Malawi - Second Karonga Rural Development Project

Document of The World Bank FOR OMCLAL USE ONLY Re"t No. 5340 PROJECT COH?LETION REPORT MALAWI SECOND KARONGA RURAL DEVELOPMENT PROJECT PHASE II (LOAN 1286-T-MAI) November 28, 1984 Government of Malawi Ministry of Agriculture and East Africa Projects Department Regional Mission in East Africa This document has a restricted ditribution and may be used by recipients only in the performnnce of their official duties. Its contents may not otherwise be disclosed witbout World Bank authorization.  ABBREVIATIONS A.D.D. = Agricultural Development Division ADMARC = Agricultural Development and Marketing Corporation CADO = Chief Agricultural Development Officer CSC = Cold Storage Company IBRD International Bank for Reconstruction and Development IDA International Development Association KCRDP = Karonga-Chitipa Rural Development Project MANR Ministry of Agriculture and Natural Resources NRDP National Rural Development Programme NRDP (PI) National Rural Development Programme Preliminary Investment RDP = Rural Development Project STA = Senior Technical Assistant TO = Technical Officer  FOR OFFCIAL USE ONLY KARONGA-CRITIPA RURAL DEVELOPMENT PROJECT, PHASE II PROJECT COKPLETION REPORT TABIE OF CONTENTS Page No. Abbreviations Table of Contents Preface i Basic Data Sheet ii Footnotes iii Highlights iv Comments on and Summary of Government's PCR 1 I INTRODUCTION I 1I PROJECT OBJECTIVES I III PHYSICAL IMPLEMENTATION 2 IV PROJECT MANAGEMENT 2 V AGRICULTURAL SERVICES SUPPORTED BY THE KARONGA- CHITIPA RURAL DEVELOPMENT PROGRAM 3 VI NATIONAL RURAL DEVELOPMENT PROGRAM PRE-INVESTMENT 7 VII PROJECT COSTS 7 VIII DISBURSEMENTS OF WINDOW TWO LOAN 8 IX PROJECT BENEFITS 9 X GOVERNMENT PERFORMANCE 13 XI BANK PERFORMANCE 14 Government PCR 16 Foreword 17 MAIN TEXT PART A : KCRDP II 18 1. Introduction and Summary 18 2. Background 19 3. Formulation 21 4. Implementation 24 5. Imnact 34 6. Financial Performance 44 7. Institutional Performance 45 8. Economic Rate of Return 48 9. Discussion and Conclusion 49 PART B NRDP PRE-INVESTMENT 50 1. Background and Formulation 50 2. Implementation 53 3. Financial Performance 56 4. Overall Evaluation 58 5. Conclusion 58 PART C LAKE TRANSPORT 59 1. Background 59 2. Implementation 60 3. Conclusion 62 KARONGA-CRITIPA RDP PHASE II - ANNEXES 63 Table of Contents 64 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.  MALAWI Karonga Rural Development Project, Phase II - Loan 1286-T-MAI PROJECT COKPLETION REPORT Preface This is a completion report of the Karonga Rural Development Project, Phase II, for which a third window loan (Lu 1286-T-MAI) was approved on June 2, 1976. The loan was fully disbursed and clo3ed in December 1982. This report consists of a project completion report (PCR) prepared by the Planning Div'ision in the Ministry of Agriculture, dated February 1983, a revised economic analysis completed in October 1983 and a summary evaluation by the Resident Mission East Africa, completed in November 1983. The PCR was submitted to OED but the Project was not selected for audit. The 1DCR and the overview was sent to the Government for comments on August 31, 1984. i&1i.ng prepared the PCR, the Government did not send any further comments.  ttt) SECWD KAROXA RURAL EVLOErT PROJECr - WAN 1286-T-nl PRO.ECa CtGClON REPORT Basic Data Sheet KFY PROJECr DATA Actual or Actual as percentage Apprisml Estimated of Appraisal Estimate Actual Estifmte Project coat (USS dillion) 12.093 12.434 102.8 Loan Amout (USS million) 9.2 9.2 100 Date of Board Approval 06/30/76 Date of Effectiveness 09/24/76 Date Physical Components Completed 09/PD 03/82 Houses 10O: Roads n3 loreholes 9o0 Markets 202 Health 1O01 Training Centers 1007 Closing Date : 03/81 12/82 Econoidc Rate of Return: NRDP 14X 14t - : l~~ake Transoort 18X LOz Instittitonal Performance: Phor 1/ Agronontc Performance : Variahle 21 Financial Performance : Poor 31 - Nober of Direct : 11.000 farmers 41 Beneficiaries aMIATIVE DISBURSEMENTS: FY77 FY78 FY79 FY80 FY81 FY`82 Appraisal Estimate (USS nillon): 0.8 4.0 7.4 8.6 9.2 - Actual (USS million) : 0.5 3.5 6.9 8.0 8.9 9.2 Actual as 2 of Estimate : 62.5 87.5 93.2 93.0 96.7 100 Dte of Final Disbursement : February 1982 MIS5ION DATA: Staffweeks Tpes t/ Ifssion No. of Specializations In the Performance5! 6/ of Mission Source Date Persons Represented Field Rating Trend Problems Preparation RMEA 10(28/74 2 Preparation IMEA 01/22/75 1 Appraisal HQ 10/04/75 5 Econ. Supervision RMEA 01/30/77 3 Econ/Publ.Health 6 2 - TO Supervision RMEA 01/10/77 1 Econ. 2 2 2 10 Supervision RIEA 09/03/78 2 Econ.fAgronomy 4 2 2 FM Supervision RMEA 09/20/7R 2 Engin/Econ. 6 2 2 TO Supervision RICA D8/01/79 I Agronomy 2 2 1 T Supervision RIfA 05/09/80 2 Agric. Econ./Agron. 2 2 2 FT Supervision RSEA 01/21/81 1 Agronu-y 1 2 2 FT OIE PROJECT DATA: Borrower : Govertnnt of Malawi (GCI) Executitng Agency : Mtnistry of Agriculture. Halawi Railways Fiscal Year of Borrower : April I - March 31 Nne of Qarrency : Malawi Kwacha (MK) Carrency Exehange Rate Appraisal Year Average (1975) USS 1.00 - 0.90 MK Intervening Year Average (1975-1981) USS 1.00 - 0.84 Completion Year Average (1981) USS 1.00 - 0.90 FOLLOW-N PROJECr :National RIral Development Progrsm (NRDP) Phase III Credit iNumber : 183-MAI Credit Amontt (USS million) : 7.3 Date of Board Approval : 10/31/1%i  - iii - FOOTNOTES 1/ Poor management and budget control in early Project years for Karonga Rural Development Project. 2/ Variable due to variability of rainfall and of crop prices. Farmer profits unsatisfactory for cash crops, cotton and groundnuts. Farmers reacted favorably to crop price Increase for maize and rice in particular. Insufficient development of extension messages. 3/ Excessive expenditures for operating costs in the first Project years. The Ministry of Finance appropriated M1K 1.5 million from the Credit Fund. Budget allocations generally satisfactory. 4/ Some 11,000 farmers representing 28% of the farming cormunity were participating in the group credit schemes. Others benefitted indirectly from roads, water supply and education provided under project. 5/ Status 1: Problem-free or Ninor Problems; 2: Moderate Problems 3: Major Problems. 6/ Trend 1: Improving; 2: Stationery; 3: Deteriorating 7/ Types of Problems: F - Financial; T - Technical; P - Political; O - Other  - iv - MALAWI Karonga Rural Development Project, Phase II, Loan 1268-T-MAI PROJECT I'IOMPLETION REPORT Highlights (i) The project, which was the seventh IDA/Bank supported rural development project in Malawi, was the second phase of a rural development program in Malawi's far north. The first-phase Project was implemented from 1972 to 1976. It provided finance for rainfed and irrigated agricultural development, health services and transportation in the Karonga district only. The irrigation component under the first phase project was not successful because of high costs overruns (unexpected requirement of canal lining) and the resulting shortfall in its economic viability. In addition berthing and handling facilities at the southern lake port of Chipoka could not be comnpleted because of cost overruns in other parts of the Lake Transport component and inability of Government to finance the overrun. The second-phase project was extended in area coverage to include the sparsely populated Chitipa district. The second phase project had three distinct components including (a) agricultural and livestock services and infrastructure in the Karonga and Chitipa districts, (b) a two-year pre-investment phase to the National Rural Development program (NRDP), and (c) the completion of the Lake Transport component started under the phase I project. (ii) Project start-up was with funds from the first phase project. Project funds were used for 5 1/4 years compared to the original life of 4 years. Disbursements for local operating and personnel costs for the Karonga Chitipa Rural Development program were 80% above estimates. In addition, an appreciation of the Mtalawi Kwacha relative to the dollar during the project period reduced the Kwacha value of the Third Window Loan. Government increased its Kwacha contribution to the project by .8 million Kwacha (US$.94 million equivalent) compared to the appraisal estimate. Despite this, total costs denominated in Kwacha (10.5 million Kwacha, or USS12.4 million equivalent) were about 4% lower than appraisal estimates (10.9 million Kwacha). Annual work programs and budgets were adjusted downwards to availabl-: finance, except for operating costs which could not be contained. Phys.cal road construction for example amounted to only 32% of the appraisal estimate. (iii) Only increased production from rainfed rice in Karonga, and maize from Chitipa contributed to project benefits. Favorable farmer profits obtainable for these crops (due to relatively high prices) induced farmers to grow larger areas, and to devote more labor, management and inputs to these crops. However, financial incentives were inadequate for obtaining increased production of cotton, groundnuts and livestock.  - ' - (iv) Surveys indicated that there was virtually no uptake of the technology advocated by extension agents during the project period. Farmers who were able to introduce the simple technology advocated by extension agents had already done so by the end of the first phase project. Both the extension and the research service failed to generate and communicate new technology of interest to the larger credit-worthy farmers. Both services also failed to consider the strong risk aversion of subsistence farmers when designing agricultural improvements. Subsistence farmers were untouched by the extension service. In this regard, the NRDP pre-investment component failed to strengthen agricultural research. (v) Benpfits from the livestock component were minimal because of a lack of market in the remote project districts despite increasing numbers of livestock. Indeed improved animal health facilities increased the number of livestock, while offtake did not increase. This exacerbated over-grazing. (vi) ADMARC had insufficient funds and incentives to construct the markets/inputs stores foreseen at appraisal. Input supply services by this parastatal were particularly poor. Marketing services were less bad, ADMARC handling an increase in rice and maize throughout despite the lack of construction of new facilities. However, the good performance was the unassisted parallel market which was able to handle increased production offered for sale. (vii) Management of the Karonga Rural Development Project Area was mediocre, in particular during the first 18 months when poor budget control resulted in excessive operating costs. Management of the Chitipa area was good. In general however, Government procedures for creating positions and filling posts with suitable qualified staff were lengthy and cumbersome. (viii) The NRDP pre-investment component achieved its "hardware" objec- tives of providing the necessary infrastructure (houses, office facilities and stores) equipment and staff in three futture NRDP development areas (Mzimba, Thiwi Lifidzi and Kawinga). However, its "software" activities were nct met. It failed to appoint staff to the agricultural research component and agro-economic studies were not undertaken. Accounts and audits were not received for this project component. The investtaeat costs for the pre-investment component remained 12% below the appraisal estimate. (ix) Malawi Railways was the executor of Chipoka harbor improvements under the Lake Transport component of the Project. Because of low appraisal cost estimates, MK 310,000 of construction could not be included in the tender. In addition, it was decided that barges undertake fuel transport instead of the oil tanker which the original project was to be rehabilitated. Despite these shortfalls, cargo tonnages handled grew to approximately the level foreseen at appraisal. Between 1976 and 1979 (latest available data) the freight forwarded from Chilumba (in Karonga district) increased by 67Z, in part indicating the increased production available for sale from Karonga. A crude estimate of the economic rate of return on the Lake Transport component is 10%.  - vi - (x) The project's economic rate of return (ERR) for the agricultural components of the project is estimated in the Government PCR at 14%, identical to that projected at appraisal. Higher rainfed rice and maize production than originally envisaged offset the lack of project impact on cotton, groundnuts and livestock. This success compares very favorably to other Rural Development Projects in East Africa having similar design. The critical factor was probably the relatively favorable agricultural policy environment in Malawi, particularly price policy for rice and maize. Nevertheless, unfavorable price policy for cotton, groundnuts and beef curtailed possible production benefits from these crops. The parastatal marketing and input supply agency ADMARC performed poorly. However, this was largely mitigated by a flourishing parallel market which was not molested by Government. Finally, there was some synergy effect in expanding agricultural production resulting from high prices for rice and maize, the flourishing parallel market, improved credit availability (credit use expanded to one-third of the farm population), roads, water supply, and education provided by the project. (xi) As can be judged from the above, the importance of the agri- cultural policy environment was seriousLy under-estimated at appraisal. This policy environment turned out to have as much of an impact on production in the project area as did project services. In retrospect, it is also unfortunate that the project attempted to assist the parastatal ADMARC and not the private traders which constituted the parallel market.  MALAWI Karonga Rural Development Project, Phase II - Loan 1286-T-MAI PROJECT COMPLETION REPORT Comments on and Summary of Government's PCR I. Introduction 1. The Planning Division in Ministry of Agriculture, in conjunction with Karonga ADD personnel prepared a PCR for the above project, a final draft of which was received in RMEA on October 18, 1983. IDA staff have reviewed this PCR, and comments are provided below. The Ministry of Agriculture has been self-critical in preparing its PCR. Most comments (though not all) made by IDA staff on earlier drafts have been incorpo- rated. The preparation of a PCR was not a condition of the Credit Agree- meent, and Government's efforts are therefore particularly commendable. The following comments should be read in conjunction with, or as addiLions to Government's PCR. They try to clarify a few inconsistencies in data and express some views which differ from those expressed in the Government's PCR. II. Project Objectives 2. This integrated rural development project followed a first phase which was implemented in the Karonga District of northern Malawi, and was comple:ed in 1976. This second phase expanded the project to another district: Chitipa. Both projects were directed primarily to increasing agricultural production, income and social services. The total area covered in the second phase was 900 thousand hectares of which 7% was cultivated and on which 38,000 farm families lived. The project contained a project management unity, development of agricultural research and extension, agricultural credit, livestock services, fisheries, soil conservation services, marketing and input supply facilities, water supply, health and education facilities, and roads. The project also was to undertake preliminary investment in infrastructure and the development of Central Ministry of Agriculture Services needed to accelerate the implementation of a "National Rural Development Program" throughout Malawi. Finally, the project included investment in transportation services between Karonga and Chipoka harbors on Lake Malawi. Most cargo between Karonga and southern Malawi is carried by ship on the ]ake (the road link is poor). The component included harbor facilities, cargo handling equipment, and rehabilitation of an oil tanker.  -2- III. Physical Implementation 3. The Third Window Loan for the project became effective in Septcmber 1976, and the project was closed in March 1982, one year longer than expected at appraisal. 4. Karonga-Chitipa Rural Development Project. Civil works construction commenced promptly and targets for staff housing, offices, health facilities (7 dispensaries and 5 maternity wards constructed), and primary schools (36 schools) were reached early. Borehole drilling (water supply) was about on target (83 boreholes drilled compared to 90 planned). However, because of substantial overspending in operating costs during the first 18 months, a rescheduling of funds was undertaken, along with improved monitoring procedures and financial control. Operating cost increases were contained. In addition, several construction programs were reduced in scope due to insufficient funds to meet unexpectedly high costs. The road construction program was cut back for this reason, and achieved only 30% of its original target (30 miles of road were constructed or rehabilitated). Livestock dipping tanks were not constructed because costs exceeded appraisal estimates and Government could not provide the additional funds necessary. ADMARC (marketing and input supply parastatal) failed to construct markets and input stores because of its own financial constraint. ADMARC constructed only five small marketing sheds. 5. NRDP Pre-Investment. Most of the staff houses and offices foreseen at appraisal were constructed. These were located in districts in which subsequent NRDP p-jects would be based (Thiwi-Lifidzi, Kawinga and Mzimba districts). Road -uilding (largely in Thiwi-Lifidzi) was about 50% of that foreseen. I'ehicle acquisition for NRDP staff was largely as foreseen. The two ADMARC markets foreseen were not constructed. 6. Lake Transport. The oil tanker was never refitted. Instead, a barge was purchased to carry fuel. Cargo handling equipment was procured. Civil works construction at Chipoka harbor was largely completed. Costs were underestimated at appraisal, so some construction was dropped. In addition, due to a cement shortage in Malawi, construction was late. IV. Project Management 7. Karonga Chitipa Rural Development Project. (a) There were 3 Project Managers during the project's life in Karonga district. The first Manager allowed excessive operating expenditures due to overstaffing, poor control of vehicle running, etc. A total of MK 803,000 was spent on  -3- operating costs above estimates in the first 18 months of the project. Following a detailed review of financial management by Ministry of Agriclture staff, reprogramming of project activities and financing was agreed with the Bank. Under the following two project managers there was improvement in program planning and budgeting, and execution of project activities. (b) Staff vacancies for several key posts and some poor quality support staff created management problems in both Karonga and Chitipa districts. (C) A large number of surveys were carried out by the Monitoring and Evaluation section. The data was not always adequately analysed and evaluated and was of limited assistance to management in decision making and forward planning. (d) ADMARC showed no interest in or commitment to the project. 8. NRDP Pre-Investment Phase. This component was implemented by the Ministry of Agriculture and National Resources, under the authority of the NRDP coordinator. As indicated in para 5, management of physical implementation was good. However, management of software" (agricultural research, socio-economic studies, and the resources survey) was poor (see also para 18). 9. Lake Transport. This component was adequately managed. Freight traffic through the two harbors increased substantially during the project period. This was handled despite deficient pvrt facilities. V. Agricultural Services supported by the Karonga-Chitipa Rural Development Program 10. Agricultural Extension. This component was expected to be most important in generating agricultural benefits. A new extension methodology was successfully introduced, referred to as the farmer group approach. Extension agents contacted fixed groups of farmers on a systematic scheduled basis. The approach had some of the elements of T & V (indeed in subsequent years, it has evolved towaTd the T & V system). The group approach enabled more farmers to be reached than under the phase I project, and was relatively cheap since agents visited groups rather than individuals. To assess the impact of extension it is informative to look at the major extension messages, combined with survey results including the degree or uptake of extension advice. There were five categories of extension messages for maize, groundnuts, rice and cotton:  -4- Message Percent of Farmers Following Message 1977/78 1979180 (a) Use Improved Seed Maize 35 7 Rice 75 33 (b) Use Fertilizer, manure Haize 31 12 Rice 48 49 (c) Plant Early Maize (before December 30) 68 75 Cotton 60 91 (d) Optimum Plant Density Maize 18 10 {e) Weed on Time- Maize 98 80 Groundnuts 96 93 Rice 93 81 Cotton 98 100 The percentage of farmers following extension adrice for the most part declined during the project period.  