Guinea - Pineapple Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 3960 PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) June 9, 1982 Operations Evaluation Department This document 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.  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) TABLE OF CONTENTS Page No. Preface ............................................................ Basic Data Sheet ..............******************.**.................i Highlights ......................................................... iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT SUMMARY ......**............................... 1 Background and Project Formulation ................... 1 Project Implementation ...................... ... 3 Agricultural Impact and Returns ...................... 6 Institutional Performance and Development ............ 7 II. MAIN ISSUES ......................................8......8 A. Bank Performance during Project Formulation and Supervision ................ . ........ 8 B. Yield Reduction and Economic Rate of Return .......... 10 C. Nucleus Estate with Outgrowers ........ ........... 10 D. Organizational Structure ............................. 13 E. Visiting Consultant .................................. 15 F. Monitoring and-Evaluation .............................. 16 III. CONCLUSIONS AND FUTURE OUTLOOK .......................... 16 Table 1 Pineapple Production of Daboya Estate ................... 21 Table 2 Comparison between Various Production Estimates .......... 22 PROJECT COMPLETION PROJECT I. Background ..............* ............*......* ............ 23 II. Formulation ............................................. 24 Origin ............................................... 24 Preparation, Appraisal, Negotiation and Approval .... ....... ................ 24 Project Description ..... # ... ......... * ......... ..... 26 Target and Goals ....................... ... ......... 30 Sector Significance ... .................. 33 Other Donor Agency Roles .............................33 This document 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. TABLE OF CONTENTS (continued) Page No. III. Lmplementation ............................... ......... 33 Effectiveness and Start Up ............................... 33 Revision ................................................ 34 Physical Progress ........................ ......... 34 Farm Investment ............................. ...... 37 Processing and Marketing ................ .......... 37 Procurement and Construction ................... ..... 39 Costs and Disbursements ................... ........ 41 Covenants ........................................... 46 IV. Agricultural Impact ..................................... 47 V. Rates of Return ............................. .......... 49 VI. Institutional Performance and Development ................ 50 Institutional Design and Growth ...................... 50 Supporting Services ..................................... 50 Farm Credit .......................................... 51 Financial Performance and Returns and Government Income and Deficits ..................... 51 Staff and Training Issues ................................ 51 Foreign Technicians .................................. 51 Accounting and Reporting ............................ 52 Institution-Building ................................ 52 VII. Special Issues .......................................... 53 Substitution and Diversion .......................... 53 Weather and Other Risks . ......... ....... . ............ 53 Research and Technical Availabilities ... ........... 53 Sector Influences ....................... 53 Integrated Development ............................. 54 Replication ..........* .. *......... . .. . . ......... 54 VIII. Changes in Repeater Projects .......................... 54 IX. Bank Performance ... ...... .. ............. . . ...... ...... 54 X. Conclusions ...... ......... .............................. 57 Annex Export of Pineapples and Mangoes 1970-1980 Maps IBRD 11444R (PPA) Pineapple Estate Irrigation Works IBRD 16366 (PPA) Location of the Project Area PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) PREFACE This is a performance audit c: the Fineapple Development Project i Guinea for which Credit 69-GUI in the a.ouit of US$7.0 million was approveu' in June 1975. The credit was closed Fully CIsbursed in June 1981, chz date originally set as the closing date. This audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCE) dated June 12, 1981. The PCR was prepared by the Western Africa Regional Office on the basis of a country visit in February 1981. The audit memorandum .s based on a review of the Appraisal Report (No. 697a-GUI) dated June 12, 1975, the President's Report (P-1623a-GUI) of June 16, 1975, the Credit Agreement dated July 2, 1975 and the PCR. Correspondence with the Borrower, quarterly and other reports, and internal Bank memoranda on project issues, as contained in relevant Bank files have also -been consulted and Bank staff and consultants associated with the project have been interviewed. An OED mission visited France and Guinea in October 1981. Discus- sions were held with consultants closely involved in project implementation, officials of the Ministries concerned and of the project implementation agency and project outgrowers. The information thus obtained and observations made during that mission were used to evaluate the conclusions of the PCR and are also reflected in the audit memorandum. The draft report was sent to the Borrower on April 8, 1982 for comments; however, none have been received. The PCR is thorough and accurate. The audit highlights certair i!,sues which are of particular interest for the future viability of project -nvestments, but in general agrees with the PCR's conclusions. OED gratefully acknowledges the valuable assistance providec ucy Government and project staff as well as outgrowers affected by the project. Their assistance greatly contributed to this report.  - ii - PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % Estimate Estimated Actual of Estimate Project Costs (US$ million) 8.5 11.5 135 Credit Amount (US$ million) 7.0 7.0 100 Board Approval Date - 06/26/75 - Credit Agreement Date - 07/02/75 - Effectiveness Date 09/30/75 10/22/75 130 Date Physical Zompcnent Completed 01/3/80L 01/31/81 ioL Proportion then completed %)- 100 b - Closing Date 06/30/81 06/30/81 100 Economic Rate of Return (%): (a) Nutleus Estata Component 15.0 5.0 34 (b) Smaillbclde: C3mponent 38.0 SatisfactoryL - Financial Rate of Return (%) n.a. n.a. - Institutional Performance Good Inadequate Agricultural Performance (yields) Good Inadequate - Number of Direct Beneficiaries 85 outgrowers5 36 outgrowers 42 n.a..f 260 laborers - CUMULATIVE DISBURSEMENTS FY76 FY77 FY78 FY79 FY80 FY81 Appraisal estimate (US$ million) 1.0 3.2 4.2 6.0 6.4 7.0 Actual (US$ million) 0.1 1.4 3.1 4.8 6.3 7.0/J Actual as % of estimate 10 44 74 80 98 100 Date of Final Disbursement: 10/21/81 MISSION DATA Date No. of Manweeks Specializations of Performance lypes of Mission (Month/Year) Persons in Field Mission Members/k TrendL Problems/k Identification (HQ) 02/73 2 3.0 Preparation (RMWA) 11/73 1 0.4 Preparation (RMWA) 03/74 1 1.1 Preparation (RMWA) 05/74 1 0.3 Appraisal 10-11/74 4 16.0 Total preparation/appraisal 20.8 Supervision I 02/76 3 1.8 a, c, d 2 - M, T Supervision II 05/76 1 1.0 a 2 2 M, T, F Supervision III 09/76 2 2.0 a, d 2 2 M, F, P Supervision IV 04/77 2 3.4 a, d 2 2 N, F, P Supervision V 10/77 2 2.0 a, d 3 2 M, F, P Supervision VI 03/78 2 1.4 d, d 2 1 m, F Supervision VII 10/78 1 1.1 d 2 2 M, T, F Supervision VIII 02/79 2 3.4 c, d 2 1 N, T, F Supervision IX 09/79 2 4.2 c, d 2 1 M, T, F Supervision X 05/80 2 4.2 b, d 2 2 N T, F, OJ Supervision XI 10/80 3 5.1 b, d, a 2 2 F, 0/1 PCR Follow-up and Supervision 02/81 1 2.0 b, a 3 2 M, F Total supervision 31.6 OTHER PROJECT DATA Borrower Republic of Guinea Executing Agencies Entreprise National Agricole de Daboya (ENAD) Follow-on Project None, but see PPAM, paras. 53-59 /a This is the estimated completion of estate investments as per appraisal report construction schedule (Annex 3 of appraisal report). The Credit Agreement provides for a December 31, 1980 project completion date and the time overrun is therefore negligible. /b For estate development; the outgrower component had been substantially reduced. /c The weighted overall rate of return at appraisal was estimated at 18%. /d Limited data prevent full reestimation of rate of return and changed composition of component would make comparison with appraisal estimates not very useful. However, on the basis of available but limited indications rate of return believed to be satisfactory (PPAM, para. 19). /e Cumulative hectares planted for outgrowers estimated at 340 ha. and farm model based on average size of 4 ha (appraisal estimates). However, present outgrowers (36) only have an area oi 69 ha (which present an average size of only 2 ha.) /f According to the appraisal report (Annex 2, Table 2), 69,100 mandays are required (or about equivalent to 200 laborers) for estate field operation, but this does not include labor requirements for non-field operations. /R As of June 5, 1981, US$21,343 remained undisbursed, however, following the final disbursement in October 21, 1981, the credit was fully disbursed. / a = agriculturist, b = agricultural economist, c = financial analyst, d = irrigation engineer, e = marketing specialist. /i 1 = problem-free or minor problems, 2 moderate problems, and 3 = major problems. /I 1 = improving, 2 = stationary, and 3 deteriorating. /k F = financial, M managerial, T = technical, P = political and 0 = other. 71 Other in these two cases refers to marketing problems. P - i 4i1- PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) HIGHLIGHTS The project was the Bank's first involvement in the Guinea agri- cultural sector. Although an enclave type of project, it was regarded as an essential prerequisite to building-up a pipeline of projects in Guinea. Furthermore, Government attached high priority to the foreign exchange earn- ing potential of the project. The project consisted of two components: a pineapple development component included establishing a 420 ha nucleus estate as well as support for 65 outgrowers and strengthening of the implementing agencies; a technical assistance component included review of the livestock and rice sectors in Guinea as well as the preparation of two feasibility studies. Despite construction problems and the need for a complete redesign of the irrigation system, the 420 ha estate was virtually completed in time. However, there were substantial cost.overruns (per ha costs rose from US$10,000 to US$15,000). Contrary to expectations, no rainfed outgrowers have been associated with the project but a modest irrigated outgrowers program has evolved covering 36 outgrowers. Project costs have risen to US$11.5 million (rather than the originally estimated US$8.5 million). The broader study of the fresh fruit sector has yet to be undertaken. Although deficient from the project preparation point of view, the two feasibility studies paved the way for further IDA assistance for a Rice Development Project (Credit 952-GUI) and Livestock Development Project (Credit 1063-GUI). Estate pineapple production is now expected to reach 7,000 tons at full development compared to 8,400 tons estimated at appraisal. Reduced yields, late arrival of inputs and substantially increased costs have resulted in an economic rate of return of 5% for the estate component (compared to an appraisal forecast of 15%). However, both the financial and economic returns for the outgrower component are believed to be satisfactory (PPAM, para. 19). The company responsible for production aspects performed reasonably well and developed into a capable, operating organization. However, this organizational approach has serious weaknesses, notably the dependence on other agencies to assure adequate and timely input delivery and output market- ing. Institutional development has not been completed. Higher integration between production, input supply and marketing functions is required to guarantee that the project's impact is maintained. Government has a capital investment of US$11.5 million in a project with substantial capacity to increase annual foreign exchange earnings. However, to realize this poten- tial, Government should reexamine which operational structure is best suited to achieve this. - iv - The major lessons emerging from the project's implementation experi- ence are: (i) detailed design should be completed before credit approval to avoid significant changes and implementation problems (PPAM, paras. 3, 7, 22, and 26 and PCR, paras. 3.03-3.04, 3.20, and 9.05-9.07); (ii) regular and frequent consultancy missions (visiting consultants) can be highly effective in their impact on project implementation (PPAM, paras. 20, and 48-49 and PCR, para. 6.11); (iii) a high degree of integration of production, transport and marketing is required to make growing a perishable commodity like pineapples profitable (PPAM, paras. 41, 44-46, and 56 and PCR, paras. 6.14 and 7.05); (iv) timely delivery of inputs is essential (PPAM, paras. 27 and 43 and PCR, para. 3.22); and (v) legal covenants cannot alone ensure adequate project implementation, as is demonstrated by the failure to achieve coordination between various project organizations (PPAM, para. 23) and to undertake the subsector study (PPAM, paras. 11 and 25 and PCR, paras. 3.31-3.32); Other points of interest are: - Bank supervision missions provided substantial technical assis- tance and considerable continuity resulted in excellent rela- tions with project management and officials; they can therefore be credited as having substantially contributed to the project's achievements (PPAM, para. 26 and PCR, paras. 9.04-9.09); - given the much higher costs and lower economic return for the nucleus estate than for outgrowers, the project mix between estate development and outgrowers has so far been uneconomic and questions about the appropriate mix between estate and smallholder development are as valid today as they were when the Board discussed the project (PPAM, paras. 30-39); and - recruitment and administration of expatriate staff was fraught with difficulties; a better formula might have been to have all expatriate staff provided by a consulting firm responsible for their administration and, if necessary, their replacement (PCR, para. 6.10). PROJECT PERFORMANCE AUDIT MEMORANDUM GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) I. PROJECT SUMMARYI/ Background and Project Formulation 1. The project was the Bank's first involvement in the Guinean agricul- tural sector. Bank economic missions had identified the absence of real incentives to producers caused by low official farmgate prices and the lack of consumer goods as the basic problem of the Guinean agricultural sector. Further constraints were poor transportation facilities, lack of foreign exchange for crucial imports, low levels of technical know-how, ineffective institutions serving the sector, especially those responsible for research, extension, input supply, credit and marketing. As a result, although over 80% of the population were engaged in agriculture, the agricultural balance of trade was moving towards increasing deficits. 2. After considerable discussions at all levels, the Bank decided that, despite the risks-/ involved, the pineapple project at Daboya offered the best prospects for successful Bank involvement in agriculture, particularly because the Government attached high priority to the project and as an enclave type project it could be implemented without waiting for the policy changes and structural reforms required in the sector generally. In addition, such a project would allow the Bank to finance further studies which were necessary if a pipeline of agricultural projects was to be built up.3/ 3. The project had its origin in a study prepared in 1970-72 by consul- tants investigating the hydro-agricultural development of some 3,600 ha in the upper basin of the River Samou. However, the Bank felt that this proposal was too ambitious-/; rather it suggested that consideration might be given to a 1/ Adapted from the PCR. 2/ These included the difficulties faced by expatriates working in Guinea; problems of attracting labor unless wages were supplemented and the need for foreign exchange allocations. 3/ For that reason, the project was known for a long time during prepara- tion and appraisal as the Guinea Pineapple Development and Technical Assistance Project. This name was later changed. 4/ Among the reasons was the high cost per ha (US$6,000-US$7,000). - 2 - pilot project at Daboya. During 1973, it was agreed that such a revised project should be prepared by the same consultants. At the same time, a complementary agro-technical stuly was to be undertaken by an expatriate pineapple specialist engaged by RMWA (Regional Mission in Western Africa). Although the report prepared by the consultants was recognized to be defi- cient, it was decided to go ahead to avoid further delay-!. The project was appraised in October/Novembe: 1974, on the basis of the then available informatiorL/. Negotiations took place from May 21 until June 3, 1975, and the project was approved by the Board on June 26, 1975. Various aspects of project implementation were discussed by the Board including the need for increased producer efficiency in order to assure sufficient benefits from an only slowly increasing output price; the problem of calculating rates of return when output prices are unknown;3/ cost advantages of IDA rather than Government recruiting expatriate staff; and the sufficiency of the training component. In addition, questions were raised about IDA's policy of allocat- ing credits in relation to a couatry's external debt and the desirability to invest in estate development when outgrower development had higher rates of return. The prolonged gestation period since identification basically reflects the time necessary for both the Bank and the country to become better informed as to each other's policies and procedures. 4. The project as approved consisted of two parts: (a) The pineapple component: (i) establishment at Daboya in the Kindia region (some 120 km northeast of Conakry), of an irrigated nucleus estate of 420 ha for the production of pineapple; (ii) provision to pideapple growers in the Kindia area of a package of support services to improve their productivity; 1/ An additional consideration was that detailed design could be included in the project. 2/ A major institutional issue was raised between appraisal and negotia- tions. The appraisal mission had proposed that all activities be integ- rated in FRUITEX, the state company responsible for export marketing of fruit. To avoid interminis:erial frictions, the Government proposed an alternative arrangement: a new company to be responsible for production and FRUITEX for transport and marketing. See PCR, para. 2.06 and PPAM, paras.4, 20-21, 23, and 40-47. 3/ Pineapples were exported from Guinea to Eastern European countries under barter agreements on terms unknown to the Bank; therefore output prices were unknown; instead Ivory Coast export prices (to France) were used as a proxy. . 