Guinea - Livestock Sector Rehabilitation Project

r _mcnz Of The World Bank FOR OMCIAL USE ONLY Report No. 5701-GUI STAFF APPRAISAL REPORT REPUBLIC OF GUINEA LIVESTOCK SECTOR REHABILITATION PROJECT June 4, 1986 Western Africa Projects Department Agriculture A 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 authorintion.  CURRENCY EQUIVALENTS Currency Units = Guinean Franc (FG) US$1.00 = FG 360 a/ FG 1.00 = US$0.0027 WEIGHTS AND MEASURES Metric System LIST OF ABBREVIATIONS BADEA - Banque Arabe de Developpement Economique en Afrique (Arab Bank for Economic Development in Africa) CA - Centrale d'Approvisionnement (Input Supply Center) CBPP - Contagious bovine pleuropneumonia CCCE - Caisse Centrale de Cooperation Economique DGE - Direction Generale de l'Elevage SPE - Direction Prefectorale de l'Elevage FAC - Fonds d'Aide et de Cooperation IRBAG - Institut de Recherches et de Biologie Applique de la Guiriee (Central Vaccine Production and Diagnostic Laboratory) MDR - Ministere du Developpement Rural (Ministry of Rural Development) PE - Poste d'Elevage (Livestock Post) RP - Rinderpest GOVERNMENT FISCAL YEAR January 1 - December 31 a/ The official exchange rate at appraisal in April 1985 was US$1 = sylis 24.4. From October 1985, the Guinean currency, which was changed from the syli to the FG, has been floating according to a market-determined rate, which at the time of negotiations on March 12, 1985, stood at US$1 = FG 360  FOR OFFMCAL USE ONLY LIVESTOCK SECTOR REHABILITATION PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page DOCUMENTS CONTAINED IN THE PROJECT FILE....................... iv CREDIT AND PROJECT SUNKR ...................................* v-vii GUINEA AGRICULTURE DATA SR r ................................. viii I. INTRODUCTION ......... ................................... 1 II. BACKGROUND .............................................. 1 A. The Economy 1........................................ B. Agricultural Resource Base .......................... 2 C. Agricultural Sector Issues and Strategy ............. 3 III. THE LIVESTOCK SECTOR .................................... 5 A. Population Characteristics .. 5 B. Animal Productivity and Health ...................... 6 C. Institutional Structure .. 7 D. Sector Financing and Taxation .. 10 E. Sector Objectives and Investment Program ........... . 11 F. Experience in Past Lending .......................... 12 G. Sector Strategy and Rationale for IDA Involvement... 13 IV. THE PROJECT ............................................. 14 A. Objectives ........ ............................... 14 B. Sunmiary Description ................................ 14 C. Detailed Features ... ............ 15 1. Establishment of Herdsmen's Associations ....... 15 2. Livestock Inputs .. 17 3. Pilot Credit Scheme .. 18 4. Upgrading of Public Livestock Service .......... 19 5. Training ....................................... 19 6. National Vaccination Campaign Program .......... 20 7. Technical Assistance ............................ 21 This report is based on the findings of a Bank Appraisal Mission consisting of Ms. Nguyen and Messrs. Sinodinos and Fayd'Herbe (IDA). Secretarial work was done by Ns. Playfair-Scott and Matos. This document ha a sticted dstbuto and may be umd by recipents only in the performance of thw okcui duieL Its contents may not othrwie be dcksed without World Bank auQhriaon.  (ii, Table of Contents (Continued) D. Project Cost and Financial Arrangements .............. 22 1. Project Cost .................................... 22 2. Project Preparation Facility ..................... 22 3. Financing ....................................... 24 4. Procurement ..................................... 25 5. Disbursements .................................... 27 6. Special Account and Revolving Fund ............... 27 7. Financial Procedures, Reporting and Audits ....... 28 E. Project Implementation ................................ 30 1. Organizational Structure ......................... 30 2. Training Program ................................. 31 3. Organization of National Vaccination Campaign .... 32 4. Staffing Plan .................................... 33 5. Staff Rationalization Program .................... 33 6. Distribution and Sales of Livestock Inputs ....... 34 7. Pilot Credit Administration ...................... 34 8. Implementation Schedule and Building Construction 35 9. Operation and Maintenance of Vehicles ............ 35 10. Monitoring and Evaluation ........................ 35 11. Present Status of Credit Effectiveness ........... 35 V. PRODUCTION, MARKETING AND PRICES, AND FINANCIAL ANALYSIS ... 36 A. Production .............. 36 B. Marketing and Prices ................................. 36 C. Herdsmen Incomes and Incentives ...................... 38 D. Cost Recovery ........................................ 39 VI. BENEFITS, ECONOMIC ANALYSIS, AND RISKS ..................... 41 A. Project Benefits ...................................... 41 B. Economic Analysis ..................................... 41 C. Risks ................................................ 42 VII. AGREEMENTS AND RECOMMENDATIONS ............................ 42  (iii) Table of Contents (continued) ANNEXES 4-1 Livestock Inputs 4-2 Pilot Credit Scheme 4-3 Technical Assistance and Consulting Services 4-4 Summary Cost Table 4-5 Disbursement Schedule 4-6 Organizational Structure 4-7 Training Program 4-8 Staffing Plan 4-9 Implementation Schedule 5-1 Parameters Used in Herd Projection 5-2 Project Impact 5-3 Herdsmen's Incomes 6 Economic Analysis MAP IBRD 18990 R  (iv) GUINEA LIVESTOCK SECTOR RHABMILITATION PROJECT DOCUHMENTS CONTAINED IN THE PROJECT FILE A. Project Working Papers (Available from UAPA A) Code No. 1. TECHNICAL 1.1 Training Activities 229.417 (1) 1.2 Vaccination Program 1.3 Livestock Inputs 1.4 Herd Projection 229.417 (4) 2. PROJECT COST TABLES 229.418 2.1 Upgrading DGE 2.2 Upgrading SPEs 2.3 Input Supply 2.4 Technical Assistance 2.5 Staff Training 2.6 Vaccine Production Unit 3. FINANCIAL PLANNING AND CONTROL 229.419 4. ECONOMIC ANALYSES 229.420 4.1 Economic Analysis Table 4.2 Sensitivity Analysis 5. TERMS OF REFERENCE - RESIDENT SPECIALISTS 229.421 6. LEGAL DOCUMENTS 6.1 Arrete to cancel Vaccination Tax 229.423 6.2 Arrete to reorganize DGE 229.424 6.3 Arrete to attach the Vaccine Production Laboratory to DGE 229.425 6.4 Ordonnance to create Input Supply Center 229.426 B. Additional Supporting Documents (Available from WAPA A) 1. Preparation du Second Projet du Developpement de l'Elevage (2 volumes) 229.422 (1-2) 2. Livestock Development Project (IDA Credit No. 1063) 3. Supervision Reports (IDA Credit No. 1063) 4. Project Completion Report (IDA Credit No. 1063)  Cv) THE REPUBLIC OF GUINEA LIVESTOCK SECTOR REHABILITATION PROJECT CREDIT AND PROJECT SUMKARY Borrower: Republic of Guinea Beneficiary: NIinistry of Rural Development Amount: SDR 8.5 million (US$9.8 million equivalent) Terms: Standard. Cofinanciers: Caisse Centrale de Cooperation Economique (CCCE), Fonds d'Aide et de Cooperation (FAC) and Banque Arabe de Developpement Economique en Afrique (BADEA). Project Description: The project would increase the productivity of the Guinean cattle herd and thereby augment national meat and milk production, improve nutrition, and raise the standard of living of cattle-herding families. It would be implemented over five years and would include: (a) support for the privatisation process of livestock service through: (i) establishment of herdsmen's associations; (ii) creation of an Input Supply Center for the production, purchase, distribution, and sales of livestock inputs; (iii) provision of a small pilot credit component for the establishment of private veterinarians throughout the country, for setting up animal production farms, for herdsmen's associations, and for distribution of livestock inputs; (b) strengthening of a reduced public livestock service through: (i) upgrading the infrastructure of the central livestock department in Conakry and 33 field offices and provision of equipment. vehicles, and basic materials; (ii) establishment of a training center in Labe with a capacity for 40 students for recycling training of selected livestock staff, practical training of livestock agents nominated by herdsmen's associations and training of representatives of herdsmen's associations on group development; (iii) provision of fellowships for external training of high level staff, and (iv) provision of equipment and vehicles for annual national vaccination campaigns against common cattle diseases; and (c) provisions of about 19 staff-years of internationally recruited specialists and 39 staff-months of short-term consultants to assist in project implementation, carrying out studies related to the sector, and preparing a possible follow-up project.  (vi) Benefits and Risks: By the tenth year of the project. national beef production vould increase by 302 or 5.900 tons per annum, and milk by 402 or 11.900 tons per annum, representing a significant improvement in national protein intake-. Net income of herdsmen from cattle is expected to increase by 302. Through the establishment of herdmen's associations, the creation of the Input Supply Center, and the pilot credit scheme, the project would pave the way for eventual privatisation of livestock service. Through its institutional and training measures, the project would enable a more effective usage of the Government's livestock services. The project involves no major technical risks. The main risks are related to: (i) the implementation of the staff rationalisation program, and (ii) the willingness of livestock owners to participate in the project. On the former, risks would be minimized by the agreement to be reached under the national staff rationalization scheme, a key feature of the Go7ernment's structural adjustment program. With the liberalization of the cattle market, financial incentives for herdsmen to participate are judged to be attractive. Furthermore, they are aware of the benefits of using veterinary services and inputs and would be willing to pay for them. Thus, the risk would be minimal. Estimated Cost: Summary Project Cost Estimate (US$ millions) Local Foreign Total Livestock Inputs 0.1 2.3 2.4 Pilot Credit Scheme 0.1 0.9 1.0 Upgrading of Livestock Service 0.7 3.8 4.5 Training 0.3 2.0 2.3 Vaccination Campaigns 0.1 0.9 1.0 Technical Assistance 0.0 4.0 4.0 Supervision of Construction 0.0 0.3 0.3 Total Base Cost 1.3 14.2 15.5 Physical contingencies 0.2 0.9 1.1 Price Contingencies 0.9 4.1 5.0 Total Project Cost (net of taxes) 2.4 19.2 21.6 Taxes 0.6 0.0 0.6 Total Cost (inc. taxes) 3.0 19.2 22.2  local Foe ) Mtal M& - 9.8 9.8 COCE - 3.8 3.8 FAIC 0.1 1.3 1.4 - 4.5 4.5 (bCezz.eit 2.6 - 2.6 Beficiaries 0.1 - 0.1 Total 2.8 19.4 22.2 Fstlmted ID lAs: ID Fscal Year 1987 1988 1989 1990 1991 1992 1993 U S$ -ll{ Axzial 1.18 1/ 1.47 2.45 2.15 1.77 0.68 0.10 ommlative 1.18 2.65 5.10 7.25 9.02 9.70 9.80 I/ Tncbxfn refinancing of a FPF advane of iS$465,000 Economic Rate of Return: 14Z Map: IBRD 18990R WAPA A May 1986  GUINEA LIVESTOCK SECTOR REHABILITATION PROJECT I. INTRODUCTION 1.01 The Government of Guinea (GOG) has requested assistance from the Association to finance a Livestock Sector Rehabilitation Project designed to improve the productivity of Guinean livestock and thereby augment national meat and milk production, and raise the incomes of livestock owners. The project would be implemented ove-; five years at an estimated cost of US$22.2 million. The project would be co-financed by France's Caisse Centrale de Cooperation Economique (CCCE) and Fonds d'Aide de Cooperation (FAC) and Banque Arabe de Developpement Economique en Afrique (BADEA). 1.02 The proposed project is a modification of a previous Livestock Development Project (Credit GUI-1063 of September 1980) which became effective in July 1981. It was then cancelled in September 1983 on the ground that the Government had not taken measures to remove forced marketing of cattle and to offer adequate incentives to herdsmen for sale of their cattle. In April 1984, the new Government requested the Association to reactivate the project since the marketing constraint was removed and the herdsmen are now free to sell their cattle in the market. In view of the positive development of cattle marketing and pricing policy, the preparation of the proposed p.oject was undertaken. The project was prepared by the GOG with the assistance of a consulting firm, the Bureau pour le Developpement de la Production Agricole (BDPA, France). II. BACKGROUND A. The Economy 2.01 Guinea has an area of about 246,000 km , a population of about 5.9 million and a per capita GNP of about US$300, among the lowest in the world. Despite excellent agricultural and mineral resources (bauxite and iron ore), economic performance has been poor since Independence (1958), except for a short-lived impulse to growth during 1973-76 due to the opening of two bauxite mines. The slow growth of the Guinean economy (1.6% per annum from 1979-83) is attributable primarily to the low level of productive investment, the misallocation of public investments and the poor performance of the public sector. Guinea is currently facing serious balance of payment and debt servicing problems. At the end of 1985, external debt arrears were US$300 million, representing 50% of annual export earnings. 2.02 Guinea's long-term development possibilities are substantial based on its agricultural, fisheries, mineral, and hydroelectric potential. However, with 80% of the population in the rural sector, and with modest national savings (about 9.4% of CDP in 1983) combined with an acute  - 2 - shortage of foreign exchange, the exploitation of this potential hinges on the country's ability to provide incentives to agricultural producers and to actract foreign capital for investment in mining, agro-industry, and eventually, petroleum development. 2.03 During the 1980s Guinea will continue to face a serious foreign exchange constraint, despite the starting of the operation of a diamond mine in 1984. Exisring mining operations have few prospects for expansion in the coming years, and the downward trend in agricultural exports will be hard to reverse immediately. At present, Guinea is excessively dependent on bauxite mining for its foreign exchange. Diversification of its mineral production is thus a key element in the country's longer-term development strategy. Iron ore mining is one possibility now under active investiga- tion, as are oil exploration and development of other minerals. 2.04 The Government has commenced to implement an economic reform program aimed at further encouraging private sector development, notably in agriculture, while at the same time increasing the efficiency of the public sector and improving resource management. Particularly crucial is a major devaluation, with accompanying measures to correct price distortions, and thereby reform the structure of agricultural incentives. The authorities are also introducing rigorous budgetary measures and the rational programming of public investments. To reverse the previous regime's economic policies, the new authorities have opened up the economy to the private sector and have taken steps to reduce the scope of the Government's direct involvment in the productive sectors. To reduce its external debt burden, Guinea concluded a multilateral debt rescheduling (approximately US$180 million of debt including arrears and service payment for the period of January 1986 to February 1987) with the Paris Club in April 1986. The Government's economic reform program has gained support from the f!F Standby Arrangement (US$36.3 million) and the Structural Adjustment Credit from IDA (US$25 million) and SFA (US$17 million) in February 1986. However, once the Government embarks on major reforms, Guinea would face a difficult transition period during the rest of the 1980s when increased foreign assistance, on concessional terms, would be needed to ease the balance of payments difficulties and contribute to a gradual realization of the country's considerable development potential. B. Agricultural Resource Base 2.05 Guinea has arable land of about 7.0 million ha which accounts for 28.5% of its total territory of about 24.6 mijlion ha. The country can be divided into four main agro-ecological regions with principal characteristics as follows: (a) Middle Guinea encompasses tne upland plateau known as the Fouta Djalon at altitudes from 600 to 1,500 meters and, to the north, the low'and plains of the Gaoual and Koundara regions. It covers 20% of the country's area. Rainfall varies from 1,500 to 2,000 mm. In many areas, soils have been eroded, hardpanned or degraded and can only be used for the cultivation of fonio, the  -3- region's staple food. Rice, vegetables and miscellaneous food crops are found in the tapades (home gardens) and hydromorphic bottomlands, which contain richer soils for intensive cultivation. N'Dama, trypano-tolerant cattle, are raised in large numbers and are the region's main asset. They account for 51Z of the aational cattle herd. (b) Maritime or Lower Guinea covers 18% of the country. It consists of a swampy coastal zone behind which lies a plain rising slowly to the foothills of the Fouta Djalon. Annual rainfall varies between 2,000 and 4.000 mm. Swamp rice, coconuts and kola nuts are the main crops in the coastal zone, while bananas, pineapple, citrus, and vegetables are grown in abundance in the piedmont. The cattle population is only 152 of the national herd. However, the region has abundant pasture resources which have induced increasing permanent settlement of traditional cattle owning families from the Fouta Djalon. Cc) Upper Guinea, covering 40Z of the country's total area, is a savannah region with a rolling landscape of terraced plateaux which lie between 200 and 400 meters above sea level. Rainfall is relatively low at 1,300 to 1,700 mm per annum. Rice, cassava and