$0.3 million); (f) CATEGORY VI Reimbursement of the amount disbursed under the PPF allocation including unpaid financing charges (SDR 0.15 million - US$0.2 million); and (g) CATEGORY VII Allocation towards the project revolving fund (para 5.08) in foreign exchange (SDR 0.08 million - US$0.1 million).  - 31 - SDRl.14 million (US$1.5 million) would be unallocated. A schedule of dis- bursements is at Annex I, Table 2. Category II includes materials required for vaccine production. All disbursements would be fully documented. The disbursements against non-incremental purchases of veterinary products in Category C fii) above (US$1.1 million after allowances for the Unallocated Category) are calculated so as to compensate for not financing foreign exchange costs in fuel and lubricant and transportation costs (footnote (a) of the financing plan). 5.07 Financing Procedures and Revolving Funds. Administration of project accounts, procurement and disbursement would be handled through the DGE-s Financial and Administrative Services Department. Accounting for veterinary supplies to herdsmen would be kept separate from the accounts for other project expenditures and is described in paras. 3.07 and 5.12. For all other project items, local expenditures would be financed as at present through provisions from the "Budget Nationale" (para 1.29). Forward planning of incremental requirements in local currency, and the allocation of funds required, would be as described in para 5.10. 5.08 For foreign expenditures, a special account for the project in foreign exchange would be established in the "Banque Guineene du Commerce Exterieur" (BGCE). Foreign exchange working capital requirements in this fund would be kept at a minimum through the usage of procedure III financing (direct payments to suppliers) wherever possible. Some foreign exchange held in this account with the BGCE would, however, be necessary primarily for the financing by Government of certain smaller items and materials purchased directly for the project and for the direct financing of costs involved in some fellowships and short term consultant services. A revolving fund in foreign exchange equivalent to US$100,000 would therefore be established for these purposes immediately after project effectiveness through a withdrawal of this amotnt from the IDA Credit. IDA would replenish the account upon receipt of evidence of disbursements from the fund for allowable expenditures. Should any disbursements be made from the revolving fund that are not acceptable to IDA, Government would be responsible for replenishing the fund in the corres- ponding amount. Monitoring of disbursements against the revolving fund would be faciliLtated by the requirement that all withdrawal requests would be fully documented and would be accompanied by monthly statements of the revolving fund account giving details of all withdrawals and deposits as well as the opening and closing balance of the account. Agreement on the above procedures was reached during negotiations including specific assurances safeguarding the appropriate usage of the revolving fund. Opening of the special account at the BGCE would be a condition of effectiveness of the proposed IDA Credit. 5.09 Reporting Requirements, Accounts and Auditing. Project reporting procedures would be the responsibility of the BDE which wouldi arrange for the provision of appropriate information from the key departments responsible for the project. Such reports would be produced annually and quarterly and would be designed to provide a management tool with which to monitor the progress of the project, make improvements where appropriate, and plan for the future requirements of the project. Sound financial reporting would be a key element of these reports and would be handled, in liaison with the BDE,  - 32 - by the Financial and Administrative Services Department. Accounting records would be consistent with sound accounting practices and adequate to reflect the detailed cost of project operations. 5.10 The annual report would be produced not later than March 31 of each year, three months after the end of the preceding financial year (January 1 to December 31). The report would contain a description of the past financial year's activities, achievements realized, and a comparison against targets set at appraisal and at the beginning of the year. Targets established for the current financial year would also be contained in the report together with expected targets for the following financial year. The report would be accompanied by an estimated budget for the current financial year separated by main cost items, and detailed costings for the previous financial year. The report would be sufficiently detailed to provide a meaningful assessment of the past year's progress and of financial, managerial, staffing and technical needs by project sub-activity during the current year. Brief quarterly reports would be produced within two months of the end of each quarter and would provide summary financial information together with key comparative information concerning the project's physical progress, and also continually updated forecasts of forthcoming project needs (equipment, materials, veterinary inputs, staff etc.) and their financial implications. The quarterly reports would form the primary tool for short and medium term planning of project implementation and would form the basis for allocating sufficient local currency reserves from the "Budget Nationale" (para 5.08) and for procurement planning. The annual and quarterly reports and their associated accounts would be made available to IDA within the time durations specified above and would form a basis for discussions with Government concerning project progress, ongoing needs and future orientations. The above procedures (paras 5.09 and 5.10) were discussed and agreed during negotiations. 5.11 Project accounts would be audited by a qualified independent agency under procedures satisfactory to IDA and an audit report would be submitted to IDA within four months of the end of each financial year (by April 30). The audit report would include specific verification of the legitimacy of all expenditures utilizing the foreign exchange revolving fund (para 5.10). An assurance on the above was obtained from Government during negotiations. As with the recently effective Rice Development Project (Cr. GUI-952) it is anticipated that this function would be handled by the "Ministere de Controle d'Etat" (MCE). The MCE operates in Guinea as an independent auditor and has demonstrated the thoroughness of its procedures in connection with the Daboya Pineapple Project (Cr. GUI-569). Agreement was reached during negotiations that any alternative auditing arrangement that might be proposed by Government during the course of the project would be discussed beforehand with IDA and should be acceptable to IDA. 5.12 Charges for Veterinary Services. Veterinary treatments and mineral licks (paras 3.06 to 3.07) would be provided to herdsmen at costs designed to allow for the recovery of project induced Government expenses (para 5.14) and to remain attractive to livestock owners (paras 6.11 to 6.14). Vaccinations (paras 3.08 to 3.12) would be free so as to ensure total  - 33 - coverage wherever needed. This distinction is in keeping with the different characteristics of the project's two main field interventions. Vaccinations are as much in the national as in the individual herdsman-s interest, whereas veterinary treatments and mineral licks offer specific and clearly defined user benefits. 5.13 Charges would be standardized throughout the country at 20 sylis (about US$1.00 at the official exchange rate) per treatment regardless of type with the exception of sprays against external parasites which would be charged at 10 sylis (about US$0.50) per animal. Such uniform rates would simplify accounting and would help ensure that financial considerations would not bias the decisions taken by the veterinary officer or the herdsman regarding the type of treatment required. Mineral licks would be charged at about 50%t above c.i.f. cost price -- 8 sylis (about US$0.40) per kg -- so as to cover transportation and storage costs. The charges for veterinary treatments are about twice the average estimated costs of the chemicals and materials used. A small fixed percentage margin to provide for some free demonstrations and also to make up for some breakages and losses would be allowed for in the provision and accounting of veterinary products and mineral 'Licks. This would be set at 5% for veterinary products and 2% for mineral 'Licks. Project costs and the financial and economic analysis take account of this margin. The above arrangements (paras 5.12 and 5.13) were discussed and agreed during negotiations. 