3 - (iii) strengthening the handling capacity of the State Fruit Export- ing Company (FRUITEX) under the Ministry of Foreign Trade, and support including technical assistance and training for the newly established state-owned company "Entreprise Nationale Agricole de Daboya" (ENAD)1/, which would be responsible for the plantation and its associated outgrowers; and (iv) conducting marketing trials and transport studies and varietal field trials. (b) The technical assistance component: Under the Ministry of Rural Development this component consisted of the employment of qualified consultants to make an analysis of rice growing and livestock production prospects in Guinea and to prepare development programs and projects in these two sub-sectors. 5. Total project costs were estimated at Sylis 175 million (US$8.5 million) of which Sylis 116 million (US$5.7 million) or 66% of total costs represented foreign exchange costs. An IDA credit of US$7.0 million was approved on standard terms. No particular problems were envisaged with dis- bursement and procurement procedures. Expatriate staff were to be recruited through the Bank?]. At full production in year nine, total annual project production was expected to stabilize at 10,200 tons of pineapple; the nucleus estate producing 8,400 tons with outgrowers' incremental production amounting to 1,800 tons. It was assumed that 90% of the production would be exported to Eastern European countries. 6. The principal objective of the project was to increase the produc- tion of fresh pineapple through the creation of a nucleus estate and increas- ing the production of participating outgrowers, although it was recognized that this particular project would not lead to improvements in the living standards of a significant number of people. Project Implementation 7. The credit had become effective without undue delay in October 1975. Land reconnaissance and soil analysis in 1975/76 showed that, as foreshadowed in the agro-technical study, the original plans prepared by the consultants 1/ ENAD came under the responsibility of the Ministry of Agriculture; it was established by Government decree on May 17, 1975, a few days before the negotiations began. 2/ As there were, at that time, no diplomatic relations with France, Govern- ment was averse to direct contracts with Institut de Recherches sur les Fruits et Agrumes (IRFA) - French Fruit and Citrus Research Institute - personnel. could not be implemented. To provide the desired 420 net hectares of land suitable for pineapple production it proved necessary to enlarge the total area from 720 ha to 1,000 ha; this involved a re-design of the irrigation system, with considerable cost increases. After some discussions, the Govern- ment and the Bank decided to maintain the target of 420 ha even though this involved irrigation installation unit costs rising from the appraisal level of about US$4,400 per ha to US$10,480; restriction of the gross plantation area to its original limits would havE! reduced the cultivable area to 190 ha and would have increased installation costs to US$13,610 per ha.l/ 8. The contractor engaged for the first major installation contract (covering 190 ha) performed unsatisfactorily and this led to his withdrawal after contract penalties had been imposed. This and the need to find another firm to complete the contract caused temporary delays in the execution of the planned planting program. Cons:ruction suffered further delays from the flooding of the Kale pumping station site in July 1977. However, construction then accelerated and in the end, there was only a six-month delay in commis- sioning the 420 ha under irrigation. Under the circumstances, an impressive achievement. 9. Only that part of the outgrower program relating to irrigated production was implemented as other growers needed price incentives, assured input supply and efficient output marketing more than technical assistance and were dissuaded from participating in the project during its initial stages by the Kindia Regional Fruit Cooperative. In regards to irrigated smallholders, the outgrower progran developed by the project has been on group lines. By 1980, some 69 ha, more than 2-1/2 times the appraisal forecast, had been irrigated and planted to pineapple. 10. The project component related to strengthening the handling capacity of FRUITEX was not implemented, mainly because in 1976 responsibility for transportation (not marketing) was transferred from FRUITEX to newly formed state organizations (COTRAs) which were being provided with trucks and equip- ment. A limited transport study was undertaken by IRFA but no action was taken by the Government to implemeat its recommendations. 11. The appraisal report envisaged export of 90% of project produc- tion to Eastern European markets - Guinea's main customers at the time of appraisal - with marketing assured under a contract between ENAD and FRUITEX. Subsequently, the Government changed its policy to emphasize exports to Western European markets in order to earn convertible currencies. Because of more demanding quality and timing requirements for Western European markets, the maximum exportable proportion of Daboya's production was estimated by Bank supervision missions to be 75%. However, to break into new and highly competitive markets while making an optimum allocation of available sup- plies between Western and Eastern Europe called for a degree of marketing 1/ For details, see footnote 2 of PPAM, para. 13. - 5 - expertise that was not available. Marketing inefficiencies, including failure to provide appropriate containers, and insistence on fixed price sales rather than the more customary sales on commission culminated in 1980 when, coupled with breakdowns of the main Guinean processing factory and no programmed shipments to Eastern Europe, ENAD had to destroy some 427 tons of pineapples (value US$200,000). At the same time, non-associated growers in the Kindia region alone claimed losses of over 2,000 tons valued at nearly US$1 million, with consequent further discouragement to producers. 12. This situation was made substantially worse by the failure of the official importing agency (SEMAPE) to supply any of the project's fertilizer requirements (ordered in September 1979) with consequent damaging effects on immediate output and the future production cycle. The Bank therefore presented to the Government in October 1980, a project recovery program based on the transformation of ENAD into a fully autonomous and integrated entity, empowered to market its own output and to utilize part of the foreign exchange derived from export sales to finance direct importation of the inputs needed by the estate and its associated outgrowers. As of the time of the audit mission in October 1981, apart from administrative measures to strengthen project management, this recovery program had not been implemented. Because no fertilizer had been received for 20 months, two seasons' planting programs have suffered and a severe decline in production for the next few years has now to be faced. 13. Total project costs have risen to US$11.5 million; the cost overrun of US$3.0 million (35%), including an estimated US$1.0 million in foreign exchange, has been met by the Governmenti'. The major cause of this cost overrun was the increased cost (some US$2.4 million) of the redesigned irri- gation system and construction delays-2/. Disbursements of the IDA credit of US$7.0 million were virtually on schedule. 14. Covenants specifically related to the development of the nucleus estate were complied with; but compliance with covenants having a wider impact and involving other agencies and/or impinging on general policy issues was less satisfactory. In particular, the broad study of the fresh fruit sector that was hoped to lead to a dialogue between the Government and the Bank with a view to introduce policy and structural changes has yet to be 1/ In addition, increased development costs were met by a considerable reduction in estimated expenditures on the smallholder program and utilization of funds originally allocated for strengthening FRUITEX. 2/ Irrigation installation costs increased from US$4,400 per ha to US$10,480; overall land development and irrigation costs rose from US$10,000 per ha to US$15,000. - 6 - undertaken. FRUITEX marketing performance has also been unsatisfactoryl because of this and the limited scope of the outgrowers program the sector impact of the project has been limited. Agricultural Impact and Returns 15. Designed as an enclave type project, its impact could only be on a narrow front. Estate product:on was projected at appraisal to reach 8,400 tons at full development, which would counter the decline in smallholder production. By 1980, Daboya's contribution to total Guinean-pineapple exports had already reached 40% as compared to 20% in 1970. A Bank supervision mission in October 1980 revised production estimates to 7,000 tons of which 5,000 tons (75%) wou d be of exportable quality with a value of US$2.5 million in foreign exchangel. 16. No rainfed outgrowers have been associated with the project, but a modest irrigated outgrower program evolved under the project in which small groups (10-15 members) provide the land, planting material and labor to grow irrigated pineapple on 20-30 ha plots with supervision and technical assis- tance from ENAD, which also provides mechanical and other services on a contract basis and assists each group to obtain supervised credit from BNDA to purchase a motor pump and sprinkler irrigation set. As of end-1980, there were 36 smallholders in three groups with 69 ha of irrigated pineapple planted. Initial results suggest this is a promising approach to resolving the problem of introducing and combining new techniques with traditional farming systems and could, under certain conditions, be used as the basis for a pineapple component in a follow-up project3/. 17. At appraisal, it was envisaged that the National Agricultural Research Institute (INRAF) would have a major supporting role. However, this has not been forthcoming and with Bank approval, efforts have been con- centrated on the conduct of limited applied research by the project itself. 18. The economic rate of return was comprehensively re-calculated in late 1980 taking all known changes into account including lower production forecasts. On this basis the point estimate of the economic rate of return 1/ The Bank link to FRUITEX was through a credit covenant requiring ENAD to enter into contractual arrangements with FRUITEX satisfactory to the Association. 2/ Although still attainable, the delayed arrival of fertilizer implies time delays in achieving full production (PPAM, paras. 27-29). 3/ This pilot scheme has aroused considerable interest in the Kindia region. Prospective new groups are rearranging customary land holdings and some 200 ha have either been approved or are awaiting soil inspection by ENAD staff. - 7 - for the nucleus estate was 8.5% against an appraisal forecast of 14.9%. Had higher contingency allowances been made at appraisal in view of the special nature of the project and a lower shadow exchange rate been used, this dis- parity would have been lessened. That this revised rate is not lower, even in view of increased costs, lower production and export forecasts and a reduced shadow exchange rate, is due to the doubling of export prices. Recalculated to take into account the likely further reductions in output and exports due to the continued lack of fertilizer supplies, the audit estimates that the economic rate of return will further fall to 5%. 19. No rates of return have been recalculated for the outgrower compo- nent, due to limited data available at this time which makes quantative reestimates difficult under these circumstances (the economic rate of return for the outgrower component was estimated at 38% at appraisal). Furthermore, due to substantial changes in scope, the present outgrower program cannot be compared with that envisaged at appraisal. On the basis of higher prices and lower capital costs, as well as substantial interest shown in this program by smallholders, the PCR judges that the outgrower program is likely to have a satisfactory rate of return (PCR, paras. 5.05, 5.07 and 4.03 - 4.05). The audit has found no evidence to doubt this judgement. Institutional Performance and Development 20. The new State company (Entreprise Nationale Agricole de Daboya) established specifically to implement pineapple production component has developed into a unit capable of operating at present with only limited technical assistance!! and has benefitted from good direction and continuity of staff. Only on-the-job training was available as ministerial approval for overseas training fellowships provided for under the project was not forth- coming. In all, three foreign technicians recruited by the Bank were seconded to the project for differing periods. Their impact on project implementation, however, was less effective than the influence of the regular and frequent consultancy missions by a pineapple specialist of IRFA and, in a more re- stricted field, to similar engineering consultancy services provided by an engineering consulting firm. The project's simple expenditure/receipts accounting fails to provide management with adequate financial information for cost accounting purposes. Audit arrangements were satisfactory. 21. The state company responsible for production aspects performed reasonably well and developed into a capable organization. However, recent experience has shown that this organizational approach has serious operational weaknesses, notably its dependence on other agencies to assure for itself and its outgrowers the timely arrival of inputs as well as output marketing. 1/ However, this assessment would not necessarily hold true if the scope of the company were to be changed (PPAM, para. 58-59). -8- II. MAIN ISSUES A. Bank Performance during Project Formulation and Implementation-' 22. During project formulation (1973/74) the Bank had only a limited involvement with project preparation already on the way by consultants engaged by the Government. The failure of these consultants to take into account the views contained in the complementary agro-technical report (commissioned by RMWA and prepared by an IRFA pineapple expert) regarding the suitability of the proposed project area contributed to cost overruns of the irrigation system. The Bank's decision to go ahead with the appraisal in October 1974, rather than to insist on a revision of the preparation report added a further risk element to what was already recognized to be a risky project. Under these circumstances, higher cortingency allowances and an extended sensitivity analysis would have been justified. It should be noted that present Bank policy would have required preparation to be more advanced before proceeding with appraisal and would have required detailed engineering to have been completed before approval of the project. 23. Acceptance of the Government's view that a new separate agency (ENAD) under the Ministry of Agriculture should be responsible for production aspects only, contrary to the original appraisal mission proposal to entrust these functions to a new production division of FRUITEX (the national State company responsible under the Ministry of Foreign Trade for fruit marketing), implied that the necessary coordination between the two organizations could only be assured through contracts and covenants. Unfortunately, this proved unattainable in practice and demonstrates once more the limitations of what can be achieved solely relying on the covenants of the legal documents. Furthermore, this organizational set-up now threatens to undo whatever has been achieved under the project (PPAM, para. 21). 24. Bank decisions to go ahead with the project were dictated by a desire to avoid further delays that might have precluded its opportunity to get involved in the agricultural sector through a project that did not immedi- ately oblige the Bank to insist on policy and structural reforms. This strategy to build up a dialogue and consequently a pipeline of agricultural projects through a first "neutral" project is quite acceptable. However, the Bank could not resist expanding the scope of the project beyond its "neutral" impact by including Itudies and discussions on the broad development policies of the fruit secto . In the end, changes proved unattainable. 1/ These conclusions are identical to those reached in the PCR; therefore, for further details, see PCR, paras. 9.01-9.11. 2/ Section 4.03 of the Cred:'t Agreement "The Borrower undertakes that not later than June 30, 1976 or such other date as the Association may agree, it shall complete a broad development plan for its fresh fruit sector for the period ending December 31, 1980 and shall have afforded the Associ- ation a reasonable opportunity to exchange views on said plan." - 9 - 25. The Bank went even further beyond project "neutrality" by including an interest rate studyl/. Onlending to outgrowers was originally envisaged at a rate somewhat higher than 9%, but the Guinean delegation would only accept a rate not higher than 9%. Negotiations actually broke down at this point and only resumed when a compromise was reached: 9% interest rate and an interest rate study. In the end, the study was never undertaken. Further- more, the audit finds it difficult to understand why the Bank placed so much emphasis on the onlending interest rate, given the fact that all input and output prices in the Guinean economy are set by the Government. In summary, given the limited objectives of the project, the Bank, in the audit's view, overloaded the agreements with too many sectorial covenants. 26. The project was intensively supervised by the Bank; during the five years (1976-80), eleven supervision missions were mounted involving some 34 manweeks of staff in the field. These included a large element of technical assistance complementing that provided by foreign technicians and consultants (see PPAM, paras. 20 and 48-49, PCR, para. 6.09-6.11). The con- siderable continuity of the staff assigned to the missions resulted in excel- lent relations with project management and Government officials. These missions had to tackle the redesign of irrigation infrastructure due to shortcomings in the preparation report. Because of the urgency to keep the project on schedule, a complete reappraisal, which might well have shown that a smaller and less sophisticated system was more appropriate, was not con- sidered2/. Because of technical problems arising from the redesigned and delayed construction of the irrigation installations, supervision missions tended to concentrate on technical aspects and it was not until the end of project implementation that organizational and institutional problems, which are of primary importance for the operational phase, were addressed in depth. Supervision missions gave also considerable help in institution building. They supported ENAD management in its proposals to strengthen the organization to meet the increased responsibilities of the operational phase, although implementation of recommendations has been slow because of delays in obtaining ministerial approval. Inadequate attention was also given to introducing a 1/ In a side letter, the Borrower agreed "to complete and to submit to the Association for its comment not later than June 30, 1976 or such other date as shall be agreed with the Association, a study to review BNDA's lending policies and procedures. This study will, in particular, include a thorough assessment of the financial justification of current interest rates applicable to loans made by BNDA. Should this study make recommen- dations for an increase of interest rates applicable to loans made to state-owned enterprises, the onlending rate applicable to the subsidiary loan made by BNDA to Daboya shall be revised accordingly." 