11. Despite the above results, the Government's PCR shows data (page 19) indicating that farmers reached by extension got higher crop yields for maize, pulses and groundnuts than did farmers not reached by extension. However, from the information in para 10 above, it could be deduced that those farmers following extension advice were already introduced to the improved technology in the first phase project. This would explain the higher yields of those farmers who followed the advice of extension agents and suggest the second phase project failed to introduce new technology to additional farmers. The use of fertilizer, improved seed, and early planting may be difficult for subsistence farmers who have little cash to purchase inputs, are not credit-worthy, and cannot hire labor (due to lack of cash) at peak labor-demand times for early and rapid planting, weeding, etc. Such farmers may plant at less than the "optimum" plant density in order to give individual plants a greater chance of survival in :ase of adverse weather conditions. They may use less fertilizer than recommended to reduce the possible adverse financial impact from using costly fertilizer in years of rainfall. Alternatively, the result of inadelquate and untimely supplies of inputs would produce a similar impact with a limited number of farmers able to utilize new technology. Despite the focus of extension messages, the balance of farmers would have to adapt production systems that would function adequately without improved seeds and fertilizer. There is evidence from a recently completed crop survey (1979-83) 1/ to support this view point. Although maize plantings increased dramatically over the project period and this was sustained in the follow-up project 2/, the expansion was totally confined to local maize and inrerplanted maize prodoction neither of uhich require fertilizer. National supply of fertil5zer has now been addressed through a Bank/IFAD Project 3/. Most small farmers :,tercrop, for which no extension advice was available. This failure of extension was also the failure of agricultural research which was inadequately executed under the project. Indeed, the national agricultural research apparatus was inadequate. This problem is only being addressed now. 12. Rice yields in Karonga district and maize yields in Chitipa increased marginally during the project period, but there was a significant increase in the area of maize planted in both project districts. Expansion in production of rice and maize accounts for the project's acceptable economic rate of return. How is this explained given the failure of extensior and research and input constraints? The most important explanatory factor was the increase in the relative price of maize and rice during the projer period. The resulting greater profitabilil-y of maize and rice stimulated greater farmer attention and labor input in cultivation of rice and maize, hence leading to increased plantings. There was also truth to the concept of integrated rural development activities (water supply, credit, road building and education especially) having an impact on production. Better educated farmers with better educated children make 1/ Source: ADD Monitoring and Evaluation Unit 1984. 2/ NRDP III (Cr. 1183-MA). 3/ Smallholder fertilizer project (Cr. 1352-MAI)  - 6 - 13. Seasonal credit was only provided through credit groups. The introduction of group credit helped double the number of credit farmers to about 10,600. Thue 30% of farmers received credit. Late availability of inputs tended to inhibit an even greater demand for credit. In addition, many farmers were either not convinced that the profitability of some crops increased when using expensive fertilizers, or were unprepared to take the risk of purchasing fertilizer on credit. Failure of sub optimal levels of fertilizer to increase yields and income would have left these farmers in a perilous situation having a debt to repay and no additional income to repay it with. This rational risk aversion inhibited uptake of new technology requiring a cash outlay or credit. Less than expected demand for credit was the result. The average loan per farmer was MK 25 per season. Credit repayments were excellent at 98%, mainly because defaulting groups became ineligible for new credit. This component -as in general successful, although it did not reach as many farmers as targetted. 14. Livestock extension services concentrated on improving animal health (cattle dipping, castration) and on livestock management (culling, marketing of unproductive animals) after several development components were cut following Government's review of project activities in 1978. Results were not good in an economic sense. The marketing of livestock did not increase (at least partly due to the inadequate official price offered), while cattle numbers did increase. Overgrazing is worse as a result. 15. The Land Husbandry Component demarcated 7% more land into water control areas in Karonga district than foreseen at appraisal. Water controi measures, however, were not successfully carried out, largely because of lack of funds for construction. Flooding is therefore still a problem in Karonga. The Land Husbandry staff provided assistance with feeder road layout and design. Feeder roads were then constructed on a self-help basis. 16. Marketing and Input Supply. ADMARC not only failed to construct most of the facilities foreseen under the project, but also generally distributed inputs late or not at all, and was somewhat inefficient in its marketing activity. Government ignored a flourishing parallel market which was able to absorb additional rice and maize production. In retrospect, it was unfortunate that the efficiency and resourcefulness of this parallel market was not recognized and assistance provided through the project to its development. This could have had a much larger impact than did the attempt to assist ADMARC.  - 7 - VI. National Rural Development Program Pre-Investment 17. The objective of this component was to create the necessary infrastructure, central services and staff necessary to launch the national rural development program which was to eventually (in about 20 years) cover the entire country. The concept was to prepare for the introduction of low cost, replicable investments in marketing, extension, input/credit organization, roads, and water supply. The pre-investment phase financed under the Karonga/Chitipa Rural Development project succeeded in meeting most of its infrastructure and equipment targets. However, the Central Ministry of Agriculture Services which were to be developed to serve the entire NRDP Program were not strengthened as foreseen except in its accounting department. This hurt the start-up of adaptive agricultural research in particular, in turn retarding the process of developing valid extension messages. Other central services such as agro-economic surveys and land resource analysis were not undertaken. In conclusion, the 'hardware element of this component was successfully implemented, but the "software- element was not. VII Project Costs 18. The various tables in Government's PCR show coflicting total cost data. The data in Annex IV is correct. Total cost was MK 10.537 million. The Bank provided US$9.2 million (MX 7.8 million equivalent) or 74%. Total cost at appraisal was estimated at MK 10.9 million of which 75% was to be financed by IDA. In local currency there was a 3% cost underrun.5! This was due to an appreciation of the Malawi Kwacha which caused the Kwacha equivalent of the Third Window Loan to decline, combined with ADMARC'S inability to finance its share of the input supply and marketing facilities (which were not constructed). Financial Source Appraisal Estimate Actual Amount % Amount X (MK mil) (MK nil) IDA 8.3 75 7.8 74 Government 1.9 18 2.7 26 ADMARC 0.7 7 0 0 Total 10.9 100 10.5 100 Government's contribution increased considerably to finance overruns of local (largely operating) costs. 1 5/ In the Basic Data Sheet, total project costs are shown in US$ equivalent. Because of the appreciation of the Kwacha, actual total cost denomination in dollar equivalent was 2.8% higher than expected at appraisal.  -8- Recurrent Costs 19. The PCX shows high operating and personnel costs during project execution (about US$1.1 million p.a. equivalent in current prices). This level of operating costs is excessively bigh. An attempt should have been made during project execution to reduce operating costs and increase cost recovery in order to impose less of a burden on the Government budget. The general issue of high operating costs of agricultural projects in Malawi is being addressed in the SAL. In addition, under the third phase of this Project (NRDP III, Credit 1183-HAI) high recurrent costs for staff salaries, vehicle operations and building maintenance are being funded by IDA on a declining basis over the Project period. This procedure which passes an increasing share of the financial burden of operating costs onto Government during project execution, is intended to provide an additional incentive to Government to reduce and/or to recover costs. Unfortunately, the overruns of operating cost during the second phase project, largely financed by Government, did not induce Government to reduce such costs or recover more cost. Greater attention must be given in project design to this issue. VIII. Disbursements of the Window Two Loan 20. The following table compares Loan allocation with actual disbursements. Allocation Actual Z Category at Appraisal _ _ _- IJS$ - IA Karonga RDP - vehicles, machinery, 600,000 393,085 65.5 equipment B - civil works 1,000,000 1,277,909 127.8 C - personnel 1,000,000 1,447,751 144.8 D - operating costs 1,000,000 2,151,415 215.1 2A NRDP pre-inv. - vehicles, machinery, 400,000 370,710 94.3 equipment B - civil works 900,000 1,028,126 114.2 C - personnel 400,000 198,367 49.4 D - - operating costs 300,000 401,309 133.7 E ' - consultants 130,000 87,292 67.2 3A Lake Transport - civil works 1,500,000 1,652,073 110.1 B - cargo handling eguip. 150,000 191,963 128.0 C - Mpasa refitting 20,000 - Unallocated 1,800,000 TOTAL 9,200,000 9,200,000  - 9 - 21. Disbursements for local personnel and operating costs exceeded disbursement estimates at appraisal by 80%. Physical completion of civil works was somewhat less than expected at appraisal. Cost was 20% higher than the appraisal basic (before contingency) estimate, reflecting the expected rate of price inflation. Expenditures for foreign personnel and consultants were lower than expected because not all staff anticipated at appraisal were appointed. Equipment purchases were lower than anticipated at appraisal to keep costs down. In effect there was a substitution of operating and personnel costs for equipment and for foreign personnel. This was undesirable. Greater efforts should have been directed to limiting persor:el and operating costs. IX. Project Benefits Crop Production 22. Most project benefits were expected from increased production of maize, rice, cotton and coffee, with smaller production increases of groundnuts, beans and beef. The concept was that the development of agricultural services, infrastructure, and people (health and education) would combine to have an impact on production. It was recognized that the individual impact of each component would be difficult to identify. Unfortunately, the PCR presents conflicting data on the evolution of cropped areas, crop yields and production. This reflects the inadequacy of the monitoring and evaluation system. In addition, different sources provide different data. Inconsistencies of data in an early draft of the PCR were reported to Government. Government in response provided a corrected Annex X entitled "Economic Analaysis'. The data in this annex are the best available. Crop Production in Karonga District 23. Crop Area. 6/ Appraisal estimates were for 1,420 ha each of the improved crops maize, groundnuts, cotton and unimproved cassava or maize. The PCR indicates that the maize area exceeded this target significantly (4,500 to 5,200 ha in the last 4 years) but cotton and groundnut areas declined to less than 150 ha in 1980/81. Rainfed rice was expected to increase to 4,490 ha. This area was slightly exceeded in 1978/79 and in 1979/80 but almost doubled to 8,800 ha in 1980/81, no doubt due to favorable producer prices and good rains. 6/ Data on cropped area reported in the Government's PCR may not be accurate.  - 10 - 24. Crop Yields were expected at appraisal to increase to approximately 2,000 kg/ha foDr maize, 720 kg/ha for cotton, 410 kg/ha for groundnuts and 2,200 kg/ha for rainfed rice. Yields varied considerably from season to season mainly reflecting rainfall and price as discussed in Dara 10 above. Maize yields averaged about 1,150 kg/ha or slightly better than half the target yield. Average cotton yields appear to have slightly exceeded the target, and average groundnut yields were below that antici- pated. Rainfed rice yields ranged from an unusually high 3,000 kg/ha in 1980/81 to 1,037 kg/ha in 1977/78. 25. Crop Production. Project crop production varied considerably from year to year, mostly depending on seasonal conditions (rainfall) and producer prices. Maize and groundnut production in Karonga was less than projected without the project. This occurred as rice production was substituted for maize and groundnuts due to increased paddy prices. Cotton production increased only marginally compared to the without project projections. 26. Official Crop Purchases. ADMARC data on crop purchases for Karonga do not indicate substantial increases during project imnplemen- tation. Rice purchases in Karonga were highest in 1977/78 with 10,850 tonnes and then declined to about 7,500 tonnes per annum. Cotton purchases stabilized at about 380 tonnes, while maize and groundnut purchases were negligible. This means that much of the incremental production was marketed through unofficial channels, possibly the result of insufficient ADMARC prodived marketing facilities and, no doubt, also due to higher unofficial produce prices. Crop Production in Chitipa District 27. Crop Area. The SAR indicates that the pre-project maize area of 2,732 ha (mostly intercropped with beans and grounduuts) would be replaced in 1980/81 by 1,093 ha each of composite and improved local maize and 547 ha each of improved beans and groundnuts. During project implementation the maize area stabilized at about 10,500 ha, or at 4-5 times the appraisal estimate, mainly due to attractive prices on informal markets. The ground- nut area was close to estimates but more than doubled in 1979 to 1,300 ha. Bean areas exceeded the appraisal target and stabilized at about 1,900 ha in 1979/80. 28. Crop Yields. Maize and groundnut yields were expected to be about 2,370 and 525 kg/ha respectively. Only in 1977/78 was the appraisal estimate for maize yield reached; in the following years it ranged from 1,734 to 1,937 kg/ha. Groundnut yields varied between 280 and 645 kg/ha. 29. Crop Production. Incremental maize production exceeded appraisal targets while groundnut production did not.  - 11 - 30. Official Crop Purchases. Since 1976/77 maize purchases by ADMARC more than tripled the average of the previous five years. Furthermore, it has been alleged that some over-the-border trading has occurred. Sales of groundnuts and pulses were highest in 1979/80 with only some 30-40 tonnes respectively. 31 Causes for Production Changes. It is clear from the data that producer price and rainfall were critical factors in determining production. Because of inadequate producer prices cotton and groundnut production was not stimulated as expected. Rice production in Karonga was stimulated as was maize in Chitipa. Extension messages appear to have had little impact during the project period as indicated in para 10. Little benefit accrued from the livestock component, although the cattle population increased qt a more rapid rate because of increased dipping and improved veterinary services. The essential constraint to achieving the objectives of the livestock component was Karonga-Chitipa's isolation which prevented the Cold Storage Company from purchasing all offered stock (because the company had a limited imprest account reducing its ability to purchase from areas which have high transport costs). 32. The "synergy" effect on agricultural production expected from a simultaneous, integrated development of agricultural services, infra- structure and social services was important, with however some unforeseen causes. Expanded agricultural credit services, roads, water supply and education contributed directly or indirectly to increasing agricultural production. However, the predominant unforeseen factors were the high rice and maize prices making these two crops profitable, and a dynamic parallel market. Rainfall was also of great importance. 33. Annex 10 of the Government's PCR provides an economic rate of return calculation. It includes incremental crop production benefits, and those project costs related to production. 7/ It excludes Lake Transport services, health, hydrology studies, monitoring and evaluation and livestock (for which benefit data are not available). The result is an ERR of 14%. The ERR for the livestock component (not computed in the Government's PCR) is likely to be about 0%. The total cost of the livestock component was MK 147 thousand, or 2% of costs. Assuming a 0% rate of return to livestock if this component is included, the FRR falls 7/ The economic rate of return analysis contained in the Government's main report (page 48) was not correctly prepared, and was sent back to Government with a request for changes. These changes were made in a new Annex 10, which is to be taken as the correct calculation.  - 12 - insignificantly. It would still be rounded off to 14%. The ERR projected at appraisal, which was estimated on the same basis, was also 14%.8/ 34. Ex-post economic rate of return analysis does not distinguish between agricultural benefits generated in a project area by project services, and those generated by other factors. Agricultural projects situated in countries having appropriate agricultural development policies tend to succeed, while those projects situated in countries having inappropriate policy tend to fail (see the World Bank's Eight Annual Review of Project Performacne Audit Reports for this conclusion). In Malawi, agricultural policies were relatively good. The economic rate of return of 14% reflects this fact as much as it does the impact of project services. Only recently has the Bank realized the overwhelming importance of the policy environment. Presently, considerable assista:ice is being provided to improve agricultural policies in Malawi through SALs, technical assistance, and Bank agricultural sector work. 35. The impact of the project on the Government's budget has been negative. The budget has benefitted little from increased taxes and duties, and was negatively affected by the high operating costs of the project. ADMARC, the main purchaser of surplus produce, de..lved little or no benfits from the project because of its high costs of handling the mostly Chitipa maize and because of financial losses incurred in marketing Karonga rainfed rice. 36. Social benefits are significant and observers have repeatedly remarked on the improved education facilities for the population. The number of pupils attending primary school in Karonga rose from 20,000 in 1974 to 23,600 in 1981. In Chitipa, attendance rose from 13,600 to 21,000 in the same period. The boreholes have improved water quality, reduced the drudgery of obtaining water, and liberated labor or farming. Only health care has not improved significantly because of understaffing in the health centres created. In addition, these facilities and services require considerable recurrent expenditures. For the time being the latter are funded from the third phase project (NRDP III ) and SALs. It would be useful to introduce cost recovery mechanisms which would contribute to the operation of health facilities and help finance better health services. 8/ If all project costs are included, the rate of return would fall to 7%. This estimate is not particularly useful since it included the costs of social and extra-project services which were intended to (and did) have social benefits and economic benefits outside the project area. These components were not intended to directly stimulate agricultural production.  - 13 - 37. As stated above the NRDP Pre-investment phase succeeded in creating certain basic infrastructure useful in accelerating start-up of subsequent NRDP projects. However, this component did not undertake the adaptive agricultural reserach foreseen, which was intended to generate more appropriate extension messages. Nor did it undertake the agro-economic analysis foreseen. 38. Lake Transport. The appraisal report calculated benefits of the Lake Transport component on the basis of increased cargo which would be carried to and from Karonga permitted by project harbor improvement and rehabilitation of the oil tanker. The increased cargo was expected to come from additional agricultural production in Karonga. Freight traffic handled through the two ports which were partly rehabilitated by the project did increase rapidly during the project period (by 39% in terms of weight handled from 1974 to 1979). No economic rate of return was calculated in the PCR. However, project costs were approximately equal to the appraisal estimate of Kwacha 2 million. Freight traffic grew at a rate nearly identical to that projected at appraisal. Given this situation, the actual ERR was probably close to the 18% estimated at appraisal, and certainly above 10% (10% has been placed in the basic data sheet). X. Government Performance 39. Government commitment to the project was satisfactory as is typified by its willingness to finance cost overruns from its budget. Project management initially was weak, particularly in workplan and budget preparation and in containing operating costs. Throughout the Project very close Ministry of Agriculture assistance and supervision was required (from the Chief Agriculture Development Officer). Staff appointments were delayed because of cumbersome and time-consuming procedures, and there were 3 Project managers in Karonga district in 4 years, all factors which affected Project management adversely. The only major curtailment in planned Project activities occurred in road construction (only some 32% of the target) and in ADMARC's inability to construct markets and input stores. The Government provided insufficient crop price incentives for cotton and groundnuts to allow appraisal targets to be reached. The Ministry of Finance also withdrew MK 1.5 million from the revolving agricultural Credit Account. It has been agreed, however, that this amount will be refunded to the Karonga ADD Credit Fund or to a Central Credit Fund if and when this latter is established. 40. The major Project weakncss was the inadequacy of on-farm research, in particular that focussing on the needs of subsistence farmers. As a result there was no strengthening of extension messages during the project period. Although the extension sevices adopted a farmer group approach, its focus remained mostly on creditworthy farmers who had land in excess of subsistence requirements.  - 14 - 41. The withdrawal of the post of NRDP Coordinator contributed to poor coordination of NRDP pre-investment activities. Accounts and audits were never received for this component, nor were they received for the last few years of the Karonga-Chitipa Rural Development Project. Other covenants were complied with in a timely manner. XI. Bank Performance 42. The appraisal team suitably reduced the scope and cost of the Karonga-Chitipa component (deleting coffee development proposals and scaling down credit and ADMARC components). This contributed positively to the Project design. The change in approach of the agricultural research component from the originally proposed large number of replicated trials to that of on-farm trials was sound, but trial implementation was less than satisfactory because the required staff were not appointed. The inadequacy of the national agricultural research system was overlooked. The impact of existing extension messages was over-estimated. The extension service had much less to offer in terms of improved technology than was anticipated. Input usage (except improved rice seed in Karonga) was overestimated, but the appraisal team could not foresee the external logistical problems of getting farm inputs into Malawi, nor were the unfavorable crop prices for cotton and groundnuts predictable. Nevertheless, as with other agricul- tural project appraisals in East Africa, the importance and impact of the policy enrivonment was grossly under-estimated. 