groundnuts, the major crops, are cultivated under rainfed conditions or uncontrolled flooding along the rivers. This region has considerable agricultural potential under controlled flooding and irrigation. Pasture resources are plentiful resulting in heavier animals than in Fouta Djalon. The cattle population is about 26% of the national herd. (d) The Forest Region comprises 22% of Guinea's land area. It has an equatorial climate with rainfall varying from 1,700 mm in the north to 3,000 mm in the south. Located at the south-eastern tip of Guinea, it is fairly isolated from the rest of the country. A mountainous relief, culminating at 1,600-1,700 m of altitude, renders communications and transport of produce difficult. The lush tropical forest that once covered most of the region has been extensively cleared and now offers a limited potential for logging. Tne region has an excellent potential for smallholder oil palm. Cattle are of less significance in the region which con'ains only 8% of the national herd. Meat is supplied primarily from small ruminants. C. Agricultural Sector Issues and Strategy 2.06 Agriculture is the mainstay of the country's economy, providing a livelihood to about 80% of the population and generating about 40% o' GDP. Agricultural production over the past two and a half decades has deteriorated. Agricultural exports, while accounting for the bulk of Guineas's total exports in 1958, are now reduced to a negligible amount. At the same time, food crop production has not kept pace with the increase in population. Rice imports, which were 7,000 tons in 1958, reached 96,000  - 4 - tons in 1984, with total food imports representing 16% of the general import bill. This picture of stagnating production and mounting import requirements is in marked contrast with Guinea's agricultural potential. Its abundant water resources and varied topography and soils are capable of satisfying all of the country's needs for food crops and to produce greater quantities of coffee, cocoa, oil palm products, coprah, pineapples and livestock for local processing and export. 2. 7 The most critical factor impeding development of Guinea's rural sector had been the lack of incentives for producers. In line with Guinea's post-independence move towards a centrally planned economy, the marketing of agricultural and consumer goods was taken over by the state. Farmgate prices were set too low in relation to the prices of consumer goods and subsequently, in an effort to reduce its import bill, the Government limited the supply of consumer goods. Little incentive was therefore provided for production beyond family requirements, and production reverted to subsistence farming, with very little output being sold to the state. A "parallel" market developed in all commodities with prices substantially higher than official prices and with smuggling of agricultural produce such as coffee and livestock to neighboring countries in exchange for consumer goods which were then sold on the parallel market. Prices on the parallel market were as much as five to eight times as high as official prices reflecting a similar degree of overvaluation of the Guinean currency. The parallel market, however, had insignificant stimulus on the rural sector as a whole, as opportunities to trade in tnis market were limited. This incentive problem was aggravated by the pattern of investments in agriculture during the past years. Directed to collective farming and parastatal agencies as the vehicle to promote agricultural development, the results had been dismal as most of the funds available were used to pay salaries with very little returns. 2.08 After the change of government in April 1984, Guinea adopted a free trade economy with strong emphasis on the private sector. Notably among its first specific policy changes was the abolition of some state marketing agencies and the Ministry of Collective Farming and the removal of transport barriers to movement of goods between regions. The Government's new policy direction and the specific changes already made are fully in line with the Association's recommendations as set out in the Agricultural Sector Review (Report No. GUI-4672, 1984). 2.09 The main objectives in the rural sector, as they are evolving under the new regime, are to promote cereal production for food self-sufficiency, increase export production, and raise the standard of living of the rural population. Because of the several years of neglect of agriculture, a number of issues remain to be resolved to permit an expansion of rural sector activities. These include: (a) inappropriate pricing and marketing policies for agricultural products; (b) the complete absence of effective and functional agricultural services (extension, research, input, supply and credit) for farmers; (c) an overstaffed ministry with poorly trained personnel and ill-adapted structures; and (d) inadequate financial resources to permit a proper functioning of  - 5 - agricultural services. The new leaders have appealed to the donor community and in particular to IDA to help them resolve these issues and revive growth in agriculture. The Association has responded to the demand through various lending instruments as described below. 2.10 The Association's lending strategy for agriculture is oriented towards increasing productivity of smallholders and individual livestock owners while creating durable sector institutions in both the public and private sectors. The Association is pursuing dialogues on both macro and micro-economic policies to provide incentives for agricultural import substitution and exports through the Structural Adjustment Credit (para 2.04). Lending activities in the sector would focus on proven technology to be applied to adaptable areas on the one hand, and strengthening the administrative and technical capability of the Ministry of Rural Develop- ment (Ministare du Developpement Rural, MDR) on the other hand. A Gueckedou Agricultural Development Project (Credit 1635-GUI, US$6.7 million of November 1985) supports the agricultural development in the Gueckedou region with technology proven under the First Rice Development Project (Credit 952-GUI of September 1979)* and the Agricultural Services Project (Credit 1636-GUI, US$7.6 million of November 1985) aims at improving the capability in planning, policy formulation and project analysis of NDR. A study, financed by a Project Preparation Facility (PPF) advance, on the reorganization of the agricultural supporting services and long-term development of the rural sector is being undertaken by MDR with the assistance of consultants. Together these interventions support the Government's institutional objective of promoting the rural sector by unleashing the productive energies of Guinea's smallholders, making them primarily responsible for their own livelihood with minimum state intervention. Once the details of this strategy have been worked out and agreed, an expanded IDA agricultural lending program, working closely with other donors, is planned. III. THE LIVESTOCK SECTOR A. Population Characteristics 3.01 Livestock Numbers and Distribution. Livestock and in particular cattle are an important element of Guinea's rural economy. Livestock resources comprise about 1.6 million cattle, 450,000 sheep, 445.000 goats, 40,000 pigs and five million chickens. Of the total cattle population, about 51% are kept in Middle Guinea, 26% in Upper Guinea, 152 in Maritime Guinea and about 8% in the Forest Region (para 2.05). The regional distribution of sheep and goats is similar to that of cattle. Pigs, on the other hand, are concentrated mainly in the Forest Region. Poultry are raised throughout the country. 3.02 Breeds. The cattle population consists almost entirely of the N'Dama breed, the only significant exceptions being along the border with Mali where some crossbreeds between N'Dama and Zebu are found. The N'Dama  - 6 - is a humpless hardy breed with moderate fertility and milk production. The N'Dama's most outstanding characteristic is its relative trypanosomiasis and streptothricosis tolerance. Trypanosomiasis, a disease transmitted by the tsetse fly, can be found in most humid parts of Africa which represent about one-third of the continent. Streptothricoasis is a skin disease prevalent in hot and humid climate. The N'Dama breed, which is thought to originate from Guinea's upland plateau, the Fouta Djalon, has therefore become much sought after by countries that wish to introduce N'Damas so as to utilize the untapped forage resources in humid tropical regions. 