2/ Furthermore, given the fact that the Bank had accepted that preparation would be completed during implementation, the logical follow-up was intensive supervision rather than reappraisal. - 10 - proper cost accounting system which would be more useful as a management tool. With the benefit of hindsight, one can conclude that certain aspects of project implementation did not receive early enough attention. On the other hand, under the circumstances prevailing at the time (and remembering that this was the first Bank agricultural project in Guinea) Bank supervision, in the audit's view, can be credited as having substantially contributed to the project's physical achievements. B. Yield Reduction and Economic Rate of Return 27. The expected arrival of fertilizer in June, 1981 was the basis for yield and production re-estimates as presented in the PCR (see PCR, paras. 5.03 and 3.22 and text Table 3). However, fertilizer arrived only by the end of July, too late to allow for timely application and thus for attaining the re-estimated yields and production level. Furthermore, limited availability of planting materials and of labor necessitates lowering the projections of the area harvested. 28. In view of these limitations, the consultant, closely involved in project implementation, presented new projections to the audit mission (see Table 1 attached to this PPAM).!/. Current estate yields are as low as 21 tons/ha2/. This is comparable to yields of without-project outgrowers, only about two-thirds the current yields of. with-project outgrowers and only one third of the yields achieved on commercial plantations in the Ivory Coast. 29. These latest yield estimates cause the economic rate of return on. the nucleus estate to fall from 6.5% as computed for the PCR (see PCR, para. 5.01-5.04) to about 5%. C. Nucleus Estate with Outgrewers 30. As the apraisal report points out, "t:: project was to employ the well-tested and proven system of nucleus estate and associated outgrowers. The nucleus estate would develop basic cultivation techniques, engage in applied research, train personnel, serve as a demonstration to outgrowers, and generally act as the base from which the broad range of support services needed by outgrowers would be provided. Very importantly, the nucleus estate would guarantee a basic supply of high quality fruit for export, such a basic supply being a conditio sine qua non for the efficient operation of any fruit exporting industry.si." 1/ A comparison between the various estimates is given in Table 2. 2/ But prior to the fertilizer crises, yields of 30-35 tons/ha were obtained (see also Table 1). 3/ Appraisal Report (Appraisal of Pineapple Development Project, Guinea Report No. 697a-641 dated June 12, 1975), para. vii. - 11 - 31. The production system of a nucleus estate with outgrowers has so far not worked well in Guinea as compared to production by outgrowers only. There are two main reasons for this: (a) the high cost of estate development; and (b) the lack of incentives for estate labor. 32. The high cost of estate development has contributed to the project's low economic rate of return and also compares unfavorably with the cost of outgrower development. The actual cost of estate irrigation was US$15,900/ha (as against an appraisal forecast of US$10,160/hal/). The total per ha cost for outgrower irrigation is not exactly known; although detailed accounting data are available for direct costs, indirect costs are very difficult to estimate due to the absence of analytical accounting at ENAD. An approxima- tion of these costs can, however, be derived from appraisal estimates of US$617/hal/; that amount, increased by the average percentage cost overruns of 35% for the overall project brings the probable outgrower irrigation costs to US$833/ha, or only 5% of the cost of estate land development. Whatever the exact figure, it is obvious that outgrower development investment costs - also due to a different irrigation method - amounted to only a fraction of those for estate developmenti/. 33. Poor project planning, particularly in regards to suitability of the selected area, and the unsatisfactory performance of a contractor, con- tributed to the cost overruns on estate irrigation. But even without the cost overruns, the difference of costs is so large that it raises questions on the desirability of nucleus estate development under Guinean conditions. 34. In hindsight, it can be said that the project area could to a large extent have been developed through outgrowers, at a fraction of the actual 1/ Includes cost of land development, irrigation system installation, supervision of development and contingencies. Figure derived from appraisal report cost table, page 13. 2/ Irrigation sets, labor, irrigation O&M and contingencies. Figure also derived from appraisal report cost table, page 13. 3/ Although a promising start has been made, at present only 69 ha are involved and there has been intensive back-stopping from the project. Close monitoring is needed to properly assess impact of outgrower devel- opment (see also PCR, para. 4.03). - 12 - cost for estate development!!. With low cost portable pumps, outgrowers could have irrigated large tracts of land along the Bassa and the Kouloukoule rivers, both of which flow into the Kale reservoir. The area of higher elevation midway between the two rivers could have been left undeveloped for the time being. 35. The higher cost of astate development could have been justified if yields were accordingly higher. This is not so. Experience to date has shown that estate yields are not higher than outgrower yields; as a matter of fact they reach only two-thirds of outgrower yields (PPAM, para. 28). 36. Lower estate yields may be explained by lower cultivation standards due to lack of sufficient incentives and motivation of laborers!/. At ap- praisal, this was already anticipated as a possible problem. It was then considered necessary for ENAD to provide rations of rice and vegetable oil at official prices-/ to their workers, in addition to wages. Government indi- cated during negotiations that they would ensure enough consumer goods to be available at official prices to ENAD's workers. 37. As it turned out, labor availability did indeed become a problem because ENAD is compelled to pay official wage rates - which are only about one quarter of those paid in the Ivory Coast - and has difficulties in supply- ing rations at official prices to compensate for unattractive wages. Insuffi- cient labor incentives are causing additional problems: absenteeism (about one-third) from work is high and a substantial amount of the pineapple produc- tion is estimated to disappear (now about 10-15% and as much as 20% some years ago). Security costs on the estate have risen as a consequence. 38. The much higher costs and the lower yields of the estate as compa. .d with those of outgrowers show that the system of nucleus estate and associat-A outgrowers has not yet had a chance to "prove" itself in Guinea. The au,t agrees with the PCR that development of Guinea's pineapple production, b - ever, has been viable when undertaken by outgrowers. 1/ In fact, the Board discussed the nucleus estate/outgrower question also (see PPAM, para. 3). Firs:, given the emphasis on rural development, why should support be provided to yet another state company; and second, why should a large part of the funds be invested in the estate when the outgrower component had a rate of return of 38% while the estate com- ponent yielded only an estimated rate of return of 15%? As a matter of fact, these questions remain as valid today as they were in 1975. 2/ Not only by late arrival of fertilizers, as this affects estate and outgrower yields alike. 3/ Food and consumer goods were difficult to obtain at official prices and even on parallel markets often impossible to obtain at high prices. - 13 - 39. Given the unresolved labor problems alternatives for the estate might be considered. One alternative could be to subdivide the estate into small plots to be rented out to laborers/smallholders1. ENAD would then retain the functions of providing inputs and technical assistance, conducting agronomic trials, organize produce marketing and maintain a work- shop for repairing outgrower machinery and equipment. However this alter- native is somewhat theoretical given the difference in production technology. Furthermore at this stage the critical issue for both smallholder and estate development is input supply and marketing (see PPAM, para. 58). D. Organizational Structure 40. The considerable risks facing the project were accepted by the Bank only after careful consideration. The desire to accelerate project processing for various reasons (PPAM, para. 24) contributed to an early acceptance. One of the largest risks identified was the uncertainty of whether the project could operate efficiently within Guinea's political and administrative envi- ronment. As it turned out, this type of risk was not fully appreciated. The inability of SEMAPE to deliver fertilizer on time and inefficient pineapple marketing by FRUITEX have been principal factors in lowering the rate of return. 41. A high degree of integration of production, transport and marketing activities is required to make growing a perishable commodity like pineapple profitable. At appraisal, several Government agencies were involved in producing, transporting and exporting the crop, and in importing and dis- tributing inputs. This had led to inefficiencies in the past. It was, therefore, proposed by the appraisal that the project should be managed by an agency with a reasonable degree of autonomy. 42. The appraisal proposal (see also PCR, paras. 2.04-2.07) entailed that all activities concerning the pineapple sector should be integrated in one organization, FRUITEX, the state company under the Ministry of Foreign Trade, responsible for fruit exports. The Government did not accept this proposal, however, because managing the pineapple estate was to be the sole responsibility of the Ministry of Agriculture. As a result, a new state company (ENAD) was created for the purposes of implementing the nucleus estate and outgrower components of the project. The necessary degree of collaboration between the two entities was to be assured through contracts and covenants. As concerns input supply, ENAD was empowered to directly import all farm inputs and other goods necessary for both estate and outgrower operations. 1/ If the labor problem can be resolved and the timely arrival of inputs assured, this alternative becomes less obvious. Furthermore, the estate operates a much more sophisticated irrigation system. The fact that outgrowers operate effectively under a simple irrigation sytem, does not necessarily indicate they would do as well in a divided estate. However, what becomes clear is that estate expansion should not be seriously considered at this time. - 14 - 43. In practice, ENAD has performed well, particularly considering the often difficult circumstances. The performance of FRUITEX has been unsatis- factory!/ and marketing efficiency been low, thus greatly discouraging production. Due to cost overruns of the irrigation component, more IDA funds had been allocated to that category and SEMAPE, the Government procurement agency, undertook to procure fertilizers and chemicals with its own funds. An order placed with SEMAPE by ENAD in September 1979 eventually arrived in May, 1980; and a second order was only made by SEMAPE in October 1980 and arrived in July 1981; this delay is responsible for substantially depressed yields. In addition to the above three agencies, pineapple production has been depen- dent for transport on COTRAs, newly formed Government organizations, to which transport services were transEerred from FRUITEX in 1976, and for foreign exchange on the Central Bank. Borrower officials recognized that this split of organizational responsibilities has severely hampered project implementa- tion. 44. It must, therefore, be concluded that absence of the required high degree of integration has severely hampered project performance and that specific proposals and arrangements, to achieve this integration, have not worked mainly because of inter-ministerial coordination problems and ineffi- ciency of the state companies concerned. Shortage of IDA funds prevented direct input procurement and this added to the problems. 45. Now that the investment stage has been completed, a re-examination is being made to determine the operational structure best suited to make better use of the project's -ndoubted potential. The PCR (see PCR, para. 10.10) advances the proposal to establish a joint venture with an experienced foreign fruit company whose integrated operations would embrace input supply, production and output marketing. Such a joint venture could also be expected to re-appraise the present production system to provide for better working relations between the nucleus estate and outgrowers. Borrower officials have supported this proposal. IFC has been studying the possibility of such a joint venture. 46. At the t me of the audit visit - circumstances have later changed - another proposa. was advanced by some staff and the consultant2'. They considered asso .ation with a foreign company unnecessary and felt that borrower officials underrated their own capabilities, and argued that the success achieved by ENAD in establishing the estate could in principle be duplicated in administering imports, (ENAD was originally expected to under- take its own importing in anr case) and also exports. In respect of fruit 1/ For performance of public enterprises, see also World Bank, Revolutionary People's Republic of Guinea, Country Economic Memorandum (Report No. 3150-GUI) and Revolutionary People's Republic of Guinea, Survey of the Public Enterprise Sector (Report No. 3046-GUI), both dated July 20, 1981. 2/ The Guinean authorities and the Region favor at present and are actually pursuing the joint venture organizational model (PPAM, para. 58-59). - 15 - exports, a study, carried out by consultants, indicated that only little additional specific knowledge is required and that it would be within ENAD's capabilities. What was needed they considered, was more autonomy for ENAD and specific powers to organize fruit exports, which could be done in close collaboration with importers in consuming countries. An additional advantage would be that profits from producing and exporting pineapples would remain wholly in the country. The region disagrees and argues that for ENAD to man- age a vertically integrated operation by itself would, at the very least, require a management contract with a consulting firm to provide frequent reqular visits by specialists in marketing, administration, accounting and technical matters and even this would not provide the same likelihood of success as that provided by an experienced foreign partner with capital and profit margins at stake. 47. Whatever the solution chosen, it is obvious that institutional development has not been completed. Worse, if institutional development is not taken care of, it is likely that the economic impact of the investment will be even lower than now estimated. E. Visiting Consultant 48. A consultant with wide experience in pineapple production was engaged by the Bank during project identification to analyze the agro-tech- nical aspects. During implementation, the consultant's services were retained by the Borrower. He visited the project regularly and frequently: on average three times per year for a duration of two weeks per visitl/. The consul- tant was one of the driving forces behind the project. As noted in the PCR (PCR, para. 6.11), his missions contributed greatly to the successful imple- mentation of parts of the project. He provided for continuity and technical assistance. Project officials confirmed this view and commended the work done. They felt that the method of the visiting consultant had enabled them to attract an expert with higher qualifications than they would have otherwise been able -to attract as resident expert. Moreover, it was not as costly as employing a resident specialist. 49. The benefits of a visiting consultant may be more widely applicable than for this project alone. Apart from the advantages of being able to attract highly qualified experts at lower cost, the disadvantages of possible friction with local project staff, of differences in salaries and lifestyle and of possible strains from long exposure to .difficult project working conditions, would also be minimized. Of course, this project lent itself to this solution more easily than some other projects perhaps would: project crop production did not require continuous attendance like, for example, ranch 1/ Detailed reports were submitted to Government and project authorities (and to IDA) following each mission; and missions regularly coincided with IDA supervision missions. - 16 - management would have. The system of visiting agents is also widely used in commercial treecrop projectsl'.L Given the advantages of the system, the Bank should consider the applicability of the visiting consultant system in other Bank-financed projects. F. Monitoring and Evaluation 50. A specific monitoring and evaluation (M&E) system was not included in the project but would, according to the PCR (see PCR, para. 6.13), probably be needed under a follow-up project dealing with outgrowers. Project offi- cials thought such a component might be useful. 51. The performance of built-in M&E components in Bank-supported agri- cultural projects has, however, been disappointing. This is related 'to the lack of efforts devoted to M&E and inadequate understanding of its purpose and scope.2/ 52. The audit mission doubts the need for a separate M&E component. A possible follow-on project would not be very complex and still deal with only one crop, pineapple. The project progress reporting system under the just completed project already presented data on production, yields, and area planted. Any improvements required (e.g. cost accounting) could easily be met by upgrading the management information system already in place. III. CONCLUSIONS AND FUTURE OUTLOOK 5j. The audit agrees in general with the conclusions formulated in the PCR/ "At this early stage, it' is difficult to predict the project's final outcome. In emerging from the chrysalis of the Bank-supported investment period, the project is already facing a major crisis. Possible solutions have been indicated in the project recovery program submitted to Ministers by the October 1980 supervision mission, but Government's decision on these proposals was still awaited at the time of audit". There is ample justification for the Government taking the actions proposed in the recovery program: the project represents a capital investment of US$11.5 million, with the capacity of increasing its production to provide annual foreign exchange earnings of US$2.5 million. I/ Such a system requires, however, strong management in the field as a necessary precondition. 