5.14 Financial Implications for Government. A cash flow representing the impact of the project upon Government's financial position is at Annex I, Table 6. Payments received from herdsmen during PYs 1 to 4, would amount to sylis 278 million which is equivalent to US$14.6 million. This would cover the loca:L costs of the project (sylis 67 million; US$3.5 million), and the replacement costs of veterinary products (sylis 154 million, US$8.1 million) leaving an estimated margin of about sylis 60 million (US$3.0 million) which could makce up for losses in revenues stemming from abolition of the vaccina- tion tax (para 1.29) and contribute to the costs of livestock service staff salaries (currently estimated at about sylis 50 million, US$2.6 million, para 1.26). 5.15 So as to cover Government's financial requirements for the re- purchase of veterinary products and mineral salts, funds received from herdsmen in the account with the BNDA set up for that purpose, would be converted to foreign exchange at the official exchange rate between the syli and the foreign currencies required. Should herdsmen contributions be insufficient to cover these needs, Government would provide the extra funds required (para 5.03). Assurances to the above effect were obtained during negotiations. 5.16 The cash flow at Annex I, Table 6 is based on the assumption that the charges for veterinary treatments would not be changed during the project disbursement period but then increased by 50%, an amount equivalent to the anticipalted international inflation during that period, and would thereafter be increased annually in line with annual inflation. Under this set of assumptions, net revenues from PY5 would continue to be positive. It is probable, however, that charges for veterinary treatments would be increased  - 34 - sooner than in PY5 in which case a lower increment in prices would still entail a satisfactory balance for Government in subsequent years. Neverthe- less, a stepwise rather than a smooth progression of prices (for instance 10 sylis to 15 sylis for sprays and 20 sylis to 25 sylis for other treatments, etc.) would be necessary in order to continue to utilize for single purchases the smallest coin in common circulation, the five sylis piece. It is expected that for the first two years of the project at least, the charges for veteri- nary treatments would not change from the amounts specified in para 5.13 so as to facilitate acceptance by herdsmen during the introductory period. Veterinary charges would, however, be reviewed continuously during the course of project supervision bearing in mind such criteria as, firstly, the recovery of purchase and distribution costs and, secondly, the ability and willingness to pay of livestock owners. In view of the importance of the charges levied upon Government's financial position and upon usage by herdsmen of project inputs, Government provided an assurance at negotiations that it would discuss with IDA the charges to be levied annually and would, prior to making any adjustment to these charges, discuss the implications of such a proposed change with IDA beforehand. VI. MARKETING, PRICES, PRODUCTION AND INCOMES A. Marketing and Pricing Policies 6.01 Marketing of cattle is done both through an official channel and through the unofficial or "parallel" market (para 6.04). For other livestock, the parallel market is used almost exclusively. The official marketing system is based on an annual census conducted by regional officials which forms the basis for an annual quota of 10% of the national herd dis- tributed according to the census and which is supposed to be marketed offi- cially. Pouvoir Revolutionnaire Local (PRL, para 1.21) leaders are given responsibility for rounding up the required number of animals. Cattle are then delivered to the regional authorities responsible for collecting the animals ("Entreprises de Commercialisation du Betail, ENCOBE's) for which the PRL receives 13 sylis/kg liveweight. Of this, herdsmen receive 11 sylis/kg liveweight. The ENCOBE's deliver either: (i) to an official regional butcher at 15 sylis/kg liveweight for local sale of meat at 32 sylis/kg; or, (ii) to the abbatoir at Mamou for 15 sylis/kg liveweight for subsequent slaughter and transportation to OBETAIL in Conakry for 40 sylis/kg carcass weight; or (iii) directly to OBETAIL's other abbatoir in Conakry for 18 sylis/kg liveweight. OBETAIL ("Office de Commercialisation du Betail"), which is a government enterprise responsible for supplying meat to Conakry, sells to nine official retail outlets in which meatis sold under strict rationing for 50 sylis/kg. 6.02 Although the official system has as its objective the supplying of meat to consumers in Conakry at prices which would keep the cost of living low, it is extremely inefficient and open to considerable abuse. The census on which the quota is made, for example, is generally a poor reflection of the size of the herd as herdsmen are reluctant to report all their cattle, principally because of the low official price that they receive (20% of the parallel market price, para 6.07), but also because payments to herdsmen are  - 35 - in many regions delayed by up to two or three months and because the census is also perceived by herdsmen as the basis for the unpopular annual "vacci- nation tax" (para 1.29). Additionally, while there are age and weight criteria for animals that are to be sold on the official market, this is seldom met a9 the low official price induces herdsmen to offer only their lightest an,imals, generally the sick or the very young. Losses in transit as a result of unsatisfactory handling of the animals are also high. Animals may be kept up to 6 days under poor conditions awaiting transportat:Lon and an additional 5 days awaiting slaughter. This can cause weightlosses of up to 15% to liveweights rarely exceeding 130 kg. By comparison, the liveweights of normal healthy adult animals are between 200 and 250 kg. Further losses, estimated at 12% of carcass weight, occur during storage and transit sub- sequent to slaughter. 6.03 The end result of these inefficiencies is that in recent years the official market is estimated to have accounted for less than 600 tons of meat (with bone) per annum which, when divided by Conakry's population, represents less than one kg per person. This has led to infreqluent and irregular availabilities. Moreover, the rationing system for distributing such supplies tends to favor higher income Governraent employees, at the expense of low income consumers. 6.04 Since the mid 1970s an unofficial marketing system for meat has been allowed to evolve parallel to the official channel, as Government has become increasingly tolerant of free market activities. Producers sell animals directly to traders and butchers, slaughtering generally takes place in open spaces under variable sanitary conditions, and retailing is through traditional town market stalls and on the roadside. Prices in this market are not systema- tically gathered or analysed, but appear to be about 50 sylis/kg liveweight (nearly five times the price paid to herdsmen by Government) and, for meat, 100 sylis/kg in remote towns and roadsides, to over 150 sylis/lcg in Conakry (in contraLst to the official price for meat of 50 sylis/kg). The size of the parallel market for cattle is estimated to be equivalent to about 12,500 tons of meat (para 6.09) representing over 90% of the market for beef. 6.05 As a result of the development of the parallel market, and the ability of herdsmen and urban consumers to use this channel to effectively bypass the inefficient and inegalitarian official market, continuation of the current system, providing that further measures are not attempted by Government to enforce the ten percent compulsory purchasing system more strictly, would have only a minor negative impact upon the incentives for herdsmen to adopt project recommendations. The parallel market would be expected to continue functioning and its supply and demand responsive pricing mechanism would provide sales outlets and appropriate incentives. However, continuation of the official marketing system in its present form is not ideal. Firstly, the relationship between herdsmen and livestock service staff is impeded because the extension workers (who conduct their owm census in addition to that undertaken by the regional authorities) are often perceived by herdsmen as being somehow involved with the census undertaken by the regional authorities upon which compulsory sales to Government and the "vaccination tax" are based (para 1.29). Secondly, maintaining the official  - 36 - marketing system as it is, would continue to divert government resources and interest away from and even preclude actions such as sanitary inspection of meat processing, dissemination of price and market information, and exporta- tion of N'Dama breeding stock which would widely encourage sectoral pro- ductivity. 