43. There was too much faith in the possibility of assisting an inefficient marketing, and input supply parastatal (ADMARC). It is unfortunate that no thought was given to assisting energetic traders on the parallel market. 44. NRDP pre-investment proposals by the Government were suitably reduced by the appraisal team to allow more time to establish the necessary institutional framework and to collect and analyze essential data on which specified NRDP development proposals were to be based. In the event, this proved to be an excellent decision since the administration of this component was relatively poor. 45. Although the appraisal team altered project design in order to minimize investments and recurrent costs, there was not enough attention given to ways in which to wean the project from dependency on high Government expenditures for operating costs. The project is too costly to operate, and offers little in temrs of cost recovery.  - 15 - 46. The Bank's Resident Mission in East Africa srnt 7 supervision missions to Karonga-Chitipa, which provided considerable technical assistance, particularly on extension organization and project management. The project was probably somewhat better managed as a result. Supervision missions for example asissted in resolving staffing and financial problems. Excessive operating expenditures were detected early which resulted in a rescheduling of project activities and expenditures. Nevertheless, recurrent costs were excessive and no system was recommended for reducing recurrent costs or increasing cost recovery. Although supervision missions pointed out the negative impact on cotton and groundnut production of price policy, they were unable to influence a change in such policy. Errors made at the design stage marked the project for its life. 47. In summary, the Bank appraisal mission did marginally improve project design, and Bank supervision did improve management. However, Bank staff did not fundamentally alter or improve design nor were they influential in changing Government price policy or project design during implementation.  - 16 - MALAWI SECOND KARONGA RURAL DEVELOPMENT PROJECT PHASE II oIZan 1286-T-MAI) PROJECT COMPILETION REPORT Government of Malawi Ministry of Agriculture  - 17 - FOREWORD This project completion report for Karonga-Chitipa Project Phase II has been prepared by the Central Evaluation Unit of the Planning Division in the Ministry of Agriculture. It is the second completion report, after that of Lilongwe Land Development Programme Phase III, to be prepared by a local team. Therefore local experience is being developed in the preparation of project completion reports. While the Preparation of the report started in good time to allow for the presentation of the report about six months after the completion of the project to the World Bank, a number of problems emerged. Firstly, the then Senior Economist (Evaluation) who initiated the work left the country at the end of his contract with Malawi Government in April, 1982. At the same time, he took away with him all the information that had been gathered with the promise that he would work on the report while outside the country. This did not materialze even after numerous correspondences. The data was returned in September 1982. Therefore, the work had to be started again. Secondly some key data could not easily be traced and retrieved for instance, the performance of the pre-investment phase and the Lake Transport Component. The draft report was prepared in October 1982 and valuable comments on its content were received from various government officers as well as World Bank staff from the Regional Office in Nairobi. These comments have, either whole or in part, been incorporated in this final report. As -will De gathered from the report, the project had been successful in incressing crop production during the phase and a network of social infrastructure was provided in order to improve the living standard of the people. This report is a result of joint effort by staff of the Planning Division and Karonga Agricultural Development Division (KADD). The write- up of the report was done by Messrs. D.M. Chembezi and F.R. Mwambaghi, all Evaluation Economists in the Planning Division's Central Evaluation Unit. The Senior Economist (Planning) assisted the team in finalizing the report, especially in producing the chapter on Economic Analysis. The Chief Projects Ofticer provided valuable guidance in the preparation of the Final Report. G.B. Chirwa CHIEF PROJECTS OFFICER  - 18 - 1. INTRODUCTION AND SUMMARY 1.0 This is the second Project Completion Report to be prepared and presented to the Bank by Malawi Government, thie first one being that of the Lilongwe Land Development Programme Phase III prepared in 1979. Phase I Completion Report for Karonga Rural Development Project was prepared by the Bank itself. Although some mention has been made of how much investment went into Phase I, this report has laid emphasis on the activities and implementation of Phase II which included Chitipa District originally omitted _n the first phase. 1.1 Basically the presentation of material in this report fo]lows guidelines detailed in the Bank's Operational Manual Statement (IBRD, February 1979). This manual clearly presents and indicates what aspects ought to be included under each section. An attempt has been made to include as much information in the text as possible, however, follow-up details have been presented in the form of Annexes and referenced within the text. 1.2 This report finds that physical implementation of the project was generally good although markets and roads fell short of the appraisal target. The project was however implemented with weak management and financial control. Autonomy, within the frame of decentralization, appears to have been granted to the project far too early and because of this coupled with lack of proper financial control, cost over-runs were experienced during the first two years of the project life. 1.2.i The Project has had considerable impact and success on crop production. Incremental crop production for rice, maize and somehow cotton been increasing annually, and higher yields except for groundnuts have been maintained. Reduced land under cultivation and change from Malimba to Manipintar groundnut appears possible cause for the poor production performance of cotton and groundnuts respectively. The estimated economic rate of return is 33% over a period of 25 years. This excludes costs of components left out in the analysis at appraisal. If all component costs are included, the rate of return falls to 18%. Because of lack of phase I cost streams, no attempt has been made to calculate a combined rate for phases I and II. 1.2.2 Research has not focussed their attention on local needs and liuk with the extension service has been weak. Credit use has expanded and recovery rate has also improved considerably. Seasonal inputs on credit have however fallen short of the appraisal targets probably because of the introduction of credit groups and the policy which restricted loans to groups. 1.2.3 Little attention has been paid to land use planning and data for the monitoring of envircnmerntal effects are hardly available. On livestock development, little emphasis was laid on inproved livestock development programmes instead general livestock extension was undertaken. 1.3.0 Regarding the preliminary Investment Phase of the National Rural Development Programme, considerable infrastructural development has been ac ieved. Work which was suppose to be done by Land Resources and Agricultural Research in proposed NRDP project areas never took shape  - 19 - because of the problems of filling the posts agreed at appraisal. On this basis therefore, the Pre-Investment Phase has been a failure. 1.4.0 A considerable part of the work proposed at appraisal under the general objective of Lake transport improvement has been done. Both Chipoka and Chilumba harbours are being used and the amount of cargo handled is increasing with time. 1.5.0 In conclusion, the project (KCRDP II) has demonstrated considerable success in as far as crop production is concerned thereby ccntributing to the improved socio-economic life of the target population and the nation as a whole. Mention also needs to be made of the valuable lessons learnt from the planning and implementation of KCRDP II. This has helped to improve the planning and implementation of the project's third phase and also other Rural Development Projects (RDPs) within the National Rural Development Programme (NRDP). 2. BACYrROUND 2.1 Following the implementation of regional intergrated development projects in the Central and Southern Regions of Malawi in 1968, the National Development Council, early in 1969, directed that an economically viable integrated development project be mounted ir the Northern Region. The Northn Region was regarded as disadvantaged by being at the extreme end of a long line of communication with a severe lack of feeder roads. Karonga Lakeshore produced practically all the saleable surplus of the Region and was viewed as the area with the greatest immediate potential in terms of irrigation, and human and cattle populations. A Phase I for Karonga Rural Development Project was subsequently appraised in 1971 and commenced with finanzial assistance from in 1972 VCredit Agreement 282-MAI). 2.2 The first Phase was originally expected to run for five years (to 1977) however, due to initial difficulties in staff recruitment and delays in housing construction, progress in the first year was slower than expected. Revisions were made and the Phase was shortened to four years. Proposals were then prepared by Malawi Government for a Second phase and this was subsequently appraised by the World Bank in 1976. Phase II commenced with financial assistance from IBRD (Third Window) in the same year (Credit Agreement 1286-MAI). This Phase was designed to last for four years (to early 1981), was however subsequently extended by one year to close on 31st March, 1982. 2.3 These two phases of the project received finance from IDA/IBRD Credits Malawi as follows:- Phase Appraisal Report Credit Amount Period I PA 106a 282-MAI US$6.6 Million 1972-1978 II 1084-MAI 1286-MAI USS9.2 Million 1976-1981 There has been an cverlap between phases I and II in finances: residual funds from Phase I have been used in Phase II. Included was funding towards improved Lake Transportation Services and a Pre-Investment for the National Rural Development Programme. These together made up some (46) per cent of the total.  - 20 - 2.3.1 The total cost of the two phases (including contributions from Malawi Government) amounted to an estimated MKI5.85 million. This was allocated as follows: Phase I Phase II Total (MK "Million) Karonga and Chitipa Project: Development Account 6.61 5.14 11.75 Karonga and Chitipa Project: Revenue Account 0.10 1.58 1.68 NRDP Pre-Investment - 2.42 2.42 Total 6.71 9.14 15.85 2.4 The Completion Report for Phase I concluded that the Project had provided a stimulus to the development of Karonga; not only through the provision of inputs and extension services but also from the improved physical infrastructure which had been achieved. The purpose of Phase II was to continue this support for the development of agricultural production in Karonga and spread this development to Chitipa District. In addition the second Phase included a component to support the preparation of the National Rural Development programme through a strengthening of the planning capacity withiMANR and through preliminary investment in three selected 3-eas of Malawi. A component for the further improvement of Lake transpoication services was alincluded. 2.5 The total area of the Karonga and Chitipa Districts is 0.89 million hectares of which 7% were estimated to be under cultivation at the commencement of Phase II. The project area is bounded by Zambia to the West, Tanzania to the North and Lake Malawi to the East. A large mDuntain range to the South confined road accsss between the project and the rest of Malawi to a single unreliable lakeshore route. The two districts could be divided into five main natural areas, namely: the steep-sided coffee-growing Misuku hills, the scarcely populated undulating Chitipa plain, the agriculturally unproductive and unpopulated Karonga scarp zone, the fertile North Karonga Lakeshore plain. Annual average rainfall ranges between 750 to 1500 millimetres, most of it falling between November and May. An estimated 38,000 farm families lived ithe two districts at the commencement of Phase II. 2.6 To some extent the design of the second phase represented an adjustment in policy from an intensive Scheme approach towards a more general approach covering all farmers and all crops-. This was in line with the present National extension policy which aims at covering all Smallholder farmers. 2.7 By the commencement of Phase II, a considerable facility of infrastructure and staffing was already available in both Karonga and Chitipa Districts. A summary of these facilities is provided at Annex I. 2.8 The principal sources of information which have been used for compiling this project completion Report were the reports and records of the project Evaluation Unit, the Financial Division (cost accounts and  - 21 - Credit Fund Control), Programme Management and component heads and the files and records stored at Ministry of Agriculture Headquarters. Numerous other specific sources are quoted in the text and a list of the main reference at Annex II. 3. FORMULATION 3.1 Initial discussion and Project Identification outline for a second phase of Karonga Project took place at a meeting with leaders and politicians of Karonga and Chitipa districts at Karonga in October, 1971. Provisional proposals for this second phase were then prepared by a joint team from Planning Division (Ministry of Agriculture and Natural Resources) and Karonga project management. These proposals were prepared in full consultation with senior staff working on the project and with all Ministries and departments concerned;particularly the Agricultural Development and Marketing Corporation, Cold Storage Company, Ministry of Health, Ministry of Works, and other Departments within the Ministry of Agriculture and Natural Resources. Following this integrated planning procedure, the Project Proposal Document was submitted to a World Bank (IBRD) Appraisal team in October 1975. 3.2 The concept of a National Rural Development Programme was being actively discussed within Government at that time. The extension of the project phase II to Chitipa District was originally envisaged as a first pilot for the concepts of NRDP. 3.3 The Malawi Government Proposals for Phase II over a four year periodcommencing 1st April, 1976 amounted to a base cost of K6.603 million. Physical and price contingencies were calculated at K2.892 million giving a total o K9.50 million. Detailed cost breakdown by component were presented and an internal rate of return of 13.3 per cent was estimated over a 25 year period. This economic analysis omitted the components of research, hydrology, fisheriesevaluation, health and livestock. The primary benefits of the project were expected to be increased production of maize, rice, cotton and coffee, with smaller production increases of groundnuts, beans and beef. 3.4 An IBRD Appraisal Mission of five team members visited Malawi in October/November 1975. An additional team of two visited in February, 1976 concerning the lake transport proposals. 3.5 There were some considerable differences between the final appraisal document and the original Malawi proposals. The main points of difference we as follows: (i) The Appraisal document required an additional Malawi Government provision of over K1.5 million according to an enlarged project design and a change of contributory financing proportion.  - 22 - Text Table 1: Financing Arrangements compared (MK'OOC Project Proposal Appraisal Prov. Source by Malawi Govt. (1084-HMAI) World Bank Loan 8,071 (85%) 8,300 (75%) Malawi Government 338 ( 4%) 1,900 (18%) ADMARC 1,066 (11%) 700 ( 7Z) TOTAL 9,495 100% 10,900 100% (ii) Components for Fisheries and coffee development were dropped by the Appraisal document; (iii) Two large new components, which involved pre- investment for the National Rural Development Programme and the development of lake transport- ation facilities, were introduced at appraisal. These components alone made up some 46 per cent base cost provision in the new project design. (iv) The proposals for staff housing were amended at appraisal with provision for less junior (P-type) housing and more senior (C and D type). At the same time the cost provision for the construction unit and civil works was out at appraisal by almost fifty per cent to cover what was virtually an equivalent programme. (v) For extension the farmer to technical assistant (extension worker) ratio was reduced by about twenty per ceiLt (to 1:600). Although a group extension approach was emphasised by the proposals with concentration on defined areas (schemes), these aspects were not specifically mentioned by the appraisal document. (vi) Allocation of new funds, the farmers revolving credit fund were reduced at appraisal. This was based on a revised estimate of loan requirements during the phase representing only one-third that anticipated by the project proposal. The appraisal document revised downwards the project- ions of package-adopting maize and cotton farmers (by 50 per cent) and of medium term credit inputs (by 80 per cent). The projection of groundnut adopters' (Karonga) was however increased by 30 per cent. Credit for coffee production was dropped. A schedule for phasing farmers off credit towards cash purchases of inputs was adopted by the appraisal document with a more rapid move to cash (advanced by two years). (vii) The Appraisal document considered that the Land Husbandry work programme should give increased emphasis to encouragement in adoption of good land  - 23 - use practices. To this end it was recommended that this component be absorbed into the extension services during the last two years of Phase II. This was not the object of the original project proposal which had emphasised concentration on rainfed rice schemes (as in Phase I) and the survey of alignments for farms and roads. (viii) Proposals for the development of a holding ground in the south of Karonga District (at ChLilumba) for marketed Livestock together with an investiga- tion of the possibility of their movement by lake barge to Central Region markets were not adopted at appraisal. Further appraisal omissions were for a temporary cattle market and three pilot grazing schemes in Chitipa District. (ix) For the Research component, the appraisal document placed emphasis on a programme of project specific research. This was to be based on an extension system of farm scale tests to be initiated with the help of extension staff. The project proposal had based its research component on large numbers of replicated trials to fit within the national framework of research department headquarters. (x) The programme for development of ADMARC facilities was reduced at appraisal from an original proposal of twelve input stores and thirteen market complexes to eight input stores and nine market complexes. Summarised comparison of component costs are as follows:  - 24 - Text Table 2: Component costs compared (K14'0O)(a) Project Proposal Appraisal by Malawi Govt. Document 1084-M&I Component (4 years) (4 years) Karonga Project Area: Management Unit 398 255 Financial Control 254 625 Mechanical Maintenance 158 169 Construction 1,540 836 Extension 952 719 Credit Operations 450 (b) Land Husbandry 161 143 Livestock 306 262 Research 251 208 Hydrology 131 136 Evaluation 149 181 Health 351 399 Fisheries 58 0 Component Costs sub-total 5,159 3,833 Credit Fund Injection 763 173 ADMARC Construction 681 466 Total Base Costs (KCRDP) 6,603(100Z) 4,472(54Z) NRDP Pre-Investment: 0 2,276 Lake Transport: 0 1,536 Total All Base Costs 6,603 8,284 Contingencies: Physical 584(9X) 540(7%) Price 2,308(35%) 2,059(25%) Total Project Cost 9,495 10,883 Note: (a) These are costs on Development Account only. 3.7 Description of the Project A formal description of the Phase II project, as given by the Development Credit Agreement (1286-T-MAI) Schedule 2, is reproduced at Annex III. 4. IMPLEMENTATION 4.1 Effectiveness and Start-up 4.1.1 The funding for Phase II (Credit 1286 MAI) was officially agreed on June 24, 1976 and became effective on September 24, 1976. After an extension in the life of this phase, to allow for the completion of outstanding infrastructure and the financial arrangements for a third  - 25 - phase, the available funds were finally used ui on 31st March 1982 giving a total implementation of 34 years. 4.1.2 With a considerable (HK440,000) carry-over of funds from Fgase I (282-MAI) and the basic managemeat and staffing already available, the Phase II project was able to start-up on schedule without any delays on October lst, 1976. Funds were actually warrainted by Treasury on October 13th. 4.2 Revisions: Although there were no major revisions during implementation to the basic design of the p7oject for its principal objectives, some changes were found to be necessary both in the life of the project (as mentioned above) and financial aLlocations between loan categories. These changes were introduced to meet both the growing difficulty of Malawi Government funding of local contributions and 8a a result of a particularly excessive over-expenditure in operating costs during the first eighteen months of project life. 4.2.1 Ailnual. Treasury allocations to development account for this project Phase, compared to those anticipated at appraisal, were as follows: Fundiag (MKt000) (1) (2) Financ'al Period AppraieaJ Plan Treasury Allocation 1976-77 3,435 800 1977-78 5,010 1,535 1978-79 1.527 1,504 1979-80 911 882 1980-81 0 400 1981-82 0 0 (1) From 1084-MAI Annex 8 Table 1. (2) From Development Estimates. Malawi Government. Excluding Lake Transportations and NRDP Pre-investment components. 