2/ See also Built-in Project Monitoring and Evaluation: Third Review, OED Report No. 3320, dated February 2, 1981. 3/ See also PCR, paras. 10.01-10.12. Section III of the PPAM is based on Chapter X of the PCR, sonetimes unchanged, sometimes slightly adapted and/or expanded. It has been included in the PPAM to highlight the importance of these issues for the future of the project. - 17 - 54. On the positive side, as the PCR notes, the project had several accomplishments: (a) "the establishment, virtually on schedule, of an irrigation infra- structure capable of serving 420 ha net; (b) the build up of a project management team that now, with a mini- mum of technical assistance, and given the essential inputs, has demonstrated its capability of managing and operating the production of a technically demanding crop; (c) the evolution of a formula for associated outgrowers' irrigated pineapple production that seems to offer considerable prospects for future extension; and (d) although deficient from the project preparation viewpoint, the studies of rice and livestock development under the technical assistance component paved the way for IDA-financed projects in these sub-sectors." 55. Against these considerable successes must be set the project's shortcomings, notably: (a) although irrigation infrastructure and field management are in place, yields are below estimates, labor problems have not been resolved, timely inputs not been assured and the rate of return as reestimated estate development is marginal; and also, as the PCR notes: (b) "inadequate input supply and output marketing safeguards for project production, a crucial deficiency in view of the complications in the pineapple production cycle and in the marketing of a perishable commodity; (c) non-attainment of targets for increased production of rainfed outgrowersl', suffering from inadequate price incentives, lack of inputs and poor marketing services; and (d) lack of any appreciable impact on sector policy2/ 1/ Only an irrigated outgrower program, larger than estimated at appraisal and with satisfactory returns was implemented (PPAM, paras. 9 and 19). 2/ However, in the audit's view, the project should not have included substantial sector policy objectives (see also PPAM, paras. 24-25). - 18 - 56. An agricultural development project has been identified by FAO/CP for the Kindia region, with a component presently envisaging the extension of smallholder pineapple production by some 800 ha. "This does not seem unreal- istic in view of the success of the limited outgrower program at Daboya. Such an extension would mean that Daboya's services would need to be strength- ened and enlarged to provide adequate technical assistance and supporting services to an increasing number of participants. Capital costs involved, including provision of credit to participating groups for the purchase of small pumps and sprinkler irrigation sets, should not be high and financial and economic rates of return should prove attractive. But, in the light of project experience, essential pre-conditions for any such fruit component of a follow-on project would be that the implementing agency be given effective powers to market its output and that of participating outgrowers, and to utilize foreign exchange earned from export sales to finance direct imports of essential inputs." 57. "Now that the investment stage has been completed, a re-examination is being made to determine the operational structure (including both organi- zation and estate/outgrower systEm) best suited to achieve the project's undoubted potential." This is an immediate priority for Government, and the Bank is also following-up on this important question. 58. In the course of the audit memorandum, various thoughts on follow-up have been exposed: (a) subdivide the estate into small plots to be rented out to laborers/ smallholders (PPAM, paras. 38 and 39); (b) a joint venture between ENAD and a foreign fruit company (PPAM, para. 45); (c) more integration and autonomy for ENAD (PPAM, para. 46); and (d) extension of smallholder pineapple production (PPAM, para. 56). Some of these options are not mutually exclusive. Although there has only been limited experience with the smallholder component, first indications are good and further expansion of this component could be warranted, provided of course that a strong organization remains to provide the necessary support for these smallholders. The FAO/CP Kindia agricultural development identifi- cation mission, in fact, recommended that only fruit development should be pursued. However, their proposals are, to date, not under actual considera- tion as Government gives priority to solving the present ENAD problems. Although smallholders have clear cost advantages, estate production could clearly be improved; furthermore,, smallholders will need a strong support organization and such organization might well be better off if it itself has some production function. Most importantly, the option to divide the estate mainly arose in the midst of the labor problem. Given that the estate has a more sophisticated irrigation system and that through provision of higher - 19 - wages and/or premiums the labor problem can be resolved, subdivision of the estate would not be practical. However, what is clear from the project experience is that a strong, autonomous and integrated organization is re- quired to realize the present project's potential. The Guinean authorities and the Region are at present in contact with a potential foreign partner to form a joint venture. This would follow a pattern adopted with success in Guinea in the mining sector (with Bank support) and recently in other sectors (e.g., hotels). 59. The Region has furthermore explained that the current proposal is for the formation of a joint private sector/Government company in a fully autonomous, financially independent, vertically integrated operation compris- ing production, input supply and intensively managed export marketing. The company would: (i) continue operating the estate and upgrade efficiency and yields; (ii) expand the associated outgrower program; (iii) provide inputs (sale of fertilizer, chemicals, packing materials) and marketing services to the many existing non-irrigated pineapple smallholders in the Kindia area; and (iv) provide marketing services for the export of the Kindia area's high quality grafted mangos which are much sought after in foreign markets but currently have no successful export mechanism. If this type of venture can be achieved, the institutional lessons learned during project implementation would have been applied. This possibility would provide an attractive future cash flow, a source-of foreign exchange earnings and income earnings possibil- ities for local farmers. Given the significant investment already made and the undoubted potential (and tradition) in the Kindia area for high quality fruit production, it would be a pity to let this possibility pass. s PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) Pineapple Production of Daboya Estate Actual Re-estimated Forecast 76/77 77/78 78/79 79/80 80/81 81/82 82/83 83/84 84/85 85/86 onwards 1. Annually planted area (ha) 35 25 70 80 73 75 100 140 140 140 2. Annually harvested area (ha) -- 35 25 70 80 73 75/a 100 140 140 3. Yield (m tons/ha) -- 32 32 31 21 22 45 45 45 50 4. Marketable production (m tons) - 1,124 820 1,690b 1,00&/c 2,369/d 3,375 4,500 6,300 7,000 5. Appraisal estimate of market- able production (in tons) -- 1,400 2,100 3,150 5,600 6,300 7,700 8,400 8,400 8,400 6. 4 as % of 5 -- 80 39 54 18 38 44 54 75 83 /a Area not expected to be larger mainly because of labor shortage. /b An additional 420 tons rotted in the field. /c About 300 additional tons were wasted mainly because factories were closed: the Salguidia factory for renovation and the Kankan factory for lack of cans. /d Including 716 tons from the previous year; delay on account of fertilizer delay. go CD PROJECT PERFORMANCE AUDIT REPORT GUINEA PINEAPPLE DEVELOPMENT PROJECT (CREDIT 569-GUI) Comparison between Various Production Estimates (Daboya Estate) 76/77 77/78 78/79 79/80 80/81 81/82 82/83 83/84 84/85 85/86 onwards Annually Planted Area (ha) - Appraisal (June 1975) 40 60 90 90 140 140 140 140 140 140 - First Revision (October 1980) 35 25 70 90 140 140 140 140 140 140 - Second Revision (October 1980) 35 25 70 80 100 140 140 140 140 140 - Third Revision (May 1981) 35 25 70 80 85 90 140 140 140 140 - Audit Revision (October 1981) 35 25 70 80 73 75 100 140 140 140 Production Estimates - Appraisal (June 1975). - 1,400 2,100 3,150 5,600 6,300 7,700 8,400 8,400 8,400 - Supervision (October 1980) - N.A. N.A. 2,110 2,640 4,200 5,600 6,300 7,000 7,000 - Completion (May 1981) - N.A. N.A. 2,110 2,400 3,000 4,000 5,000 6,000 7,000 - Audit Revision (October 1981) - 1,124 820 1,690 1,006 2,369 3,375 4,500 6,300 7,000 H3 L N) - 23 - GUINEA PINEAPPLE DEVELOPMENT PROJECT Credit 569-GUI Project Completion Report I. BACKGROUND 1.01. The project was the Bank's first involvement in the Guinean agricultural sector. On the part of the Government, it represented a significant movement away from projects financed under bilateral aid from centrally planned countries; for the Bank, it posed particular problems mainly of a non-technical nature. 1.02 Bank economic missions had identified the basic problem of the rural sector as absence of real incentives for producers because of artifi- cially low official producer prices and lack of consumer goods. Further constraints were imposed by poor transportation facilities, lack of foreign exchange for crucially needed imports, low levels of technical know-how and management and defects in the institutions serving the sector especially research, extension, input supply, credit and marketing. 1.03 As a result, although over 80% of the population were engaged in agriculture, the agricultural balance of trade was moving into increasing deficits and real per capita income was declining. In 1972 GNP was estimated at about US$450 million and per capita income at US$90. 1.04 Government, which had previously given priority to investment in mining, was showing its awareness of the position by indicating in its Five -Year Plan (1973-1978) its intention of putting more emphasis on agricultural development. The Bank's earlier operations in Guinea had all been concerned with the enclave type Boke bauxite mining venture. The first, of US$1.7 million, SI-GUI/1966 was an engineering loan; 557- GUI/1968 for US$64.5 million was for construction and 766-GUI/1971 for US$9.0 million was to increase project production capacity. 1.05 After considerable discussion at all levels, it was decided that the pineapple project at Daboya, despite the risks involved, offered the best prospects for successful Bank involvement in the agricultural sector because it was a project to which Government attached high priority. Preliminary reviews in Washington and in the field confirmed its probable economic viability and as a semi-enclave type project it could be implemented without waiting for the policy changes and structural reforms required in the sector generally. - 24 - 1.06 Situated some 120 km north east of Conakry, the selected project area possessed the advantages of proven favorable ecological conditions for high-grade pineapple production and good road access to the port of Conakry thus facilitating exports. II. FORMULATION Origin 2.01 The project had its o:-igin in a study submitted to the Government in 1970 by consultants investigating the hydro-agricultural development of the upper basin of the River Samou. Involving the construction of a new barrage on the River Samou at Daboya, the study proposals envisaged, in addition to the production of 2.5 million KWh of electricity, an annual output at full production from a state farm covering 3,600 ha of: 86,000 t. of export crops (mostly pineapples, mangos and bananas): 6,600 t. of market garden crops 9,000 t. of food crops 223 t. of meat 2.4 million litres of milk at an investment cost of US$23.2 million without livestock or US$25.2 million with livestock. 2.02 After this ambitious scheme had been presented to it by the Government in 1972, the Bank indicated that because of its high investment costs (US$6,000 - 7,000 per 1tectare), optimistic yield assumptions and heavy labor requirements, it was convinced that benefits for Guinea did not justify the risks of a project of the size proposed, but suggested that consideration might be given to a pilot project at Daboya. 2.03 Following visits by EQ and RMWA staff during 1973, agreement was reached on the outline of such a revised project, and the consultants were asked by Government to prepare the irrigation and economic aspects while a consultant - a staff member cf the fruit research institute IFAC (now renamed IRFA) with a wide experience in pineapple production -was engaged by RMWA to prepare a complementary report on agro-technical aspects. As part of the revised outline, it was agreed that the project would also provide finance for studies of the rice and livestock sub-sectors. Preparation, Appraisal, Negotiation and Approval 2.04 In the event, the feasibility study produced by the consultants in May, 1974, was considered unsatisfactory by both Government and RMWA, particularly as regards general. background and the irrigation study, which - 25 - failed to take into account the recommendations in the IRFA consultant's report as to the perimeters of the project area. Since to call for a redraft of the consultants' study would have involved further delays especially as the consultants interest in the project appeared to be waning and since provision for the detailed design of the irrigation system could be included in the project, it was decided to go ahead and an appraisal mission visited Guinea in October/November, 1974, and appraised the project on the basis of the then available data. 2.05 During Bank discussion of the issues involved, it was agreed that the crucial problem was whether the project could operate efficiently within the political and administrative environment prevailing in Guinea. This risk was rated high particularly in view of the difficulties faced by expatriates working in Guinea, the problems of attracting labor without supplementing cash wages with rations at official low prices and the need for foreign exchange allocations by Government to meet foreign exchange costs particularly after the project development period. (Subsequent events have confirmed the validity of these assessments). Again after careful consideration at all levels up to and including the Regional Vice- President, it was decided these risks were acceptable. 2.06 Between appraisal and negotiations a major institutional issue was raised by Government. The appraisal mission had proposed that all activities concerning the pineapple operation should be integrated in one organisation - Fruitex, the State company responsible for export marketing of fruit. This was justified on the technical grounds that the profitable marketing of a perishable commodity such as pineapples demands a high degree of integration of production, transport and marketing activities. The appraisal mission thought its proposals had been agreed, but the Bank was informed in April, 1975, that these proposals were unacceptable because, to amend the statutes of Fruitex - an organisation under the Ministry of Foreign Trade - to enable it to run the nucleus pineapple estate, would lead inevitably to interministerial friction since the Ministry of Agriculture was solely responsible for agricultural production. The fact that these Ministries were part of different "Super- Ministries" (since abolished under a recent Government restructure) reinforced this view. The alternative proposed by the Government was for the creation under the Ministry of Agriculture of a new State company (1'Entreprise Nationale de Daboya - ENAD") with the same degree of autonomy and financial powers as Fruitex, to be responsible for the production aspects of the project; the new company to enter into a contract with Fruitex which would be responsible for transport and marketing. 2.07 Negotiations lasted from May 21 until June 3, 1975, and opened with a detailed exchange of views on the rules and procedures of the Bank and the Government since this was the first opportunity for their collabo- ration in the rural development field. Thereafter the main points raised were: (a) Organization. The Bank representatives accepted the alternative proposed by Government, noting that ENAD had already been created by Decree No. 200 PRG of May 17, 1975. - 26 - (b) Financing. Since the Guinean Government had no procedure to cover on-lending, it was agreed that the loan for Daboya would be made on Government's account by the National Agricultural Development Bank (BNDA). (c) Management and staff. The Guinean representatives asked the Bank to recruit directly the three experts (i.e. plantation manager, plantation engineer and agronomist for research and extension) and seconc. them to the project and to do its best to obtain the consultant: services of a pineapple specialist. (The difficulty here was That the Government was averse to a formal agreement with IRFA - on the grounds that it had then no diplomatic relations with France but was willing to accept a specialist on a personal basis). The Bank agreed to the appointment of Government's candidate (a Guinean) to the post of General Manager of Daboya. 2.08 The final version of the Appraisal Report (No. 697a - GUI) dated June 12, 1975, was submitted to and approved by the Board on June 26, 1975. The prolonged gestation period since identification was largely due to the "pioneer" nature of the projec- and the time taken up by both parties in getting to know the other's procedures and policies, and, in the circumstances, could hardly have been reduced. Project Description 2.09 The project was divided into two parts: A. Pineapple Component This consisted of: (a) establishing at Daboya an irrigated nucleus pineapple estate (estimated gross area 720 ha) to cultivate 420 ha of pineapples; (b) providing pineapple growers in the surrounding Kindia area with a package of support services to permit them to maximise their productivity; (c) strengthening Fruitex's road transportation and fruit handling capacity through the provision of new vehicles and spare parts, the construction and equipping of a vehicle workshop, and providing specialised equipment to facilitate the loading of pineapples at the pcrt of Conakry; (d) conducting trials and studies of internal and external transport arrangements for fresh pinapples, including trial shipments of pineapples to new markets, especially to Western European countries; - 27 - Table 1: Project Cost Estimates at Appraisal Foreign Local Foreign Total Local Foreign Total Exchange ------ Syl. '000 ------ ------- US$'000 ------- % A. Pineapple Component I. Nucleus Estate Land Development 6,535 3,838 10,373 319.4 187.6 507.0 37 Irrigation System Inst'n 5,185 21,399 26,584 253.4 1045.9 1299.3 80 Building Construction 3,532 5,228 8,760 172.6 255.5 428.1 60 Vehicles & Farm Equipmnt. 