6.06 In light of the above observations, an assurance was obtained during negotiations that Government would, by December 31, 1981, take measures with respect to the official cattle marketing system to remove constraints on further development of the livestock sector and to offer adequate incentives to herdsmen for the sale of their cattle. It was further agreed that the measures to be introduced would include: (i) creation of a new system for the livestock service to collect data on herd size so that there would be no risk of confusion by herdsmen with the census conducted by the regional authorities; (ii) forth-coming estimates of Government meat requirements would be estimated in terms of meat tonnage rather than head of cattle and cattle would eventually be purchased by Government authorities in the free market at competitive prices to attract the targeted production (the regional authorities' census could then be dispensed with); and (iii) the ENCOBE's would provide herdsmen with cash payments at the time of purchase. During PY1 the internationally recruited BDE economist would be responsible for coordinating a detailed analysis and for providing recommendations of future price levels for the official cattle marketing system. He would, inter alia, use the interim results of the study on agricultural prices and rural incentives currently being undertaken under the Rice Development Project (para. 1.09). IDA staff would, during the course of project supervision, provide advice to Government relative to the results of the BDE's analysis and concerning appropriate action to be taken. B. Economic Values of Meat and Milk 6.07 The estimates for the economic values of the projects' two princi- pal products -- beef and milk - have been based on prices in the parallel market supplemented by inferences from other sources. Meat (with bone) fetches about 150 sylis/kg in the most important urban market, Conakry, and about 125 sylis/kg in rural market centers. Herdsmen in transactions in remote areas obtain about 50 sylis/kg for live animals which converts at a liveweight to carcassweight ratio of 2.0 to the equivalent of 100 sylis/kg of meat. These relationships agree quite closely with the mark-ups involved in traditional marketing from rural producer to urban consumer in neighboring countries (typically about 40% - 50% of the meat equivalent producer price), and represent the costs of collection, trecking, slaughtering and selling including coverage for weight losses. Retail prices for meat sold in urban centers in other West African countries are also similar to parallel market retail prices in Guinea. They range from US$2.50 to US$4.00 eq'uivalent per kg depending upon the degree of scarcity in the area concerned. Guinean urban retail prices of between 125 to 150 sylis/kg are equivalent, in economic accounting prices (paras 1.09 and 7.04), to US$3.30 and US$3.90 respectively. The economic analysis of Chapter VII therefore uses a price of sylis 100/kg  - 37 - (US$2.63/kg in economic accounting prices after application of the estimated standard conversion factor of 0.5; para 7.04) to value the "meal: equivalent weight" (half of the liveweight) of cattle at farmgate. 6.08 Nilk prices of between 35 and 45 sylis per litre are observed throughout Guinea. Milk is seldom sold far from its point of production (generally in the village or at the roadside) and is not subjectL to Government regulation. A value of sylis 40/litre of mTilk has been taken in the economic analysis which, in economic accounting prices, is equivalent to US$1.05 per litre. C. Production 6.09 Production Without the Project. The national cattle herd is estimated at about 1,,250,000 head and is expected to be about stable. Available informa- tion concerning herd fertility, composition and death rates indicates a marketed (parallel and official) cattle offtake of about 11.5% representing about 13,800 tons of carcass meat per annum. Mortality through diseases is currently high -- about 8% per annum overall -- representing a further 4,800 tons of meat (on the assumption that about half of such meat is consumable) which is available for consumption in the area where the animal has fallen. Production from other sources is estimated as follows: sheep and goats 2,000 tons; pork 2,000 tons; poultry 2,500 tons; and eggs 1,300 tons. The global production of meat, offal and eggs is therefore estimated at about 26,400 tons or about 5.3 kg per capita per year representing about 1,000 grams of protein. Annual milk consumption is estimated at about 28,000 tons or 5.5 litres per capita. This figure is based on the assumption that 100 litres of mtlk per lactating cow is made available for human consumption (after suckling by the calves) and that about 54% of the estimated 520,000 cows would be lactating in any given year. Inclusive of milk, annual production of protein is estimated at about 1,300 grams per capita (Project File, Table B7). Consumption is probably lower than this as part of parallel market sales of animals are thought to be sold over the borders in exchange for hard currencies or con- sumer goods. 6.10 Project Impact. While the veterinary measures introduced under the project would be available for all forms of livestock, project impact has been etstimated solely in terms of cattle output (incremental beef and milk), the project's primary focus. Annex I, Table 3 provides details concerning development of the herd plus assumptions used. Calving rates are assumed to increase from 54% to 57%, calf mortality to fall from 34% to 25%, and mortality of young stock under two years of age to fall from 12% to 9%. Reduced mortalities in other age/sex categories are also expected and included in the assumptions of Annex I, Table 3. These factors are assu;med to result in higher offtake (from an estinated current offtake of 11.5% to an offtake of 14.5%), increased liveweights, and higher milk yields for lactating cows. The total herd size is not assumed to be significantly affected, increasing by only 4% in aggregate over the life of the project. Guinea's forage resources, currently plentiful in most areas (paras 2.02 to 2.06), are therefore not expected to be put under strain as a result of the project.  - 38 - These factors would result in an incremental 4,200 tons per annum of marketed beef or 30% of the estimated without-project beef supply. Tilk available for human consumption would increase by about 1,000 tons per annum by PY4 and by 11,000 tons per annum in PY11, an increment of 39%. Total animal protein production as a result of the proJect would therefore have increased by 18% from 1,300 grams to 1,500 grams per capita. The economic value of this production increment (in constant 1980 terms) would be over US$22 million per annum by PY11. However, it should be noted from Annex I, Table 3 that, due to the lagged nature of the prodllct[on cycle for cattle, the impact of the project builds up slowly reaching full development only in "Y1I. D. Herdsmen Incomes and Incentives 6.11 Producer Incomes. The expected impact of the project upon producer incomes is illustrated in Table 3. Payments for livestock treatments and mineral salts are as at para 5.14. Parallel market prices, sylis 100/kg for carcass meat and sylis 40/litre for milk (paras 6.07 and 6.08), have been used for valuing output as the official market price for meat has little overall weight due to the low volumes involved (para 6.04). These values reflect the real income generated from meat and milk production, although only part of this will be in cash. Thus, some of the meat and most of the milk is consumed by the family or apportioned in the village through non- financial transactions. Table 3: EFFECT ON HERDSMEN INCOMES /a Without With Incremental Project Project Amount Percent (Full Development) at PY11 Gross Income from National Herd Sylis US$ SI ls US$ Sylis US$ Meat (millions) 1378 (73) 1798 (95) 420 (22) 30 Milk (millions) 1120 (59) 1560 (82) 440 (23) 39 Meat and Milk (millions) 2498 (132) 3358 (177) 860 (45) 34 Herdsman Contributions for Veterinary Products (millions) - - 111 (6) 111 (6) - Net Income from Cattle: National Herd (millions) 2498 (132) 3347 (171) 749 (39) 30 10 Animal Herd (units) 19964 (1051) 25951 (1366) 5987 (315) 30 5 Animal Herd (units) 9982 (525) 12975 (633) 2993 (157) 30 /a Constant 1930 Terms. In Sylis except for figures in parentheses which are in dollars. (Conversions at 19 sylis:UJS$, the official exchange rate). Figures for the national herd are in millions. All the above figures refer to income from cattle only. Full details in Annex I, Table 7.  - 39 - 6.12 Under the project, aggregate annual gross income from the national herd's meat and milk production would increase by 30% and 39% to sylis 1800 million (US$95 million) and sylis 1560 million (US$82 million) respectively, or sylis 3360 million (US$177 million) from both sources. Without the project, the combined gross income from meat and milk is estimated at sylis 2500 million (US$132 million). Thus, the incremental gross income from meat and milk as a result of the project would be sylis 860 million (US$45 million) representing an incremental gross income of 34%. After subtracting herdsmen expenditures on veterinary products and mineral licks, about sylis 110 million (US$6 million), net income from cattle would be expected to increase as a result of the project by 30 percent or sylis 750 million (US$39 million). The table also illustrates the "average" impact of the project upon a smaller herd. Thus, for a ten animal herd, average net income would increase from sylis 20,000 (US$1050) to sylis 26,000 (US$1370), an increment of sylis 6,000 (US$320). Actual income would of course vary around this depending upon herd composition and age structure at the time, and the degree to which each herdsman takes advantage of project provided inputs. 6.13 While full development benefits for participants are substantial, the full impact of such measures would not be realized for several years. This is illustrated in Annex I, Table 7 which shows that annual net incremen- tal returns for the national herd are expected to be negative until PY3. Nevertheless, this lag is made up for by high returns in later years yielding a 58% financial rate of return to herdsmen. Moreover, this return is fairly resilient to adverse circumstances; thus, a combined 50% decrease in the income stream and a 50% increase in herdsmen contributions still yields an 18% rate of return. Of more immediate concern, however, is the perception of the livestock owner over the shorter run when the full benefits from participation would not yet have materialized. The average annual cost of animal treat- ments and mineral licks for a 10 animal herd would be sylis 800 (US$42). This represents only 4% of the average annual income from such a herd (without the project) or, alternatively, the equivalent of 20 litres of milk or 8 kg of meat. The payments expected from project beneficiaries are therefore affordable. 6.14 Herdsmen Incentives. The analysis of paras 6.11 to 6.13 above illustraties the financial attractiveness to herdsmen of participating in the project. It is expected that this would be fully appreciated by Guinean livestock owners. Through contacts with herdsmen in neighboring countries, Guinean livestock owners are aware of the benefits from using veterinary inputs and mineral licks, and also know that these are generally charged for. When available in Guinea, such items are in high demand and, for in- stance, some livestock owners even go to the trouble of purchasing common salt to provide to their cattle. Furthermore, while lags may be experienced in realizing full income benefits from the project's health meiasures, the results in terms of, for instance, the improved visual appearance of an animal previously infested with parasites, are readily apparent.  - 40 - E. Credit Program Incentives 6.15 Under the pilot credit program (paras 3.23 and 3.24), the otherwise substantial investment cost inherent in building up a small cattle herd and work oxen team would be reduced to supportable levels. This is illustrated in Annex I, Table 8 where a model cash flow for a participating family with a three hectare farm is provided. Provision of credit would relieve the initial investment cost (over sylis 40,000, US$2,100) and result instead in moderate annual surpluses over the first four years (sylis 1,300 to 2,000, US$70 to 100). These projections are based on the current market value of hiring out work oxen services and assume that the participant cultivates his own fields and an additional two hectares under contract to other farmers (the value of milk from his herd has not been included here). Occasional sales from his herd from then onwards would supplement this income and from year 9 the net annual income from the herd would average over sylis 18,000 (US$950). F. Revenues from Export of Breeding Stock 6.16 The attractive properties of the N'Dama breed (para 1.11) are reflected in the high prices offered for breeding stock. For instance, in 1979, Gambia exported about 600 head of N'Dama to Nigeria for about 1,100 Dalasi (US$630) per head FOB, and Nigeria is expected to be interested in acquiring such animals for a number of years. Also, in 1979, 250 head of Senegalese cattle, predominantly N'Dama heifers, were exported to Ghana for a price of 132,000 CFAF (US$640) per head FOB. A three year old heifer can currently be purchased in the parallel market in Guinea for about sylis 6,000 or -- at the official exchange rate of sylis 19:US$ -- about US$320. At the shadow exchange rate used in the project's economic analysis, this is about US$160. The costs of getting the animals from farmgate to the boat (mostly local costs such as wages) would be well within the margins available between the FOB value and the parallel market purchase price, thus justifying the attention that would be paid under the project to this possibility (para 3.25). Successful implementation of such an export scheme could therefore yield substantial foreign exchange earnings which could be used for importation of meat into Guinea. Taking frozen Argentine beef, cif Europe as a yardstick at about US$1800 per ton (1979), the exportation of three heifers would be able to generate sufficient foreign exchange to import one ton of meat. By comparison, Guinea's official marketing system is estimated to account for less than 600 tons of meat. However, there are limitations on the overall size of such a scheme. Firstly, export possibili- ties for N'Dama stock would have to be explored and taken advantage of as each occasion arises. Secondly, at high export volumes the removal from the national herd of breeding heifers would in large quantities have an adverse impact upon herd productivity. For example, the annual exportation of 1800 heifers (equivalent in foreign exchange terms to 600 tons of imported meat) would represent a 50% increase in current "mortality" rates of heifers of three years of age and over. Nevertheless, the foreign exchange earnings to be expected from a more limited breeding stock exportation scheme could become a highly attractive element within the livestock sector, although the project's financial and economic analysis has not included estimates for such benefits.  - 41 - VII. BENEFITS, ECONOMIC ANALYSIS AND RISKS A. Project Benefits 7.01 The project-s directly quantifiable benefits would result from the improvements in livestock productivity that it would induce. These have been estimated entirely in terms of cattle output, the project's specific focus, although other forms of livestock would also benefit from the project's veterinary measures. Under the project, beef production is anticipated to increase by 30% or by 4,200 t per annum (para 6.10). This would represent an increment of 16% in the production of all forms of meat, offa:L and eggs. Additionally, an incremental 11,000 t of milk or 39% of without project production is expected. Per capita consumption of animal proteins (excluding fish) would therefore be expected to increase by an average of 230 grams per annum or by about 18%. This would represent a significant improvement in the national diet of animal proteins which is currently estimated at 1,300 grams per annum as compared to about 2000 grams for West African colntries as a whole. 