4.2.2 Following a monitoring and supervision visit to the project by a team from the Central Evaluation Unit (MANR) in 1978, weaknesses in financial management were uncovered and an excessive over-expenditure in operating costs was highlighted. The Report on the findings resulted in the development of improved monitoring procedures and tighter financial control. A request for the re-programming of funds for the Karonga-Chitipa Project component was then prepared; this is reproduced in details at Annex IV, and includes adjustments to allow for a correction to the original project financial design (re-ADMARC Contribution), fluctuations in the value of US$ and an increased provision to operating cost categories. 4.2.3 Plans for the construction of livestock dipping tanks were dropped because funds allocated for these became inadequate as a result of raising the standards for construction of dipping tanks. The funds were then reallocated to the construction of other civil works.  - 26 - 4.3 Infrastructure Development: A sumanary of infrastructure achievement compared to target for Phase II is given at Annex l(b). Achievements of appraisal targets have been varied as is indicated in the following paragraphs. 4.3.1 The construction programme was largely satisfactorily implemented. Housing, training centres, borehole, health facilities, offices, workshops and stores were all completed to the required standard in good time as shown in Annex V. 4.3.2 Of the 96 miles of roads planned, 30.4 miles were constructed, incorporating 6 bridges, 17 culverts and one drift. The coatings used at appraisal were found to be considerable underestimates; funding was insufficient for the full construction programme. 4.3.3 Responsibility for construction of marketing facilities (credit input stores and ADMARC sheds) was handed over to ADMARC. Owing to financial problems within ADMARC, no facilities were constructed under Phase II, although five ADMARC sheds were constructed in Chitipa district using ADMARC maintenance funds late in the Phase. 4.3.4 Out of 92 boreholes planned, 83 were drilled representing 90% achtievement of target. This is an impressive achievement when compared with that of road construction programme. 4.4 Crop Development: During Phase II, general approach to crop development was adopted for both rice and dryland crops. To achieve this end, group approach in extension activities was the principal method of reaching farmers. The general approach and the group approach to extension are in line with NRDP policy. 4.4.1 The advantages of the group approach are that the staff farmers ratio can be reduced considerably without adversely affecting extension contact, and that farmers easily learn from each other. The groups may also be used for other project activities such as credit disbursement. The group approach and the general approach to crop development in Karonga Phase II has been an improvement over the scheme approach which was followed in Phase I. 4.4.2 Rice: Phase II concentrated largely on rainfed rice which is predominant as opposed to irrigated rice; as Table 3 shows the increased production was to be achieved by increases in area cultivated and yield. Yield was to increase as a result of improved cultural practices, use of improved varieties and fertilizers and also the ability of Faya rice to yield well even without inorganic fertilizers. 4.4.3 The appraisal yield target of 2400 Kg/ha was achieved by 1978/79 season and by the end of the second phase rice yields in Karonga were 27% higher than the appraisal target. Exact reasons for this impressive achievement of yield targets are not known, however, favourable rainfall could be one of the reasons. Appraisal hectarage targets were also achieved during the phase, emphasising the importance of rice as source of family revenue.  - 27 - 4.4.4 Dryland Crops: Planning of Phase II envisaged that development of dryland crops would be achieved by yield and area increases. Tables 4 and 5 show planned cropped area and actual in Chitipa and Karonga districts. In none of the years, are the appraisal targets achieved. The deviation from appraisal estimates was most pronounced for cotton and groundnuts, and this is due to the low returns per hectare relative to the othe crops (see Text Table 3). TEXT TABLE 3 : GROSS MARGINS (M I(ACHA/HECTARE) II S E A S 0 N I C R O P ICRIP 1980/81 1981/82 Rice (Faya) 220.00 220.00 I .i I Maize (MH12) 118.17 269.29 I I i Groundnuts (Malimba) 80.00 80.00 I Cotton 160.29 195.29 Source: KCRDP Evaluation Unit. TEKX TAKE 4 CROP EEIELDR1JT (HA) KAOW IDescip. 1976/77 1977/78 1978/79 1979/80 1980/81 1 Year P=ied Achiev. lamed Ahiev-. Planed Achieve. Eanne_ ATieve BI. T1.aIj Achie'v. lR1oe 2,040 4,050 2,653 4,250 3,265 5,000 4,490 5,200 4,490 8,808 1 ICOtte 1,517 sXo 1,705 870 1,898 856 2,126 770 2,309 125 IMaize 7,494 3,450 7,568 4,250 7,680 5,000 8,080 5,235 8,469 4,526 fGroLm&nts 2,371 500 2,542 509 2,724 300 2,977 360 3,189 140 TDTAL 13,422 8,900 14,468 9,879 15,567 11,156 17,673 11,565 18,457 13,600 Source: World BaRk appraisal (Revised) and Evaluation Farm Su-rvys.  - 28 - TEXT TABLE 5: CROP DEVELOPKENT (HA) CHITIPA I . $~~~~~~~~~~~~~~~~~~~~~~~~- 1976/77 1977/78 1978/79 1979/80 CROP Planned Actual Planned Actual Planned Actual Planned Actual Maize 13,325 10,500 13,650 10,600 14.025 10,275 15,075 10,400 Groundnuts 4,850 400 5,000 550 5,175 450 5,400 1,300 I Pulses 8,225 3,000 8,225 2,100 8,250 1,950 8,250 1,900 Millet 2,650 1,050 2,700 750 2,800 600 2,875 800 Cassava 5,175 600 5,225 450 5,275 800 5,325 650 Source: World Bank Appraisal Report and Evaluation Farm Surveys. 4.5 Management and Organization: The Programme Management Structure is summarised in the organization chart at Annex VI. No major change occurred during the phase. The overall implementation of the project is the responsibility of the Ministry of Agriculture. The Programme Manager who looks after the day-to-day implementation of the activities is directly responsible to the Chief Agricultural Development Officer (CADO). In line with the NRDP set-up and also following the appraisal document, the post of Project Manager (F7) upgraded to Programme Manager (P6). 4.5.1 Mention needs to be made of the fact that the Programme Manager experienced some form of autonomy within the frame of decentralisation. This is right and good if decisions are to be made and corrective actions taken where deviations are imminent without having to wait from the Ministry headquartersfor action. Supporting the question of autonomy is the fact, for example, that some procurements in Phase II had to be made by the Project directly through the Blantyre Office. The idea of having a certain degree of autonomy has so farbeen advocated and appears now to exist in all the eight Development Divisions. 4.5.2 Staffin*: The senior staff chart at Annex VI shows the situation senior staff level. The posts of Programme Manager, Assistant Programme Manager, Financial Controller, Senior Extension Officer and Evaluation Officer were generally always filled during the phase. However, change of management was prevalent, and this may have had some adverse effects on the overall implementation of the project (lack of continuity). At both senior and lower levels, most sections suffered from staffing problems. For example, the Project was without Senior Administrative Officer and Engineer for the whole phase. Financial control had to rely on untrained staff and Credit Section iad to run without the Credit Accountant. 4.6 Extension and Training Component: The following table summarises ratio of field assistants (TA) to farmers and the staffing situation (TAs and DAs) as at the end of Phase II, Development Assistants reduced to two (2). This was expected as the aim was to increase staff of TA grade.  - 31 - to be carried out, for -sample, flood control in rice fields which is still a problem. The other problem was that of transport forcing the sectio. to fail to achieve some of its objectives. 4.9 Livestock Section: The Livestock Section placed emphasis on conventional livestock extension methods, i.e. cattle dipping, castrations, culling and emphasis on marketing unproductive animals. The envisaged development programmes of Weane:/Yearling, grazing schemes, demonstrations (Lu_lta) etc. were not achieved. Lack of adequate funds and shortage of staff contributed to failure to implement the programmes successfully. The prices the weaners did not provide enough incentive and as a result, farmers found more profitable to sell animals amongst chemselves or slaughter them at locamarkets. 4.10 Research Section: Like the Construction Unit, this section also suffered understaffing at senior level. The project was without Senior Agricultural Research Officer for most of Phase II. Although a post was available at Karonga for Senior Agricultural Research Officer, policy with'i Research Department demanded that the post be filled by a Professional Officer and so the Senior Agricultural Research Officer was posited out of Karonga. It should be noted that Research programmes were almost entirely designed to fit the National trials programmes. There wasn't sufficient emphasis on project specific trials and results interpretation for localised packages. The achievemants of the section, however, included accompli-ment of selection and multiplication of improved faya seed; establishment of natural grass/legume sward in Chitipa; introduction of UCA and CCA maize varieties in both Chitipa and Karonga districts, and also some recommenda-tions on groundnuts fungicide (Sulphur and Daconil). 4.11 Financial Control: No accounting machine was used during the phase. All financial control work was done manually. There was problem of insufficiently trained staff and untrained industrial grade staff had to be used. Initial problem in lateness of financial records production caused problems in monitoring of costs and expenditures. These were largely overcome towards the end of the phase. Accounts and statements of expenditures were however audited every year. 4.11.1 A Senior Credit Accountant to control credit finance was not in post for most of the phase (see Annex VI). This placed extra burden on the Financial Controller. 4.12 Health Section: The major problem in this section was the lack of staff to man the health facilities which were constructed. The section however, implemented some bilharzia programmes searching for existence of snails and prevention of bilharzia in the rice schemes and in some villages outside these schemes. Annex VII(L) under "Social Impact" indicates the activities of thesection in great more detail. 4.13 Evaluation Section: There was satisfactory success in the implementation of the section's programmes during phase II. Several survey were conducted and coverage was quite good, ensuring more representative data base. Resident enumerators were used in the enumeration areas. The section experienced some staffing problems (enumerators). There was high turnover of enumerators during the phase due to non-established posts.  - 32 - 4.13.1 Data handling and processing improved considerably by the use of the Central computer in Blantyre. These improvements have ensured adequate analysis and more timely reporting. Clear and simplified reporting system and interpretation of data were used for rapid reference and effective use of the survey findings. 4.13.2 The Evaluation section conducted several farm surveys during the phase. Garden, household composition and yield surveys were/are run every year to monitor and measure progress on crop mixtures, crop husbandry practices, input/output relationship etc. Other surveys were conducted as and when required at the request of the Programme Management. Analyses were done and working papers written up as follows:- Survey Title Crop Disposal (1975/76) Yield Study (1975/76) Yield Study (1976/77) Household Composition (1976/77) Garden Survey (1976/77) Yield Study (1977/78) Household Composition (1977/78) Garden Survey (1977/78) Survey Title (Cont'd.) Local Market Survey (1977/78) Irrigated lice Survey (1977/78) Resource Survey (1977/78) Garden Survey (1978/79) Pilot Livestock Survey (1978/79) Local Market Survey (1978/79) Yield Study (1978/79) Household Composition (1978/79) Household Composition (1979/80) Garden Survey (1979/80) Yield Study (1979/80) Local Market Prices Survey (1979/80) Garden Survey (1980/81) Yield Study (1980/81) Household Composition (1980/81) Resource Survey (1980/81) Extension Survey (1980/81) Energy Survey (1980/81) Livestock Survey (1980/81) NatioTal Survey (1980/81) Local Market Prices Survey (1930/81) Income and Expenditure (1980/81) Crop Storage Survey (1980/81) Note: 1980/81 information has been processed jointly by the Project and National Statistical Office. Working papers to be prepared.  - 33 - 4.13.3 A number of working papers have been useful in exercises carried out by Management such as:- Crop Estimates, Gross Margin calculations and Annual Work Plans. Information from Evaluation has also been useful in the preparation and production of this completion report. 4.14 Hydrology Section: With the beginning of the Karonga Chitipa Project, it was found necessary to expand the collection of data on rainfall, stream flow, evaporation and other relevant data useful in designing hydraulic structures like dams and determining sowing dates for crops and climatic suitability of an area for new crops. Such surveys weve/are also important for the better understanding of the irrigation potential of the Karonga Lakeshore Plain. 4.14.1 During phase I the Hydrological and Meteorological network within the project was expanded and improved and a paper on the Hydrology of the Songwe River catchment was prepared. In Phase II these hydrometeorological activities continued; data processing and analysis was completed and papers on the hydrology of the Wovwe and North Rukuru rivers catchment characteristics were produced. Further expansion work to stations was done and new gauging stations were established. The hydrological and meteorological network was as follows at the end of Phase II: Karonga Chitipa Hydrological Station 15 12 Evaporation Fan Stations 4 5 Rainfall Stations 29 39 Weather Stations 4 4 4.15 ADMARC: Existing markets and input storut; were maintained and staffed by ADMARC. The planned construction of new markets and input stores was not achieved, horever, because of ADMARC's financial problems. Late distribution and availability of inputs by ADMARC was greatly experienced in Phase II, but this improved during the last two years of the phase. Lack of storage space in ADMARC Depots aused a slow down in marketing activities. 4.16 Credit and Marketing Component: In Phase II of the Project, credit policy changed to provide seasonal credit zo credit groups only (see Annex IX(a) Table 1). In the first season of Phase II (1976/77) the first credit groups were organised (70 in Chitipa and 30 in Karonga), while at the same time some individual farmers still continued to receive credit. In the following years, however seasonal credit was disbursed to group farmers only. 4.16.1 Disbursement of medium-term credits were slow during the phase because in most years items were not available and there was a shortage of spare parts. In addition, rising prices of implements reduced effective demand for ox-drawn implements. Credit recovery was low because priority was on recovering seasonal credit during marketing. 4.16.2 As already pointed out in 4.11.1, the credit section was without a Senior Credit Accountant for most of the phase. There was also lack of adequate and more perrmanent staff in the section and, consequently, lack of proper basic data in credit offices of the project was experienced.  - 34 - 4.16.3 Other problems faced in Phase II included difficulty in operation of markets due to poor roads and lack of adequate ADMARC transport at peak marketing periods. It should also be mentioned that in Karonga concen- tration of credit issues was only on Scheme farmers due to lack of caretaker committees. More problems regarding credit issues ar:d adminis- tration are discussed in greater detail in Chapter 5. 4.16.4 Text Table 6 presents disbursement of seasonal credit inputs by year compared against targets and shows that targets were generally not achieved. More details on constraints are presented in paragraph 5.5.5. MT TABLE 6: TAR(EI AGANSr ACHanYJf?S ON SEASOAL CRDILT DIN5 (MEMC EON-S) 1975/76 1976/77 1977/78 1978/79 1979/80 1980/811 =Target Achiev. Target AchIev. Target Addev. Target Adiev. Target Adciev. Target Aduiev. 'Am=da (S/A) 594 251 804 324 1029 514 1271 536 1486 645 1585 767 : I 120:2D:0 104 52 165 109 239 246 331 152 436 144 535 194 IRice Seed 105 254 126 356 154 367 182 139 198 300 138 461 jMaize Seed 11 4 17 9 23 29 31 13 40 21 48 19l IG/nuts Seed 35 - 52 - 72 40 95 9 120 13 147 14 l t I CaDtton'i lInsecticides lper acre package / 1125 47 1625 567 2125 1139 2625 1096 3125 480 3500 436 I 1/ Cottor. insecticide pacage is based cn ecomendatioor of 50 sachets sevin, 24 sachets MDT 75% and 7 sachets Dimethoate. Ihe package hanged to 50 sachets sevin, 30 DET and 10 Dimethoate in 1979/80. It is apparent that some insecticides were obtained outside the package. crce: KRDP, Credit and Marketing Section. 5. lMPACT 5.1 Introduction Project impact is mainly achieved by increased agricultural production as a result of project activities. Karonga Phase II aimed at increasing the production of both livestock and crops. Rice, cotton, maize, groundnuts and pulses were given priority. 5.1.1 Methodological issues do not allow attributing increase of yield, hectarage and production directly to project impact because even without the project, crop development would still take place probably at a reduced rate. Methodological issues also do not allow us to assess project impact  - 35 - by comparing achievement in Karonga project with that of other projects because of climatical weather and soil differences. Because of these reasons impact assessment is based exclusively on the extent the appraisal targets have been achieved. 5.2.0 Crop Yields Yield estimates for Phase II are shown in Text Table 7 for both Chitipa and Karonga Districts. Appraisal targets are also presented for comparison with the actual yields. In general, rice (which is predomi- nantly Faya type) and cotton yields were achieved and did not deviate much from the expected. This is a result of improved cultural practices followed and the ability of these crops to yield well without fertilizer. Yields of other crops deviated considerably from appraisal estimates. By 1980/81 season, groundnut yields were 69 and 80 per cent of appraisal targets in Karonga and Chitipa respectively. IEI TABLE 7: YIAD LEVELS BY CROP AND BY YWR (OG/HA) rescri n Araisal I ACaL 198/81 as %I Description j Targets 11976/77 1977/78 1978/79(2) 1979/80(2) 1980/81(2)1 of Targets I iChitipa - Xaize 2,400 1,265 2,398 1,734 1,836 1,937 1 80 I - I5 251 526(1) 530 465 -346 69 | -Puflses 1 400 338 462 645 540 277 I 69 Karcga - R ice 2,400 i1,774 1.037 2,669 2,266 3,037 127 - Cotton | 800 IN/A 1,188 713 839 N/A I N/A -Maize i 2,400 | 1,131 1,947 1,153 1,158 1,105 46 Erun&wts; 450 395 360 346 365 .12 a p Notes: (1) Pure stand average for different varieties. (2) Evaluation Sunry tabblatiors 1078/79, 1979/80 and 1980/81. Source: IWbrkig peprs, Evaluation Section, Karonga. 5.3 Total and Incremental Production: Incremental production is shown in Text Table 8. By the end of Phase II, 1980/81 estimated incremental production of maize and rice in both Karonga and Chitipa districts had already exceeded appraisal estimates, while that of groundnuts and cotton was below targets. The incremental production of maize and rice is primarily a result of increased hectarage (see Text Tables 4 and 5). As noted earlier, yields of cotton were satisfactory while groundnut yields in Karonga were 60 per cent of appraisal target. These yield levels combined with areas under these crops indicate that the poor production performance of cotton is a result of reduced area and that of groundnuts is due to yield and area reduction.  - 36 - 5.3.1 Cropping Pattern: According to the 1980/81 NSSA preliminary report, mean cultivated area in the project area is 0.97 Ha per household giving 0.88 and 1.07 hectares per household for Karonga and Chitipa respectively. In 1980/81, the cropping pattern was as follows:- Average Cropping Pattern KXRDP Crop Chitipa Karonga Maize(l) 51.2 27.9 Groundnuts(l) 0.9 2.0 Cotton(l) - 1.1 Rice 43.4 Cassava(l) N/A 15.0 Other 47.9(2) 10.6(3) Note: (1) Pure stand only. (2) Composed of maize/pulses mixtures, maize/ groundnuts mixtures, sweet potatoes and millet. (3) Composed of maize/cassava mixtures, fruit and maize/groundauts mixtures. Source: 1980/81 NSSA preliminary Report, N.S.O., 1982.  - 37 - TEXT TABLE 8 : INCREMENTAL PRODUCTION (Metric tonnes) Karonga Description 1976177 1977/78 1978179 1979/80 1980/81 Rice Hectarage 4,050 4,250 5,000 5,200 8,808 With Project Production 7,290 9,350 13,500 11,960 26,424 Without Project Prod.l/ 6,480 6,800 8,000 8,320 14,092 Incremental Production 810 2,550 5,500 3,640 12,332 - (Appraisal) - 600 1,200 1,800 2,400 Cotton Hectarage 900 870 856 770 126 With Project Production 540 1,044 599 616 N/A Without Project Prod.l/ 270 261 257 231 38 Incremental Production 270 785 342 385 385 (Appraisal) - 185 370 555 755 Maize Hectarage 3,450 4,250 5,000 5,235 4,526 With Project Producticn 3,795 8,075 6,000 6,282 4,979 Without Project Prod.1/ 2,760 3,400 4,000 4,188 3,621 Incremental Production 1,035 4,675 2,000 2,094 1,358 (Appraisal) - 70 140 210 160 Groundnuts Hectarage 500 509 300 360 140 Project Production 200 183 120 144 56 Without Production Prod.1/ 150 153 90 108 42 Incremental Production 50 30 30 36 14 "(Appraisal) - 165 247 360 445 Ghitipa - Maize Hectarage 7,300 8,150 8,025 7,400 6,557 With Project Production 9,234 19,544 13,915 13,586 12,701 Without Project Prod. 6,300 6,360 6,165 6,240 5,788 Incremental Production 2,934 13,184 7,750 7,346 6,913 -(Appraisal) 405 945 1,620 2,430 3,240 Groundauts Hectarage 150 250 200 300 104 With Project Production 38 84 129 162 29 Without Project Prod. 80 110 90 260 134 Incremental Production (42) (26) 39 (98) (105) (Appraisal) 9 9 27 46 59 1/ Appraisal yield estimates are used. 5.4.0 Livestock Development: Cattle population in Karonga Rural Development Project area is now estimated at 84,000 and is increasing annually at an estimated average rate of about 3.6%. There has been some increase in the annual growth rate and this is attributable to improvement in disease control and general extension advice on animal husbandry. 5.4.1 Livestock productivity as measured by growth rate and off-take, has shown some steady increase. There are however some differences in productivity between Karonga and Chitipa, the latter showing higher annual  - 38 - growth rates and off-take values. The construction of more dipping tanks in Chitipa means wider dipping coverage resulting into higher dipping percentage. It is interesting to note that in 1972, an estimated 75Z of the total herd in Karonga were within 8 kilometre radius of a dip tank and in 1980/81 over 90% (Table 2 Annex VIII). 