765 4,317 5,082 37.4 211.0 248.4 85 Supervision of Dev'ment 12,780 12,882 25,662 624.6 629.6 1254.2 52 Subtotal 28,797 47,664 76,461 1,407.4 2329.6 3737.0 62 II. Smallholder Program Building Construction 165 252 417 8.1 12.3 20.4 60 Vehicles 87 493 580 4.2 24.1 28.3 85 Salaries & Allowances Extension Staff 5,036 1,600 6,636 246.1 78.2 324.3 24 Vehicles Running Costs 250 700 950 12.2 34.2 46.4 74 Incremental On-farm Costs Irrigation Sets & Spryrs 228 1,277 1,505 11.2 62.4 73.6 85 Agricultural Chemicals 697 2,785 3,482 34.1 136.1 170.2 80 Other Materials 141 565 706 6.9 27.6 34.5 80 Labor 784 - 784 38.3 - 38.3 0 Irrigation 0 & M 335 335 670 16.3 16.4 32.7 50 Incremental Packing & Tr.1 821 4,157 5,978 89.0 203.2 292.2 70 Subtotal 9,544 12,164 21,708 466.4 594.5 1060.9 56 III. Other Pineapple Activities Strengthening Fruitex Transport Service 3,290 11,228 14,518 160.8 548.8 709.6 77 Pineapple Research 1,651 2,824 4,475 80.7 138.0 218.7 63 Training 28 1,162 1,190 1.4 56.8 58.2 98 Subtotal 4,969 15,214 20,183 242.9 743.6 986.5 75 B. Technical Assistance Component Rice - Consultants - 2,750 2,750 - 134.4 134.4 100 Livestock - Consultants - 2,423 2,423 - 118.4 118.4 100 Vehicles & Other Costs 792 757 1,549 - 37.0 75.7 49 Subtotal 792 5,930 6,722 38.7 289.8 328.5 88 Total Project Costs 1. Base Cost Estimates 44,102 80,972 125,074 2155.4 3957.5 6112.9 65 2. Physical Contingen. 10% 4,410 8,097 12,507 215.5 395.7 611.2 65 3. Expected Price Inc. 27% 9,915 26,941 36,856 484.6 1316.8 1801.4 72 Total Expected Cost of Proj. 58,427 116,010 174,437 2855.5 5670.0 8525.5 65 - 28 - (e) providing internationally recruited specialists to initially operate the nucleus plantation, develop the irrigation system, provide services to outgrowers, and to establish and run the Fruitex workshop until such time as Guineans had been trained under the project to assume these functions; (f) providing Guineans w.th overseas training fellowships in irrigation, pineapple marketing and vehicle maintenance; and (g) carrying out field trials with pineapples in which recent experience gained abroad would be tested under Guinean conditions. B. Technical Assistance Component for Rice and Livestock 2.10 Handled by the then Ministry of Rural Development, this consisted of: (a) the employment of qualified consultants to: (i) make an analysis of rice growing prospects in Guinea and recommend appropriate policies for stimulating rice produc- tion and (ii) following the review of this analysis and recommendations by Government, the preparation of a rice development program and specific investment projects in rice production suitable for external and particularly World Bank Group financing; (b) the employment of qualified consultants to examine the livestock potential of Guinea with the same objectives as in (a) above. 2.11 Expected project ccsts totalled Sylis 175 million (US$8.5 million), of which the foreign exchange component would be Sylis 116 million (US$5.7 million) or 66% of total costs, are summarised in Table 1. - 29 - 2.12 An IDA credit of US$7.0 million was approved on standard terms. The closing date was fixed as June 30, 1981 and repayment of the principal to conmence on October 1, 1985, by semi-annual instalments ending April 1, 2025. Disbursements were to be against import documentation, contracts and certified records of expenditure, examined by Bank supervision missions. Procurement was to have been under standard terms; interna- tional competitive bidding (US$2.8 million) for contracts over US$50,000 and local bidding for smaller contracts and minor constructions. The Project's resident expatriate staff were to be recruited through Bank Secondment Contracts. Consultant contracts for the rice and livestock studies were to be approved by IDA. 2.13 As explained in para 2.06 and 2.07, it was finally agreed that the newly created Entreprise Nationale Agricole de Daboya under the Ministry of Agriculture would be responsible for carrying out the nucleus estate and outgrowers components of the project; while Fruitex, under the Ministry of Foreign Trade, would be responsible for the transport and marketing components listed at paras. 2.09 A (c), (d) and (e). Daboya and Fruitex were required to enter into a contract to provide for the prompt collection, transport and marketing abroad of pineapples produced at Daboya and by its associated outgrowers. It was hoped that a close collaboration would develop between the two agencies, thus paving the way for more general improvements in the organisation of the fruit sub-sector, which already in 1975 was showing that lack of efficiency in the existing system was leading to declining exports. 2.14 The principal objective of the project was to increase the production of fresh pineaples for export through the creation of a nucleus estate and increasing the production of participating outgrowers. On the basis of exportable production valued at market prices for fresh pineapples in Western Europe and a shadow exchange rate of Sylis 125 = US$1 (or six times the official rate) the economic rate of return for the project as a whole was calculated to be 18%. A sensitivity analysis indicated that simultaneous cost increases of 15% and yield decreases of 10% would reduce the rate of return to about 10%. Separate rates of return for the nucleus estate and outgrowers components of the project were 14.9% and 38% respectively. 2.15 The studies of the rice and livestock sub-sectors were intended to lead to well-conceived and adequately financed programs that would benefit substantial numbers of rural people. 2.16 It was recognised that the project would not lead to improvements in the living standards of any very significant number of people. But the main justification for accepting the high risks involved in the project was that it appeared to be the sole opportunity for introducing and demonstrating some of the basic organisational and deve- lopment techniques that must be adopted to achieve progress in the rural sector. - 30 - Targets and goals 2.17 Account has to be tsken of the fact that the pineapple is neither an annual nor a perennial plant. In Guinea, the time taken from planting a sucker to harvesting its fruit. takes an average of 18 months. To this must be added another year after harvest during which suckers on the harvested plant grow to a stage when they can be removed and used as planting material. After removal of the suckers the old plants have to be destroyed. Given the time needed to re-prepare the land for planting, the overall cycle is about 3 years and any given piece of land (a "sole") can only produce pineapples once in every three years. Moreover, to ensure production during the period November/May (the best selling period on Western European markets), fruiting must be controlled through the use of special sprays. 2.18 Projections of nucleus estate development were as follows: Table 2: Annual Planted Areas 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 Area Planted to Pineapples in ha (April -.December) and Averages Appraisal Report Estimate (June 1975) 40 50 90 90 140 140 140 First Revision (October 1977) 35 25 70 90 140 140 140 Second Revision (October 1980) 35 25 70 80 100 140 140 Third Revision (May 1981) 35 25 70 80 85 90 140 The first revision was made in the light of delays in installation of the first phase of the irrigation system (see para. 3.06 below); the second revision took into account labor and other constraints limiting planting capacity and the effects of fertilizer shortage in 1980. Continued fertilizer shortage during the current (1981) planting season is reflected in the third revision under which full annual plantings of 140 ha are not achieved until 1982/83. 2.19 For the first part of the project's operational phase, production and export forecasts as at appraisal, the last full supervision (October, 1980), and under current (May 1981) conditions are as follows (Table 3). Table 3: Production and Export Forecasts Estimates 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 -------- - -------------------------- all tons-------------------------------- A. Production 1. Appraisal Report 3,150 5,600 6,300 7,700 8,400 8,400 8,400 8,400 (June 1975) (35) (40) (45) (55) (60) (60) (60) (60) 2. Supervision Mission 2,110 2,640 4,200 5,600 6,300 7,000 7,000 7,000 (October, 1980) (31) (33) (42) (40) . (45) (50) (50) (50) 3. Current (May 1981) 2,110 2,400 3,000 4,000 5,000 6,000 7,000 7,000 (31) (33) (33) (45) (45) (45) (50) (50) () Figures in brackets show yields in tons per ha B. Exports 1. Appraisal Report 2,700 4,760 5,600 7,000 7,700 7,700 7,700 7,700 (June 1975) (85) (85) (89) (91) (92) (92) (92) (92) 2. Supervision Mission 411 736 2,384 3,660 4,095 .5,250.. 5,250 5,250 (October 1980) (19) (28) (57) (65) (65) (75) (75) (75) 3. Current 411 600 1,000 1,600 2,500 3,600 4,900 5,250 (May 1981) . (19) (25) (33) (40) - (50) (60) (70) (75) () Figures in brackets show exports as a percentage of production - 32 - 2.20 In the light of experience, the rate of improvement in yields had to be reduced from the levels forecast at appraisal (e.g. from 60t/ha to 50t/ha at full production) with consequent lowering of total production levels. There was an even greater reduction in export projections, as difficulties experienced in controlling fruiting to permit exports to Western Europe as against appraisal assumptions of exports to Eastern Europe where quality requirements are less stingent, forced a lowering of the forecast percentage of total production available for export from over 90% to 75% at full productioa. The current (May 1981) estimates take into account the effects of prolonged fertilizer shortage in 1980 and 1981. 2.21 For outgrowers, at aDpraisal (June 1975) it was assumed that during the five-year project development period some 340 ha. of outgrowers pineapples (about 50% of thE hectarage then planted to pineapples in the Kindia region) would become associated with the project in accordance with the following approximate program: Table 4: Appraisal Outgrowers Program 1977 1978 1979 1980 Total ha. pineapples planted to outgrowers 40 80 100 120 340 (April-December). 1978/79 1979/80 1980/81 1981/82 ha. in production (December-April) 40 80 100 120 of which irrigated 2.6 7.8 15.6 26.0 2.22 What rainfed pineapple growers needed was not so much technical advice as assured and timely supplies of inputs, an incentive producer price, and efficient marketing of their production. Since Daboya was unable to meet these needs, and because of opposition from the Kindia Region Fruit Cooperative which in the early stage considered the project as a threat to its authority, but has since modified these views, no rainfed outgrowers have become associated with the project. Since the responsible agencies have also failed to meet their needs, the output of rainfed smallholders has continued to decline (Annex, Table 1). As regards irrigated smallholders, it was thought at appraisal that assistance would be given to individual smallholders but the outgrower program developed by the project has been on group lines. By 1980, some 69 ha -- more than 212 times the appraisal forecast -- had been irrigated and planted to pine- apples. Details of and comments on this promising approach are given in Section IV. - 33 - 2.23 The goals of the technical assistance component of the project were achieved in that the consultants' studies on the rice and livestock sub-sectors, although not entirely satisfactory, paved the. way for the Rice Development project for which an IDA Credit (952-GUI) of US$10.4 million was approved on September 18, 1979 and a Livestock Development project with an IDA Credit 1063-GUI amounting to US$17.5 million approved on November 21, 1980. Sector significance 2.24 The project was deliberately limited to a narrow front but it was hoped that it would demonstrate the value of a carefully designed and rational approach to the problems of the sector. The failure to give Daboya complete autonomy with power to market its own production and use part of the foreign exchange proceeds of pineapple export sales to finance its direct purchases of inputs has belied that hope. 2.25 For the country's production and export of pineapples, Daboya's role has rapidly become an important factor; but, as Annex Table 1 shows, this is mainly because of the steep decline in the country's overall, mainly smallholder production. Other Donor Agency Roles 2.26 No other donor agencies were involved in the project. III. IMPLEMENTATION Effectiveness and Start Up 3.01 The IDA credit became effective without undue delay on October 22, 1975, after the following conditions had been met: (a) the general manager and estate manager had been appointed; (b) an approved contract between Daboya and Fruitex had been signed; (c) arrangements acceptable to IDA had been entered into by Daboya to provide for technical assistance in estate development and smallholder extension services; and (d) a subsidiary loan agreement had been signed between BNDA (on behalf of Government) and Daboya. 3.02 There was agreement on retroactive financing of up to US$100,000 for expenditures incurred after June 1, 1975 on fertilizers, aerial photography, key staff and consultancy services. - 34 - Revision 3.03 When the land reconnaissance and soil analysis were completed (mid-1976), it was clear that the original proposals could not be implemented because in the project area they proposed (some 720 ha) there were too many settlements and established cultivation rights, grafted mango trees, slopes and shallow skeletical soils to provide the desired 500 ha gross (420 ha net) of land suitable for pineapple production. To meet this objective, the project boundaries would have to be extended to higher ground on the south and east and enlarged to cover more than 1,000 ha. This in turn involved a re-assessment of the irrigation system on which the appraisal report had been based. 3.04 Accordingly, after zonsideration of a report prepared by the firm appointed as consulting engineers on May 24, 1976, and after discussion with project management and the Bank, it was agreed that to cover the project area, two separate irrigation networks would be needed viz. "bas service" for the northern section comprising 190 ha net and "haut service" for the southern and eastern (higher) areas covering some 230 ha net. This meant that i:.rigation cost estimates would inevitably be higher than expected. Alternative solutions were considered. Not to go beyond the original boundaries would have meant restricting the cultivable area to that of the bas servize (190 ha) with costs per ha estimated at US$13,610 due to small operational area, high cost of Donkea transformer and pumping station, fragmented and sloping terrain and high unit costs in Guinea. If the "haut service" were included, additional costs would be incurred (notably, additional pumping stations) but since some of the "bas service" costs would be attributable to a wider area, the cost per ha was expected to fall to US$10,480, as against an appraisal level of US$4,400; and it was decided to proceed on this basis. Physical progress 3.05 General infrastructure. The following table compares the imple- mentation schedules projected at appraisal and actually achieved: - 35 - Table 5: Implementation Schedules Achieved as at Appraisal as at End Phase ha under Irrigation (June 1975) 1980 (Cumulative) 40 ha (temporary works) 35 ha I Start construction February 1976 February 1976 Commissioned November 1976 February 1977 190 ha (permanent) 200 ha II Start construction February 1977 January 1977 Commissioned November 1977 February 1979 420 ha (permanent) 420 ha 2/ III Start construction February 1979 February 1979 Commissioned November 1979 May 1980 1/ in partial operation November 1978. 2/ 35 ha irrigated through temporary works from November 1979 through April 1980. 3.06 This must be considered an impressive achievement, particularly when considered against the background of the need to re-design the irrigation system (para 3.04), difficulties with contractors (para 3.21) and existing Guinean conditions. In addition, in July 1977, torrential rains led to flooding of the construction site of the pumping station in the Kale reservoir and consequent construction delays. The effects on the planting program have already been noted in para 2.18. . 3.07 Table 6 attempts to compare the main physical components of the irrigation as projected at appraisal with those actually installed as a result of the revision of the irrigation system as outlined in para 3.04. 3.08 The main reasons for the increases in the sprinkler systems installed were the scattered distribution of cultivated areas under the revised scheme, the need to be able to irrigate 2/3rds of these areas at any one time and the provision of 40 reserve sprinkler3 units. The an5ual water requirements were revised upwards from 4,000 m /ha to 4,320 m /ha delivered in 4 applications of 18mm each per month for 6 months. 3.09 The irrigation system installed at Daboya is a sophisticated one. The topography of the area, the light soils and the needs of the crop dictated the use of sprinklers. The choice of electricity as the main Table 6: Comparison of Actual and Projected Irrigation Equipment Installed Appraisal Projections Actuals Item (June 1975) (as at end 1980) 1. Water Sources One only. Kale compensation reservoir Three: viz for whole estate. a) Kale compensation reservoir for "bas service" system only b) River Kouloukoulou for. "haut service" c) River Bassa ) 2. Pumping One only. Kale compensation reservoir Four: viz. stations comprising 4 vertical electric pumps a) Kale compensation reservoir (as before) 120 hp. b) River Kouloukoulou: 4 electric pumps c) Rivpr Bassa - upstream: 1 60 hp motor pump (re- located from Phase I) d) River Bassa - dcwnstream: groups of 3 motor pumps 43 hp each. 3. Power supply 6 km of 15 kv line plus 2 transformers as projected plus:- 630 Kva 15/0.4 Kv 15 HZ a) 1.25 Km transmission line linking Daboya and Kouloukoulou pumping station b) diesel fuel for motor pumps on River Bassa. 4. Irrigation 800 m above ground main pipe plus Bas Service network 17,000 m of buried secondaries 11,400 m in all Haut Service 12,935 m in all 5. Portable 16 x 315 m units each comprising 80 x 270 m*units of 15 sprunklers at 18 m laterals .18 sprinklers at 18 m intervals intervals (:21,600 m in all). (= 5,040 m in all) - 37 - power supply was considered to be the cheapest solution and the most efficient alternative; however, it certainly carries with it the risk that power failures could jeopardise the whole irrigation program - as they have done in 1980/81 due partly to delays in installing adequate transformer and supply equipment at Donkea (para 3.21). Signature, on IDA recommen- dations, of a maintenance agreement with a local firm should minimise the risks of failure or poor operation. With the alternative of motor pumps, in addition to the problems of maintenance and provision of spare parts, there is that posed by recurrent shortages of diesel fuel from which Guinea suffers. Farm investments 3.10 Only minor modifications were made in the projected investment in agricultural machinery and equipment for the estate. In addition, under the outgrowers program, two motor pumps (of 40 hp each) and associated sprinkler systems were purchased with loans from BNDA by two farmer groups to enable them to grow irrigated pineapples on some 60 ha as detailed in para 4.02. Processing and marketing 3.11 As explained in paras 2.06 and 2.07, in place of the appraisal missions proposal that, to ensure the needed coordination of production, transport and marketing of a perishable commodity, responsibility for estate development would be vested in Fruitex, the State company responsible for fruit exports, the Government's alternative of a separate State company under the Ministry of Agriculture to run the estate was adopted. 