7.02 These benefits would be widely distributed. About 160,000 families (1.3 million persons) representing a quarter of Guinea-s population own cattle. Almost all of these families would benefit through t'he project's vaccination coverage and a majority of them are expected to utilize to some degree the improved veterinary services provided under the project. Aggregate net real income from cattle (in 1980 terms) of Guinean herdsmen is expected to increase by 30% or 750 million sylis per annum (para 6.12). After adjusting for exchange rate distortions (paras 1.09 and 7.04) this is equivalent to an increment: of US$20 million or an average increment per family of US$125 equivalent. 7.03 Additionally, through its institution strengthening and training measures, the project would enable the more effective usage of Government s livestock service staff providing the technical and institutional base for: (i) planning and implementing other initiatives in the livestock sector; (ii) following up in a possible second phase on the productivity impetus achieved under the project; and, (iii) examining and instigating improvements to critical sectoral problems such as pricing, marketing and taxation policies, and manpower planning and training. Furthermore, the pilot credit program would encourage the spread of cattle ownership and the usage of draft oxen and would establish a framework through which mixed farming systems, involving closely iinterrelated livestock and cropping practices, could be developed in the future. The potential for exporting N'Dama breeding stock would also be explored and if possible developed during the project period. This could not only provide much needed foreign exchange for Guinea but would also--as with the project s vaccination program--have regional benefits.  - 42 - B. Economic Analysis 7.04 Analytical Assumptions. In calculating the project's economic rate of return, only the project's directly quantifiable benefits (para 7.01) have been taken into account and all project costs, including institution strengthen- ing and training measures and the credit scheme, have been included. Costs (net of taxes but inclusive of physical contingencies as at para 5.02) and benefits have been computed over twenty years in constant 1980 prices. For analytical purposes it has been assumed that project activities are maintained at PY4 levels from PY5 onwards and that no further improvements to the livestock services's impact upon productivity are achieved. Incremental output has been valued at sylis 40/litre for milk and sylis 100/kg for carcass beef on the basis of the findings at paras 6.07 and 6.08. Both benefit streams and the local component of the cost streams have subsequently been adjusted downwards by multiplying with a standard conversion factor (SCF) of 0.5 so as to adjust domestic prices to their border values in economic accounting prices (para 1.09). The resultant cost and benefit streams are presented in Annex I Table 5 supported by Annex I Table 4 on cost streams and Annex I Table 3 on herd development and production assumptions. 7.05 Economic Rate of Return. Under the above assumptions, the project's economic rate of return (ERR) is estimated at 25% (Table 4). Alternative estimates encompassing the likely range of estimation error for the standard conversion factor to be used, provide results of 33% for a SCF of 0.67 and 20% for a SCF of 0.4. If no adjustment for exchange rate distortions had been made (i.e. a SCF of unity), the rate of return would have been 43%. 7.06 Sensitivity. The sensitivity tests in Table 4 indicate that the project's economic viability is fairly resilient to changes in costs or benefits. Thus, a 20% shortfall in benefits or a 20% rise in costs would in both cases still induce a rate of return of over 19%, and if both event- ualities occured together, the ERR would still be acceptable at about 15%. Alternatively, the sensitivity of the project to changes in costs or benefits can be expressed in terms of switching values -- the percentage fall in benefits or rise in costs which would reduce the net present value to zero at the estimated opportunity cost of captial (12%) -- which are 74% for costs and 43% for benefits. This means that benefits would have to fall by 43% or costs to rise by 74% for the ERR to fall as low as 12%. The effect upon the project's economic rate of return of lags in the realization of benefits are also illustrated in the table.  - 43 - Table 4: SUMMARY OF ECONOMIC ANALYSIS 1. Point Estimate: ERR% 25% 2. VariatJnns in Cost and Benefits: Cost Benefits Plus 20% Unchanged 21 Less 20% Unchanged 31 Unchanged Plus 20% 30 Unchanged Less 20% 20 Plus 10% Less 10% 20 Plus 20% Less 20% 16 Plus 20% Lagged one year 17 Plus 20% Lagged two years 13 3. Switching Values Cost must increase by 74% Benefits must decrease by 43% 4. Participation Rates At 75% of Expected Rate 22 At 50% of Expected Rate 17 Participation at 75% of Expected Rate and delayed by one year together with a cost increase of 20% 14 7.07 The effects of alternative levels of participation in the veteri- nary program have also been examined. The analysis has assumed that all benefits and the variable costs associated with the veterinary program (costs of veterinary products and mineral licks and their transportation) would vary in the same proportion, while maintaining all other costs of training, institutional strengthening, project management and the vaccination program constant. At a 75% participation rate, the ERR becomes 22%; with only 50% of herdsmen participating it falls to 17%. Under the combined assumptions of a 75% partLcipation rate, a one year lag in the benefit stream and a 20% rise in costs, the ERR falls to 14%. C. Risks 7.08 From a technical viewpoint the measures proposed under the project for improving livestock productivity are not considered a major risk. The activities already initiated in Guinea with UNDP/FAO assistance have demon- strated the feasibility of the vaccination program, and the projects veterinary measures are based on experience elsewhere in Africa. Additionally, the project would remain viable even under highly unfavorable relative trends of inflation on costs versus benefits. Such a possibility could be envisaged for veterinary products and mineral licks and their distribution costs. These  - 44 - together amount to two thirds of project costs taken over a 20 year period. A doubling of these costs relative to benefits would however still be within the switching value for costs (para 7.06). 7.09 The project's main risks are judged to relate to: (i) the need for high calibre Guinean and technical assistance staff and the support that they would need to receive from Government institutions connected with the project; and, (ii) the willingness of livestock owners to particiate in the project. On the former, risks would be minimised by careful attention to selection of key Guinean staff and of consultants. This would be supported by fellowships and programs at the training center designed to upgrade staff capabilities as and where needed. Further, the project's organizational, administrative and financial arrangements, have been designed to simplify and facilitate the logistical and accounting problems inherent in a countrywide project involving a large number of staff and beneficiaries and large transfers of goods, personnel and funds. 7.10 The willingness of livestock owners to participate in the project is explored in Chapter VI. Providing that herdsmen continue to have access to the parallel market, financial incentives for herdsmen to participate are judged to be present (para 6.14). Furthermore, they are aware of the bene- fits from using veterinary inputs and mineral salts and from vaccinations. A current impediment to herdsmen incentives concerns Government-s compulsory offtake policy involving, theoretically, 10% of the herd. If this quota were to be fully enforced, it would involve practically the entire current annual offtake of the national herd (11.5%) and would severely reduce incentives as the price paid to herdsmen is only about one fifth of that obtainable in the parallel market. At present the policy has only a minor negative impact upon incentives as enforcement is very incomplete (official offtake is less than one tenth of total offtake, para 6.04). Further, the gradual resolution of the current imbalance between official and parallel market prices (assurance at para 6.06), which in turn would allow for abolition of the compulsory purchase policy, would eventually remove this potential hazard to achievement of the project-s objectives. VIII. AGREEMENTS AND RECOMMENDATION 8.01 During negotiations, assurances were obtained from Government on the following: (a) measures would be taken by December 31, 1981 to