5.4.2 From the available statistics, only cattle records in Karonga have been clearly broken into three distinct registers. Chitipa cattle records leave much to be desired, consequently, it is not easy to detail the impact of project activities on cattle herd. However, because of the size of the district and unaccessible terrain, Chltipa has more dip tanks than Karonga has (23 Chitipa and 21 Karonga) although cattle population is lower in Chitipa than in Karonga. 5.4.3 Cattle market sales and slaughter (Annex VIII(a)) reveal a higher commercial off-take in Chitipa than in Karonga. Possible reasons include the fact that cattle owners in Karonga attach great value of wealth to their herds. Secondly, prices offered by commercial buyers have been much lower than those of local markets. The animals have therefore been withdrawn by owners. Cattle owners would like to sell their animals to local butchers or slaughter them themselves for sale at rural slaughter slabs rather than dispose them at minimum floor prices (Annex VIII(d)). The other reason relates to the inability on the part of the Cold Storage Company, sole authorized residual buyer, to buy all the animals unsold due to its limited cattle purchase imprest of K1O,000. 5.4.4 Cold Storage is also faced with the problem of moving cattle from Karonga to the slaughter houses in Lilongwe and Blantyre. Transport costs are high and in addition cattle lose weight on transportation which is a cost to the Cold Storage Company. Some consideration towards construction of a chilling plant in the Northern Region should be able to alleviate this problem. Slaughter statistics for the small livestock classes, namely, goats, sheep and pigs have also gone-up (see Annex VIII (f)). It should however be noted that although this is so, negligible numbers of sheep, goats and pigs are maintained in the two districts. 5.4.5 Cattle castrations have gone up in the project and this reflects the effect of increased Veterinary Services in the project and also increased awnreness by livestock owners to castrate their animals with a view to using them for draught power (Annex VIII(e)). 5.5 The Credit Facility: In phase I the seasonal credit was extended to individual farmers only. The use and recovery of credit were lower than envisaged but began to improve after the end of Phase I. The figures shown in Annex IX(a) give the accummulated recovery rates. 5.5.1 In Phase II of the project, credit policy changed to provide seasonal credit only to groups. In the first season of the phase (1976/77) the first credit groups (70 in chitipa and 30 in Karonga) were organized while at the same time a portion of individual farmers still continued to receive credit. Recovery rates of above 90% have been maintained since 1976 (Annex IX(a)).  - 39 - 5.5.2 Availability of credit facilities in the project area has benefited a substantial number of farmers. This is evidenced and demonstrated by the increase in the total annual issues and total number of farmers and groups receiving credit each year (Annex IX(a)). The number of farmers receiving credit in the season 1980/81 was about 11,000 representing about 28% of the total number of farmers living in the Project area. Until 1980/81. the number of groups increased to 631 with an average of about 25 members. The average credit amount per group borrower was higher than the amount of credit taken by individual borrowers in former years. 5.5.3 Credit targets in phase II, both seasonal and medium term targets, were generally not achieved. There were a number of problems and obstacles that resulted in targets not being achieved. Some of which are: (a) Defaulting individuals in credit groups have increased considerably thereby causing some groups to drop out from the list of groups eligible for further credit. The number of defaulters has increased since 1976. In addition, the fact that so.aiebody drops out from the borrowers list even if his group has few defaulting farmers has had some adverse effect on the number of credit farmers. (b) In Karonga area, input issues were only made to scheme farmers. Farmers outside scheme areas were not considered for credit because there were no caretaker committees. (c) Late distribution and insufficient inputs in ADMARC selling points contributed to low uptake of seed and fertilizer. Input distributions were limited because of poor road conditions, the late opening of ADMARC markets and shortage of input packages. (d) Rising prices of farm implements offered had some adverse effects on medium term loan. te) Some farmers are still not convinced of the benefits of fertilizer application at recommended application rates. The difference between fertilized and non-fertilized maize and rice in some parts of Karonga is not substantial. This has therefore meant a decrease in quantity of fertilizer issued. (f) Over optimistic targets. It would appear credit input issues targets were overestimated. 5.6.0 Extension and Training: The extension component has provided farmers with a considerable exposure to advice on improved farm practices such as time of planting, fertilizer application, improved seed, planting density etc. (see Text Table 9). It is apparent that emphasis was mainly on crop production.  - 40 - 5.6.1 The extension component still has a task to accomplish In KRDP. Although fertilizer application has been emphasised (para. 5.6.0), uptake has been slow for reasons given in para. 5.5.3(e) especially among farmers in some Karonga Dryland Schemes, like Lupembo, Lupaso and Mlare. This has resulted in few farmers taking fertilizer packages. Research in Karonga should therefore have emphasized on adaptive trials to produce specific recommendations for the area (para. 5.7.0). 5.6.2 Scheme/Group Approach: There is need to look critically at both scheme and group approaches. In the case of the former, extension services were only rendered to the scheme farmers and their non-scheme counterparts were more or less ignored. As regards the group approach, which was formed for the purpose of obtaining credit (para.4.6.4 and 4.6.5), the group would discuss development plans with the help or the extension worker. This was fortunate to the group farmers and unfortunate to the non-group farmers and the development programmes as a whole as extension efforts were concentrated on group farmers. 5.6.3 From the training point of view, it would appear that both staff and farmer training addresses a wide range of topics and issues in general terms including crop and animal husbandry, home economics, health, credit, crop storage, etc. The most critical aspects of crop and livestock management practices were, however. not addressed in a manner sufficient to motivate the necessary improvements (Text Table 9), for crops. The low plant population density is due to ridge spacing and spacing within the ridges. 5.7.0 Research: Research activities in Phase II were tailored to fit the requirements of the national programmes. There was little emphasis on solving project oriented problems. In a district as ecologically diverse as Karonga, it is necessary that locally based programmes should be carried out. Because of the way the research programmes operated, project management did not get the requlated information in time.  - 41 - Text Table 9: Agronomy Results - KCRDP II 1977/78 1978/79 1979/80 ---(X of growers)--- (i) Using improved seed - Maize 35 1 7 - Groundnuts - 2 4 - Rice 75 42 33 (ii) Using fertilizer/manure - Maize 31 3 12 - Groundnuts - - - - Rice 48 52 49 (iii) Planting early - Maize (before 30th December) 68 62 75 - G/Nuts (before Jan. 15th) 64 71 59 - Cotton (before March 15th) 60 97 91 (iv) With Option density - Maize (35,000 Plants/Ha) 18 20 10 (v) Weeding on time - Maize 98 93 80 - Groundnuts 96 93 93 - Rice 93 75 81 - Cotton 98 100 100 Note: The figures are low under (i) and (ii), probably because of late distritution of inputs. Source: Evaluation Section Annual Surveys - KCRDP. 5.8 Economic Impact - Evidence on the impact of the project on the economy of Karonga and Chitipa is incomplete, such information as there is, however, can provide a general picture of the direction of changes (For more details see Annex VII). 5.8.1 The National Sample Surveys of Agriculture Income and Expenditure Survey was designed on a national basis, and at project level the small sample size produces unreliable results. Data on ADMARC purchases show the trend in income from farm produces through-official channels. An estimate of changes in the volume of sales of produce sold in local markets, to supplement this, can be obtained from records of market fee collections. 5.8.2 Beyond this, an idea of the direction of change of incomes can be found from information on savings and investment. Investment in human capital can be estimated from primary school attendance figures which is a high priority in most households budgets. The District Councils sell licenses to all traders and craftmen, but records are unreliable or non-existent. The effect of changing incomes on local businesses can be assessed, however, by considering savings data (Annex VII(f)).  5.8.3 Eviden.- cnr. income from sales to ADMARC, farmer's institutional savings and debts, cash purchase of farm implements, spending on education and the non-agricultural economy in Karonga district shows a marked, even quite rapid, improvement until the late 1970s. There is a small down-turn in the value of ADMARC purchases 1974, reflected in other variables a year or s0 ' The value of ADMARC purchases reached a peak in 1977/78, and clas declined consistently since then, followed with various time lags, by the other variables (Also sse annex VIII(a/b)). The only variable not following this pattern is the uptake of implements and oxen on credit, which has increased steadily throughout Phase II. Credit for these items is largely unpaid, however, and unless other variables begin to show a renewed improvement debts are likely to rise and foreclosure of some of the loans will follow, as farmers find themselves unable to repay the credit. 5.8.4 Despite this downturn, most variables demonstrate an overall improvement in Phase II as well as Phase I. ADMARC purchases appear to move closely with seasonal variation in rainfall - 1977/78 was an exceptionally favourable season, and rainfall has been progressively less beneficial in the years after this. It is possible to view the downturn, therefore as a temporary lull in an upward overall trend. 5.8.5 In Chitipa District, improvements have been more consistent reflecting a more stable rainfall regime. Considerable increases in almost all variables have occurred. These have taken place from a general lower level than in Karonga. 5.8.6 The non-agricultural sector consists largely of wage and salary earners, and retail and food processing businesses. The project has had significant effect on the former, especially in Karonga, and this probably accounts for some of the growth in savings in the mid-1970s in Karonga and the late 1970s in Chitipa. The impact of the decline in Civil Servant's real incomes in recent years probably also contributes to Karonga's later fall in savings. 5.8.7 The major movements in non-agricultural savings are closely linked to change in agricultural incomes, however, with a lag of one to two year's. In Karonga, where farmer's incomes appear to have fallen in recent years, non-agricultural savings have declined also. In Chitipa, non-agricultural savings have continued to grow, at an increasing rate. 97% of the total growth in institutional savings since 1972 is non-agricultural, almost all of any rises in farmers' incomes goes towards consumption or investment (Annex VII(i)). 5.9 Social Impact: The benefits from an integrated rural development project like Karonga-Chitipa Project are numerous yet extremely difficult to quantify. It is apparent that with the project, there has been improve- ment in housing, eating habits, awareness of education, job opportunity, general infrastructural development, etc. 5.9.1 In Karonga, the number of Schools has increased from 56 in 1974 to 75 in 1981. Correspondingly, the number of pupils attending primary school has risen from 20,000 in 1974 to 23,600 in 1981. In Chitipa, attendance has risen from 13,600 in 1974 to 21,000 in 1981 while the number of schools increased from 54 in 1974 to 69 in 1981. These schools both in  - 43 - Chitipa and Karonga have been built largely on self-help basis (Annex VII(k)). 5.9.2 Primary School attendance depends on the number of schools in a district, on rural incomes and the cost of school fees, and on the level of priority given to education in households' budgets. The project may have an indirect influence on the first and third factors, by contributing to the stimulus towards self-help work and committee participation and by stressing education in its extension work. The Project's direct impact on rural incomes, and the movement of attendance figures with changes in the value of ADMARC purchases suggests that incomes are the limiting factor. It is reasonable, therefore, to state that the project has contributed in a major way to the growing success in primary education in Chitipa district. The rising number of uneducated children in Karonga district must be cause for concern, however. It seems that the project's economic impact has not been sufficient to offset the increasing education needs of a growing population. It may be, however, that without the project, the number of uneducated children would have grown at a faster rate (see Annex VII(k)). 5.9.3 In phase IT health posts and maternity clinics were constructed in Chitipa. In addi.:ion to this direct contribution, project staff assist at "Under-Five Clinics" and teach health subjects to women's groups, and assist in vaccination campaigns. Despite this input and from the data available, it is difficult to recognise success in Karonga. Unless there has been dramatic improvements in health, a drop of over 50% in outpatients attendance at health centres in Karonga has been observed. Data on vaccinations fluctuate widely, reflecting the difficulty of obtaining vaccines and the emphasis on a periodic campaign approach. Attendance at "Under-Five Clinics" grew slowly to 1978 and has since declined. This reflects a decline of interest by the mobile team (Annex VII(L)). 5.9.4 In Chitipa, attendance by outpatients has improved, though this canno_ reflect on the project since its facilities remain unstaffed. Deliveries at maternity clinics have risen and this could be attributed to additional facilities constructed by the Project. The number of vaccinations fluctuates, though not widely as in Karonga, and it is hard to see an improvement. 5.10 Impact on Ministry's concept to Rural Development: The KCRDP experiences have had some impact on the Ministry's planning and management of Rural Development Projects (RDPs). A more intensified way of monitoring project implementation was developed in a form of more organized Project Evaluation and Monitoring Committee. This Committee now operates from Ministry Headquarters and effects some spot checks on the various ADDs including Karonga's implementation activities. This has enabled the Government to spot deviations and take corrective measures in time. 5.11 Environmental Impact: Very insufficient data on river flow, conservation, siltation etc. exist. In view of this fact, it is difficult to assess the impact of the Project on the overall environment. There is therefore need for data for adequate monitoring.  - 44 - 6. FINANCIAL PERFORMANCE 6.1 The contributions to sources of finance compared with those planned at appraisal were as follows:- Appraisal Plan Actual Development Source (NK'Million) (MK'Million) -Amount X Amount X IBRD 8.3 75 7.8 74 Malawi Government 1.9 18 2.7 26 ADMARC 0.7 7 0 0 10.9 100 10.5 100 Contribution to Development account by Malawi Government was 42% more than envisaged at appraisal. This was due to the following reasons:- (i) expenditure on 100% reimbursible foreign currency capital goods was lower than initially envisaged. This explains the lower contribution of the IBRD; (ii) on the othcr hand, expenditures on capital goods with the higher componant of local resources (less than 100% reimbursible) was considerably higher than initially foreseen. Consequently, the contribution of Malawi Government had to be increased from MK1.9 Million to MK2.7 million, 42% more than appraisal plan; (iii) investments by ADMARC never took place during the phase and were postponed to later development phase. 6.2 The cost on Development and Revenue Accounts of the KCRDP component was MK1.2 million above the anticipated amount at appraisal (see Annex IV(b)). This increase in expenditure was financed mainly from an increased Malawi Government contribution. Expenditures are again revealed when comparison of planned and actual withdrawal of the loan by loan categories is made. For example overexpenditure in the KCRDP operating costs, underexpenditure in the NRDP Pre-investment personnel and consultants costs (see also Table 1 of Annex IV(b)). 6.3 As indicated in Annex IV(c) the amount of finance from IBRD sources was less than anticipated for NRDP Pre-Investment component. This was compensated for by an increased contribution of Malawi Government resulting in a total expenditure near the appraisal plan. 6.4 The Lake Transportation (Table II of Annex IV(c)) component resulted in some under-expenditure compared to the original base cost allocation with contingencies added. In addition the proportion of contribution from Malawi Government was above the amount envisaged at appraisal.  - 45 - 6.5 Further comparison is made of the component operating costs for the KCRDP. Costs of the construction unit and management components exceeded the anticipated levels. These two components took up 49Z of total operating costs of the project compared to the originally planned figure of 20%. Extension, livestock and land husbandry components utilized 24% of costs compared to the 36Z planned. Evaluation, Research, and Hydrology itilized 10% compared to the 16% originally planned. Health crets amounted to a 2% of the total compared to the planned 7% (see Table V of Annex IV(f)). 6.6 Drawdown of the Credit 1286-T-MAI as presented in Annex IV(e) provides a comparison of the anticipated with actual drawdown. After initially keeping pace with the planned cummulative drawdown to mid 1978, the drawdown rate reduced to less than planned following the tightening of project expenditure control at the time. The balance of loan remaining at the originally planned completion of drawdown was subsequently used for extension of the project life by one year. 6.7 Financial Control/Monitoring wes generally inadequate particularly during the first two years of the project, due to: (i) staffiLig difficulties; (ii) no computerised system, everything had to be done by hand; Xiii) and inadequate system of quarterly report monitoring. Financial Statements were however generally produced on time. But they were inadequate for detailed monitoring purposes. 6.8 Project funding was basically adequate, except the Construction Unit funding which was cousiderably below required levels due to: (i) low costs made at appraisal; (ii) the very high inflation of costs (materials) during the period compared to price contingencies. 7. INSTITUTIONAL PERFORMANCE 7.0 Institutional performance is reviewed in five components: performance of the project itself, of the parent Ministry Headqup'ters, of the parastatal organisations, ADMARC and the donor agency involv-d. 7.1 Performance at Project Level: The organisational structure effected in Phase I continues in Phase II. Each project component or section was headed by divisional chief or sectional head who in turn was responsible to the Programme Manager. 7.1.1 Management Organization: The size of the project in terms of number of components and area covered and its diversificaticn in terms of the natural regions invo-ved and different levels of development - (while Karonga district was in its second phase of the project, Chitipa was in  - 46 - first phase) - gave management no easy task. Manpower constraints in key posts and quality of staff in supporting staff were faced in Research, Construction and Finance sections. Delays in procurement of vehicles and equipment were also experienced because of the lengthy procedures followed. Despite these difficulties, management has done a satisfactory job through a series of project reprogrammes, and by the system of Annual Workplan, and budgets which allows adjustment of the project activities accordingly, and also through a series of Ministerial Monitoring and Supervision Cormittee meetings. 7.2 Administration: The Administrative Unit which is part of project management, has responsible for personnel recruitment and staff welfare; and the maintenance of an adequate store of stationery and equipment. 7.2.1 Personnel recruitment in KCRDP II followed Government procedures. It has been noted in other reports that these procedures are cumbersome and time consuming and therefore slowing down replacement of key staff. 7.3 Finance Section: As noted in Chapter 5, the section did not keep adequate and regular records of expenditure in the first few years of the project, two reasons explain this shortcoming: (a) the unavailability of aczounts assistants in the section resulting in using industrial class staff to compile accounts information, and (b) lack of accounting machines to process the data with. As a result of this deficiency, financial reporting was inadequate and consequently serious over-expenditure followed in 1978. By the end of the phase, the situation was under control. 7.4 Evaluation: In 1978, Evaluation Unit, together with other Evaluation Units in other ADDs in conjunction with the Central Evaluation Unit in the Ministry, adopted a common survey design and computer programme to monitor and analyse crop yields and associated management practices. Since the introduction of the above system, a number of surveys have been conducted as given in paragraph 4.14.2. 