3.12 Included in the project (Credit Agreement Schedule 2 parts C and D) were provisions to strengthen Fruitex by financing: (i) the purchase of new vehicles and spare-parts; (ii) the construction and equipping of vehicle workshop and ancillary buildings together with provision of an expatriate engineer; (iii) the purchase and installation of specialised pineapple loading equipment at the port of Conakry; (iv) trials and studies of different methods of transport of fresh pineapples to new (Western European) markets; (v) a study to review Fruitex transport, operating and pricing procedures; and (vi) a program to provide overseas training facilities in pineapple marketing. - 38 - 3.13 However, in September 1976, the transport services of Fruitex were transferred to newly formed Government organisations (COTRAs), which were being equipped with new vehicles, so most of the above provisions were judged to be no longer applicable. No disbursements had been made in these categories and this helped to meet cost overruns at Daboya; a candidate being considered for the post of mechanical engineer with Fruitex being offered instead the post of engineer at Daboya, which he accepted. 3.14 A study financed under the project embracing items (iv) and (v) was eventually conducted by IRFA during 1977. Its main findings were: (a) Guinea's exports of fresh pineapples would continue to decline unless farmgate prices were increased, and a price structure adopted to reflect differing costs involved in export by air, by sea and for canning; (b) Daboya's projected production might offset the fall in small- holder production, which had also declined qualitatively since Eastern European market standards were lower; (c) falling exports had reduced possibilities of shipment by boat which required sufficient quantities to fill at least one 200 tonne chamber at a loading; (d) only when annual exportable production exceeded 5,000 to 6,000 tonnes would regular boat shipment again be feasible; (e) for Western European markets: (i) limited possibilities for export by air existed but at considerably higher freight cost; (ii) the most favorable marketing period was November-May, which called for controlled fruiting; (iii) consignment rather than fixed price sales should be adopted. 3.15 Under section 4.03 of the Credit Agreement, the Government undertook to complete not later than June 30, 1976, a broad development plan for its fresh fruit sector. This was not done and despite Bank representations no action was taken to implement the recommendations of the limited IRFA study. The producer price for fresh pineapples for export remains unchanged at Sylis 9 per kg. (packed and delivered point of shipment); the only modification in the price structure being an increase in the price of pineapples for processing from - Sylis 6/kg to Sylis 7.6/kg unpacked, which can hardly be justified on economic grounds. - 39 - 3.16 At appraisal it was projected that 90% of total estate pineapple production would be exported to Guinea's then main markets i.e. Eastern Europe. Subsequently, Government changed its policy to concentrate exports on Western European markets to earn convertible currencies. While Daboya, given adequate supplies of the necessary inputs (principally fertilizers and chemicals to maximise harvesting in the period November/May), could ensure that 75% of its production could be exported to Western European markets, because of production deterioration, only a much lower percentage of other pineapples would be produced at a time and of a quality to be accepted in Western Europe. The marketing policy change involved therefore not only the difficult task of breaking into new and highly competitive markets but would also require a high degree of coordi- nation between production and marketing and a carefully planned program to ensure optimum allocation of available supplies between Western and Eastern Europe and between exports and local processing. Unfortunately, the Guinean fruit marketing system was not adequate to cope with these tasks. 3.17 Marketing inefficiencies, including failure to provide appropriate packing material and loss of Western European selling opportunities due to insistence on fixed price sales, culminated in 1980 when, coupled with breakdowns at the processing factory (Salguidia), Daboya had to destroy some 411 tonnes of pineapples and growers in the Kindia region alone claimed losses of over 2,000 tonnes valued at nearly US$1 million, with consequent further discouragement to producers. 3.18 Faced with this crisis situation which was made worse by the failure of the official importing agency (SEMAPE) to supply any of the project's 1980 fertilizer requirements with consequent damaging effects on the immediate output and future production cycle (para 3.22), the October 1980 supervision mission presented a recovery program to the Ministers concerned, based on the transformation of Daboya into a fully autonomous and integrated entity, empowered to market its own output and to utilise part of the foreign exchange derived from export sales to finance direct importation of inputs for the estate and its associated outgrowers. This has yet to be approved by the Council of Ministers but some parts of the program have been implemented including provision of special foreign exchange allocations to cover import needs for 1981, conclusion of a tighter agreement for the 1980/81 season between Daboya and Fruitex than that signed in 1975 and some strengthening of Daboya staff. However, as of mid May 1981 no fertilizer had arrived which will further reduce production for at least two years (1981/82 and 1982/83). Procurement and Construction 3.19 Competitive bidding procedures were adhered to, although the dearth of reliable local contractors and the difficulties involved in import procedures caused delays. The main sources of the chief physical components were: - 40 - Electrical equipment Spain, France and Switzerland Irrigation Equipment France Agriculture Equipment: and Machines France Buildings Sierra Leone. More difficulties were experienced by Daboya in following Bank procedures than for example by the Road project (Credit 596-GUI) but allowance must be made for the fact that Daboya is 120 km from Conakry and still without telephonic communication with the capital. Bureaucratic delays under the Guinean ordering and importing procedures involved problems with the use of Bank procedure 5 and guaran:ee periods had frequently to be extended. 3.20 As already indicated in para 3.04, the original delimitation of the project area and the design of the irrigation system based thereon made in the preparation report had to be fundamentally revised. The amended design prepared by the engineering consultants proved to be satisfactory. 3.21 In the early stages, international competitive bidding was made difficult because few contractors were prepared to operate under the existing conditions in Guinea. For Phase I of the amended design - installation of the "bas service" irrigation - only two bids were received and the difference between them was more than 30%. After reviewing both, the formal bid evaluation made by the consulting engineers and additional clarifications submited by both bidders, the Bank agreed that the lower bid should be accepted. Subsequently, the consulting engineers raised doubts about the technical and financial capacity of the lower bidder and Government suggested that negotiation should be opened with the higher bidder, whose credentials were undoubtedly better; but, since there was no evidence to support the doubts expressed by the consulting engineers, the Bank could not agree to this proposal. To guard against the possible risks, at the Bank's suggestion, the contract was carefully drafted to give full financial guarantees anc. arrangements were made to strengthen the supervision of the contractor's operations by the consulting engineers. In the event the contractor's performance was unsatisfactory and this was further aggravated by the flooding of the Donkea power station cons- truction site. After provisional commissioning of contract works on February 6, 1979, contractual penalties had to be imposed. The contractor withdrew and a substitute was appointed to complete the work and replace faulty equipment. Project management is currently attempting to obtain payment under the performance guarantee given by the original contractor's bankers. 3.22 Another critical procurement problem, that related to input supply, began to emerge in 1980 when the Government procurement agency for fertilizer and chemicals, SEMAPE, failed to respond to ENAD's requests for - 41 - these inputs. Hitherto, IDA funds had been used for such procurement but, with the emerging cost overruns on the irrigation works, it was decided that Government would procure such inputs with its own funds. An order placed with SEMAPE by Daboya in September 1979 eventually arrived in May 1980 but was instead alloted to another plantation, Salguidia. A second order which was only made by SEMAPE in October of 1980 is now finally expected to arrive in June 1981. This happened despite repeated strong representations and follow-up correspondence by Bank supervision missions and assurances made by the Ministries concerned on each occasion. The Daboya estate and the plantings of its associated outgrowers has thus been without fertilizer for over a year which has resulted in radical reductions in yields during 1980 and 1981 and, due to the nature of the crop, a projected carry over for several years to come. The effect on the project's rate of return is described in para 5.03. At the heart of this problem has been the reliance by ENAD on the inadequate state procurement system which, moreover, had to respond to national needs and operate within foreign currency constraints imposed by the Central Bank. Further, given Guinea's chronic foreign exchange shortage, wholesale stocking of inputs is not practiced and every requirement must be met through a specific order. Costs and Disbursements 3.23 In project accounts, costs are expressed in foreign exchange (dollars) or sylis according to whether the project entity had to pay for them in foreign exchange or local currency. Part of local expenditures, however, represents hidden foreign expenses incurred by Government importing agencies that subsequently sold to Daboya for sylis such items as fuel, fertilizer, cartons and some equipment. 3.24 Total project costs amount to US$7.7 million plus Sylis 74 million (US$3.8 million) making US$11.5 million in all. These additional costs have been met by a larger than anticipated Government contribution in sylis (part of which as indicated in the preceding paragraph actually represents foreign exchange) and an additional contribution by Government of US$0.8 million equivalent to cover direct foreign costs in excess of the IDA credit of US$7.0 million. In the appraisal report it was projected that the IDA credit would cover all foreign exchange costs (US$5.7 million) plus 45% of local currency costs (Sylis 28 million or US$1.3 million) since analysis of public sector savings and balance of payments estimates showed that Guinea could only afford a limited contribution towards the financing of investments. In the event, the IDA credit was insufficient to cover all foreign exchange costs and Government has had to allocate or use more than US$1.0 million to ensure completion of the project. 3.25 The total cost over-run is 35%, all of which has been borne by Government as the following table shows: - 42 Table 7: Comparative Financing Plan IDA Government Farmers Total --------------------US$1 ,000------------------ Appraisal projection 7,000 1,346 180 8,526 1/ Actual 7,000 4,500 Negligible - 11,500 1/ The small contribution by farmers is due to the slow development of the ougrowers program. Government was consulted as cost overruns became apparent and its willingness to shoulder the extra financial burden involved is indicative of the importance it attached to the project. 3.26 Daboya's accounts are kept in conformity with Guinean Government standards for state enterprises and do not lend themselves to comparative analysis of project expenses by category. The following table makes an approximate comparison of the cost of the main investment component with the appraisal report projectio-s: Table 8 : Comparison of Appraisal Projections and Actual Costs of Main Investment Items Appraisal Estimate Actual Difference (Including Contingencies) Costs Amount in % -------------------------------(US$ '000)----------------------- 1.. Land development and installation of irrigation system and super- vision of development. 4,267 6,678 2,411 56% 2. Building Construction. 625 368 (257) (41%) 3. Vehicles and farm equipment 346 700 354 102% 4. Rice and livestock studies 458 550 92 20% - 44 - From this it is obvious that the main cost escalation was in the land development and irrigation system (item 1) where costs were 56% higher than estimated. The additional cost of redesigning and extending the system probably accounted for 3/4 of this increase with the balance due to inter- national inflation levels substantially in excess of appraisal estimates, but a detailed apportionment woald be difficult to quantify more closely in view of the changes involved (para 3.07). 3.27 These increased development costs were met by (a) considerable reductions in estimated expenditures on the smallholder program which, including contingencies, accounted for US$1.48 million or 17% of total appraisal cost estimates and (b) itilisation of funds originally allocated for strengthening of Fruitex (as explained in para 3.13) which amounted to some US$990,000 (including contingencies) or 11% of total projected costs. As a result of cost increases, the land development and irrigation costs rose to US$15,000 per ha as against an appraisal forecast of US$10,000, mainly because irrigation installation costs increased from US$4,400 per ha to US$10,480. 3.28 The phasing of Bank disbursements is given in the following table: -45 - Table 9: Comparative Schedule of Disbursements- Accumulated Disbursements (US$ !000) Appraisal Actual as % of Fiscal Year, Actual Estimate Appraisal Estimate 1976 1st Semester - 400 0 2nd " 135 1,000 14 1977 1st,Semester 553 2,040 27 2nd " 1,369 3,170 43 1978 1st Semester 1,973 3,670 54 2nd " 3,100 4,220 73 1979 1st Semester 3,936 5,020 78 2nd 4,813 5,980 80 1980 1st Quarter 5,970 - 2nd " 6,269 6,380 9 3rd " 6,359 - 4th " 6,614 7,000 94 1981 1st Quarter 6,800 - 97 2nd " 7,000 - 100 Closing date: 6.30.1981 - 46 - The main reasons for the slower than forecast disbursement rate in the early stages were the delays imposed by the need to re-design the irrigation system (para 3.07) and the default of the contractor for phase II (para 3.21). 3.29 The undisbursed balance remaining of the IDA credit as at May 26, 1981, was US$21,343. Exchange rate adjustments were minimal. Covenants 3.30 Of the twenty main covenants included in the Credit Agreement, fourteen (relating mainly to the establishment of the nucleus estate and the associated outgrowers program) have been complied with; three have been modified or lapsed as a result of changes affecting Fruitex (para 3.13); that relating to an agreement between Daboya and the research station INRAF has been modified with the Bank's approval and applied research is being conducted on the estate itself. 3.31 Of the two remaining covenants, that under section 4.03 of the Credit Agreement under which the Government undertook "that, not later than June 30, 1976, or such other date as the Association may agree, it shall complete a broad development plan for its fresh fruit sector for the period ending December 31, 1980 and shall have afforded the Association a reasonable opportunity to exchange views on the said plan" has only partially been complied with in that the study prepared by IRFA in 1977 was virtually restricted to pineapples (para 3.14). No success has attended the Bank's efforts to obtain either implementation of the IRFA proposals to amend the price structure for pineapples or the mounting of an overall fruit sector study, and this is a contributory factor to the continuing decline of fruit production and exports (Annex ). This situation would have to be remedied before any follow-up project with a component based on smallholder production could be considered. 3.32 Under section 4.07 of the Credit Agreement, Daboya was "to enter with Fruitex into a contract, satisfactory to the Association, pursuant to which Fruitex shall undertake to promptly collect, transport and market abroad pineapples produced by Laboya and outgrowers." The contract signed in September 1975 as a condition of effectiveness was couched in very general terms and when Daboya commenced production for export in 1978 proved unsatisfactory. Despite the Bank's written and oral recommenda- tions, Fruitex marketing performance has been unsatisfactory culminating in the 1980 experience described in para 3.17. Following Bank pressure, a new contract containing normal commercial clauses was signed on October 25, 1980, between Daboya and Fruitex covering arrangements for the 1980/81 season only since, under the project recovery program, Daboya would be responsible from the 1981/82 season for marketing its own output and that of its associated outgrowers. - 47 - IV. AGRICULTURAL IMPACT 4.01 Designed as a semi-enclave type project, its impact could only be on a narrow front. State farm (nucleus estate) production of pineapples was projected at appraisal to reach 8,400 tonnes per annum at full production which would counter the decline in smallholder production and guarantee the basic supply of high quality fruit necessary for the efficient operation of any fruit exporting industry. As shown at the Annex, with the continued decline of smallholder pineapple production, Daboya's contribution to total exports has already risen from 20% in 1978 and 1979 to over 40% in 1980. If smallholder production for export virtually disappears, Daboya would be the sole source of exportable production, with a potential annual export of over 5,000 tonnes according to the revised forecasts at para 2.19 earning some US$2.5 million in foreign exchange per annum. 4.02 No rainfed outgrowers have been associated with the project, but outgrowers are producing pineapples under irrigation with technical assistance from the project on some 69 ha against 26 ha projected at appraisal, when it was envisaged that individual outgrowers with access to a perennial stream would be assisted to instal a simple sprinkler irrigation system, powered by a 5 hp diesel motor and serving 4 ha. 4.03 The modest-scale system developed under the project has been on group lines. A group with 10-15 members is encouraged to redistribute its traditional land holdings to make available 20-30 ha of land judged by the Daboya extension staff to be suitable for pineapple production. The group then adopts statutes specifying the services Daboya agrees to provide (such as technical assistance, mechanical operations, land clearing, plowing, floral induction, provision of inputs, cartons and transport) while the members undertake responsibility for such operations as final clearing, planting, weeding, fertilizer spreading, maintenance, harvesting and packing. Daboya then assists the group to obtain a 3-year (with a one year grace period) loan at 9% p.a. from BNDA to enable it to purchase and operate a motor pump and sprinkler irrigation set for its plot. Daboya is considered the sole supplier of the group and the BNDA makes transfers from the group's account to that of Daboya for goods delivered and services rendered (priced according to an agreed scale to-cover Daboya's costs). To date this small supervised credit scheme (advances total less than US$500,000) is operating smoothly but obviously more time is needed before it can be properly assessed. In all, this formula evolved at Daboya constitutes a promising approach to the perennial problem of marrying new techniques to traditional farming patterns. 4.04 The first group harvested in June 1979 pineapples from its first "sole" planted in January 1978. Proceeds from their sale to the canning factory were sufficient to give a financial net return of Sylis 80,000 - 48 - (US$4,000) per ha as compared with Sylis 50,000 - 60,000 forecast at appraisal for an individual 4 ha holding. Additional advantages accruing to the group members are that the swamp lands (bas fonds) previously utilised for pineapple growing are available to grow food crops and market garden produce, provided labor requirements are complementary. Experience to date has shown that yields on these group plantations are higher than on the estate and losses from theEts are lower. 4.05 This pilot scheme ias aroused considerable interest in the region. Prospective new groups are re-arranging customary land holdings and some 200 ha have either been approved or are awaiting soil inspection by Daboya extension staff. Clearly this merits consideration as the basis for a fruit component of any proposed follow-up project, but only on condition that (i) Daboya is empowered and able to import inputs outside the normal (inefficient) system so as to be able to assure their supply to associated outgrowers, who at Lhe moment, like Daboya, are suffering from the effects of the 1980 fertilizer shortage; (ii) present marketing inefficiencies are removed, may be by making Daboya responsible for marketing their output along with its own; and (iii) the present producer price structure is reviewed to reflect differing costs, particularly as regards fruit accepted for export to Western Europe. 4.06 As regards employment, some 260 laborers are employed on the nucleus estate. Labor availability has proved a problem now that the plantation is approaching full operation, due partly to the fact that Daboya only pays official wage rates and has difficulty in supplying rations at official prices to make such wages attractive - despite an assurance given at negotiations that enough consumer goods would be available at official prices for Daboya's workers. 4.07 At appraisal it was proposed that Daboya should enter into an agreement with the national agriculture research institute (INRAF) at Foulaya some 12 km from project. headquarters covering technical assistance for estate development and smallholder extension services and for assistance in carrying out the research component of the project. With the Bank's approval, efforts were instead concentrated on the conduct of limited applied research operations by the project itself under the technical supervision of an expatriate specialist. Although continuity was lost in some experiments through interruption in supplies of water and inputs,some useful results have already emerged from these trials; notably, that planting density can be increased to 61,000 stands per ha as against 48,000 envisaged at appraisal and estate plantings are now on this basis. - 49 - V. RATES OF RETURN 5.01 Because of the project's somewhat chequered history, the economic rate of return was recalculated by the supervision mission which reported on September 10, 1980. This re-calculation took into account (i) actual costs (allowing for the foreign exchange component in some purchases made by Daboya in sylis); (ii) latest available production and export projections using lower yield assumptions and a smaller percentage of output being available for export; (iii) Western European market price propects; (iv) realistic assumptions as to air and sea freight possibilities and related costs; and (v) a Standard Conversion Factor of 0.5 to reflect distortions between sylis and foreign currencies (equivalent to a shadow exchange rate of twice the official rate whereas at appraisal a shadow exchange rate of six times the official rate had been used). Details of the calculations are contained in Annex 8 of Supervision Report dated September 10, 1980 which show a point estimate of 10%. 5.02 Recalculation of that rate to allow for the further revision of production and export projections made by the October, 1980, Supervision Mission results in the point estimate falling to 8.5% (see Annex 9 of Supervision Report dated December 12, 1980). A re-calculation as of May 1981 based on assumptions of further reductions in output because of continued input shortages, leads to the point estimate becoming 6.5%. 5.03 The following table compares the results of these various calculations with appraisal estimates: Table 10: Comparison of Rate of Return Calculations Point Estimate Economic Rate of Return for Nucleus Estate Appraisal (June 1975) 14.9% Supervision (September 1980) 10.0% Supervision (December 1980) 8.5% Current (May 1981) 6.5% 5.04 That these revised rates are not even lower in view of increased costs, lower production and export forecasts and a reduced shadow exchange rate, is due to the fact that it is possible in the light of experience to use export unit prices twice those adopted at appraisal. 5.05 For the outgrower component the appraisal report calculated an economic rate of return of 38% and it is clear that an extension of the outgrower program on the lines of the pilot scheme initiated by Daboya, as described in paras 4.03 - 4.05, because of the lower capital costs involved, is likely to have a high rate of return. - 50 - 5.06 The Guinean fiscal system and arrangements for financing development projects in the public sector are based on the system employed in the centrally planned countries of Eastern Europe. Targets are set for each enterprise with respect to annual production volume, revenues, production costs and benefit (profit). Prices of both inputs and outputs are set and controlled by Government. Under this system the primary responsibility of an enterprise is to attain its targets, and its financial viability cannot be judged by its benefit. Consequently, there is no purpose in attempting to calculate a financial rate of return for the project and it was not estimated at appraisal. 5.07 For outgrowers the position is different; their motivation clearly is financial and the cash returns from growing pineapples must be adequate to ensure their continued interest in the crop. Due to the restricted scale of the project outgrowers program, data are insufficient to calculate a meaningful financial rate of return; although the preliminary results given in para 4.04 suggest that this would be satisfactory. VI. INSTITU-IONAL PERFORMANCE AND DEVELOPMENT Institutional design and growth 6.01 The new State company ('Enterprise Nationale Agricole de Daboya") formed specifically to execuze the pineapple production aspects of the project was staffed according to appraisal report proposals. Under its Guinean General Manager who has been in post since Daboya's inception, the small staff (about 30 in all) has given devoted service in often trying circumstances. To the General Manager and his team belong much of the credit for the successes achieved. 6.02 During the period from start up to mid-1979, the project came under the Ministere des Grands Amenagements et des Eaux et Forets and the Minister gave the project much needed support during its critical earlier stages. From mid-1979 until February 1981, responsibility for the project was vested in the Ministere d'Agriculture, Eaux et Forets et FAPA. In February 1981, the project was brought under the Ministere d'Agriculture, Eaux et Forets et Conditionnement. Supporting services 6.03 Details of the supporting services offered to participating outgrowers and how these differed from appraisal estimates have been given in paras 4.02 and 4.03. Responsibility for the operation of the project outgrower program rests wi-th a small section (which also handles applied research) and has bene:'itted from close supervision by the IRFA consultant. - 51 - Farm credit 6.04 Interest on BNDA loans to associated outgrower groups is 9% per annum - the rate stipulated by the Bank - whereas other similar lending by BNDA is at 6%. Collateral consists of a lien on all group assets. As yet, there have been no overdues but the scheme is only in its third year of operation. Financial performance and returns and Government income and deficits 6.05 Because of the Guinean fiscal and finance systems as outlined in para 5.06, no meaningful comments can be made under these headings. Staff and training issues 6.06 Difficulties were experienced in recruiting staff of the right calibre to work under the difficult working and living conditions at first encountered at Daboya. The first appointee to the post of Assistant General Manager had to be removed and there was a long delay in obtaining ministerial approval to the appointment by promotion of his successor. Otherwise there has been a remarkable continuity of staff. As a result of ministerial changes, there have been delays in implementing proposals supported by the Bank designed to strengthen Daboya's organisation to meet its increased responsibilities now that it is entering the production phase. 6.07 Provision was made for overseas training fellowships for Daboya staff in pineapple production and for Fruitex staff in pineapple export marketing. However, first Government did not agree that Daboya staff would be trained in the Ivory Coast. Later, following Bank insistance this appeared possible and all arrangements were made, but again it was vetoed by the Minister. Possibly because by that time (1979) it was clear that cost overruns including foreign exchange costs would have to be borne by Government. 6.08 For Daboya staff "on the job" training was provided by the frequent visits of the expatriate pineapple specialist and, in the engineering field, by visits of the consulting engineers. No overseas training facilities were sought by or granted to Fruitex. Foreign technicians 6.09 Three technical assistant posts (Estate Manager, Research and Extension Manager and Workshop Engineer) were to be filled by inter- national recruitment and Government requested the Bank to recruit the necessary staff and second them to the project. It proved to be very difficult to find suitably qualified French speaking staff with knowledge of pineapple plantation production problems prepared to work in Guinea. In fact the personnel eventually recruited to fill the positions of Estate Manager and Research and Extension Manager both spent several months in Ivory Coast gaining experience in modern pineapple cultivation techniques prior to being sent to Guinea. The Estate Manager's performance was - 52 - initially satisfactory but deteriorated over time and his appointment was not extended after expiration of his three-year contract. The Workshop Engineer had originally been recruited to fill a similar post under the project with Fruitex. When the project component under Fruitex did not materialise, he agreed to accept the Daboya post. 6.10 The recruitment and administration of these technicians was fraught with difficulties. Where they were regarded more as Bank representatives than project personnel, their effectiveness was reduced. This and the frustrations inherent in the system did not make working conditions easy for expatriates. A better formula would have been that adopted under the Guinea Rice and Livestock Development projects where all such staff are provided by a consulting firm which is responsible for their administration and replacement if necessary. Expenditure on foreign technicians under the project represented 4% of total project costs. 6.11 It is clear that the provision of regular and frequent consultancy missions by the IRFA consultant (averaging three a year) contributed greatly to the fact that investments were completed so successfully. The same remarks apply in a more restricted field to the engineering consultancy services. In both cases, further back-up was provided by frequent Bank supervision missions. Particularly under Guinean conditions, such a technical assistance formula provides a necessary complement to the employment of foreign technicians in project management posts. Accounting and reporting 6.12 Progress reporting procedures were satisfactory, but the accounting system, which was required to conform to Guinean Government practice, although accurate, was rudimentary and failed to provide analytical information for management purposes. Now that the project has entered the operational phase, some form of cost accounting needs to be introduced. After a shaky start, audits have been carried out to the Bank's satisfaction by the Mitistere de Controle d'Etat. 6.13 No specific monitoring and evaluation system was incorporated in the project since the nucleus plantation consituted its main operation. If a component based on the pilot outgrowers program developed by Daboya is included in any follow-up project, specific provision for monitoring and evaluation would probably be needed. Institution building 6.14 The diagnosis of institutional problems made at appraisal was correct and rightly stressed as a major risk factor. The solution adopted at Government's request of a separate state company for production aspects only, while it worked reasonably well during the investment period, has been shown to have fundamental operational weaknesses, notably, the project's dependence on other agencies to assure for itself and its outgrowers the timely arrival of inputs and for output marketing. Had a - 53 - commercial partner been involved in the project, it would have insisted (as in the case of the mining companies) on effective control over these two functions, i.e. on a truly integrated enclave type operation. Given the circumstances surrounding the formulation of Daboya (as described in section II), it was hardly possible for the Bank to insist on similar conditions for what is fundamentally a state farm, but failure to do so then means that this basic problem has still to be tackled as stressed in the proposed recovery program drawn up in October, 1980. On Government's decision on these proposals depends the project's viability and capacity to survive. VII. SPECIAL ISSUES Substitution and Diversion 7.01 The very small lending component of the outgrower program has been designed on supervised credit lines that should minimise the possibi- lities of substitution and diversion. Weather and other risks 7.02 Construction suffered from the flooding of the Kale pumping station site in July, 1977, due partly to abnormally heavy rains in the preceding days. Drought in 1980 reduced te water collected in the main Banieya reservoir to about 100 million m or less than half its full capacity at the end of the rainy season (October 1980) raising problems for hydroelectric power generation and indirectly for Daboya which gets its water supply for the bas service from the Kale regulating reservoir down- stream of Banieya. Special agreements had to be made with the National Electricity Authority (SNE) to ensure that no restrictions were imposed on power or water deliveries for the project. An abnormally cold spell in November/December, 1980 affected fruiting and meant a further downward revision of immediate production and export projections. Research and Technical Availabilities 7.03 Because of the poor level of research in the nearby National Agricultural Research Institute (INRAF), instead of a joint research program, the project set up its own applied research program which has already produced results (such as higher planting density per ha) that have been utilised on the plantation and by associated outgrowers. But the problem of improving the level of research in INRAF remains to be tackled. Sector influences 7.04 The project's failure to achieve the targets set at appraisal for the rainfed outgrowers program was partly due to lack of incentive price policies for the fruit sub-sector. Daboya had little leverage in -1 54 - this matter but the covenants at section 4.03 of the Credit Agreement required the Government to complete a broad development plan for its fresh fruit sector and to discuss it with the Bank. As indicated in para. 3.30, this was only partially complied with and the issue has been raised again in the project recovery program of October, 1980. Integrated development 7.05 "Integrated development" of the kind involved in a rural integrated development project was not present at Daboya which was essentially a semi-enclave plantation production project. Integration in the more limited sense of proper coordination of production, transport and marketing of a highly perishable commodity was to be achieved under the project through close collaboration between Daboya and Fruitex. In the event, the required close collaboration was lacking and the marketing inefficiencies of Fruitex have been such that under the October 1980 project recovery program supported by the Bank, Daboya would eventually be given responsibility for the marketing of its own produce. For an interim preparatory period, a revised contract between Daboya and Fruitex will operate while Daboya builds up the services necessary for the assumption of full responsibility for its own output marketing. Replication 7.06 In the outgrowers scheme developed at Daboya, costs and returns per ha appear t-- b- r:ch as to justify its extension in the Kindia region. Under this scher-. Di.oyi acts ag a sour.? .f 'echnical assistance and supplier of conzracz serxices. The present outgrowers program is limited to pineapples but the formula might well in the future be adopted and applied to other fruits, possibly mangos in the first place. Mango exports (principally from the Kindia region) averaged more than 1,000 tonnes per annum over the years 1976-1979. VIII. CHANGES IN REPEATER PROJECTS 8.01 No repeater project has yet been. considered by the Bank, although one for the Kindia region involving food crop development as well as an extension of the Daboya outgrowers program is under preparation. This should take into account the lessons learnt in the Daboya project as summarised in section X. :'X. BANK PERFORMANCE 9.01 In judging Bank performance in this project it must be recalled that it represented the first involvement of the Bank in the country's - 55 - agricultural sector. This applies particularly to the formulation period. It accounts for the long gestation period and for the fact that the Bank had only limited overview of the project preparation work of the consultants already engaged by the Government. RMWA had hightly insisted on a complementary agro-technical report (prepared by an IRFA consultant) and its findings, particularly as to project perimeters, were at variance with the main report. 