initiate a system of manpower planning, education and recruitment for staff in the livestock sector in accordance with staff needs and budgetary constraints (para. 1.28); (b) measures to phase out the vaccination tax would be undertaken by December 31, 1981 (para. 1.29);  - 45 - (c) arrangements for distribution, accounting and charging for veterinary products and mineral licks provided to herdsmen were agreed (paras 3.07 and 5.13); (d) facilities, vehicles, equipment and materials flurnished through UNDP projects GUI/78/012 (vaccination campaign) and GUI/78/013 (IRBANC laboratory) would continue to be made available for exclusive usage under the proposed project (paras 3.09 and 3.14); (e) an annual plan for the recycling training center and the fellowship program would be presented to IDA for comment and approval at least two months before the start of each fiscal year (para 3.21); (f) for the pilot credit program outline credit arrangements were agreed and it was agreed that a model contract for use between participants, the livestock service and the BNDA would be prepared not later than December 31, 1981 for comment and approval by IDA (para 3.24); (g) the key Guinean personnel would be appropriately qualified and experienced (para 4.03); (h) terms of reference for technical assistance staff and a proforma of short term consultant needs were agreed and, selection and appointment of such staff and consultants would be tnder procedures satisfactory to IDA and would1 require IDA approval (paras 4.04 and 4.05); 'i) with respect to reporting requirements and procedures for accounting and auditing: i) the annual report would be presented not later than March 31 of each year and, the quarterly reports would be produced within two months of the end of each quarter (para 5.10), all to be made avail- able to IDA for comment; ii) accounting would be in accordance with sound accounting practices and adequate to reflect the detailed cost of project operations (para 5.09); and iii) auditing of project accounts would be by a qualified indepen- dent agency and to standards satisfactory to IDA, and would include a specific assessment of all expenditures made through the project's foreign exchange revolving fund (para 5.11); (j) for the financial arrangements of veterinary services, Govern- ment would: i) allocate funds received from livestock owners for veterinary products and mineral salts towards the repur- chasing of such items which would be converted to foreign exchange at official rates (para 5.15), and ii) set charges to herdsmen at levels adequate to provide for the recovery of  - 46 - costs and provide a surplus to compensate for phasing out the vaccination tax bearing in mind the willingness and ability of livestock owners to pay; and iii) discuss such charges annually with IDA and consult with IDA prior to making any changes to such charges (para. 5.16); and (k) with respect to the official cattle marketing system, measures would be taken by December 31, 1981 to remove constraints on further development of the livestock sector and to offer adequate incentives to herdsmen for the sale of their cattle (para. 6.06). 8.02 Conditions of project effectiveness would be: (a) satisfactory appointments or confirmation of satisfactory appointments had been made to the positions of Director of the DGE and Director of the BDE (para 4.03); (b) the signing of a satisfactory contract for the project-s technical assistance positions (para 4.06); and (c) opening of a special foreign exchange account for the project at the BGCE (para 5.08). 8.03 Under these assurances and conditions, the project is considered suitable for an IDA Credit of SDR 13.3 million (US$17.5 million).  GUINEA LIVESTOCK DEVLWPMENT PROJECT Project Costs By Year 1/ (UVS ' 000) FOREIGN EXCHANGE F2O PYI PY2 PY3 PY4 TOTAL % Aeaunt INSTITUTIONAI. STRENGThENING (DGE/BDE H.Q,) Constructias 806 - 806 65 524 Vehicles 86 34 - - 120 100 120 Eqaipmest and Fur-ssings - 134.8 59.5 65.5 65.8 325.6 64 208.6 Spare Parts - - 8.6 12 12 32.6 100 32.6 Foel and Lubricants - 22.4 34.8 34.8 34.8 126.8 50 64 Sub-total - 1,049.2 136.9 112.3 112.6 1,411.0 67 949.2 VACCINE PRODUCTION AND DIAGNOSTIC IABORATORY Constr-ctions - 83 - - , 83 65 54 Vehicles - - 31 - - 31 100 31 Equipaent sod Mstsrials - 144 50 55 135 384 97 374 Spare Parts _ 40 40 43 43 166 100 166 Foea and Lubric.nt - - 24.1 24.1 24.1 72.3 50 36 Other Operating Costs - 50 50 60 70 230 99 227 Sub-total - 11 195.1 182.1 6T 7.r3 -- If DRUGS AND MINERALS - 816 1,232 516 616 3,180 100 3,180 REINPORCEMET OF REGIONAL LIVESTOCK SERVICES Constroctio-a - 448 382 - - 830 65 540 Equip-eot for DREP Headquarters - 175 - 1 21 139 90 177 Equipsent for DREP and Arroodissemeot Clioic - 246 53 74 74 447 100 447 - Vehicles 18 36 - - 54 to0 54 Spare Parts - 16 30 33 33 112 I00 112 Fuel and Lubricants: Transportation Costs - 100 282 357 432 1,171 58 683 Other Operating Costs - 316 325 333 333 1,307 79 1,034 Sub-total - 1,319 1,108 798 893 4.118 74 3,047 VACCINATION CAMPAIGN Materiula and Eqoipsint - 138 5 5 268 416 100 415 Operating Costs; Maintenance and Miacellaneous Supplies - 49 59 59 59 226 89 201 Operating Costs; Fuels and Lubricants - 33 66 66 66 231 50 116 Sub-total - 220 130 130 393 873 8 732 PILOT CREDIT SCHEME Investment Fonds - - 42.1 63.1 105.3 210.5 - - Vehicles - - 18 - - 18 100 18 Spare Parts - - - 1.8 1.8 3.6 100 3.6 Fuel and Lubricants - - 4.7 4.7 4.7 14.1 50 7.1 Sub-total - - 64.8 69.6 111.8 2 4 6 . 2 28 . 7 TRAINING CENTER Constructions - 687 - - - 687 65 447 Vehicles - 86 - - 86 100 86 Equipnent and Furnihings- l - - 111 81 90 spare Parts - - - 8.9 8.9 17.8 100 17.8 Fuel and Lubricants - - 21.7 21.7 21.7 65.1 50 33 Miscellaneou. Operating Costs - 108 li6 121 345 28 96 Sub-total - 687 326.7 146.6 151.6 1,311.9 57 FELLOWSHIP PROGRAM 30 85 71 56 43 285 100 285 TECHNICAL ASSISTANCE Resident Staff - 202 690 690 633 2,215 100 2,215 Consultant Services 180 246 156 65 26 673 100 673 Sub-total 180 448 846 755 659 2,888 IOO 2,888 TOTAL PROJECT COSTS 210 4,941.2 4,110.5 2,765.6 3,252.1 15,279.4 84 12,767.9 1/ Detailed Cost Tables in Project File.  -48- ANNEX I Table 2 GUINEA LIVESTOCK DEVELOPMENT PROJECT Estimated Schedule of Disbursements (US$ '000) Cumulative Undisbursed Fiscal Year 1/ Quarter Disbursements DisbursementdAboust - ~~~~~~~~~Disbursement Amount FY81 Third 200 200 17,300 Fourth 250 450 17,050 FY82 First 1,250 1,700 15,800 Second 1,600 3,300 14,200 Third 1,500 4,800 12,700 Fourth 1,500 6,300 11,200 FY83 First 1,450 7,750 9,750 Second 1,200 8,950 8,550 Third 1,000 9,950 7,550 Fourth 1,000 10,950 6,550 FY84 First 1,000 11,950 5,550 Second 1,000 12,950 4,550 Third 1,200 14,150 3,350 Fourth 1,200 15,350 2,150 FY85 First 900 16,250 1,250 Second 650 16,900 600 Third 600 17,500 1/ Fiscal Year: July 1 - June 30 Closing Date: June 30, 1985  - 49 - GOUch ANNlES I Tabl7e 3 LIVESTOCK uVnnPne PROJECt 7'.4f94hiad) Set ore Oscolopuact rTo Ff1 nT2 PY n4 n5 PY6 PY7 PY8 PY9 PYlO Py1-O20 I. NERD ils 25.9 25.9 25.9 25.9 25.9 24.6 23.0 22.5 22.9 23.6 24.5 24.3 Cars 516.2 516.2 516.2 516.2 511.1 507.5 506.6 500.9 499.2 499.3 496.0 486.9 Heifer, +3 76.1 76.1 76.1 76.1 77.0 79.3 79.3 82.5 64.2 85.9 86.7 90.0 Hetier 2-3 81.0 81.0 01.0 81.9 84.4 84.4 87.8 88.6 9). 4 91.3 94.5 94.7 Heifer. 1-2 92.0 92.0 92.0 94.8 94,6 97.6 98.4 100.5 100).3 103.8 103.5 104.1 B 3lls/Stsees 343 31. 31.3 31.3 31.3 31.8 33.4 33.9 36.0 3'.6 39.0 40.1 44.3 Balls/Steers 2-3 58.0 58.0 58.0 58.9 60.7 61.6 64.4 66.0 61.3 69.2 71.7 73.9 Balls/Steers 1-2 92.0 92.0 92.0 94.8 94.8 97.6 98.4 100.5 100;.3 103.8 103.5 104.1 Calves 278.7 278.7 278.7 278.7 278.7 261.1 279.1 278.6 280.5 279.6 279.6 277.5 Totel 1,251.2 1,251.2 1,251.2 1,258.6 1,259.2 1,267.1 1,270.9 1,276.1 1,2827 1,295.5 1,300.1 1,299.8 Total AU 1/ 959.9 959.9 959.9 964.7 964.4 968.0 971.0 974.3 979.2 989.4 993.2 993.4 2. SRTALrTY loll. 1.~ ~ ~~~~ ~~~~~0 10 .0 10 1 00 10.9 0.9. . 11.0 Co.s 21 . 25.0 25 0 25.0 23.0 256 2.4 253 20. 25.0 25.0 919. Hatters +3 3.0 3.8 3.8 3.0 3.0 3.9 4.0 4.0 ,1. 