7~5 Livestock development: Most of the original objectives of livestock component as given in the project document have not been achieved mainly because financing of this component was withdrawn from development account after the 1978 budgetary crisis. Construction of dipping tanks was dropped and the envisaged development programme of weaner/yearling demonstrations at Lufita was not achieved. Alternative grazing area at Chisi intended to reduce overgrazing problem on the fertile Karonga plain proved a failure because farmers lacked confidence of the security of tneir animals whilst at Chisi. The secEion, however, concentrated its activities in the usual livestock extension aspects i.e. cattle dipping, castrations, culling and marketing of the unproductive animals. Achievement on these activities has been considerable, proportion of animals dipped have increased, cattle population has been increasing at the rate of 3.6% per annum and the off-take also improved during the phase.  - 47 - 7.6 Reporting: Overall reporting on the implementation of project activities has been satisfactory. Section heads submitted to the Management monthly and quarterly reports for collation into project reports. There has been a steady flow of quarterly reports between the project, the Ministry and the donors. In 1978, the Central Evaluation Unit of Ministry of Agriculture produced a standard reporting format for all major projects in Malawi. This was also revised in November, 1981 and introduced in all the Rural Development projects. 7.7 ADMARC Performance: At appraisal, it was envisaged that ADMARC would buy, store, process and market all marketable produce grown in the project. Additionally, it was establish that ADMARC would provide inputs and marketing facilities to smallholders. The Programme was responsible for the credit institution whilst marketing was organised by ADMARC in collaboration with the Programme Credit and Marketing Section. As indicated in Chapter 5, the credit facility in the project helped a lot of farmers and allowed for improved agricultural production. It was only unfortunate that ADMARC's services in certain cases were not adequate and timely. 7.7.1 The Programme's marketing section together with ADMARC prepared marketing schedules and the section monitored the progress of distribution of farm inputs and implements to selling points and issues to farmers thereof. It also collected data on credit and cash sales of these inputs. Recommendation for upgrading of some mobile markets to seasonal markets were done in conjunction with ADMARC and Extension Section. This resulted in increase in seasonal markets during the phase. Because of this close liaison between these sections constraints in the marketing system were quickly identified although necessary adjustments were not always made. 7.7.2 ADMARC did not manage to provide seasonal inputs on time although this improved during the last two years of the Phase. This prevented some smallholders to adopt the extension recommendation correctly. Secondly ADMARC markets operated with difficulty due to poor roads and lack of adequate transport at peak marketing periods. Lack of adequate storage facilities in ADMARC Depots caused a slow down in marketing. Many of these problems could have been solved if ADMARC constructed the inputs stores planned and if ADMARC brought inputs to the EPA Markets at the time of transporting their produce back to the depots. There is therefore need to explore ways and means in which constraints of similar nature could be minimised or eliminated altogether during the course of Phase III implementation. 7.8.0 Malawi Government Performance: The Government contributed 42% more to development account than what was envisaged at appraisal and thus filling gaps or meeting the shortfall in project funding. As regards staffing, the Government has shown some weakness. As Annex VI indicates the project was without Senior Field Devolopment Engineer and Senior Research Officer throughout the phase. Other senior staff such as Senior Administrative Officer, Hydrologist and Chief Credit Accountant have been in post for only part of the phase. This inadequate staffing and high turnover of project managers during the phase (3 Programme Managers in 4 years) must have affected the performance of the project.  - 48 - 7.8.1 Ministry of Agriculture headquarters on the other hand, provided adequate support and assistance to the project. The Ministry assisted project managenent in re-programming available funds to enable project completion. Tighter financial control was achieved after 1978 with help from the Ministry. Annual Workplans and Budgets introduced by the Ministry proved useful in replanning and rescheduling some project activitie3 in light of available resources. 7.9.0 Donor Agency Participation: The involvement of Donor Agency is reviewed here from two points of view - clarity of the Appraisal document and supervision Missions during project implementation period. 7.9.1 Donor Agency involvenent was adequate. The Bank provided five supervision Missions during project implementation which allowed the Malawi Government together with the Bank to examine the problems and arrive at appropriate solutions. As would be expected, most of the problems highlighted herein were identified and discussed at supervision round-up meetings - i.e. problems of staffing, finance and general implementation. 7.9.2 The Appraisal document (1084-MAI) provided adequate basis on which to formulate component budgeting and overall implementation of the Programme. It was easy to follow and gave a lucid indication of project objectives and targets. Annual work plans and hence compilation of this completion report has been made easier because of the comprehensive guidelines to project implementation outlined in the appraisal document. Although there were overexpenditures in operating costs during the first eighteen months of the project life, this was purely domestic and nothing to do with Donor Agency. 8. ECONOMIC RATE OF RETURN 8.1 Economic rates of return have been estimated for the project at two l1vels. The first level is where all costs for components left out at appraisal havs been excluded and the second level is where all project costs have been considered. Although it was initially envisaged to carry out another analysis comprising Phases I and II, lack of requisite data (cost and benefit streams used in the first phase) does not permit us to do it and instead only second phase analysis has been carried out. 8.2 Because of the problems of identifying and quantifying benefits, it has been difficult to determine rate of return for tbe Lake Service Component. Again no rate of return has been estimated for the NRDP Preliminary Investment as the objeetive of this project component was not tailored to orovide impact but rather to strengthen and expand MANR's Central Services and increase its capacity to prepare and implement future investment phases of the National Rural Dcvelopnent Programme. 8.3 The estimated economic rate of return (ERR) for Karonga/Chitipa Project is 33%. This excludes all costs of components left out in the analysis at appraisal (i.e. livestock, hydrology, evaluation, health and research). Considering all project costs proportionately, an 18% economic rate of return is obtained. Mention needs to be made that benefits used in the analysis were exclusively derived from incremental crop production, and in view of this, the project has demonstrated a very high rate of return  - 49 - (33%) over a period of 25 years compared to 16Z at appraisal, reflecting substantial increases in production (of rice, maize and cotton) from relatively low-cost improvements of use of fertilizer and improved seed. 8.4 The treatment of costs and benefits is discussed in detail in Annex X. 9. DISCUSSION AND CONCLUSIONS 9.1 Discussion on the overall project performance is hereby presented for the following components:- (i) Overall implementation and general organization; (ii) Financial performance and (iii) Project impact with specific reference to crop development. These areas are felt to be important components of the project. 9.1.1 Implementetion: Phase II began in 1976/77 season and the organizational structure is shown in appendix VI(b). Project management was responsible for day to day running of the project and was given a considerable degree of autonomy within the frame of decentralisation programme. Planning of Karonga Phase II was in line with NRDP proposals where a degree of autonomy is deemed necessary if management is to assume responsibility of an Agricultural Development Division. The autonomy was however granted to the project management too early before key staff were in post to assist the project manager and even before adequate supporting staff with sufficient qualification and experience were in post. As a result of this, project management especially financial control slackened in the first two years of the project. The situation was however controlled by ]978 with the help from Ministry headquarters. 9.1.2 Achievement in construction of buildings, roads and drilling of boreholes has been satisfactory even though the project was without Senior Field Development Engineer throughout the phase. 9.2.0 Financial Performance: In general, financial performance was unsatisfactory during the first two years of th- project. Serious overexpenditure was uncovered by 1978 and this was a result of inadequate financial control which arose because of inavailability of sufficiently trained accounts staff and lack of a proper accounting procedures and machine. The introduction of Annual Workplans and Budgets where project activities for the coming year are documented in fairly detail and a corresponding budget drawn has helped project management in financial planning and control. By the end of the phase, ove;all financial control in the project had improved considerably. There is need however, to improve the level of detail of accounting data which is presented to enable easy compilation of project completion report. 9.3.0 Crop Development: High incremantal crop production has been achieved in rice and maize (see Text Table 8 section 5.3). Incremental  - 50 - crop production in these crops has consistently been increasing during the phase because of mainly favourable producer prices which encouraged farmers to increase cultivated hectarages (see Tables 4 and 5 in Chapter 3). Yields of rice and maize have also been within the appraisal targets. In rice, this satisfactory yield increase is a result of favourable rainfall whilst high maize yields are a result of combination of favourable rainfall and greater use of recommended inputs. 9.3.1 Production of cotton in Karonga district and groundnuts in both Chitipa and Karonga districts has been below appraisal targets. Estimates cultivated area under both cotton and groundnuts are aiso below targets and groundnuts yields have been low. Relatively lower gross margins for cotton than maize and rice is the main contributing factor. As for groundnuts, the change from Malimba groundnut, a variety preferred for local consumption, to Manipintar, an oil nut, is the main reason. In addition to this, Caronga district is generally not a groundnut growing area and the little that is grown there is not even enough for local demand. 9.3.2 The decline of cotton and groundnut production in the country as a whole has been noted in other reports (see a report on Evaluation Study of Lakeshore Rural Development Project). Because of the wide coverage of the problem and the importance of cotton and groundnuts as foreign exchange earners, it is essential for government to explore means by which production of these crops could be improved. 9.4.0 Conclusion: In general the project has been a success in as far as crop development is concerned. Incremental crop production targets for maize and rice have been exceeded through increases in cropped area and yield. 9.4.1 Achievement of construction programme has been satisfactory except that of road construction which-was far below appraisal targets. 9.4.2 It is difficult to assess conclusively the impact of group approach of extension activities at this stage. On the face value, however, the method appears an improvement over the scheme approach in as far as number of farmers who can be contacted in a given time is concerned. 9.4.3 ADMARC have not constructed the market/input sheds complexes in Karonga and Chitipa districts as was originally planned because of ADMARC's financial prob ems. 9.4.4 Overall, planning and implementation of Karonga II followed closely that of NRDP proposals. The experience gained has been useful in planning Phase III of the project and also in the overall planning and implementation of other Rural Development Projects (RDPs) within the National Rural Development Programme. PART B : NRDP PRE-INVESTMENT PHASE 1.0 BACKGROUND AND FORMULATION OF THE PROJECT 1.1 The concept of the National Rural Development Programme (NRDP) was born out of joint discussions between the officials of the then  - 51 - Ministry of Agriculture and Natural Resources (MANR) and those of the World Bank/IDA on th'_ impact of major Agricultural Projects in Halawi and the possibility of these being extended to other areas of the country. The heavy capital outlay required for the major projects weighed against the idea of extending them over the whole of Malawi. Therefore as an alternative, a rolling rural development programme which would cover all the rural areas of Malawi over a period of 10-20 years was agreed on. This would place emphasis on minimum initial investment on improved marketing, extension, input/credit organization and roads and water supply improvements in any given area in order to effect a maximum distribution of available capital and manpower resources (see a document on NRDP proposal for detailed discussion). 1.2 Malawi Government launched NRDP Pre-Investment Phase (1976-1978). In the context of UNDP, the objectives and detailed activities of this pre-investment phase were as follows:- (1) Expansion of MANR's Central Services in Lilongwe to increase its capacity to prepare and implement future investment phases of NRDP through: (a) strengthenirg of the: (i) land husbandry section; (ii) agro-economic survey section; and (iii) accounting services by provision of additional staff, and the necessary supporting facilities; (b) provision of agricultural research staff to conduct crop experiments in six future NRDP sub--projects; Cc) Construction of about 35 staff houses in Lilongwe. (d) establishment of an evaluation unit comprising of 15 staff with supporting facilities at MANR's Regional Headquarters at Mzuzu; (e) establishment of a road construction unit based in Lilongwe and (f) provision of consultants to undertake special studies on various subjects related to the implementation of the Project (Type of studies required listed in Appraisal report). (2) Preliminary investments in three NRDP sub-projects as follows: (a) Construction of about 20 houses in North-West Mzimbal/ about 30 houses in Thiwi-Lifidzi and about 30 houses in Kawinga; 1/ This project is now known as Mzimba Rukuru-Kasitu.  - 52 - (b) construction of one training centre in North West Hzimba, 2 training centres each in Thiwi-Lifidzi and Kavinga; (c) construction of about 20 boreholes in North West Nzimba, about 16 boreholes in Thiwi-Lifidzi and about 10 boreholes in Kawinga; (d) construction of about 3 bush markets inputs stores in North West Mzimba, about 3 input stores in Thiwi-Lifidzi and 2 input stores and one market in Kawinga; (e) expansion of the extension and land husbandry services staff; (f) construction of the necessary office accommodation in North West Mzimba, Thiwi-Lifidzi and Kavinga; (g) construction of 2 bridges in North West Mzimba; (h) construction of about 50 miles of rural roads in Thiwi-Lifidzi and (i) construction of additional health facilities in North West Mzimba. 1.3 Funding of this project was done jointly with that of Karonga II. The total estimated cost of this preliminary investment phase was K5.3 million or US$6.4M with a foreign exchange component of K2.6 million or US$3.1 million (49%). The total project cost included physical and price contingencies estimated at KO.851M or US$1.02M. These costs, were broken down as follows in the proposal documents: TABLE 1: Foreign Amount Exchange Cost Component K'000 U.S. $1000 % Mzimba R.D.P. 1,060 1,272 52 Thivi/Lifidzi 1,060 1,279 48 Kawinga 1,270 1,524 49 Central Services 1,938 2,326 50 Total Project Cost 5,334 6,401 49 Source: NRDP Pre-Investment Phase 1976-1978 Proposals. The amount requested from World Bank/IDA to finance this project was K4.5 million or US$5.4 million (85Z of total project cost). The balance or 15% of the total project cost was to be met from local resources.  - 53 - 1.4 Ministry of Agriculture and Natural Resources assumed the overall responsibility of the execution of this project while the Department of Extension and Training was responsible for implementing the project on the ground, under the NRDP Coordinator, an Officer charged with the day to day running of the NRDP Preliminary Investment Phase. 2.0 fl4PLEMENTATION 2.1 As shown in the objecti-es, NRDP (PI) was intended to establish basic infrastructure in the form of houses, roads, staff in different components, health facilities, ADMARC markets and procure plants and vehicles. NRDP (PI) was also intended to strengthen Central Services in terms of increasing its capacity to prepare and implement future investment phases of National Rural Development Programme (NRDP). Discussion on the implementation of NRDP (PI) is therefore based on whether these objectives have been achieved or not. 2.2 Civil Works: Tables 2 and 3 presents type of civil works constructed by component. Most of the civil works proposed were in form of houses for staff, offices and boreholes. Out of 118 houses planned, 107 were built giving a 90% achievement of target. Fifty-seven percent of office space planned was constructed and 23 miles out of 50 miles of road planned has also been constructed. No details are available of the number of boreholes drilled.  - 54 - TAME 2: CIVIL W1S COS1W LCTION Houses LRT.C. dge rkets (N.) OfficEes (NO.) (Ob.) (No.) Description Planred Actal Plmed Actual Planned Actual Plamea Actual Plamed Actual Central Serces -Tad esures Survey 3 3 -Agro-Econoffc Survey 5 6 - - - - -Accoumting 15 15 - - _ _ Evaluation (Muzu) 6 6 1 1 - - Crop Exeriments 6 2 - - - -- - - - Mzitba/likuru FM 21 21 1 1 1 N/A 2 2 2 0 Thwi/ULifidzi RDP 33 27(2) 1 0 2 1 - - - - Kariga RDP 28 27 1 1 2 - Health 2 N/A - - - Source: NRDP Central Services. (2) Inchldes a hms bcught at Dedza Boma. TAEE 3: OIHER CIVILW CONS W IED Description Planned Actual Boreholes 47 exact rhuber not krnon. Roads (miles) 50 23 Maternity Wards 1 - Demrstration Kitchen L - Source: NEDP Central Services.  - 55 - TABL- 4 PLANTS AND VEHICLES Description Type Planned Actual Agro-Economic Survey Motorcycle 2 2 Crop Experiment Motorcycle 1 1 Mzuzu Evaluation FWO Pick-up 1 1 Motorcycles 1 1 Bicycles 2 1 Accounts/Construction FWO Pick-up 2 4 Caravan 1 - D6 1 1 Grader (120) 1 1 Roller 1 1 Tanker 1 1 Flat lorry 1 1 Tipper 3 3 Tractor (165) 1 1 Tipping Trailer 1 1 Front End Loader (930) 1 1 Mzimba Project FWO Pick-up 2 1 Peugeot Pick-up - I Motorcycle 3 3 Thiwi/Lifidzi Project FWO Pick-up 1 1 Flat lorry 1 1 Motorcycles i 7 Kawinga Project FWO Pick-up 2 2 Motorcycle 1 1 Source: NRDP Central Services ADMARC markets and health facilities were not constructed. As Table 8 indicates, there has been a shortfall on civil works constructed than envisaged at appraisal because of high costs. 2.3 Vehicles and Plants: Table 4 presents number of vehicles and plants by ccmponent. Almost all plants and vehicles budgeted for were acquired by end of the phase. 2.4 Staffing: Table 5 presents number of staff by section indicating number of posts agreed at appraisal, posts created and then posts filled by December 1978. By 1978, all the agreed posts were created but only 72% of the total posts had been filled. Delays in filling posts are explained by the delays in recruitment procedures. The overstaffing in accounts section is explained by the extra accounts assistants employed probably to help in the accounts section. Table 6 indicates number of staff by grade as at December 1978. it would appear it was equally difficult to fill different grades of staff.  - 56 - Table 5 Staff Establishment by Section December 1978 Description Appraisal Created Filled Land Resources 4 5 - Agro-Economic Surveys 3 3 2 Crop Experiments 6 6 - Evaluation - Mzuzu 6(1) 5 - Accounts 17 16 29 Mzimba/Rukuru 19 19 17 Thiwi/Lifidzi 31 31 16 Kawinga Project 2 2 - 88 88 66 Note: (1) Excludes Enumerators. Source: Consolidated Report on the NRDP Pre-Investment Phase, December, 1978. 2.5 Strengthening of Central Services: Strengthening of Central Services as regards filling of posts in Land Resources, Agricultural Research and Evaluation Unit as agreed at appraisal was not achieved by December 1978 (see Table 5 above). As a result of this delay, adaptive research in subsequent NRDP Projects was not carried out and it is most probable that land husbandry work in these project areas also suffered. This in turn resulted in lack of valid and relevant messages for the extension staff to use at the beginning of NRDP I. The authors therefore, feel that NRDP (PI) as a "curtain raiser" for NRDP as regards generating relevant advice for farmers has not been achieved. Table 6 Staff Establishment by Grade December, 1978 Post(l) Appraisal Created Filled P8 2 2 1 PO/CEO/CTO 5 4 2 STO/SEO 4 4 3 TO/EO 17 18 8 TA/CO/Copy Typist 56 58 47 STA/SCO 4 2 3 88 88 64 (1) For definition of different grades of staff see Appraisal Report. Source: Consolidated Report on the NRDP Pre-Investment Phase, December, 1978. 3.0 FINANCIAL PERFORMANCE 3.1 Financial performance reviews the project's financial affairs with particular emphasis on: performance, in terms of comparing actual and planned expenditure, and drawing out key changes. Table 7 presents amount  - 57 - of funds allocated, final drawdown on the loan and final expenditure, and presented by category. Overall, MK2.49 million was the amount allocated, MK2.44 million finally claimed from the donor and MK2.48 million is the final expenditure on the NRDP (PI). Final expenditure is roughly equal to amount of funds originally allocated. Table 7: Amount of funds allocated, final drawdown and final expenditure of NRDP(PI) Amount Final Final Allocated Drawdown Expend. Description MK (1) (MK) (2) (MK)(3) (3 - 1) X Vehicles, Machinery and Equipment 468,000 433,730 455,245 97 Civil Works etc. 1,053,000 1,202,907 1,157,548 109 Personnel 468,000 232,089 286,450 61 Other Operating Costs 351,000 469,532 525,212 149 Consultants 152,100 102,132 58,299 38 TOTAL 2,492,100 2,440,390 2,482,754 99 Source: Ministry of Agriculture Headquarters, Finincial Coordinator. 