9.02 The Bank decision to go ahead with appraisal rather than insist on a revision of the preparation report was dictated by a desire to avoid further delays that might prejudice its oportunity to get involved in the agricultural sector in Guinea in a project that did not immediately confront the need for policy and structural reforms. However, this decision added to the difficulties of the appraisal mission. Its report perceptively analysed the existing situation, emphasised the risks involved and set targets that have proved attainable for the physical execution of the project plantation component. The need for detailed soil and topographic surveys to permit planning of the detailed irrigation system to repair the weaknesses of the consultant's preparation report was recognised but not its implications in terms of increased cost. A higher physical contingency allowance than the (normal) 10% included in project costs should have been provided even though this would have made the economic rate of return less favorable. The appraisal targets for associated rainfed outgrowers were too optimistic, since here future production depended on improved price incentives, adequate input supplies and efficient marketing and support by the Regional Fruit Cooperative - all factors outside the projects control. Although covenants were included regarding estate imported input supplies that worked well enough during the project period when most of the foreign exchange needed was provided under the IDA credit, the project as designed failed to give similar safeguards for the production period. Acceptance of the Government's alternative to make a (new) separate entity (ENAD) under the Ministry of Agriculture responsible for production aspects only, contrary to the original proposals of the appraisal mission under which, to ensure proper coordination of production transport and marketing, project implementation would have been entrusted to Fruitex, involved an added risk since it assumed that the necessary degree of collaboration between two entities could be assured through contracts and covenants - and has unfortunately proved unattainable in practice. 9.03 Covenants and conditions directly related to project execution were enforced and undoubtedly contributed to its completion on time. 9.04 From the beginning, it was recognised that the project would require intensive Bank supervision. During the five years (1976-1980), eleven supervision missions were mounted involving some 34 manweeks of staff time in the field. In view of the element of technical assistance involved, this schedule must be considered as barely adequate although allowance has also to be made for assistance provided under the consultancy - 56 - agreements with IRFA and the consulting engineers (para 6.11). The considerable continuity of staff employed on such missions helped to achieve excellent relations with both project management and Government officials. 9.05 The first main implementation problem that had to be tackled by supervision missions was the need to re-design the irrigation system (para 3.04) and its implications. While the technical problems involved were adequately resolved, the economic ones presented even greater difficulties. At the time, July 1976, it was correctly estimated that the resultant increased costs would increase project costs by 20% - 30%. In view of the stage reached ar.d Government's willingness to shoulder these increased costs (including their foreign exchange element), it was decided to proceed with the design that permitted the cheapest method of supplying irrigation to the net area Df 420 ha fixed at appraisal. Had time and circumstances pemitted, a conplete re-appraisal might well have shown that a smaller and less sophisticated system was more appropriate. The main origin of this problem, it mist again be stressed, lies in the weaknesses of the project preparation study. 9.06 The decision having been taken to go ahead on the basis of a revised plan covering 420 ha, the next set of problems concerned the choice and performance of the contractor for the major construction phase. Because of the reluctance of contractors to accept commitments under Guinean conditions, the choice was limited to the only two bids received, and, in the absence of valid grounds to depart from normal rules, the contract was awarded to the lower bidder. Unfortunately, this contractor's performance was poor and when contractual Denal:ies were irposed at first commissioning, the co.*:*actor withdrew and othe-. 1d to be engaged to complete it. This imposec added burdens to managemern and delays in project execution. 9.07 Because of the technical problems arising from the re-design and execution of the irrigation installations, supervision missions tended to concentrate on these and it was not until the end of the project period that the organizational and institutional problems of primary importance for the operational phase were addressed in depth. 9.08 The fact that the foreign technicians were engaged by the Bank and seconded to the project did not make it easy for the establishment of a correct relationship with ministries and officials that were unenthusiastic about their employment under any circumstances. Inevitably much time was taken up in correspondence and discussion regarding candidates' suitability, recruitment, terms and conditions and severance. 9.09 Supervision missions gave considerable help in institution building as far as Daboya was concerned. They supported management in its proposals to strengthen the organisation to meet the increased responsi- bilities of the operational phase, although their implementation has been slow because of delays in obtaining ministerial approval. This in turn has - 57 - held up the installation of proper cost accounting procedures to provide a useful tool to management. 9.10 Appraisal production projections proved to be too high because of over-optimism as to yield attainments under Guinean conditions. Similarly, proportions asumed to be exportable (90%) while in line with experience in shipment to Eastern Europe, had to be reduced (to 75%) for exports to the more demanding Western European markets. With project costs increased by 35%, some reduction in the appraisal economic rate of return was to be expected. When re-calculated as detailed in section V, even with a shadow exchange rate factor of 2 instead of 6, the resultant reduction of the point estimate to 6.5% under further reduced production forecasts is far less than would otherwise be expected because of the rise in export prices. Given the uncertainties surrounding the project the range included in the appraisal sensitivity analysis could with advantage have been larger. 9.11 With the benefit of hindsight, it is clear that the Bank should have been much firmer regarding the Government's non-compliance with section 4.03 of the Credit Agreement (para 3.29), calling for an in-depth study of the problems of the fruit sector. This would have provided the factual basis for the Bank to discuss with Government the structural and policy reforms needed. Without such reforms, fruit exports have continued to decline (Annex). As far as pineapples are concerned, this defers the day when export by ship becomes feasible and thereby reduces Daboya's benefits. Pre-occupation with the pressing technical problems of the project's investment phase probably accounted for the neglect of these wider issues. X. CONCLUSIONS 10.01 At this early stage it is difficult to predict the final outcome. In emerging from the chrysalis of the Bank supported investment period, the project is already facing a major crisis. Possible solutions have been indicated in the project recovery program submitted to Ministers by the October, 1980, supervision mission but Government's decision on these proposals is still awaited and on this will largely depend the future of the project. 10.02 At the same time, it is still possible to attempt some evaluation of the project. Its main successes are (a) the establishment virtually on schedule of an irrigation infrastructure capable of serving 420 ha net; (b) the building up of a project management team that now, with a minimum of technical assistance, has demonstrated that, given the essential inputs, it is capable of managing and operating the production of a technically demanding crop; (c) the evolution of a formula for associated outgrowers' - 58 - irrigated pineapple production that offers considerable prospects for its future extension; and (d) the studies into rice and livestock under the project's technical assistance component, which although deficient from the project preparation viewpoint, have already paved the way for IDA - financed projects in these sub--sectors. 10.03 Thanks to the choice of pineapples as the crop to develop and the buoyancy of the market for this high-value crop (over the past twenty years Western European imports of fresh pineapples have shown a compound annual growth rate of 122%), the effects of a 35% increase in investment period costs and a 30% reduction in output coupled with a 53% reduction in export projections during the period 1979/80 - 1984/83 have been minimised and the point estimate of the economic rate of return for the nucleus estate has only fallen from 14.9% at appraisal to 6.5% on May 1981 estimates. 10.04 Against these considerable successes must be set the projects failures notably; (a) lack of adequate safeguards for input supply and output marketing during the production phase, a crucial deficiency in view of the complications in the pineapple production cycle and in the marketing of a perishable commodity; (b) non-attainment of targets for increased production of rainfed outgrowers, suffering from inadequate price incentives, lack of inputs and poor marketing services; and (c) lack of any appreciable impact on sector policy. 10.05 In different circumstances, it should have been possible to consider an alternative project conception under which the nucleus estate would have been much smaller and the bulk of the development undertaken by outgrowers. This would have made it possible to adopt less sophisticated irrigation systems with lower unit costs. Government's adherence to socio-political objectives was the main reason for basing the project on what was basically a "state fa-.m" model. 10.06 - The project was interded to be a first step in demonstrating "the value of a carefully designed and rational approach to the sector". In fact, this first step has proved to be a rather faltering one. To make more progress in achieving this wider objective as well as maximising benefits under the project, it will be essential to ensure that the lessons to be learnt from experience under this project are taken fully into account particularly in designing any possible follow-up project. 10.07 Under preparation is an agricultural development project for the Kindia region, with a component presently envisaging the extension of smallholder pineapple production by some 800 ha. This does not seem unrealistic in view of the success of the limited outgrowers program evolved at Daboya. Such an extension would mean that Daboya's services would need to be strengthened and enlarged to enable it to provide technical assistance and contract services to increasing numbers of participants. The capital c:sts involved including the provision of credit to participating groups to enable them to purchase small pumps and sprinkler irrigation sets should not be high and financial and economic rates of return should prove attractive. - 59 - 10.08 But, in the light of project experience, essential pre- conditions for any such fruit component of a follow-up project would be that Daboya be given effective powers to market its output and that of participant outgrowers and to utilise foreign exchange resulting from export sales to finance direct imports of essential inputs (such as fertilizer, chemicals and spare parts). This was the basis of the detailed projet recovery program presented to the concerned Ministers by the October, 1980 supervision mission. Its implementation would not only make it possible for the Bank to consider financing a follow-up project with such a fruit component, but would also ensure the survival of Daboya and the possibiity of attaining its potential production and export levels. 10.09 At the moment, (May 1981) Government approval of the recovery program is still awaited and the political obstacles in the way of its acceptance are considerable. Resistance to change is reinforced by vested interests entrenched in the present system. This applies particularly to the marketing problem. The steady decline of fruit exports (Annex) means that Daboya will from now on be responsible for an increasingly important share of pineapple exports and Fruitex might naturally oppose proposals involving Daboya's exports being placed outside its control. But this nettle has to be grasped sometime. 10.10 Now that the investment stage has been completed, a re- examination should be made to determine the operational structure best suited to achieve the project's undoubted potential. Experience to date under the existing state farm structure operating within the context of the country's general agricultural system has demonstrated that this cannot provide either the basic production requirements for an exacting crop or the proper handling of the marketing problems of a fragile commodity in highly competitive and demanding markets. A better solution seems to lie in the establishment with a recognised foreign fruit company of a joint enterprise whose integrated operations would embrace input supply, production and output marketing (as in the case of mining projects in Guinea). Such a joint venture could be expected to re-appraise the present position in order to achieve a better relationship between the nucleus plantation production and that of its outgrowers. This could be achieved by transferring responsibility for some parts of the present estate to farmer groups, coupled with an expansion of the present pineapple outgrowers program, and its extension to cover other fruits, particularly mangos, already grown extensively in the Kindia region. If IFC participation in such a joint venture proves possible, the project would benefit from continuing Bank Group involvement. IFC is presently studying such a possibility. 10.11 Investigation of such an alternative would inevitably take time. To ensure that in the interim the project position does not deteriorate and so reduce its attractiveness to any potential commercial partner, it will be essential for Government to implement the measures already detailed in the recovery program of October, 1980, and amplified by the recommendation of the February, 1981, supervision mission that sufficient foreign - 60 - exchange be allocated to the project to allow it to order and store two- year's supply of fertilizer to cover the needs of the estate and the associated outgrowers. Justification for Government taking this and other actions proposed in the recovery program lies in the fact that the project represents a capital investment of US$11 million, with the capacity of increasing its production to provide annual foreign exchange earnings of US$2.5 million at a time when other pineapple exports are declining. 10.12 In the IDA financed Rice and Livestock Development Projects (Credits 952-GUI and 1063-GUI) account was taken of some of the adminis- trative lessons to be drawn from experience under the Daboya project. These include: a. provision of technicz.l assistance personnel through consulting firms who are required to supply back-up services; b. provision of revolving funds and usage primarily of procedure III disbursements to facilitate import arrangements; c. power to import all requirements (except fuel) directly by each project; d. explicit supervision of fellowships/training programs and studies; and e. dependence of each project on only one Ministry. GUINEA PINEAPPLE DEVELOPMENT PROJECT Credit 569-GUI Annex Project Completion Report Exports of Pineapples and Nangoes: 1970-1980 Pineapples Mangoes Western Eastern Western Eastern Year Europe Europe Total Europe Europe Total 1970 1679 5182 6861 250 350 600 1971 224 7925 8149 175 500 675 1972 180 7620 7800 250 250 500 1973 250 4166 4416 300 300 600 1974 310 6198 6508 400 400 800 1975 126 6324 6450 - 1279 1279 0 1976 - 3202 3202 244 244 1977 - 2356 2356 - 1454 1454 1978 236 2713 2949 53 1121 1174 (236) (277) (513) 1979 . 247 1953 2200 136 1118 1254 (247) (24) (271) 1980 465 550 1015. '-451 215 666 (411) (411) 1) to September 30 only Figures in brackets denote Daboya production Source: Ministry of Foreign Trade (SECOMEX) d酌 ýBRD 11444R(PPA) ý982 JU F,,9wogbe Gore Kompamo Inst Fo,icya scmo Foilaya buyý Segieye 400 Friquic9be '50c.i' ýpo 130 Sekourgouri 'ý nton 100 Daboya CO ,kly 400 G U I N E A Th,s map has been prep~d by the Wolld Banks stalf exclusvely for PINEAPPLE DEVELOPMENT PROJECT Ih. h i-ce of the, readers of Ih, CO' - wh,ch -s atrached LOCATION OF THE PROJECT AREA rhe de-rr-u-, u,ed ,d the rap~t' bý,hdý,,e, h-, ý,, flu, -p dC _r ý l tre P.'t ýt, the WC,ld B-k ,d flit"te" a,,Y 'p -----ý',Pineapp e Estote App-sal proposal ,ud,-,,l C, the legal status of -y ta-te,y ý, -y ertd.,se.e.t oods ýr aCC.pt",a :f ,,h b-d,"es S Raiýroed E N E G A L ----- - - ~ eservoirs ýý G. ýINÉA-BISSAUý- jý ýRivers -400CDrtours ii meters 'G U l /N E A Bridges, 10' Icý PIN kýLE ESTýrE Conokr y 0 TI, pp", rý,p s ý,Sed ýý~, 18ý, D i 1"ý 5 1 E R R A tne ",,dp ,f;-ý ý1, LEONE e ý7 n 1,0?C 2,CýCO 3 Opý 4,0c0 5,ý00 f MEIE 5 L I B E R l A ýW 2,OPO . 3R,00ý 4,JýO 5, 0 loý YARDS  Frigulogbe G UI N E A PINEAPPLE DEVELOPMENT aservo r P R OJEOCT Pineapple Estate Irrigation Works Proiect boundory - Ist phase 2nd phase 3rd phase Re,esed Ist phose Revised 2nd phuse ("bas service") -o .Sekoungour. Conduits with risers Kolbagbe .' . .....Conduits Temporary conduit - Pumping staotions TEMPORARY Main roads PUMING STATION -. -- - -- Tracks -- -- Rivers Bridges Not. A I/ denarcaons are ndcahve only |-.s PPA r,ca s based on I3RD 114/ 5 c ,'y '5 1 a g S -nov oon ma o shov evns e pron,> Daboyo' SE N EG AL 10° Bao ii~ D boyGUcEA,BSENGAU m i\ N Lonokry CC A Er L E ON E 560 i Thsma asbenpeprd yth ordBaks ttieciw lyr h cn mecY AR DS c,- h u m i 1 s s h w n a tosm a o oyip l o t e p a t fJe .Vtr Ra- w affhn n'nod men oboentg&stausof nunertor o ary nSIem nR R A - , . |- R A- cc1 of 0,n- 000,,OnOo,,nI non,,,,,>,,LiBERIA - 0 -