3.03 Management Systems. About 160.000 families or 30% of Guinea's rural population, are rearing livestock. The ownership of cattle, sheep and goats is well distributed with an average herd size of 10 cattle, 5 sheep and goats. Thus, while a few cattle owning families with larger herds tend to have higher than average incomes, for most livestock owners' family incomes are about the average or slightly above the average for the rural sector. The small size of the typical herd means that practically all livestock owning families also grow crops which are usually their primary source of income. Herds are generally sedentary; animals are grazed in the bush or on crop residues during the day and are tethered near the homestead at night and during the rainy season. Some transhumance is practiced in the western part of the Fouta Djalon where forage resources are limited during the dry season. Cattle are reared for milk, meat and draft purposes with the importance of each function being partly dependent on locality. Thus, in the Fouta Djalon, milk is a particularly important product as is meat, but usage of work oxen is less prevalent. In Upper Guinea keeping cattle for draft purposes may be the primary motive. Throughout the country, livestock rearing is a means of storing capital for use in emergencies or for gifts at weddings and other occasions. Cattle are, therefore, highly prized possessions and, within the constraints posed by the general lack of adequate veterinary and animal husbandry support services, are generally carefully tended by their owners. B. Animal Productivity and Health 3.04 Herd Composition and Productivity. Herd composition for a 15 animal herd would typically be as follows: 4 cows, 2 calves, 2 heifers and 2 males (steers, bulls or oxen) and 5 sheep and goats. Productivity is low. Calving for heifers does not generally occur until four years of age and the subsequent calving rate is only 56% with a calf mortality of 34% resulting in a weaning rate of less than 37%. The mortality rate among young stock aged 1 to 2 years Is about 11% and the mortality rate among reproducing cows is about 5%. As a result of internal parasites, the lack of mineral supplements and generally poor disease control services, the population of the country's herd is estimated to grow slightly and annual liveweight gains for young stock aged 1 to 3 years usually do not exceed 40 kg per animal with herd offtake estimated at about 9.5%. 3.05 Animal Health. The poor status of animal health is the main constraint to livestock productivity and growth. Major health hazards found in cattle are contagious bovine pleuropneumonia (CBPP), anthrax,  - 7 - blackleg, pasteurellosis, internal and external parasites and trypanosomiasis. In sheep and goats, they are internal and external parasites and pasteurellosis. In poultry, they are newcastle disease and coccidiosis. 3.06 CBPP was endemic in Guinea causing an estimated 4,000 deaths annually, mainly in the Upper Guinea and Forest Region. Further spread of the disease to Middle Guinea and Maritime Guinea was prevented by control of animal movements. However, a few cases of CBPP have been reported recently in the western half of the country along the northern border. Rinderpest (RP), a major cattle disease, has not been reported in Guinea since the sixties. However, recent outbreaks in neighboring countries such as Senegal and Mali can cause potential problems to Guinean cattle population. The possibilities of renewed outbreaks in Guinea must be continually guarded against. 3.07 Anthrax, blackleg and pasteurellosis occur throughout Guinea although their incidence is lower in the Forest Region. Internal and external parasites cause the most serious overall economic losses to the livestock sector, resulting in low liveweight gains, reduced fertility, low milk production and reduced draft animal efficiency. Trypanosomiasis infested tsetse flies are found all over Guinea and particularly in Upper Guinea. The disease itself is a problem for all weak animals for which the inherited trypanosomiasis tolerance of the N'Dama becomes insufficient. Finally, the newcastle and coccidiosis diseases, when occuring, can wipe out the poultry population in the affected area. C. Institutional Structure 3.08 The Livestock Administration. The Ministry of Rural Development (MDR) is responsible for the development of the rural sector, including livestock. The organization chart of the MDR is shown on the following page. The General Directorate of Livestock, headed by a General Director (DG), is directly responsible under the MDR General Secretary for all activities related to livestock. The state farms at Famoyla, Dinti, Kalaboui, the selection center at Boke, and the bee keeping center at Labe also come under the supervision of the Directorate. The livestock vaccine production laboratory of Kindia is attached to the Research and Biology Institut of Guinea which is under the Ministry of Scientific Research since 1985. Responsibility for training of veterinary and livestock productimo personnel is shared with the Ministry of National Education.  -8 - GUINEA UVESrOCK SECTOR REHABILITATION PROJECT Ministry of Rural Development W rERAL| DEVEU l l l FF-~ G ASE r O r OL SERVIES 1 SESASTATE EO L A33 J DEVELOPKMEM ____ CaEk DIETOAGE-ERL DIECTORATE GNRL IEr *RURAL ENGINEERING |OF AGRIOJLTURE l| OF UVErO( | PREFECrORAL DlRECrO S CE |OF RURAL DEVELOPMENT L;;;;; iL ~SERVKCES| OF LVESrOCK t33] LlVESTOWl POBon(3=522| Worcld Bank-30522-1  3.09 The General Directorate of Livestock (Direction Generale de l'Elevage, DGE) is responsible for supervising field activities of 8 provincial inspectors and 33 regional offices ("Service Prefectoral de 1'Elevage", SPE). Under each SPE, field services are organized by sub-prefectures (about 335) which each typically covers about 70,000 ha. Staffing in a SPE would usually consist of the Chief, a Deputy, one or two high level staff, one or two controllers (middle level staff) and a "monitor" (low level staff), and for the sub-prefectoral level, a controller and one or two monitors. The field based livestock service comes under the general political and administrative umbrella of the sub-prefectoral administrators and the provincial Governor, but supervision of technical matters is under the DGE. 3.10 Infrastructure and equipment for the livestock services are very inadequate at present. The DGE is housed in a rented delapidated building and lacks transport facilities and most basic furnishings and equipment. Similarly, regional headquarters for each SPE are in need of repair or in many cases, resiting and rebuilding. Sub-prefectoral staff generally do not have constructed offices; the equipment, materials and medicines being kept in the house of the field staff concerned. Field staff do not have means of transportation nor the most basic equipment and materials for treatment of diseases. Drugs, medicines and mineral licks are virtually unobtainable. Field activities have been mainly restricted to irregular vaccination campaigns and annual censuses; the latter has created mistrust between herdsmen and livestock agents as it was the basis for forced marketing, and it was still used for taxation purpose. 3.11 Training of Livestock Staff. Guinea has two intermediate level livestock training colleges and three higher level facilities. The former provide three year courses after which about 40Z go on to tr. year courses at the latter and eventually become senior staff level. The rest enter the service immediately as controllers or assistants. Cadres with secondary school education can also be employed directly into the service as menitors and are expected to gain experience while on the job. About 60 senior staff have also studied abroad and some 75 staff are under training in various external institutions. From 1976 to 1984 the livestock education system has produced about 1,400 high level and middle level staff. They have been absorbed in the administrative services of livestock, agriculture, education and ex-Ministry of Collective Farming. 3.12 The quality of livestock education is inadequate. Most of these institutions lack even the most basic library, laboratory and practical training facilities. One of the schools is even located in the forest region where cattle raising is not a primary occupation. The subject matter of courses lack practical orientation and they frequently cover topics which are only marginally relevant to Guinean livestock sector needs.  - 10 - 3.13 Recruitment of Livestock Staff. In the past, the Government's system of mass education and of guaranteeing employment to graduates from its educational institutions has created serious overstaffing in the public services. In 1984, there were about 1,050 technicians in the livestock service, of which 33% are high level staff (Level B), 43% middle level (Level D and C), 12Z lower level (monitors), and 12% trainees. Only 30% of the staff are appointed to the field services. In addition, since the recent abolition of the Ministry of Collective Farming, about 600 livestock technicians are being integrated into the livestock services. Another 450 technicians are under training and about 200 would likely be absorbed by the services. By late 1985, the staffing level of the livestock services would likely reach 1,800. Yet, it is estimated that the requirement for livestock services is about 620 (para 4.46). This staff redundancy is one of the main causes for diminishing operational funds and as a result, the livestock services have become ineffective. The budgetary implications for the Government are serious. The annual wage bill grew from sylis 77 million in 1983 to more than sylis 160 million in 1985. 