4.2 4.3 3.6 Hletfere 2-3 4.9 4.9 4.9 4.9 4.9 5.1 5.1 5.3 4.4 4.5 4.6 4.7 REic05 1-2 11.0 11.0 11.0 10.1 10.4 10.4 9.8 9.8 10.1 9.0 9.3 9.4 Balls/Steers 3-4 1.6 1.6 1.6 1.6 1.6 1.6 1.7 1.7 1.6 1.9 2.0 1.8 BUlls/Stacos 23 3.3 3.5 3.3 3.3 3.1 3.6 3.7 3.9 3.3 3.4 3.5 3.7 Salle/Stears 1-2 11.0 11.0 11.0 10.1 10.4 10.4 9.8 0.8 10.1 9.0 9.3 9.4 Calves 94.8 94,8 94.8 89.2 69.2 83.6 84.3 78.1 78.0 72.9 72.7 69.4 Total 157.4 157.4 157.4 150.0 150.6 145.2 144.8 138.8 137.7 130.8 131.6 122.5 3. BALES Balls 13.0 13.0 13.0 13.0 13.0 13.0 12.3 11.3 11.3 11.5 11.8 12.2 cove- 46.5 46.5 46.5 46.5 51.6 51.1 50.8 55.7 51.1 54.9 59.9 63.3 Heifer- +3 - - - - - - - - - 3.6 Balls/St erer 3-4 15.7 15.7 15.7 15.7 13.7 17.5 20.0 20.3 211.6 22.6 23.4 29.1 BIlle/Stsa- 2-3 23.2 23.2 23.2 23.2 23.6 23.7 24.0 24.5 :2.1 24.9 29.6 25.9 Balls/Strees 1-2 23.0 23.0 23.0 23.0 23.7 22.6 23 4 22.6 2!3.1 22.1 22.8 20.8 Total 121.4 121.4 121.4 121.4 127.6 128.1 130.5 134.6 136.2 136.0 143.5 154.9 4. -ocal AU 110.2 110.2 110.2 110.2 116.0 116.5 116.8 123.0 124.2 124.5 131.6 143.8 5. MDO GRBL8TH 79 7 AU/ 0 0 0 0.5 0 0.4 0.3 0.3 0.5 1.0 0.4 0 6. OFFTAIN 7% 7 / 11.5 11.5 11.5 11.5 12.0 12.1 12.3 12.7 12.7 12.7 13.3 14.5 7. PRO7CTIVITT 4/ 11.5 11.5 11.5 12.0 12.0 12.5 12.6 13.0 13.2 13.7 13.7 14.5 PAPANET=ERS 3. BERTALITY IN 7. BUTls 4 4 4 4 4 4 4 4 4 4 4 4 Coe 5 5 5 5 S 5 5 5 S 5 5 4 eifers +3 5 5 5 5 5 5 S5 5 5 4 Seifrs 2-3 6 6 6 6 6 6 6 6 5 5 5 5 laif-e 1-2 12 12 12 11 11 11 10 10 10 9 9 9 BSllelst-ers 3-4 5 5 5 5 5 5 5 I 5 5 5 4 FlSta/S rears 2-3 6 6 6 6 6 6 6 6 5 5 5 5 SolIs/Otsees 1-2 12 12 12 11 11 11 10 10 10 9 9 9 Calo- 34 34 34 32 32 30 30 28 28 26 26 25 9. SALES IN % Butl. 50 50 50 50 50 50 50 50 50 50 50 50 Cass 9 9 9 9 10 10 10 11 11 1I 12 13 Heifer +3 - - - - - - - - - - - 4 BSlle 3-4 50 50 50 50 50 55 60 60 60 60 60 66 S.ll 2-3 40 40 40 40 40 39 39 38 38 37 37 35 BSlls 1-2 25 2 25 23 25 25 24 24 23 23 22 22 20 10' CALVING RTE IN7. 54 54 54 54 54 55 55 55 56 56 56 57 1/ aIn-1 USat (AS) are calclated cc follow -rg beets: Salle * 1.2 AU, Cows, Helefss *5 , Balls/Iteers 3-4 1 AU; rtif-es 2-3, BVIl/Steer- 2-3 - 0.8; Selfers 1-2, Sallilt-ers 1-0 - 0.6; Calves - 0.3 2, herd gro-th it perceot is thb torrease of total AU tf atit.cI herd darig I-et year. 3/ Offttse Ia 7. based as previoss year total AU, Offttak is bei8 sold oat of herd d/ Predac-iity is saw of hard -rowth plo offtako. Beed Production PY0 FYI PY2 PY3 PY4 Ff5 PY6 lY7 Pr8 PY9 .rT0l PY11-20 l-t I - tretal Bales (A.U.) 1/ - - - - 5.6 6.3 6.6 12.6 14.0 14.3 21.4 33.6 -oerectal Soles (tr-e) 2/ - - - - 721 788 1,.73 1,600 1,750 1,786 2,675 4,200 Milk N-b-r of Coea 1,-t-iog 3/ 078.7 278.7 278.7 287.7 276.0 279.1 276.6 275.5 279.5 279.6 277.8 277.5 L.atotioe pee rae 4/ 100 lOl 100 100 105 110 115 120 123 130 135 140 Produetton (liters c) 27.9 27.9 27.9 27.9 26.9 30.7 32.0 33.1 34.3 36.3 37.5 38.9 Iroreseetel Sale:: fooas)3/ - - - - 1.000 2,B00 4,100 5,200 6.400 8,400 9,600 11,000 1l Pr- I ite 4 oedao "He-d Oerelorae. TI At 15 kg se-t/acite UVt;, Used to ERR (A..e. 1, Tsble 5). }t Pros lle I (cws) c r "H-ed D-elopaw-c" ditided by hioe I. Bi 8efar- project bh-nfits: 100 1/-oa; With peJ.eco be-efits free F4: 57. i-cre-eet eo.h year over pre-toc *aooct up to 140 It-oe/ca. Used ic ERR (A-er 1, Table 5).  GUINEA LIVESTOCK DEVELOPMENT PROJECT Projection. of Costs for Financial and Eoono,it Analysis (USS '080, Coostant 1980 Tern.) CATEGORY PYOMIP PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9-20 TOTALS CONSTRUCTIONS: TOTAL COST 2,024 382 _- - 2,240 For-ign (65%) 1,316 248 - - 1,456 Local (25%) 506 96 - - _ _ _ _ _ 561 Ta. (10%) 185 38 - - - - - - - 223 VEHICLES, EQUIPMENT, MATERIALS, SPARE PARTS TOTAL COST 1.047 621 358 722 1,062 361 645 869 705 14,145 Foreign (93%) 974 578 333 671 988 336 600 808 656 13,160 Local (7%) 73 43 25 51 74 25 45 61 49 985 DRUGS AND MINERALS TOTAL COST 1/ 816 2,048 2,564 3,180 3,180 3,180 3,180 3,180 3,180 59,488 Foreign (100%) 816 2,048 2,564 3,180 3,180 3,180 3,180 3,180 3,180 59,488 CONTRACT TRANSPORT COSTS FOR YINERALS TOTAL COST 75 225 300 375 375 375 375 375 375 6,975 Foreign (60%) 45 135 180 225 225 225 225 225 225 4,185 Lo al (287) 21 63 84 105 105 105 105 105 105 1,953 Tao 9 27 36 45 45 45 45 45 45 837 FUEL AND LUBRICANTS TOTAL COST 8i 208 208 208 208 208 208 208 208 4,3 Foreign (50%) 41 104 104 104 104 104 104 104 104 2.017 Local (35%) 28 73 73 73 73 73 73 73 73 1,415 Tao (15%) 12 31 31 51 31 31 31 31 31 601 OTHER OPERATING COSTS TOTAL COST 366 483 509 524 524 524 524 524 524 _0,266 Foreign (72%) 264 348 366 377 377 377 377 377 377 7,387 Local (28%) 102 135 143 147 147 147 147 147 147 2,879 TECHNICAL ASSISTANCE TOTAL COST 628 846 755 659 78 78 78 78 78 3,980 Fornigo (100%) 628 846 755 659 78 78 78 7B 78 3,980 FELLOWSHI,PS TOTAL COST 115 71 56 43 51 51 51 51 51 1,101 Foreign (100%) 115 71 56 43 51 51 51 51 51 1,101 PURCHASE OF WORK OXEN; TOTAL COST - 42 64 105 - - - - - 211 Local (100%) - 42 64 105 - - - - - 211 I. TOTAL COSTS (Unadjusted) TOTAL 5,152 4,926 4,814 5,816 5,478 4,777 5,061 5,285 5,121 102,439 Foretgn 4,199 4,378 4,358 5,259 5,003 4,351 4,615 4,823 4,671 92,774 3i Local 747 452 389 481 399 350 370 386 374 8.004 - Tao 206 96 67 76 76 76 76 76 76 1,661 II. TOTAL ECONOMIC COSTS TOTAL 17 21 5,006 5,002 4,944 6,014 5,761 4,983 5,299 5,547 5,365 106,630 Foreign (including phy, conti.n) 4,593 4,753 4,729 5,748 5,540 4,790 5,094 5,333 5,158 102,201 Local (includlng phy. coctingenclen) 413 250 215 266 221 193 205 214 207 4,429 1/ ISclude a11 veterinary input. The project cos.t of Table I in the min tent inclode only increm-tal vete-iac-y input.. 2/ Used io calcolating the project . eco.o..ic rate of retorn (Tabla 5). Physical contingencim. as at pars 5.02 have beec applied; Tones hove been onitted; and local costs have been adjusted by a conv natic factor of 0.5 to reflect enchanga rate distortion.  4,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 4 GUINEA LIVESTOCK DEVELOPMENT PROJECT Summary of Economic Costs and Benefits (us$ '000) Incremental TOTAL TOTAL TOTAL Project Production (tons) 1/ Economic Benefits----- ECONOMIC ECONOMIC NET Year MEAT MILK MEAT-2/ MILK 3 BENEFITS COSTS 4/ BENEFITS pYO/l _ _ _ _ 5,006 (5.006) PY2 _ _ _ 5.002 (5,002) PY3 _ _ - - 4,944 (4,944) PY4 725 1,000 1,908 1,053 2,961 6,o14 (3,053) PY5 788 2,800 2,074 2,948 5,022 5,761 (739) l PY6 1,075 4,100 2,829 4,317 7,146 4,983 2,163 I PY7 1,600 5,200 4,211 5,476 9,687 5,298 4,389 PY8 1,750 6,400 4,606 6,739 11,345 5,547 5,798 PY9 1,786 8,400 4,701 8,845 13,546 5,365 8,181 PYlO 2,675 9,600 7,041 10,109 17,150 5,365 11,785 PY11-20 4,200 11,000 11,054 11,583 222,637 5,365 17,272 1/ Assumed average = 250 kg; 50> yield or 125 kg/carcass (0.125 ton per animal unit) expressed in '000 tons. 'n H 2/ Meat price is based on 100 Sylis/kg and adjusted using SER Sylis 38; economic benefits for meat calculated at UST2,632/ton. 3/ Milk price is based on 40 Sylis/kg and adjusted using SER Sylis 38; economic benefits for milk are evaluated at US$1,053/ton. 4/ Refer to Annex I, Table 4 (Category 2).  GUINEA LIVESTOCK DEVELOPhENT PROJECT Government Cash Plow 1/ Currency ('000 of) PYl PY2 PY3 PY4 TOTAL PY5 PY6 PY7 pW8 PY9 mY1o A. PROJECT ASSOCIATED COSTS Project Costs Excluding Veterinary Products Foreign us$ 4002 3003 2539 3195 12739 3104 2106 2777 3413 3303 3535 Local Real Costs US$ (eq.) 876 620 572 755 2823 672 629 713 796 824 882 Local Taxes uS$ 261 131 98 119 609 128 137 146 156 167 179 TOTAL us$ 5139 3754 3209 4069 16171 &7 2872 3636 435- TM9 7 Costs of Veterinary Products Incremental (100% Foreign) us$ 1033 1680 755 963 4431 - - - - - - Replacement (100% Foreign) US$ - 1114 2996 4004 8114 5317 5702 6087 6506 6961 7451 TOTAL US$ TM3 17 37 WY 12545 5317 5702 608 n6-50 6 W 7451 TOTAL COSTS Foreign US$ 5035 5797 6290 8162 25284 8421 7808 8864 9919 10264 10986 1 Local Real Costs US$ (eq.) 876 620 572 755 2823 672 629 713 796 824 882 \ Local Taxes US$ (eq.) 261 131 98 119 609 128 137 146 156 167 179 TOTAL US$ 6172 6548 6960 9073 987126 8574 97 10871 TIY2! 1f204 TOTAL COSTS BY CURRENCY Foreign us$ 5035 5797 6290 8162 25284 8421 7808 8864 9919 10264 10986 Local Real Costs Sylis 16644 11780 10868 14345 53637 12768 11951 13547 15124 15656 16758 Local Taxes Sylis 4959 2489 1862 2261 11571 2432 2603 2774 2964 3173 3401 B. FINANCING ARRANGEMENTS IDA Financing Disbursements 2/ us$ 5035 4683 3294 4158 17170 - - - - - - Service Charge 3/ US$ 19 55 85 113 272 129 129 129 129 129 129 Net IDA Financing us$ 5016 4628 3209 4045 T6898 (129) (129) (129) () (129) (l29) Revenues from Herdsmen 4/ Drugs and Medicaments Sylis 12635 37905 50540 63175 164255 94760 104236 114660 126126 138738 152612 Mineral Salts Sylis 8820 26362 35084 43904 114170 65856 72442 79286 87655 96420 106062 TOTAL Sylis 21455 64267 85624 107079 278425 176066 176678 1 213781 235158 258674 C, NET REVENUES (DEFICITS) BY CURRENCY Foreign Currencies us$ (19) (1169) (3081) (4117) (8386) (8550) (7937) (8993) (10048) (10393) (11115) Local Currency Syli 4811 52487 74756 92734 224788 147848 164727 180799 198657 219502 241916 NET REVENUES (DEFICITS) IN US$ EQUIVALENT 5/ US$ 234 1593 854 764 3445 (769) 733 523 408 1160 1617 D. Cumulative Net Revenues (Deficits) in US$ Equivalent US$ 234 1827 2681 3445 3445 2676 3409 3932 4340 5500 7117 1/ In current terms throughout except for Revenues from Herdsmen which are held constant through PY4. In PY5 revenues received from herdsmen are increased by 50% to reflect inflation from PYl to PY5. Subsequently, herdsman revenues are increased by 7% per annum. All price increase assumptions as at para 5.02. 