3.2 Expenditure within categories indicate that there was overexpenditure on the 'Other Operating Costs' and Civil Works categories and there was underexpenditure under 'personnel and consultants' categories. The high overexpenditure on the Operating Costs suggests that provision for price contingencies under this category was inadequate considering that pet-ol costs have risen some 97% between 1976/77 and 1980/81. The price contingency provision for civil works conistruction also appeared inadequate as noted from the modest overexpenditure and the actual cost of the construction programme as indicated on Table 8. Underexpenditure in personnel can be explained by the delay in filling posts and the underexpenditure on the provision for consultant fees is a result of fewer studies carried out than originally envisaged. NRDP I PRE-INVESTMENT PHASE Expenditure on Civil Works (as at 31.3.79) Capital Costs No. in Estimated No. Actual Civil Works Grey Book Cost (MK) Completed Costs (K) Training Centre 5 22,500 - - Offices (sq. ft.) 3,500 42,000 1,220 6,941 C 5 106,600 5 108,918 D 24 209,100 22 271,082 E 4 16,400 4 23,690 PH2 84 204,500 74 263,467 Boreholes 46 116,000 - - Bridges 2 90,000 (?) 156,000 Roads (mls.) 50 75,000 23 76,407 882,100 906,505  - 58 - Other Capital Costs FWD Vehicles 8 59,410 11 86,484 Flat lorries 2 27,500 1 11,985 Tippers 3 46,500 6 88,419 Tractors (MK 165) 1 10,280 1 9,300 D6 1 77,400 - - Graders 1 52,650 1 49,500 Tanker 1 10,600 1 5,075 Motorcycles 15 9,000 13 7,440 Roller 1 29,250 - - Caravan 1 4,500 - - Galion Shovel - 1 48,387 Other Equipment 66,000 43,720 Total Other Costs 393,090 350,510 Total Civil Works 1,275,190 1,257,015 4.0 OVERALL EVALUATION This section brings together the various key issues from section 2 to 3 to provide overall evaluation of NRDP (PI). Repetition of previous comments is inevitable but serves to emphasise the points already made. 4.1 Housing and Buildings Ninety per cent of houses planned, 57% of all offices, and 46% of the road programme have been built. Cost overruns in the construction programme has been the main problem. By December, 1973, most of the building was underway indicating that the constructing programme was not behind schedule. The exact number of boreholes constructed is not available. 4.2 Staffing All posts proposed at appraisal in Land Resources, research and evaluation were created, but there were delays in filling these pcsts resulting in delays in carrying out relevant trials in subsequent NRDP project areas. 4.3 Financial Performance Overall, there was no overexpenditure at the end of the phase suggesting that financial control was satisfactory. There was however overexpenditure in some of the categories such as Operating Costs and Civil Works as a result of the inadequate provision for price contingencies. In awareness of the incoming overexpenditure, the governnent curtailed the construction programme to balance up the expenditure. 5.0 CONCLUSZ.NS 5.1 Infrastructural development has been achieved. No attempt has been mede to assess the effect or impact of the developed infrastructure because the project was only for two years and its objectives were not geared towards this end. The work which was supposed to be done by Land  - 59 - Rssources and Agricultural Research in proposed NRDP project areas was not done because of the problem of filling the posts agreed at appraisal on this basis, therefore, NRDP(PI) has been a failure. PART C - LAKE TRANSPORT 1.0 BACKGROUND 1 1 Efforts to improve lake transport between Karonga and Chipoka harbour began in Phase I of Karonga Project. In Phase 1, the improvement of the lake transport was in the form of constructing two jetties and associated structures at Chilumba in Karonga district and Chipoka in Salima district. The need to improve lake transport was felt necessary because most of the cargo between Karonga and the Southern Region was normally carried by ship as a result of poor road condition between Karonga and the South. 1.2 Karonga town has no natural harbour, therefore, it was agreed that Chilumba which is 80 kilometers from Karonga town be improved. Chipoka harbour was chosen because it is connected to the railway. 1.3 Karonga Phase I proposals justified the improvement of lake transport by the increased cargo which would be carried to and from Karonga as a result of the agricultural groject. Phase I completion report stated that construction of the jetty at Chipoka was not carried out because funds allocated were insufficient (for details see completion report Phase I). 1.4 Like Phase I, the need for the improvement of lake transport between Karonga and Chipoka in Phase II came about because the road link between Karonga and the South was poor. Unlike Phase I, discussions for the improvement of the lake transport were going on parallel to proposals to improve the road link between Karonga and the So-th. 1.5 Improvement of the lake transport was to take the form of:  - 60 - Chipoka Port Estimated Cost (MK'OOO) Construction of berths transit shed, rail-siding access road, utilities and supporting facilities 1/ 1,376 Cargo handling equipment 139 Refitting of MV Mpasa 21 Sub-total T136 Physical Contingencies 2/ 139 Price Contingencies 3/ - 404 TOTAL COST 2,079 Note: (1) Includes 12% for design and supervision. (2) Included at 10% of base cost, excluding design and supervision. (3) Included at 13% of base co08 plus physical contingencies for years 1 and 12% for year 2. Source: Karonga II Appraisal Report. 1.6 Refitting of the MV Mpasa, an oil tanker, was viewed necessary in order to increase its oil carrying capacity to 200 short tons, in order to cope with the expected increase of vehicles in the project area and also the expected traffic increase on the lake. Justification of the improvement of lake transport like in Phase I was in form of increased volume of cargo carried on the lake. 2.O IMPLEMENTATION 2.1 Implementation of the lake transport component was the responsi- bility of Ministry of Transport and Communication. Malawi Railways, a statutory body, was responsible for the management of the project on site and the day to day decision making. Chipoka harbour civil work construction was contracted out in October 1977. The rehabilitation of MV Mpasa was never carried Out because of various technical reasons and, instead a barge was brought to carry fuel. The cost of this barge was met from local sources. Procurement of cargo handling equipment was done directly by IDA under Clause 6 of the Standard payment procedures of World Bank. 2.2 Chipoka Harbour Improvement: Funds allocated for Chipoka were insufficient because allocation of funds was based on preliminary estimate sometime before design was completed. As a result, the following were omitted from the contract to avoid overexpenditure:  - 61 - 3 of the 4 pipelines K45,000 estimate Ro-ro facility, except the) 78,000 land based work ) Port Masters office block 15,000 Workshop 16,000 Foot bridge 21,000 Total 175,000 Escalation and contingency 21,000 Associated works 1/ 115,000 Total K311,000 Note: 1/ possibly includes contingencies. Source: Ministry of Transport and Communicstions. 2.3 Table 1 presents detailed breakdown of estimated and actual expenditures. Table 1: Actual and Estimated Expenditure on Lake Transport Description Estimated Actual X Civil Works at Chipoka, design and supervision 1,879,502 1,824,786 97 MV Mpasa and Handling equipment 182,048 163,725 1/ 89 Total 2,070,550 2,057,969 2/ 99 NOTE: 1/ Excludes provision for refitting the MV Mpasa. 2/ Total Final expenditure does not tally with that shown in Annex IV(c) because it is not clear whether or not the cost of the handling equipment was met from local contribution. Source: Ministry of Transport and Communication files. Final expenditure was within the appraisal estimate of MK2.07M because other items mentioned in paragraph 2.2 were excluded in the contract. If all items proposed at appraisal were included and the MV Mpasa refitted as planned there would have been overexpenditure. The civil works construction at Chipoka, however, was not completed on schedule because of the nation-wide shortage of cement at that time. 2.4 Freight traffic - Table 2 shows actual dry cargo traffic in short tons at Chilumba harbour. Estimated dry cargo traffic is also provided for Chipoka harbour for comparison. It is apparent from this table that the amount of cargo either forwarded or received from each of these harbours has been increasing with time indicating how busy these ports have been.  - 62 - Table 2: Lake Transport Service (tonnage by Port), 1974-1979 l l Y E A R S Harbour l 1974 1976 1979 IF~ ~~_ I Forwarded 23375(16800)1/ 24460(16240)1/ 25323(19050) JChipoka Received 6563(10600j1/ 6722(12780)1/ 9545(16450) I Forwarded 5115 5359 8935 IChilumba I Received 3970 8573 10530 Note: 1/ Estimated dry cargo traffic. Figures in brackets are estimated appraisal targets. Source: Ministry of Transport and Communication files and Appraisal Report, Annex 13. 3.0 CONCLUSIONS 3.1 From the above, it can be concluded that a considerable part of the work proposed at appraisal under the general objective of lake transport improvement has been done. The barge has been bought instead of rehabilitating the MV Mpasa. Considerable civil works have been completed at Chipoka harbour. Overexpenditure was avoided by replanning and. reviewing the priorities of the structures to be constructed or items to be bought. 3.2 Chipoka and Chilumba harbours are being used and amount of cargo handled is increasing with time.  - 63 - MALAWI GOVERNIENT P R O J E C T C O M P L E T I N R E P O R T KARONGA-CHITIPA RURAL DEVELOPMENT PROJECT P BASE II ANNE NX S Ministry of Agriculture Planning Division Lilongwe 3, Malawi February 1983  - 64 - PROJECT COMPLETION REPORT Karonga-Chitipa Rural Development Project, Phase II TABLE OF CONTENTS ANNEXES Annex No. Summary of Infrastructural at the Commencement 1 and end of Phase II Infrastructural Development, KCRDP II l(b) References II Description of the Project III Request for Re-Programming of Funds for Loan 1286-T-MAI IV(a) Withdrawal of the Proceeds of the Loan 1286T-MAI IV(b) Estimates of Expenditure in Malawi Kwacha IV(c' Final Expenditure by Category IV(d) Drawdown of the Credit (1286T-MAI) IV(e) KCRDT Operating Costs by Component IV(f) Procurement of Plants and Vehicles V Senior Staff Personnel, KRDP, KCRDP VI(a) KCRDP Organization Chart VI(b) Value of ADMARC Purchases VII(a/b) Incremental Value of ADMARC Purchases, by Phase VII(c) Market Fees VII(d) Savings by Farmers VII(e) Credit Outstanding as on 30th September, 1981 VII(f) Investment in Farm Implements VII(g) Savings, Non-Agricultural VII(h) Spending on Primary School Education VII(i) Primary School Attendance VIlI(J/k) Health Statistics VII(1)  - 65 - ANNEXES (Cont'd.) Annex No. Cattle Numbers, Growth Rates and Offtake VIII(a) Dipping Tank Statistics VIII(b) Dipping Statistics VIII(c) Cattle Market Statistics VIII(d) Number of Castrations per year by District VIII(e) Livestock Slaughter Statistics VIII(f) Seasonal Credit Issues and Recovery IX(a) Medium Term Credit Issues and Recovery IX(b) Number of Credit Farmers IX(c) Economic Analysis X  - 66 - Annex 1 Summary of infrastructure facilities available in Karonga and Chitipa districts at the commencement and end Phase II Project Commencement of Phase II (1976) End of Phase II Staff Housing MANR) Type Number B 1) C 12) See Annex 1(b) D 22) for additional E 78) houses. p 73) Education Facilities Secondary Schools 3 3 Correspondence Centres 6 Primary Schools 108 144 Health Facilities - Hospitals 3 3 Primary Health Centres 2 3 Sub-Centres 15 15 Health Posts 4 11 Dispensaries 1 1 Communications Post Offices 2 2 Postal Agencies 12 12 Airfields 3 3 Resthouses 3 3 Telephone Communications Karonga & Chitipa towns only Roads See map No. 14 Livestock Facilities Dip Tanks 41 44 Cattle Markets 4 4 ADMARC Facilities Depots 3 3 Bulk Markets 49 84 Local Produce Markets 8 9 Extension & Training Residential Training Centres 1 3 Day Training Centres 5 7 Boreholes and Wells - 112 Source: KCRDP Phase II and III Proposal documents.  - 67 - ANNEX 1(b) Infrastructure Development: Phase II (Karonga/Chitipa Districts) Phase II Target Achievement Dip Tanks 2 0 Boreholes: Livestock 4 ) Health 8 ) 83 General 80 ) Roads: Construction 44.5 (miles)) Improvement 54.5 ( )) 30.4 Bridges 67 6 Culverts 20 17 Drifts 2 1 Maternity Wards 5 5 Health Posts 7 7 Houses: Type A 3 ) B 13 ) c 13 ) 95 D Health 23 ) D General 46 ) Market and Input store complexes 9 0 Small Input Sheds 8 0 Training Centre: Day 1 1 Training Centre: Residential (upgrading) 2 2 Source: Malawi Appraisal Report and KCRDP Headquarters  - 68 - ANNEX II ANNEX II References 1. Karonga Development Project Proposals submitted by Malawi Government 1970. 2. A review of the Agriculture in the Northern Province of Malawi and Recommendations for future Development and Reorgrnization, IBRD/IDA 1967. 3. Appraisal of Karonga Rinal Development Project, Malawi. IBRD/IDA Report No.7A-106a 1971. 4. Project Performance Audit Report. Malawi Karonga Rural Development Project - Phase I. The World Bank Operations Evaluation Department, 1979. 5. Karonga Rural Development Project Proposals for Phase II. Malawi Government, 1975. 6. Malawi Appraisal of the Karonga Rural Development Project, Phase II. World Bank Report No.1084-MAI 1976. 7. Files of Ministry of Agriculture and Natural Resources. 8. Report on Audit/Supervision Visit to Karonga Project, Central Evaluation Unit, 1978. (Confidential and Restricted) 9. National Rural Development Programme National Credit Study Phase I, 1980. 10. Evaluation of Lakeshore Rural Development Project, February 1982. 11. Ministry of Transport files. 12. 1966 and 1977 Population Census. 13. NSSA 1980/1981 Preliminary Report.  - 69 - ANNEX III ANNEX III Description of the Project A. For Karonga and Chitipa Districts, the Project was described as follows: (1) Continuation and expansion of field extension services to farmers. (2) Continuation and extention of animal and Iand husbandry services. (3) Continuation and expansion of seasonal and medium-term credit for farm inputs. (4) Continuation of agricultural and hydrological research. (5) Construction of about 6 market complexes in Karonga and about 3 market complexes in Chitipa. Each Such complex will consist of about 280 ton input store, a market building and staff housing and the construction of about 8 small input sheds in Chitipa. (6) Expansion of health facilities including the construction of 3 maternity wards in Karonga, 2 maternity wards and 7 health posts in Chitipa. (7) Construction of about 20 staff houses in Karonga and about 75 staff houses in Chitipa. (8) Construction of office accommodation. (9) Construction of one training centre and upgrading of two trnining centres in Chitipa District. (10) Construction or upgrading of about 90 miles of feeder roads and improvement of other access roads, construction of about 85 boreholes, about 70 minor bridges and about 20 culverts and 2 drifts. (11) Continued ProJect Evaluatrion.  - 70 - ANNEX III B. For Pre-investment of the National Rural Development Programme. (1) Expansion of MANR's Central Services to increase its capacity to prepare and implement future investment phases of NRDP through: (a) Strengthening of the (i) land husbandry section; (ii) agro-economic survey section; and (iii) accounting services, by provision of additional staff, offices and the necessary supporting facilities; (b) Provision of agricultural research staff to conduct crop experiments in six future NRDP sub-projects; (c) Construction of about 55 staff houses; (d) Establishment of an Evaluation Unit comprising of 15 staff with supporting facilities at MANR's Regional Headquarters at Mzuzu; (e) Establishment of a road construction unit within MANR, and (f) Provision of consultants to undertake special studies on various subjects related to the implementation of the project. (2) Preliminary investments in NRDP sub-projects as follows: (a) Construction of about 20 houses in North lest Mzimba, about 30 houses in Thiwi-Lifidzi and about 30 houses in Karonga; (b) C',nstruction of one training centre in North West Mzimba, 2 training centres each in Thiwi- Lifidzi and Karonga; (c) Construction of about 20 boreholes in North West Mzimba, about 16 boreholes in Thiwi-Lifidzi and about 10 boreholes in Karonga; (d) Constructicn of about 5 bush markets/input stores in North West Mzimba, about 3 input stores in Thiwi-Lifidzi and 2 input stores and one market in Karonga;  - 71 - ANNEX III (e) Expansion of the extension and land husbandry services staff; (f) Construction of the necessary office accommodation in North-West Mzimba, Thiwi-Lifidzi and Karonga; (g) Construction of 2 bridges in North-West Mzimba; (h) Construction of about 50 miles of rural roads in Thiwi-Lifidzi; and (i) Construction of additional health facilities in North West Mzimba. C. Lake Transport (1) Expansion and improvement of berthing and related facilities at Chipoka Lake terminal; (2) Provision of Cargo handling equipment at Chipoka Lake terminal; (3) Refitting of the motor vessel Mpasa to increase its bnlk fuel carrying capacity.  - 7I - ANNEX IV ANNEX IV(a) : A REQUEST FOR RE-PROGRAMMING OF FUNDS YOR LOAN 1286T-MAI Ref. No.: 21/5/29/52 22nd November, 1978 FROM: THE SECRETARY FOR AGRICULTURE, P.O. BOX 30134, LILONGWE 3. TO : THE SECRETARY TO THE TREASURY, P.O. BOX 30049, LILONGWE 3. Copy to: The Project Manager, KCRDP, BOX 43, Karonga. Financial Coordinator, Box 30134, Lilongwe LOAN 1286T - MAI Your 28/7/62/7/III/150 of 25th October, 1978 refers. 1.0 With reference to the re-program4ng of funds for Karonga-Chitipa Rural Development Project, and your previous letter to RMEA of 12th June, 1978 (Your 28/7/62/7/Il/113). Subsequent to suggestion raised at the round up meeting with an IDA Supervision Mission on 26th September, 1978 and in the light of more recent cost-performance analysis of KCRDP, it is proposed that the Project now attempt to run its full life of four years (to 30th September, 1980) and complete the majority of the civil works programme as agreed at appraisal. 1.1 The enclosed Paper No.1 entitled 'KCRDP a re-programming of available funds to achieve project completion", indicates tbet the projected deficit of K562,200 could be financed from the uncommitted Phase I funds available and recoveries of outstanding debts owed to the project and over-payments made. 1.2 The only proposed ommission from the originally agreed civil works programme is for two dip tanks which are now no longer required. 1.3 We therefore request that you withdraw the original re-allocation of.funds proposed by your letter to RMEA of 12th June (28/7/62/7 ':II/113) and substitute the re-programming as outlined by our enclosure Paper No.1). 2.0 The reimbursement percentage of the total loan 1286-T-MAI is the subject of the enclosed Paper No.2 entitled "The Problem of Drawdown or Funds from Loan 1286-T-MAI." 2.1 This paper indicates that there is no way, on the basis of the existing 75 per cent reimbursement claim, that the full $9.2 million (K8.3  - 73 - ANNEX IV(a) million equivalent at appraisal) can be drawn. Two factors have contributed to this problem. Firstly, the proportion of (100% reimburseable) foreign exchange expenditure has been much lower than anticipated at appraisal. And secondly, the ADMARC contribution to the Project which makes up part of the local 25% is not claimable. 2.2 On the basis of these calculations the Malawi Government would have to increase its contribution to the Project by K700,000 in order to complete the drawdown of the loan at 75 per cent reimbursement (based on the exchange rate at appraisal). Or alternatively request a chaage in reimbursement percentage upwards. If for example the reimbursement percentage was increased to 85% than increased M.G. contribution required would be K200,000. At 80% then K500,000 would be needed. 2.3 You will therefore please make the necessary approaches to IBRD to ensure sufficient availability of funding from 1286-T-MAI. 3.0 A third problem we would wish to bring to your attention concerns the effects of decline in value of the US dollar. Our Paper No.3 enclosed, entitled The Problem of Decline in relative exchange value of US$ for loan 1286-T-MAI", indicates that on current trends the IBRD Loan of $9,200,000 would be fully drawn on a total Malawi Kwacha value which is some K368,315 short of the original K8,280,000 to be funded by appraisal calculations. 3.1 This is because at appraisal the US Dollar value was taken at 90 tambala. In effect drawings thus far have averaged at 87 tambala to the dollar and based on current trends of exchange values future claims will probably average out at 85 tambala to the dollar- Only if the exchange rate were to average at 93 tambala to the dollar for the rest of the drawing period could the situation right itself; such an average exchange rate would now seem very unlikely. 4.0 Combining the two problems outlined above, namely reimbursement percentage and decline in value of dollar, would seem to indicate that the one problem offsets the other to some extent. Thus the low current reimbursement percentage reduces the drawing of the IBRD loan whilst the low -value of the U.S. dollar has the effect of increasing the reimbursemient for the same Kwacha exper.diture. Either way, however, it would seem to be necessary to increase Malawi Government contribution in order to satisfactorily draw down the loan and complete the Project. Your comments on this aspect would bo welcome.  - 74 - ANNEX IV(a) PAPER 1: KCRDP A RE-PROGRAMMING OF AVAILABLE FUNDS TO ACHIEVE PROJECT COMPLETION ARM IV (a) PAPR 1: (RP A RE-F-1Wtff4 OF AVAIlABLE F[D TO ACHIE P)JECr Q4=0I K-GR1P CDSIS TO 31/10/78 AMD FuRSE C0Sr RE-ALTXOCATIONt BAIANCES AVAILABLE CDSts aJlocated Estiated as per original Amount Projected 4 year programm Total. CGsts (+) Required to Deficit (catingencies up to Balance Cmpleted or CategOry added) 31/10/78 Pn2-d Project 9urpln Capital 807.5 379.0 + 428.5 101.0(1) + 327.5 Operating: Personnel 1,254.3 829.1 + 425.2 594.0(2) - 168.8 Other 1,225.1 1,262.4 - 37.3 8D5.0(3j - 842.3 Civil Works 1,636.5 1,580.2 + 56.3 394.0(4) - 297.7 On Farm Credit 519.1 0 + 519.1 100.0(5) + 419.1 TUAL 5,442.5 4,050.7 + 1,391.8 1,954.0 - 562.2 IUAL EEFICIT Financed By: 320.7 A. ULcommitted Phase I funds. 200.0 B. Previous overpayments and outstanding debtors recvered. 35.0 C. Airmt received from M.C.W. for Roads pLorannew 50.0 D. Provisional estimate of aiunt od by MANR Reverxm accomt to EDP. 12.0 E. Anmt oed to project by MN in respect of K 617.7 funds paid in advance fwr one dip tank (Chfwanga) n no longer required. (+) Nte source Financial Coordinator, MANR For Costs since February 1978 see Attacbed B. Other Notes to table see paper I Appendix 1  - 75 - ANNEX IV() Paper 1 Appendix 1 (1) Capital Equipment Previous budget of remaining expenditure K117,000 Less Amount spent on this budget (February to October) 16,000 Remaining expenditure by budget 101,000 (2) Personnel: Based on the phase over KCRDP staff to Revenue Account according to that programme agreed at appraisal. Plus an additional K50,000 for A.D.S. Financial Controller for one extra year. (3) Operating Costs: Based on existing average -osts of K35,000 per month (see attached Paper 1 Appendix 3). (4) Civil Works 19 boreholes at K4,000 76,000 Road: as per attached schedule (Paper 1, Appendix 2) 278,000 TOTAL: 354,000 (5) On Farm Credit: latest estimate of new funds required in revolving account.  - 76 - ANNEX IV(a) Paper 1 Appendix 2 Road Priority K 1. Completion of 25 miles of Chitipa roads (already constructed) with outstanding bridge approaches and culverts to bring to M.O.W. Class II standard for Landover (1). 28,000 2. Completion of work on Nilwi-Ngerenge-Lifira Loop (2) 30,800 3. Completion of work on Makoma-Ngerenge Dip (2) 9,700 4. Completion of work on Sefu-Kasoba Loop (2) 46,000 5. Construction and/or realignment and/or completion of Nkumbilende-Songwe (3) 6,000 6. Construction and/or realignment and/or completion of Kamome-Mwamkhumbwa 24,000 7. Construction and/or realignment and/or completion of Mwamkumbwa-Kapanda(3) 7,500 8. Nkhangwa-Ifumbo (3) 27,000 9. a Ifumbo-Chinunkha (3) 15,000 10. James Kameme-David Kameme (3) 27,000 11. - Chinunkha-Ngoya (3) 19,500 12. Ipenza-Titi (3) 18,000 13. Upighu-Kapenda (3) 19,500 278,000 (1) Source: Project Management. (2) Source: Road Report, KCPDP, (SCPO NRDP, 25/5/78). (3) Provision based on preparing roads to Class III (District) road standard (16 foot carriageway and 2 x 4 feet shoulders). Gravelled only where necessary (e.g. bridge approaches on hydromorphic patches). Estimated at K3,000 per mile to include necessary cdlverts and minor river crossings. (4) Note that roads improvement for Karonga Housing Area (K49,000 has been omitted from this amended programme).  - 77 - ANNEX IV(a) Paper 2 1.5 To overcome this projected shortfall and enable the full drawdown of loan 1286-T-MAI (K8.3 million equivalent), Malawi Government would have to contribute an additional K0.7 million. This would provide the Project with additional funds as follows:- IBRD 75Z 2.1 (MK million) Malawi Government 25% 0.7 Sub Total 2.8 Funds available 8.1 as per 1.3 above Total Available 10.9 The effect would be to increase total project funds by KO.7 million above those originally allocated at appraisal, leaving IBRD loan unchanged at gS.3 million (equivalent). THE PROBLEM OF DECLINE IN RELA'ZIVE EXCHANGE VALUE OF $US FOR LOAN 1286-T-MAI 1.0 The IBRD Loan cf $9,20O,000 is in terms of US Dollars. At appraisal the exchange rate was taken as 90 tambala to the dollars, the loan was therefore expected to provide Kwacha 8,280,000 towards project costs. 1.1 Total claims to date (up to and including No.85) have amounted to K4,173 which have drawn reimbursement to an amount of $4,802,040. This means that the average-exchangc rate for drawings to date has been 87 tambala to the doJlar. 1.2 The balance of the IBRD loan available is now $4,397,960. The -value of the dollar has recently declined to 83 tambala although there is some indication of a reversal of this trend. If it is assumed that the balance of the IBRD loan would provide an average of 85 tambala to the dollar then completed drawdown of the loan would only provide a further K3,738,266 toward Project costs (or a total of K7,911,685). There would therefore be a shortfall of K368,315 on the original funds budgetted for this project.  - 78 - ANNEX IV(a) THE PROBLEM OF DRAWDOWN OF FUNDS FROM LOAN 1286-T-MAI 1.0 The original allocation of funds to the three project parts (excluding ADMARC contribution) was as follows: (MK Million) KCRDP II NRDP LAKE TRANS. TOTAL IBRD (81.4%) 4.4 2.2 1.7 8.3 Malawi Govt. (18.6%) 1.0 0.5 0.4 1.9 TOTAL 5__ __ 2.1 10.2 (Source: Appraisal Report, paragraph 4.19) 1.1 This loan falls within the IBRD "Third Window" category which by definition amounts to a funding of 75 per cent of Project Cost. Leaving out the ADMARC funded component however (which does not pass through government account-and therefore is not re-imbursable) the proportion of IBRD contribution to the total of K10.2 million amounts to 81.4% 1.2 The actual total drawdown of IBRD funded is determined by the combined total of claims on foreign exchange expenditures (100Z reimbursement) and claims on local expenditures (75% reimbursement). At project appraisal and negotiation it was anticipated that the proportion of 100% reimburseable claims was going to be sufficient to enable the full drawdown of the K8.3 (equivalent) loan. In fact the 100% reimbursable claims to date have amounted to only some 5 per cent of total (0.2 million out of K4.2 million); giving an average IBRD contribution (excluding ADMARC) of only some 76 per cent compared to the required 81.4 per-cent of total project. 1.3 In fact, if at negotiation it was realised that ADMARC contribution could not form part of the reimbursable percentages, then on the basis of the existing agreement there is clearly no way in which the loan could reimburse 81.4 per cent of the Project on the basis of 75 per cent claims. 1.4 On the basis of current trends, therefore, the probable outcome can be summarised as follows:  - 79 - ANNEX IV(a) (MK'Millions) KCRDP II NRDP Lake Transport TOTAL IBRD Reimbursement on Foreign expenditure (100%) 0.8 0.1 0.2 0.5 IBRD Reimbursement on local currency expenditure (75%) 3.0 1.5 1.2 5.7 Total IBRD funds claimable 3.2 1.6 1.4 6.2 Malawi Government (unchanged) 1.0 0.5 0.4 1.9 Total funds available to project 4.2 2.1 1.8 8.1 Project shortfall 1.2 0.6 0.3 2.1 Total as per intended project 5.4 2.7 2.1 10.2 Which indicates that the current system of reimbursement will only be able to drawdown some K6.2 million (equivalent) of the projected IBRD loan K8.3 million (equivalent). And the project would be short of the difference being K2.1 million.  - 80 - ANNEX IV(b) LOAN 1286 (MAT) Withdrawal of the Proceeds of the Loan TABLE I Original Amount of the loan Allocated (Expressed in Dollar Final Category Equivalent Drawdown 1. KRDP (a) Vehiclcs, Machinery and equipment 600,000 393,085 (b) Civil Works other than market facilities to be constructed by ADfMARC 1,000,000 1,277,909 (c) Personnel 1,000,000 1,444,501 {d) Other operating costs including credit operation and drugs for health component 1,000,000 2,154,665 2. NRDP (PREINVESTMENTS) (a) Vehicles, machinery and equipment 400,000 370,710 Cb) Civil Works other than market facilities to be constructed by ADMARC 900,000 1,028,126 (c) Personnel 400,000 198,367 (d) Other Operating Costs including credit operations and drugs for health component 300,000 401 (e) Consultants 130,000 87,292 3. LAKE TRANSPORT (a) Civil Works 1,500,000 1,652,073 (b) Cargo handling equipment 150,000 191,963 (c) Refitting of the motor vessel Mpasa . 20,000 - 4. UNALLOCATED 1,800,000 - TOTAL 9,200,000 9,200,000 Source: KCRDP II Credit Agreement document, Treasury and Ministry of Agriculture.  - 81 - ANNEX IV(e) TABLE II ESTIMATES OF EXPENDITURE IN MALAWI KWACHA The original appraisal anticipated the following in MK million:- BASIC CONTINGENCY TOTAL KCRDP 4.0060 1.4300 5.4360 NRDP (PI) 2.1864 .4807 2.6671 LAKE TRANSPORT 1.5360 .5430 2.0790 ADMARC .5560 .1449 .7009 8.2844 2.5986 10.8830 This appeared to be revised as ADMARC is not a cash item as far as cash flow is concerned. BASIC CONTINGENCY TOTAL KCRDP 4.4720 1.5514 6.0234 NRDP (PI) 2.2764 .5042 2.7806 LAKE TRANSPORT 1.5360 .5430 2.0790 8.2844 2.5986 10.8830 FUNDS PROVIDED BY GOVERNMENT (1980/81 DEV. ESTIMATES) TEC LOCAL CONTRIB. DONOR FUNDS 077/050 KCRDP 4,881,800 1,011,744 3,876,436 077/052 NRDP (PI) 2,681,520 482,674 2,198,846 085/038 L.TRANSPORT 2,079,000 386,690 1,692,310 9,642,320 1,881,108 7,767,592 FINAL TOTAL EXPENDITURES KCRDP 6,091,340 1,522,835 4,568,505 NRDP (PI) 2,482,754 620,688 1,862,066 L.TRANSPORT 1,963,515 490,879 1,472,636 10,537,609 2,634,402 7,903,207 2,727,221.00 7,810,388 Reimbursement claims from the Donor Totalled MK7,810,388 (Dollars 9,200,000). Source: Ministry of Agricultuire - Financial Coordinator.  - 82 - ANNEX IV(d) TABLE III LOAN 1286 (MAI) FINAL EXPENDITURE BY CATEGORY (VIDE TABLE 1 FOR DETAILS OF CATEGORIES) (1) KCRDF MK SUMMARY DESCRIPTION (a) 516,052 Vehicles, Machinery, etc. (b) 1,519,317 Civil Works, etc. Cc) 1,605,348 Personnel (d) 2,450,623 Other Operating Costs Sub-total 6,091,340 (2) NRDP (PI) (a) - 455,245 Vehicles, Machinery, etc. (b) 1,157,548 Civil Works, etc. Cc) 286,450 Personnel (d) 525,212 Other Operating Costs Ce) 58,299 Consultants Sub-total 2,482,754 (3) Lake Transport (a) 1,799,789 Civil Works (b) 163,726 Cargo Handling Equipment (c) - Refitting M.V. Mpasa Sub-total 1,963,515 TOTAL MK 10,537,609 Source: Ministry of Agriculture - Financial Coordinator.  - 83 - ANNEX IV(e) TABLE IV: PHASE II: DRAWDOWN OF THE CREDIT (1286-T-MAI) Table 6 U$0'OOO QUARTER PLANNED CUMUlATIVE ACTUAL CUMULATI'V, DRAWDOWN DRAWDOWN June 30, 1977 800 Sept. 30, 1977 1,600 J,5>6 Dec. 31, 1977 2,400 :',455 March 31, 1978 3,200 3,119 June 30, 1978 4,000 3,472 Sept. 30, 1978 4,900 4,156 Dec. 31, 1978 6,000 4,950 March 31, 1979 7,100 6,298 June 30, .1979 7,400 6,868 Sept. 30, 1979 7,700 7,325 Dec. 31. 1979 8,000 7,521 March 31, 1980 8,400 7,754 June 30, 1980 8,600 8,023 Sept. 30, 1980 8,800 8,235 Dec. 31, 1980 9,000 8,517 March 31, 1981 9,200 8,569 LO-AN PERIOD EXTENDED June 30, 1981 9,200 8,742 Sept. 30, 1981 9,20C 8,948 Dec. 30, 1981 9,200 9,010 March 31, 1982 9,200 9,200 Source: Treasury and KCRDP Files  - 84 - ANNEX IV(f) TABLE V : KCRDP Operating costs by Component: Actual Totals and Proportions Compared to Proportions Allocated (Base Cost) at Appraisal To-_al operating % Allocated Component Cost (Malawi Kwacha) a at Appraisal Extension 392,099 16 24 Land husbandry 49,012 2 3 Livestock 147,037 6 9 Construction unit 490,125 20 5 Research 98,025 4 6 Hydrology 37,013 2 4 Finance 147,037 6 9 Credit 196,050 8 12 Evaluation 122,531 5 6 Management 722,680 29 15 Health 49,016 2 7 2,450,623 100 100 Sources: Quarterly reports and Financial records of Project. Note Un-allocated proportion of Operating costs of mechanical maintenance component have been proportioned out pro-rata according to vehicle operations charged.  - 85 - ANNX V Page 20 ANNEX V : PLANTS AND VEHICLES PHASE II Appraisal Bought as Description Plan BougEt . a Z of Planned LWB 10-Seater 2 A 100 SWB 7-seater 3 3 100 LWB hard-top 3 4 133- LWB pick-up 23 17 74 Personnel Carrier 2 1 50 Light PicI-up 2 1 50 Motor cycles 48 39 81 Lorry 5-ton 1 1 100 Lorry 7-ton 2 1 50 11-ton 2 - 0 14-ton* I - Tipper 7-ton 4 2 50 Tractor 165/185 4 2 50 Grader 1 1 100 Lawn Mower* - 2 - Trailer 2 1 50 Plough 1 1 100 Water Bowser 2 1 50 Cinema Van 2 -- 0 Mobile Workshop 1 - 0 Note: Nothing was planned for items with an asterisk. There might have been some need for them during the course of Projects life. Source: World Bank Appraisal document and Karonga Projcct.  - 86 - ANNEX V ANNE VICb) ANNEX VI SENOR STAFF PERSCNL KW, IOP PBASES I AND 311 POST 1972 1973 1974 1975 1976 1977 1978 11979 1980 1981 rograrzEe Manager - -- - = =H-- A'sst. P nrm Mager -l l Financal Controller I- - l - - Senior Adndn. Officer Senior Field Development Engineer Field Development Ergineer Senior Extension Officer (1) - - - Project Of cicer (Karrna) Project Officer (Chitipa) I_ Training Officer - - - - Womz's Program.e Officer . Sen.Agric. Fesearch Officer (2) --- Agric. Research Officer F - - Hydrologist (3) .___ Chief Iechdiical 5pervLior  KUMA KARCNrA NR41, DEMOR FROEC - HIA5 1OI KRIU OrgzZdatin Chst ecjt Ad distmtior gl :mmmrltmesl~~~~~~~~~mmm Aglitural and mI" Hiubaridry HydrologyI Credit IIArcraffMatsnProru H  - 88 - ANNEX VlI(a) ANNEX VII(a) VALUE OF ADMARC PURCHASES (K), 1967/68 - 1980/81 Note: Value - Volune of sales x current producer price. Minor crops are excluded. 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 Maize 1,104 1,716 7,008 9,020 4,675 6,215 CHITIPA Groundnuts 5,170 1,760 1,210 1,584 1,452 1,430 Beans 132 660 66 2,736 864 2,656 TOTAL 6,406 4,136 8,284 13,340 6,991 10,301 Rice 33,704 255,156 264,400 420,115 464,499 Maize 621 110 - - 138 3 KARONGA Cotton 28,545 21,863 12,953 5,984 15,615 23,617 Groundnuts n.a. D.a. n.a. 1,584 616 2 | TOTAL 62,870 159,341 268,109 271,974 436,484 488,121 Source: KCRDP liwnagement Unit  MAJi KAFA MML DEVELDRIJU RE PRDl. -RUSE IOI IRDP Orgwization Chart AO4AR~ Minitry of Atnture Poect Adadnlstrati(i AprcLLitural 1I1 __N 1:z1 1t 1z1 1r1 t1 1r1 1:1 1r1 1z1 Iai~iI taid Hubsrdry Lvtock PeBearch dr  -88 - ANNEX VII(a) ANNEX VII(a) VALUE OF AELARC. PURCHASES (K), 1967/68 - 1980/81 Note: Value = Vrlume of sales x current producer price. Minor crops are excluded. 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 Maize 1,104 1,716 7,008 9,020 4,675 6,215 CHITIPA Groundnuts 5,170 1,760 1,210 1,584 1,452 1,430 Beans 132 660 66 2,736 864 2,656 TOTAL 6,406 4,136 8,284 13,340 6,991 10,301 Rice 33,704 255,156 264,400 420,115 464,499 Maize 621 110 - - 138 3 KARONQA Cotton 28,545 21,863 12,953 5,984 15,615 23,617 Groundnuts n.a. n.a. n.a. 1,584 616 2 TOM 62,870 159,341 268,109 271,974 436,484 488,121 Source: KCRDP Management Unit  - 89 - ANNEX VII(b) ANNEX IV(b) MEAN ANNUAL VALUE OF ADMARC PURCMASES BY PHASE (K) Pre-'Iroject Phase I Phase !I (1967/8-7172) (1972/73- (1976/77- 1975/76) 1980/81) MEAN Chitipa Maize 4,705 17,265 130,740 53,306 Groundnuts 2,235 998 4,891 2,830 Beans 892 2,105 2,494 1,811 TOTAL 7,832 20,368 138,125 57,947 Karonga Rice 222,150 579,182 761,9ZE 516,936 Maize 174 384 3,216 Cotton 16,992 35,511 76,670 43,597 Groundnuts n.a. 604 80 TOTAL 239,756 615,681 841,892 562,309 Source: KCRDP Management Unit  - 90 - ANNEX VII(c) ANNEX VII(c) INCREMENTAL VALUE OF ADMARC PURCHASES BY PHASE (K) Phase I (1972/73- Phase II (1976/77- 1975/76) 1980/81) Chitipa Maize 576,375 Grouudnuts 19,465 Beans 1,945 TOTAL 588,785 Karonga Rice 1,428,128 2,698,880 4,127,000 Maize 840 15,210 16,090 Cotton 74,076 298,390 398,466 Groundnuts - 1,984 - 5,100 - 7,984 1,501,060 3,007,380 4,508,440 Note: For Chitipa, incremental value (mean annual value Phase II - mean annual value Phase I) x 5; For Karonga, incremental value Phase I - mean annual value Phase I - mean annual value Pre-Project) x 4; Incremental value Phase II - (mean annual value Phase 1I - mean annual value Pre-Project) x 5.  - 91 - ANNEX VII(2L ANE Vl(d) : IW3 FES (K) 1972 1973 1974 1975 1976 1977 1978 1979 Ngana 35.57 44.28 95.78 144.47 135.90 111.32 150.84 116.40 Ngereige 552.25 614.39 655.44 712.18 601.29 740.15 1254.31 1306.15 Mbande n.a. n.a. 51.23 139.72 198.06 100.01 n.a. 136. ILpenbe n.a. n.a. 184.04 194.01 189.39 225.28 235.65 239.13 N5yunge n.a. n.a. 93.11 153.85 162.51 279.92 233.0 265.73 CbihJuta n.a. n.a. 467.21 650.61 761.57 855.69 1291.75 1729.38 1TOrAL - - 1546.81 1994.84 W48.72 2312.37 3165.55 3792.79 Armual average increas = 23.8Z Note: (i) Kanga Boma ard Chitipa District maket data umvai]able. (ii) Chages in fees have had an insifint iizpact mo the total reve oDlected; these data therefore indicate dages in uLnber of trader-days spent at mnrkets. If traders sell approxiutely the volume of produce per day tbrougesut the period, the data represext cages in volue of produce sold.  - 92 - ANNEX VII(e) SAVINGS BY FARMERS (K) YEAR KARONGA DISTRICT CHIT IPA DISTRICT Deposits Withdrawal Growth Deposits Withdrawal Growth in in Savings Savings 1972 18,241 12,653 5,588 4,217 3,058 1,159 1973 25,980 17,672 8,308 7,587 5,985 1,602 1974 52,690 40,500 12,500 10,532 10,182 4,350 1975 47,734 61,505 -13,771 18,224 14,641 3,583 1976 56,286 60,428 -4,142 16,286 18,602 -2,316 1977 66,477 66,339 138 26,305 20,692 5,613 1978 69,632 65,426 4,426 33,352 23,521 9,831 1979 58,685 56,949 1,736 21,024 20,479 545 1980 57,024 77,694 -20,670 20,666 18,458 2,208 1981 47,350 54,064 -6,714 20,573 16,093 4,480 TOTAL -12,601 31,055 TOTAL PHASE I (1972-1976) 8,483 8,378 TOTAL PHASE II (1977-1981) -21,084 22,667 Note: Figures are totals for all Post Offices and Post Agencies, except Karonga and Chitipa Bomas.  - 93 - ANNEX VII(f) CREDIT OUTSTANDING AS ON 30TH SEPTEMBER (K) Medium Term Seasonal Total Karonga 1977 33,782 43,295 79,077 1978 38,762 51,037 89,799 1979 47,779 39,371 87,150 1980 59,028 58,509 117,537 1981 81,032 73,977 155,009 Chitipa 1977 - 11,705 11,705 1978 11,539 42,234 53,773 1979 17,888 27,214 45,082 1980 17,256 16,746 34,002 1981 16,519 20,437 36,956 Source: KCRDP Quarterly Reports  - 94 - ANNEX VII(g) INVESTMENT IN FARM 1DHPLEMENTS 1. Karonga Phase I 1976/77 1977/78 1978/79 1979/80 1980/81 Cash n.a. n.a. 9,572 9,771 7,221 992 Credit 32,701 16,081 15,292 18,988 27,568 39,712 TOTAL - - 24,864 28,759 34,789 40,704 2. Chitipa Cash n.a. n.a. 305 3,042 1,864 1,266 Credit - - 13,561 9,332 4,996 6,947 TOTAL - - 13,866 12,374 6,860 8,213 Note: (i) Karonga credit in 1976/77 includes Chitipa Credit. (ii) Credit is implements issued on credit, not repayment of credit. (iii) Cash sales data not available before 1977/78. (iv) Credit includes work oxen; cash sales do not.  - 95 - ANNEX VII(h) SAVINGS, NON-AGRICULTURAL WEAR GROWTH IN SAVINGS (F) POST OFFICE BANK KARONGA CHITIPA 1972 7,922 417 n.a. 1973 9,629 240 n.a. 1974 11,831 8,288 n.a. 1975 2,206 2,953 n.a. 1976 24,499 3,663 n.a. 1977 21,152 - 804 80,184 1978 10,506 10,584 119,64 1979 4,012 9,239 120,46 1980 -8,769 40,477 665,40 1981 -10,805 44,875 TOTAL 72,183 119,098 TOTAL PHASE I 56,087 14,727 n.a. TOTAL PHASE II 16,096 104,371 NOTE: Figures are for Karonga and Chitipa Boma Post Offices, and for National Bank Sub-Branch and all its agencies. Source: KCRDP  - 96 - ANNEX VII(i) SPENDIUM ON PRDMARE' EDUCATION (K) 1974 1375 1976 1977 1978 1979 1980 1981 Karonga 60,180 59,223 57,504 67,911 69,522 72,711 72,051 70,820 Chitipa 40,788 44,631 45,639 42,693 51,762 55,629 57,156 63,070 TOTAL 100,968 103,854 103,143 110,604 121,294 128,340 129,207 133,890 Notes: Ci) Based on primary school attendance data Fees are 12.50 for standfards 1-5 and K4.50 for Standards 6-8. Approximately 25X of pupils are in Standard 6-8. (ii) Data on secondary school attendance not available. Source: ICRDP  - 97 - ANNEX VII(j) EDUCATION : PRIMARY SCHOOL ATTENDANCE Chitipa 1974 1975 1976 1977 1978 1979 1980 1981 No. of Schools 54 52 51 55 67 67 68 69 TOTAL 13596 14877 15223 14231 17254 18543 19052 21023 School-age Population 28345 29036 29745 30470 31213 31974 32754 33553 % attendance 48.0 51.2 50.8 46.7 55.3 58.0 58.2 62.7 No. not attending 14749 14159 14622 16239 13959 13431 13702 12530 Notes: 1. Attendance figures are for July (Ministry of Education records). 2. School-age population for 1977 is Malawi Population Census estimate of 5-19-year-olds in the District. Growth rate to determine other years is intercensal growth rate (1966-1977) for 5-19-year-olds. 3. % attendance - total attendance x 100 + school-age population. 4. Number not attending - school-age population - total attendance.  - 98 - ANNEX VII(k) EDUCATION : PRIMARY SCHOOL ATTENDANCE Karonga 1974 1975 1976 1977 1978 1979 1980 11981 No. of schools 56 57 59 68 70 74 75 75 TOTAL 20060 19741 19168 22637 23174 24237 24017 23607 School-age Population 36312 37548 38826 40147 41513 42926 44387 45898 % attendance 55.2 52.6 49.4 56.4 55.8 56.5 54.1 51.4 No. not attending 16252 17807 19658 17510 18339 18689 20370 22291 Notes: 1. Attendance figures are for July of each year. (Ministry of Education records) 2. School-age population for 1977 is Malawi Population Census estimate of 5-19 year-olds in the Distriat. Growth rate to determine other years is intercensal growth rate (1966-1977) for 5-19 year-olds. 3. % attendance = total attendance x 100 + school-age population. 4. Number not attending - school-age population - total attendance.  - 99 - ANNEX VII(l) HEALTH STATISTICS 1.OUTPATIENTS 1975 1976 1977 1978 1979 1980 KARONGA Attendance 278225 332483 187201 166221 165024 n.a. per 100 population 285 326 175 148 141 n.a. CHITIPA Attendsuce n.a. 84748 98671 124121 133872 153600 per 100 population n.a. 120 136 168 178 201 2.MATERNITY CLINICS (Deliveries) Karonga 2231 2566 2194 2561 2453 2791 Chitipa n.a. 1448 1602 1942 1726 1905 3.VACCINATIONS Karonlga Smallpox 4845 2164 4978 4769 4103 2620 BCG 6547 7035 5860 5202 4654 5682 DPT 14159 9243 13597 13245 11099 13306 Polio 3941 8897 12333 4964 10497 13675 Measles 7242 0 0 8 133 3539 Chitipa Smallpox n.a. 1971 2093 2425 1841 1266 BCG n.a. 2597 2666 2919 2546 2195 DPT n.a.* 5380 5467 5763 5857 6248 Polio n.a. 7035 5161 4457 4679 6277 Measles n.a. 2475 3671 2365 1663 1860 Notes: Smallpox includes revaccination DPT and polio are sum of 1st, 2nd and 3rd vaccinations. 4.UNDER FIVES CLINICS 1974 1975 1976 1977 1978 1979 1980 Karonga New Attendance 117 725 541 627 580 466 511 Total Attendance 4072 4296 3571 4794 4023 3478 2952 Note: Chitipa data not available. Note: Throughout, health data have gaps and appear to be inconsistent. These data should be handled with care.  - 100 - ANNEX VIII(a) ANNEX VIII(a) - Table 1: Cattle Nmbers, Growth Rate and Offtake 1975 1976 1977 1978 1979 1980 1981 Average Karonga District Total Herd 39,862 40,328 41,262 42,614 41,309 44,118 43,849 Slaughter 3,024 3,473 3,243 3,443 3,461 3,986 4,648 Market Sales 6 4 17 47 19 301 299 Total off-take 3,030 3,477 3,260 3,490 3,480 4,287 5,947 Z off-take 10.6 1.2 2.3 3.3 -3.1 6.8 -0.6 Productivity (Z) 18.2 9.8 10.3 11.0 5.3 16.7 10.7 Chitipa District Total herd 32,560 35,313 36,783 37,135 37,734 40,517 40,100 Slaughter 2,101 2,387 2,594 2,449 2,797 3,055 3,482 Market Sales 630 723 506 1,103 1,120 821 383 Total off-take 2,731 3,110 3,100 3,652 3,917 3,876 3,865 % off-take 8.4 8.8 8.4 9.8 10.4 9.6 9.6 Growth rate 8.5 8.5 4.2 1.0 1.6 7.4 -1.0 Productivity (Z) 16.9 17.3 12.6 10.8 12.0 17.0 8.6 Total cattle population (project) 72,422 75,641 78,045 79,749 79,043 84,635 83,949 Growth rate x 9.7 4.4 3.2 2.2 -0.9 7.1 -0.8 3.6 Productivity 17.7 13.1 11.4 10.8 8.5 16.7 9.3 12.5 Source: KCRDP  - 101 - F ANNEX VIII(b) Table 2 : Dipping Tank Statistics : Total Number of Animals within Each Register in Karonga District by Year and Register 1975 1976 1977 1978 1979 1980 1981 A- Register(1) j * Total herd 39,862 40,328 41,262 42,614 41,309 44,118 43,8494/ Total in A-Register N/A 36,427 37,795 38,636 37,769 40,006 40,051 Z of total in A-Register I - 90 92 91 91 91 91 B - Register(2) l Z of total in B-Register N/A 7 6 7 6 7 6 Total in B-Register N/A 2,866 2,496 2,868 2,578 3,067 2,653 C - Register(3) I % of total in C-Register N/A 1,035 971 110 962 1,045 1,145 Z of total in C-Register N/A 3 2 2 3 2 3 1 1 (2) All animals within 8 kilometers of the Dip tark. (2) All animals within 8-16 kilometers radius of Dip tank. (^3) All animals outside 16 kilometers radius of Dip tank. (4) Total herd in 1981 fell from 44,118 to 43,849 due to probable incidence of food and mouth disease (FMD) in 1980. Source: KCRDP  - 102 - AME~X VmIc) Tam 3: Dipping Statistcs: xbr oEf A18ls dipped 'per mek" for FebruarY nmd Auut M.=tbs by Ye-r and District I I l~~~~~~~~~~~~~~~~~~~~~~98D asA%! 1975 1976 1977 1978 1979 198D 1981 f total l l cattle I