3.14 The Government is aware of this problem and has taken some significant measures to limit further expansion of public employment. It has stopped, until 1990, enrollment in all institutes training rural sector technicians. Students in the first two years in the agro-pastoral institutes are expected to be reoriented to other sectors and students under training to be veterinary doctors would become animal husbandry officers. On the national level, civil servants about 55 years old with more than 18 years of services are required to retire. Under the economic reform program which the IDA Structural Adjustment Credit supports, the Government has decided to freeze recruitments and will begin to reduce civil service staffing levels in 1986. The proposed project would also introduce pilot measures that would support the Government's efforts in dealing with this problem (para 4.12). D. Sec-or Financing and Taxation 3.15 Funding of the livestock sector is made primarily through the national budget, which finances about 90% of sector expenses. This source is supplemented by the regional budgets which finance some operating costs and some temporary low level staff positions. In 1983 the national budget provided an estimated sylis 86.8 million towards sector related expenses of which over 90% -- about sylis 77.5 million -- went towards salaries leaving, for the entire sector, only sylis 9.3 million, for the purchase of equipment, materials, veterinary products and maintenance of buildings (fuel was financed separately). Receipts from the sector stem primarily from the "vaccination tax" which provided sylis 3.9 million in 1983. Collection was based on an annual census conducted by the livestock services which was also used as a basis for estimating vaccination needs. Theoretically, other forms of taxation also exist (for instance, the slaughtering tax) but collection against these has not been effective. The sector cost recovery policy would be addressed under the project (paras 5.06-5.0(9).  - 11 - E. Sector Objectives and Investment Program 3.16 The average per capita consumption of meat in Guinea is about half of other countries in Africa. The Government's primary objective in the sector is to increase national meat production, in particular for urban consumers who are partly supplied by imported meat. In addition, the Government recognizes the nutritional value of the national cattle herd's milk production, the significance of livestock rearing on the livelihood of a substantial portion of Guinea's population, and the current and potential benefits from animal traction. The potential to further these objectives is good since a large proportion of the population has experience in keeping cattle and other forms of livestock. Furthermore, the N'Dama breed is highly suited to prevailing environmental and husbandry conditions, and in most areas there are sufficient pasture resources. A major constraint, however, is the lack of adequate veterinary and animal husbandry support services. 3.17 Efforts to improve the animal health situation in Guinea have to date concentrated on vaccination programs against the prevalent cattle diseases in eastern Guinea (Upper Guinea and the Forest Region). The financing for the vaccination programs have come from UNDP/FAO (Projects GU17402, GUI78012 and GUI78013) and the Association (the Livestock Develop- ment Project, Cr. 1063-GUI of September 1980). The results of these programs are as follows: Historical Animal Vaccination Programs in Guinea Financed Year Number of Animals b_y Vaccinated CBPP Rinderpest UNDP/FAO 1975 106,973 - UNDP/FAO 1976-77 252,475 - UNDP/FAO 1977-78 126,607 - UNDP/FAO 1978-79 407,576 58,981 UNDP/FAO 1979-80 234,340 43,937 UNDP/FAO 1980-81 97,994 2,580 UNDP/FAO 1981-82 153,860 33,000 IDA/Gov't 1982-83 109,969 - FAO/Gov't 1983-84 94,981 109,031 3.18 Except for 1978-79, the vaccination coverage has been disappointing. This could be explained by the following factors. The campaign so far has been organized and operated from a base at Kankan with mobile teams, led by veterinary officers. They travelled to each ar.a on a schedule advertised ahead of time. ThiE method has not worked so well as the vaccination period lasted for a long time, and the lack of telecommunication made it difficult to supervise the travelling schedule of the mobile teams. The organization of the vaccination campaign would be addressed under the proposed project (paras 4.44-4.45). The second factor  - 12 - was due to the forced marketing policy and the vaccination tax which had created mistrust between livestock officer and the herdsmen. As a result, the herdsman did not bring the cattle for vaccination for fear that his herd would be recorded and that he would be obligated to pay tax and to sell 10% of his herd at an official price about one third of the market value. The forced marketing policy was removed after the change of government in April 1984. Furthermore, limited financial resources have also restricted the coverage of the campaign. F. Experience with Past Lending - The Livestock Development Project 3.19 The Livestock Development Project (Credit 1063 GUI, SDR 13.3 million) was designed to help the Government achieve sector objectives. It also aimed at helping individual livestock owners through low cost investment and institutional strengthening. The Association approved the Credit on September 9, 1980 and it became effective on July 31. 1981. Disbursements were suspended in April 1983. and the undisbursed amount (SDR 11.7 million) was cancelled on September 12, 1983. 3.20 The cancelled project involved the strengthening of animal health services throughout the country. Its major activity was to carry out national vaccination campaigns against two major cattle diseases (rinderpest and CBPP), and the sale of livestock inputs (medicines, vaccines and mineral licks) to herdsmen. The project also supported the development of infrastructure and training aimed at strengthening the national livestock services. The Credit contained conditions requiring policy changes affecting marketing, vaccination taxes and overstaffing which were to be fulfilled by December 1981, a date later changed to June 1982. The project encountered important local cost financing and implementation constraints from the beginning. Government was asked by IDA in April 1982 to delay signing several contracts, until the financing and implementation problems had been resolved. One of the implementing agencies whose role had been subject to change at negotiations was not performing as had been expected. Some local production of vaccine took place in 1982 and a vaccination campaign was carried out. Livestock owners however still had to deliver a number of animals (equivalent to a tenth of their herd) to the State Livestock Marketing Agency (Entreprise de Commercialisation du Betail, ENCOBE) at a very low official price which, together with the vaccination tax, would have dissuaded farmers from making full use of the project in the future. In view of the lack of progress on the marketing issue in particular, IDA detailed certain actions it would like to see take place on marketing before December 1982 and July 1983 with the liberalisation of the cattle trade by December 1983. However, the Government did not take appropriate action and following further discussions and a mission in March 1983. cancellation of disbursements and subsequent cancellation of the Credit followed as noted above (para 3.19). 3.21 As a result, very little was achieved under the project compared to what had been intended. Only the vaccine laboratory was equipped, some vaccines produced and the first phase of the 1982-83 vaccination  - 13 - campaign carried out, affecting about 95,000 animals. Design of all buildings was completed and the contract for their construction vas awarded. However, construction was not carried out. Project disbursements amounted to SDR 1.43 million of IDA funds and about sylis 7 million of local funds. The main disbursement under the project was for technical assistance which was maintained until July 1983. 