2/ Disbursements assumed in line with foreign exchange expenditures incurred; approximately correct due to preponderance of procedure III disbursements. 3/ 0.75% of disbursed amount. 4/ 95% and 98% respectively for drugs/medicaments and mineral salts to account for losses (para 5.14). 3/ Sylis converted at sylis 19:US$.  GUINEA LIVESTOCK DEVELOPMENT PROJECT Beneficiaries Cash Flow (Sylis Million, Constant 1980 Terms) PYI PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9 PY10 PYlI-20 1. CASH OUTFLOW 1/ Veterinary Products 2/ 13.3 39.9 53.2 66.5 66.5 66.5 66.5 66.5 66.5 66.5 66.5 Mineral Salts 3/ 9.0 26.9 35.8 44.8 44.8 44.8 44.8 44.8 44.8 44.8 44.8 TOTAL 22.3 66.8 89.0 111.3 111.3 111.7 111.3 I11.3 1711.3 T3 11. 2. CASH INFLOW Meat: With Project 4/ 1378 1378 1378 1450 1460 1485 1538 1552 1556 1645 1798 Meat: Without Project 1378 1378 1378 1378 1378 1378 1378 1378 1378 1378 1378 Meat: Incremental - - - 72 82 107 160 174 178 267 420 3. Net Incremental Meat Inflow/Outflow 5/ Annual (22.3) (66.8) (89.0) (39.3) (29.3) (4.3) 48.7 62.7 66.7 155.7 308.7 Cumulative (22.3) (89.1) (178.1) (217.4) (246.7) (251.0) (202.3) (139.6) (72.9) 82.8 391.5 4. value of Incremental Milk 6/ Annual - - - 40 112 164 208 256 336 384 440 Cumulative - - - 40 152 316 524 780 1116 1500 1940 5. NET INCREMENTAL INFLOW/OUTFLOW (3 + 4) Annual (22.3) (66.8) (89.0) 0.7 82.7 159.7 256.7 318.7 402.7 539.7 748.7 Cumulative (22.3) (89.1) (178.1) (177.4) (94.7) 65.0 321.7 640.4 1043.1 1582.8 2331.5 1/ A.U's covered assumed at PYI 70,000; PY2 210,000; PY3 280,000; PY4 350,000. 2| On basis of 20 sylis per treatment except for spraying against external parasites at 10 sylis per spray. Average of 3.5 treatments and 12 sprays per annum per "complete" treatment equals 190 xylis per "complete" A.U. treatment. 3/ 15 kg per A.U. covered at 50% above cost price of US$0.30/kg. Amounts to US$0.45/kg or (converting at 19 sylis: US$) sylis 128 per A.U. 4/ Output valued at estimated parallel market prices of sylis 100/kg carcass meat (para 6,07). The minor influence of the official market (para 6.04) is not considered here. 5/ Rate of Return (excluding benefits from milk and draft oxen) is 58%. 6/ Milk valued at 40 sylis/litre. - rr  GUINEA LIVESTOCK DEVELOPMENT PROJECT PILOT CREDIT PROGRAM Cash Flow Projection for 3 ha Farm Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Years 10-19 Year 20 A. INFLOW AND OUTFLOW EXCLUSIVE OF FINANCING INFLOW Sales of Animals 1/ - - - - 10,500 - - - 9,000 9,000 55,000 2/ From Use of Oxen Team 3/ 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 1. TOTAL INFLOWS: 12,500 12,500 12,500 12,500 23,000 12,500 12,500 12,500 21,500 21,500 67,500 OUTFLOW Investment 4/ 40,000 - - - - - - - - - - Veterinary Products 5/ 750 1,000 1,000 1,250 1,000 1,250 1,500 1,750 1,750 1,750 1,750 Maintenance of Equipment 6/ 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 2. TOTAL OUTFLOW: 42,250 2,500 2,500 2,750 2,500 2,750 3,000 3,250 3,250 3,250 3,250 3. NET INFLOW/OUTFLOW Before Financing (30,000) 10,000 10,000 9,750 20,500 9,750 9,500 9,250 18,250 18,250 64,250 4. Cumulative Inflow/Outflow Before Financing (30,000) (20,000) (10,000) (250) (20,250) 30,000 39,500 48,750 67,000 249,500 313,750 B. FINANCING Provision of Credit 32,000 Debt Service Charges 7/ - (8,410) (8,410) (8,410) (8,410) (8,410) (8,410) Net Financing 32,000 (8,410) (8,410) (8,410) (8,410) (8,410) (8,410) - - - - C. NET INFLOW/OUTFLOW with Financing 2,000 1,590 1,590 1,340 12,090 1,340 1,090 9,250 18,250 18,250 64,250 D. CUMULATIVE INFLOW/OUTFLOW with Financing 2,000 3,590 5,180 6,520 18,610 19,950 21,040 30,290 48,540 231,040 295,290 1/ The results are based on herd projection sales in Table B2 and on an overall mortality rate of 12%. The prices per animal sale are as follows: Culled oxen at Sylis 12,000; culled cows at Sylis 10,000; and heifers at Sylis 6,000. 2/ This represents the residual value of the herd: 2 oxen at Sylis 12,000 = 24,000 2 cows at Sylis 10,000 = 20,000 1 heifer (1-2 years) =4,000 I oxen (2-3 years) = 6,000 I calf = 1,000 c 55,000 3/ Represents revenue from the hiring of farmer oxen teams to other farmers or the value of farmer substitution of hired oxen for manual cultivation. Valued at 2,500 sylia/ha (the mrket price currently obtainable for hire of work oxen services) assuming 3 ha on own farm and 2 ha of hired out services. 4/ Herd Purchases = 2 oxen (4 yrs old) at Sylis 12,000 = 24,000 1 heifer (3 yrs old) at Sylis 6,000 = 6,000 Equipment = Plough, yolk and chains = 10,000 Total investment for a 3 ha farm 40,000 5/ Veterinary Products at Sylis 250 per head; cost estimated on herd projection in Table B2. 6/ Replacement of equipment at 15% of investment cost. 7/ Annuitized repayments over six years at 8% interest. Annuity calculated on credit amount (sylis 32,000) plus 12% mark-up to provide a margin as insurance against incomplete repayments due to cattle deaths etc. Repayment follows one year of grace during which the amount to be repaid is capitalized at 8%.  - 55 - ANNEX 2 GUINEA LIVESTOCK DEVELOPMENT PROJECT STAFF APPRAISAL REPORT Contents of Project File A. Cost Tables 1. Summary of Project Costs 2. DGE and BDE Headquaters 3. Vaccine Production and Diagnostic Laboratory 4. Drugs, Medicaments and Mineral Salts 5. Reinforcement of regional Livestock Services - Main Table Supporting Table 1: DREP Equipment Costs Supporting Table 2: Cost of Materials 6. Vaccination Campaign, Materials and Equipment 7. Vaccination Campaign, Operating Costs 8. Pilot Credit Scheme 9. Recycling Training Center 10. Fellowship Program 11. Teclnical Assistance B. Supporting Tables B.1 Basic Parameters of Regional Services B.2 PiLot Credit Program - Herd Projection, Purchase and Sales over 20 years B.3 Pilot Credit Program - BNDA Cash Flow B.4 Summary of Economic Analyses B.5 Summary of Project Base Costs by Category B.6 Project Costs with Physical and Price Contingencies B.7 Summary of Estimated Meat, Milk and Protein Production C. Terms of Reference for Technical Assistance Staff D. Supporting Documentation I/ 1. Project Preparation Report (West Africa Regional Missicin, World Bank) 2. Sector Analysis and Identification Report (Latinoconsult) 1/ Available on Request  - 56 - ANNEX 2 Figure 1 GUINEA LIVESTOCK DEVELOPMENT PROJECT ORGANIZATIONAL STRUCTURE MINISTER OF LIVESTOCK AND FISHERIES t . . P~~~~~~~~~~~~~ELLOWSHIP. (Technical advice, l FLOGSHI studies, monitoring) -I F PROGRAM GENERAL DIRECTORATE OF LIVESTOCK (DGE) (Planning and Research Office; BDE) (Central Directorate) Director Director general of livestock Economist " Livestock specialist .* FINANCIAL AND ADMINISTRATIVE SERVICES Director Director of Financey: Supplies Procure- Chief Personnel and stores ment Accoun,- officer officer officer tant CREDIT VACCINATION DIAGNOSTIC AND REGIONAL rRAINING CENTER PROGRAM PROGRAM VACCINE PRODUC- LIVESTOCK Director TION LABORATORY SERVICES Training Credit Program (IRBANC) specialist+- officer Director Training and Veterinary extension specialist'4L specialist* VACCINATION REGIONS CAMPAIGN (DREPS) EAST EAST Coordinator VACCINATION REGIONS | CAMPAIGN - - -- (DREPS) Notes 7 WEST 1- ~ - - : WEST | Coordinatorg l | ($r) Technical assistance staff (- ) Line responsibilities  GO INEA LIVESTOCK DEVELOPMENT PROJECT IMPLEMENTATION SCHEDULE ACTIVrrY PROJECT YEAR: FYO PYI PY2 PY3 PY4 Construction Program: Architectural Design and Preparation Bidding Documents, Tendering, Evaluation and Contract Awards Construction Strengthening DGE and BDE __ . _- Reinforcement Vaccine Production and Diagnostic Lab. __________ Upgrading Regional Livestock Services (Percentage of National Herd Treated) (1) (5) (15) (20) (25) n Vaccine Campaign East 4 Vaccine Campaign West ____ Recycling Training Program _ Training Fellowship Program Credit Program Technical Assistance Livestock Specialist (DGE) Administration/Finance Officer (DGE) _ Economist BDE Veterinary Specialist (Kindia Laboratory) ___ Livestock/TraininR Specialist (Kindia Training Center~ _________ Livestock Specialist (Training, Extension,Crfedit and N'ama Export) _ Overlap With Project Related UNDP Activities I (a) Vaccine Production (GUI/78/013) . _ (b) Vaccine Campaign East (CiI/78/012) _ .   IBRD 14977 MA U RITAA H tA MRCH -9, s