3.22 Since the project barely started, it has had no impact on livestock production and owners' incomes. It has however made the Government more aware of livestock problems and the importance of economic issues. Only 15 days after the change of Government in April 1984, the new leaders took steps to deal with the problem of livestock marketing. It abolished ENCOBE and requested the Association to reactivate the Credit. In view of this positive development and the change in the new Government's policy that would likely contribute to a healthier economic environment for the sector, the Association agreed to the preparation of a new project. Lessons learnt from the cancelled project has been fully incorporated in t'- proposed project. They include conditions related to policy issues, project organization and the availability of local counterpart funds. G. Sector Strategy and Rationale for IDA Involvement 3.23 As in many other Sub-Saharan countries, the Government of Guinea controls all essential livestock services. They include policy formulation. general administration, operation of research facilities and diagnostic laboratory, treatment of animals, and distribution of livestock inputs. Government services have been ineffective so far due to the poor personnel management, leading to low productivity. Lack of control on personnel number- has led to increasing wage bills and inadequate funding of operating costs as the Government has been unable to find additional funds for both. At the same time, the livestock owners are increasingly aware of the benefits in controlling common diseases and in the use of drugs, and they are prepared to pay for the services themselves. Consequently, some consideration is being given to reorganizing livestock services, with increasing reliance on the initiatives of the private sector. 3.24 The permanent settlement of the Guinean herdsmen and their interest in livestock are conducive to a reorientation of the livestock services to the private sector. Furthermore, the liberalization policy of the new Government in Guinea is in accord with such a change. However, under the Guinean conditions where the experience of'the private sector is limited due to a quarter of a century of suppression, where basic infrastructure is virtually non-existent, and where transport facilities are highly inadequate, the entrustment of animal health and husbandry to the private sector will have to be developed gradually. The proposed project would aim to achieve this objective through a two pronged approach: (a) by introducing and supporting the privatisation process in the development of the livestock sector; and (b) by strengthening a reduced public livestock service and reorienting it to tasks of public interest  - 14 - such as general vaccinations against epidemic diseases, research and extension. 3.25 The Association's involvement through the proposed project is essential in helping the Government implement the new strategy and to rehabilitate a sector with significant potential to contribute to the growth of the economy. More importantly, it would help set out concrete examples for the reduction of public sector employment, decentralisation of public sector activities, and the privatisation process which are the Government's main preocupations in restructuring the economy. IV. THE PROJECT A. Objectives 4.01 The major objective of the project would be to increase the productivity of the Guinean livestock thereby augmenting national meat and milk production and improving nutrition, and also, raising the standard of living of livestock-owning families. This would be achieved through simple measures: vaccination against common cattle diseases; provision of medicines, and mineral licks; and upgrading of the livestock husbandry and veterinary support service. The project would also attempt to create an environment conducive to the privatisation of livestock services and provision of inputs. If successful, this could be adopted on a wider scale under future projects. B. Summary Description 4.02 The proposed project would have a country wide coverage. It would be implemented over five years and would include: (a) Support for the privatisation process through: (i) the establishment of about 45 herdsmen's associations to enable them to employ their own agents for simple animal health treatments and saies of livestock inputs. To provide incentives for the formation of associations, the project would provide for training of the associations' nominated agents, and support for the associations' initial stock of livestock inputs; (ii) the creation of an Input Supply center ("Centrale d'Approvisionnement"- CA) at Conakry for the production, purchase, distribution and sale of livestock inputs such as vaccines, medicines, and mineral licks. As the private sector initial interest in the supply of livestock inputs is limited, the state  - 15 - would be mainly responsible for the CA's operations in the beginning of the project. However, the participation of the private sector, particularly that of the herdmen's associations in CA would be permitted; and (iii) the provision of a small pilot credit component for the establishment of private veterinarians throughout the country, for setting up animal production farms, for herdsmen's associations, and for distributing livestock inputs. (b) Strengthening of a reduced public livestock service through: (i) the construction and renovation of buildings for the central department in Conakry ("Direction Generale de l'Elevage" - DGE) including the Diagnostic Laboratory, 22 Prefectoral Directorates ("Service Prefectoral de I'Elevage - SPE), and provision of equipment, vehicles and basic materials to DGE, 33 SPEs and 320 livestock posts ("Poste d'Elevage" - PE); ii) the establishment of a training center in Labe with a capacity for 40 trainees for recycling training of about 240 livestock staff during project implementation period; training of livestock agents nominated by herdsmen's associations; and training of representatives of herdsmen's associations on group development; (iii) provision of fellowships for external training of high level staff; and (iv) provision of equipment and vehicles for annual national vaccination campaigns against common cattle diseases. (c) Provision of about 19 staff-years of internationally recruited resident specialists; and about 39 staff-months of short-term consultants to assist in project implementation, carry out studies related to the sector, and prepare a possible follow-up project. C. Detailed Features 1. Establishment of Herdsmen's Associations 4.03 To decentralize animal health and husbandry services and to move towards the privatization of livestock services, the project would attempt, on a pilot basis, to establish herdsmen's associations. On average, each association would consist of about 700 herdsmen, owning about 7,000 cattle  - 16 - and 4,000 sheep and goats. These associations would be created in the form of non-profit making entities and would not be liable to taxation. The objectives of the association include purchases and distributions of livestock inputs to members, provision of veterinary services, and marketing. The management of each association would be entrusted to an executive committee to be elected by members. The revenues would be made up essentially of the members' contributions, government's subsidy, grants as well as incomes from their own sales of inputs. The associations would have access to credit for investments that can be jointly owqned and used by the group. Members would be jointly liable for the associations' debts. 4.04 Under the project, each association would nominate its own agent who would be trained (para 4.14) to perform simple treatments of animals (i.e. vaccination, castration, etc.) and to be responsible for purchases and sales of livestock inputs to the association's members. The establishment of the association would be legalized by the approval of the statute by the concerned Prefet in each prefecture. An assurance was obtained from Government that the draft model statute would be prepared and would be available for IDA review and comment by June 30, 1987. 4.05 To provide incentives for forming groups, the established association would receive an initial stock of livestock inputs including medicines and mineral licks, free of charge from the Input Supply Center ("Centrale d'Approvisionnement", CA) (para 4.08). The size of the stock would vary according to the number of cattle in the association but it would not exceed an amount about US$3,500 equivalent. Sale proceeds from the initial stock, including a profit margin of about 15% (para 4.50) would constitute a revolving fund for the association. It would then be used for stock replenishment, for payment of services of livestock agents, and for forming capital of the association. In addition, the project would provide for a small pilot credit fund of about US$200,000 for the associations to invest in infrastructure, and productive facilities such as stores, water points, etc. (para 4.12). 4.06 As the establishment of the herdsmen's associations would be a new experience in Guinea, the project would provide for the service of an internationally recruited expert to work exclusively on group development for about three years. He would be assisted by a Guinean staff who would eventually take over the task. He would work directly with the herdsmen in forming groups, draft the model statute for the associations, and help train livestock staff and the associations' representatives in matters related to group development. He would be s'ationed in the training cen:er compound (para 4.15) in Labe. He would help start herdmen's associations in the Fouta Djalon (Labe province) and would work in other parts of the country after gaining experience from the few first groups. It is expected that about 6 groups would be in operation by PY2, 16 by PY3, 30 by PY4, and 45 by PY5. Associations have been started in projects in a similar manner elsewhere in Africa (Mali, Senegal, Central African Republic), and experience indicates that when groups are created for economic purposes such as those indicated above, they often work and continue after the withdrawal of support from project authority. Furthermore, as Guinean  - 17 - livestock owners are generally sedentary and take pride in rearing cattle, the establishment of associations for economic purposes is likely to succeed. 2. Livestock Inputs 4.07 At present, sales of livestock medicines and mineral licks are virtually non existent in Guinea. The limited available medicines are often given free to herdsmen by the administration, and mineral licks, an important product for weight gains, increasing milk production and fertility are not widely utsed. This has been a disincentive for the private sector to buy and sell livestock inputs. Furthermore, other factors such as uncertainty in the economic stability of the country, non- convertibility of the local currency, and inadequate transport and infrastructure have also hampe-red private interest in importing and distributing livestock inputs, although the Government has eliminated its monopoly in this domain. 4.08 The improvement in animal health and husbandry services would only be effective with the increasing availability of livestock medicines and inputs. Given the limited governmental financial resources, this could only be made possible by the participation of the private sector. The project would help create an environment that would encourage private interest. It would establish an Input Supply Center ("Centrale d'Approvisionnement" - CA) for the procurement and distribution of inputs. The enactment of a satisfactory statute for the creation of CA would be a condition of Credit effectiveness. In the beginning, the state would have to be the sole owner due to limited private interest. However, private participation should become possible during project implementation as the economic situation and prospects improve. Therefore, the operation and management of CA would be reviewed annually between the Government and IDA to examine the possibility of a take over by the private sector. A detailed description of the statute of CA, the assumptions made in calculating the required livestock inputs, including the expected evolution in the numoer of livestock owners participants in the inputs program, and the forecasts cash flow of the CA over the first 10 project years are given in Annex 4-1. 4.09 The project would rennovate an existing warehouse located near DGE to be used by CA for storage purpose. Because of many other demands on Guinea's limited foreign exchange, the project would also finance the purchase of livestock invuts for CA for a four-year period. The accumulation of sale proceeds, by the end of that period, estimated at FG 570 million (US$1.6 million equivalent) would be used to finance the initial stocks of inputs for associations to be created after project completion. It would also be used for stock replenishments, including incremental purchases beyond the project implementation period. By that time, it is expected that the macro-economic and foreign exchange situation will have improved, and the replenishment of imported livestock inputs be less of a problem. To the extent possible, delivery of livestock inputs to sale points (para 4.49) would be contracted to private sector and the cost of private transport has been included in the project cost. The CA would  - 18 - be provided with a truck and a pick up for direct delivery when contract with private sector is not readily available. 4.10 CA would import most medicines except for vaccines which would be produced by the vaccine production laboratory in Kindia. With financing from UNDP/FAO before 1980. the Association through Credit 1063 (paras 3.19-3.22) in 1982-83, and UNDP in 1983-84, this laboratory has been upgraded to a modern facility capable of handling the vaccine production requirements for the proposed project. The main constraint to the production is the availability of regular electricity and water. The project would finance the installation of a voltage stabilizer, a hydraulic tank, and some basic laboratory materials. The vaccine production laboratory is currently an integral part of a larger laboratory fcr diagnosis of human disease ("L'Institut de Recherches et de Biologie Applique de la Guinee" - IRBAG) (para 3.08). The Government has issued a decree on April 7, 1986 to transfer the administration and all related infrastructure of the vaccine production laboratory to MDR. This would allow the unit to function independently in response to the need of the livestock sector. The unit would be provided with an internationally recruited specialists under the project (para 4.18) to help supervise the production process. 4.11 1ineral licks would be produced in a small workshop to be located at Coyah, where the main raw material for their production, salt, is readily available. The workshop would consist of a simple building which would house a simple mixer and a small warehouse (about US$70,000). The personnel would consist of four persons who would be hired and paid by DGE during the transitional period until it could be incorporated into the CA, and taken over by the private sector (para 4.08). 3. Pilot Credit Scheme 4.12 In order to facilitate the privatisation of livestock services, the project would include a small pilot credit component for the following activities: a) Ioans for setting up private veterinarian practices. These loans would be given to qualified veterinarians, particularly those retiring from public livestock services. The amount of each loan would not exceed US$8,000 each and the total US$170,000. The program is anticipated to begin in PY2 to involve about 25 participants by PY5. b) Loans for setting up animal production farms (cattle, sheep, goats etc). These loans would be given to qualified persons, particularly to those retiring from public livestock services. The amount for each loan would not exceed US$10,000 and the total US$500,000. The program is anticipated to begin in PY2 to involve about 50 participants by PY5.  - 19 - c) Loans for herder groups for the construction of storage, water points, dipping tank etc. The amount of each loan would not exceed US$10,000. The program is anticipated to begin in PY2 to involve about 20 groups by PY5. d) Loans for setting up retail shops, pharmacies for the sales of livestock medicines, small veterinary equipment, and mineral licks. The amount of each loan would not exceed US$3,500. The program is anticipated to begin in PY2 to involve about 40 participants by PY5. Financing terms and conditions would vary depending on the type of loans. The rate of interest, however, should range between 8% to 12Z. On average, the portfolio would have an interest of 10%. Detailed descriptions of the criteria for each type of loan and some cash flow models are presented in Annex 4-2. Experience from this pilot component would help build up a larger credit program in future projects, which would be carried ou: by the banking system currently under reform. 4. Upgrading cf Public Livestock Service 4.13 While private veterinarian services are being developed, the DGE would play an important role in improving anlmal health and provision of inputs. However, the present staffing level would be greatly reduced from about 1,800 to 620 (para 4.48). Because of the compLete lack of basic infrastructure and non-availability of alternative accomodations, the project would provide for the construction of a building of about three stories for the DGE in Conakry. The building would cover an area of about 300 m2 and would consist of offices, a confereuice room and a diagnostic laboratory. Of the 33 SPEs needed under the :,roject, about 13 would be newly constructed and 9 would be rennovated. Each would cover on area about 88 m2 and would consist of offices anc a small storage facility for livestock inputs. The project would also finance vehicles, equipment and operating costs of DGE, and the 33 SP.s and 320 PEs. 5. Training 4.14 To respond to the need for upgrading the professional knowledge and practical skills of the livestock staff and to provide support for the privatisation process of livestock service, three types of training would be provided under the project: a) upgrading skills of livestock staff through intensive recycling courses in the country and fellowships for external training of senior staff; b) practical training of agents of herdsmen's associations in simple treatments of animals such as vaccinations, castrations etc; and c) management training for herdsmen's representatives (President, Secretary, Treasurer). Additional informal training would be provided through periodic seminars and on-the-job collaboration with the project's specialists internationally recruited under the project.  - 20 - 4.15 To support the training effort, the project would provide for the construction of a center in Labe. Existing training facilities are inadequate, unsuitable for the objectives of the nationwide project. The center would have a capacity of up to 40 trainees at anv one time and would consist of two classrooms, a simple laboratory, offices, and a printing shop for producing technical brochures and learning materials. Because of the lack of alternative accommodations in the area, housing would be provided for the Director of the center and the two internationally recruited specialists, and a guest quarter for visiting lecturers. The center would also have a small demonstration animal farm (cattle, sheep, goats and chicken) and a shed for storing equipment and feed. The project would also provide basic materials, equipment, and vehicles for the center and funds for the occasional services of internationally recruited trainers. 4.16 The project's fellowship program would be designed to upgrade the skills of middle and upper level Guinean staff through participation in training programs abroad. Funds have been provided for about 20 medium term (one year) fellowships and 30 shorter term visits or courses (typically one to three months), and would cover all offshore costs (e.g. travel expenses, accomodation, training fees, books and pocket money). The medium term fellowships would generally cover formal training courses offered by appropriate institutions or universities. Shorter periods abroad could be used for more condensed ccurses or for visits to livestock research centers or to relevant livestock development projects and programs in other animal husbandry and tropical veterinary medicine; other project needs - for training techniques, monitoring and evaluation techniques and sector planning - would also be provided for. An assurance was obtained from the Government that it would require trainees benefitting from fellowships to stay in the service at least two years after their return. 6. National Vaccination Campaign Program 4.17 The project's vaccination program would aim at providing countryside prophylactic coverage against the major cattle health hazards posed by diseases such as contagious bovine pleuropneumonia (CBPP), and rinderpest (RP). The program would aim to cover about 600,000 vaccinations against CBPP and 160,000 against RP per year, representing about 38% and 10% of the herd size, respectively. The vaccinations, however, would cover at least 80% of the herd in the affected areas. The planning and coordination of the national vaccination campaign would be carried out by two separate bases under the overall direction of the DGE. The western base would be located in Labe and the eastern base in Kankan. Each base would be stocked with vehicles, spare parts, gasoline, freezers and necessary vaccines. The Labe base would be constructed in the same location as the SPE and the training center. It would consist of offices, a garage, and workshop for vehicles maintenance and simple repair. The existing SPE in Kankan would be refurbished and enlarged to include facilities similar to the Labe base.  - 21 - 7. Technical Assistance 4.18 Seven international specialists would be recruited to assist Guinean cadres in specialized activities for which local expertise is limited. In all, 19 man-years of technical assistance are required (Annex 4-3). These positions are: (i) a livestock specialist with project management experience to assist the DG in technical matters for three and a half years. He would be appointed as Technical Director; (ii) a financial analyst with former experience in project financial and administrative matters for four years. He would be appointed as Financial Director; (iii) a training specialist with experience in the livestock sector for the project's training programs for three years. He would be appointed as the Training Program Director; (iv) a specialist with experience in setting up herdsmen's associations for three years (para 4.06); (v) a laboratory specialist for vaccine production for two years (para 4.10); (vi) a specialist for diagnostic laboratory for one and a half years, and (vii) a specialist in the input supply system for two years. These staff would initially perform their responsibilities as line managers in their assignments and increasingly function in an advisory role in the later years so as to provide a smooth transition of responsibilities. In order to encourage the transfer of specialists' expertise to Guinean cadres, terms of reference (TOR) would place strong emphasis on the capacity of the expatriates to assist counterpart staff to acquire their skills and specify hand-over dates of their initial line responsibilities. 4.19 The project would also provide for the employment of an architect who would supervise construction works during the first two years of the project. About 39 man months of additional specialists on a short term basis has also been provided under the project. Such services would cover project needs as they materialize and would be discussed and agreed during the course of project supervision. Likely areas requiring supplementary consultant assistance would be agreed upon during project implementation (Annex 4-3) and would likely include: services of specialists for diagnostic laboratory in Conakry (para 4.13), livestock regulation, studies in agro-pastoralism. animal genetics, slaughter houses, pastoral watering points, small ruminants, and preparation of a follow-up project. 4.20 All technical assistance staff (except for the resident vaccine laboratory specialist), and about 19 staff-months of consultants would be employed according to procedures acceptable to CCCE and FAC. Their terms of references, however, would be agreed with IDA and their appointments would be consulted with IDA. The terms of employment of the vaccine laboratory specialist and about 20 man-months of short term consulting services that would be financed by IDA would require IDA approval and would be through procedures satisfactory to IDA. An assurance to this effect was obtained during negotiations.  - 22 - D. Project Cost and Financial Arrangements 1. Project Cost 4.21 Total project costs are estimated at US$22.2 million (US$21.9 net of tax) of which US$19.2 million (FG 6.9 billion), or 87% are in foreign exchange. Total project cost is summarized on the following page, with a yearly breakdown in Annex 4-4. 4.22 Project costs were estimated in dollars for all imported goods and services and in FG for local costs. Conversion between dollars and FG has been at the exchange rate of FG 360 to the US dollar. Vehicles and equipment cost estimates include allowances for an initial stock of spare parts. Cost estimates do not include local staff salaries, as the proposed project would not create incremental employment. Project costs also include operating costs and livestock inputs required during project implementation period. 4.23 Base costs are expressed in September 1985 terms. Physical and price contingencies were calculated as follows: a. Physical Contingencies % of Base Cost Buildings 15 Vehicles, Equipment, Materials 10 Livestock Inputs 30 All other costs 10 b. Expected Price Increases (Annual rates) 1986 1987 1988 1989 1990 1991 Foreign Costs (Z) 7.0 7.0 7.5 7.7 7.6 4.5 Local Costs (Z) 20.0 12.0 12.0 12.0 12.0 12.0 2. Project Preparation Facility 4.24 To allow for a quick start up of project activities during the first year of the project, a project preparation facility advance of  SUMMARY OF PROJECT COST X of Foreign as US$ Million F6 Million Base Cost I of Total Foreign Local Total Foreign Local Total 1. Input Supply 2.3 0.1 2.4 031.6 21.1 852.7 15.3 97.5 2. Pilot Scheae 0.9 0.1 1.0 331.2 33.1 364.3 6.5 90.9 3. Upgrading of Central Services 1.2 0.2 1.4 428.4 77.5 505.9 9.0 04.7 4. Upgrading of Field Services 2.6 0.5 3.1 946.9 165.8 1112.6 19.9 85.1 5. Staff training 2.0 0.3 2.3 712.8 122.7 835.5 14.9 85.3 6. National Yaccination Campaign 0.9 0.1 1.0 316.9 56.4 373.2 6.3 99.8 7. Technical Assistance 4.0 0,0 4.0 1440.0 4.4 1444.4 25.9 99.7 E. Supervision of Construction 0.3 0.0 0.3 122.4 0.9 123.2 2.2 99.4 TOTAL BASE COST 14.2 1.3 15.5 5130.0 491.9 5611.9 100.0 91.4 Physical contingencies 0.9 0.2 1.1 313.2 57.3 370.5 79.1 Price contingencies 4.1 0.9 5.0 1479.6 321.3 1800.9 82.2 TOTAL PROJECT COST (net of taxes) 19.2 2.M 21.6 6922.8 860.5 7783.3 98.7 Taxes 0.0 0.6 0.6 0.0 216.0 216.0 0.0 TOTAL PROJECT COSI (including taxes) 19.2 3.0 22.2 6922.8 1076.5 7999.3 86.3 :::::::::::S:::::SS: