Ghana - Upper Region Agricultural Development Project

Doc_ment of The World Bank FOR OFFICIAL USE ONLY Report No. 6755 PROJECT COMPLETION REPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (LOAN 1291-T-GH) May 5, 1987 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their oMcil duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency trnit = Cedi (.) Appraisal Year US $1 1.15 Completion Year US $1 - 035.00 WEIGHTS AND MEASURES Unless otherwise stated, all weights and measures in this report are metric. 1 metric ton = 0.98 long ton 1 long ton (= 2,240 lb) - 1.016 metric ton 1 hectare = 2.47 acres 1 acre 0.405 ha 1 kilometer (km) 0.62 mile ABBREVIATIONS ADB - Agricultural Development Bank CDB - Cotton Development Board CIDA - Canadian International Development Agency CRI - Crop Research Institute ERR - Economic Rates of Return FASCOM - Farmers Services Company (UR) Ltd. FSC - Farm Service Center GBC - Ghane Broadcasting Corporation ODA - Overseas Development Administration PEMD - Planning, Evaluation and Monitoring Department RMWA - Regional Mission in West Africa URADEP - Upper Region Agricultural Development Project URADPEC - Upper Region Agricultural Development Project Executive Committee URPMUT - Upper Region Agricultural Development Project Management Unit URDECO - Upper Regional Development Corporation FISCAL YEAR July 1 - June 30 (unt41 1981-1982) January 1 - December 31 (from 1982)  THE WORLD BANKFU Washingtof,. DC. 20433 US.A. Ofkic d Dvectr." wl Opwatom IvAathzn May 5, 1987 MEMORANDUM To THE EXECUTIVE DIRECTORS AND THE PRESIDLNT SUBJECT: Project Completion Report on Ghana Upper Region Agricultural Development Project (Loan 1291-T-GI) Attached, for information, is a copy of a report entitled "Project Completion Report on Ghana Upper Region Agricultural Development Project (Loan 1291-T-GH)" prepared by the Project's Monitoring and Evaluation Unit, with an overview memorandum prepared by the Western Africa Regional Office. Further evaluation of this project by the Operations Evaluation Department has not been made. Attachment ftA This document has a estrictd distributin and may be used by reciplent only in the peormance of their official duties. Its contents may not othewi be disclosed witbout Wordd anak aut_otlon.  FOR OMCIAL US ONLY PROJECT COMPLETION REPORT UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (Loan 1291-T-GH) TABLE OF CONTENTS Page No. Preface i Basic Data Sheet i Evaluation Sunmary ii Bank Overview vii I. BACKGROUND 1 II. PROJECT FORMULATION 2 III. IMPLEMENTATION 6 IV. EVALUATION OF PROJECT IMPACT 20 V. INSTITUTIONAL PERFORMANCE 22 VI. CONCLUSIONS AND RECOMMENDATIONS 27 Tables in Text Table 1: Key Indicators 5 Table 2: Project Costs 16 Annexes Annex 1: Rainfall Data 1976-84 Annex 2: Farm Inputs Table 1 Fertilizer Sales - Appraisal Estimate and Actual Table 2 Other Inputs Annex 3: Veterinary Service Department Table 1 Number of Animals Treated during Project Table 2 Numbers Treated - Pre-Project and with Project Table 3 Estimated Offtake of Livestock Annex 4s Sales of Livestock Broeding Stock Annex 5: Dam Construction/Rehabilitation and Dugout Construction as at December 1984 Annex 6: List of FSCs and District Stores Constructed/Outstanding as at December 1984 Annex 7t Disbursement IBRD Loan Annex 8: FASCOM, Summary of, Financial Results Annex 9: Telex from Government Map: IBRD No. 18484 This document has a restricted distribution and may bo used by recipients only in the perfomae of their oMcial duties. Its contents may not otherwise be disclosed without World lank authoriation.  PROJECT COMPLETION REPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (Loan 1291-T-GH) PREFACE 1. This is the completion report (PCR) on the Upper Region Agri- cultural Development Project. The loan was approved by the Executive Directors in June 1976 in the amount of US$21.0 million. The project closed September 30, 1984, twenty-one months after the original closing date. 2. The report comprises a Project Completion Report prepared by the Project's Monitoring and Evaluation Unit with consultant assistance and a Bank Overview prepared by the Western Africa Regional Office. The report was sent to the Operations Evaluation Department, where it was read. It was then decided not to audit the project, and was sent to the Borrower on March 11, 1987 for comments. Word came on April 10, 1987, from the Ghanaian Embassy that there would be no comments forthcoming on the report. 3. Western Africa Regional Office gratefully acknowledges the valuab'e assistance provided by the Government and project staff in the preparation of this report.  - il - GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (Loan 1291-T-GH) PROJECT COMPLETION REPORT BASIC DATA SHEET Actual or Actual as S Anpraisal Estimated of Appraisl KEY PROJECT DATA Estimate Actual Estimate Project Costs (US $ million) 54.6 66.1 1211 Loan Amount (US $ million) 21.0 20.3 962 Date Board Approval 06/22/76 Date Effectiveness 04/11/77 Closing Date 12/31/82 09/30/84 Economic Rate of Return 40 percent less than 10 percent Cumulative Disbursements FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 Fm5 Appraisal Estimate 3.0 10.0 13.0 17.0 21.0 21.0 21.0 21.0 21.0 (US $ million) Actual (US $ million) - 0.8 6.0 11.9 13.8 14.5 15.2 16.1 26.3 a/ Actual as % of Estimate - 8% 46% 70% 66% 69% 722 771 96% a/ US $701,678 was uncommitted by the closing date and cancelled. STAFF INPUT FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 Y86 L Preappraisal 86.2 60.6 116.7 Appraisal 58.4 58.4 Negotiation 26.0 26.0 Supervision 1.5 29.3 27.7 29.1 35.4 34.3 23.4 34.8 13.5 10.4 1.1 240.5 Other .2 .3 0 .5 Total 86.4 146.8 29.3 27.7 29.1 35.4 34.3 23.4 34.8 13.4 10.4 1.1 472.1  - iii - Basic Data Shelt MISSION DATA Date No. of Mandays Specializations Performance Types of Mission (mo/yr) Persons in Field Represented l/ Rating Trend Problems Identification 10/74 n.a n.a n.a Preparation 12/74 n.s n.a n.a Preappraisal 06/75 6 n.a a,b,c,e Appraisal 11/75 4 n.a a,c Supervision 1 06/76 2 29 a,c 1 2 0 Supervision 2 08/76 1 8 asc - - - Supervision 3 09/76 1 12 c,a - - - Supervision 4 05/77 2 20 a 2 2 M,P Supervision 5 10/77 1 22 a 2 2 M,P,F Supervision 6 03/78 2 24 a,c 2 1 M,O Supervision 7 07/78 1 17 a,c 2 1 F,M,O Supervision 8 '0/78 l 4 a,c 2 2 F,M,0 Supervision 9 04/79 2 26 a 2 2 F,1,U Supervision 10 10/79 3 36 a,b,c 2 3 P,M Supervision 11 04/80 4 28 a,c,d,e 3 3 M,D Supervision 12 10/80 4 70 c,e,f,g 3 3 N,P,O Supervision 13 04/81 1 14 c 3 2 M,O Supervision 14 07/81 3 25 h,a,c 3 1 0 Supervision 15 11/81 2 12 a,i 3 1 M,O Supervision 16 05/82 3 39 a,S 3 1 M,T Supervision 17 02/83 3 21 a,i,J 3 2 M,F Supervision 18 06/83 2 20 a,i 3 2 M,O Supervision 19 02/84 2 12 a,c 3 2 1,F7O Supervision 20 10/84 2 14 a,c 3 2 M,F,O 1/ a - agriculturist, b - agricultural economist, c - financial analyst, d - monitoring and evaluation specialist, e - livestock specialist, f - administrative assistant, g - agronomist, h - economist, i m operations, assistant, j - accountant  - iv - OTHER PROJECT DATA Borrower Republic of Ghana Executing Agent : Upper Region Agricultural Development Project Executive Committee Fiscal Year July 1 - June 30 (until 1981-82) January 1 - December 31 (from 1982) Name of Currency (Abbreviation) Cedi (W) Currency Exchange Rate Appraisal Year Average : US $1 - il.15 Intervening Years Average : US $1 - J2.75 Completion Year Average : US $1 = J35.00  - v - PROJECT COMPLETION REPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT EVALUATION SUMMARY 1. The Upper Region Agricultural Development Project was the first broad-based area development project to be financed by the Bank in Ghana. The project was identified in October 1974, prepared in late 1974 and 1975 and appraised in November 1975. Board approval was in June 1976 and the project became effective in April 1977. The project closing date was postponed twice and the project closed September 1984, 21 months after the original closing date. The delay between approval and effectiveness was due to the time taken to rppoint key staff and set up the Farmers Services Company (FASCOM). 2. The project was designed to increase production of foodcrops, cotton and livestock by providing inputs, improved agricultural extension and animal health services, supporting infrastructure and institutional strengthening. The project was also designed to improve water supplies and strengthen nutrition and health services. 2 The project area comprised the Upper Region of Ghana, covering 27,300 km with 125,000 farm families, which was sub-divided into the Upper East and Upper West Regions in 1984. 3. The project was implemented during a period of considerable political change and steady decline of the country's economy and infrastructure. The effect on the project was that the supply of agricultural inputs and raw materials was unpredictable, management did not always enjoy the support of central and regional administrations and farmers could not count on consistent incentives to raise production. 4. The project was successful in shifting Government policy to the support of small farmers, the decentralization of agricultural services and an improvement in the distribution of inputs through a Farmers Services Comp,any (FASCOM) in which farmers would build up part ownership. The project was not successful in having a demonstrable impact on crop and livestock production and the Economic Rate of Return is estimated to be below 10 percent.  - vi - 5. There were considerable delays in implementation due to country conditions and poor management. The project closing date was postponed twice, for a total extension of 21 months, in order to complete key infrastructure, provide essential agricultural inputs, which were in short supply due to foreign exchange shortages, fund emergency assistance for a Rinderpest campaign and restructure FASCOM whlch experienced serious mianagement and financial problems in 1981/82. The restructuring was successful and FASCOM is now under competent management. 6. Total project costs are estimated at US 166.1 milllon compared with US $54.6 million at appraisal, a cost overrun of 21%. While the value of ths cedi was held stable at 02.75 to US $1.00 dollar during the period 1977-82, it vas excessively overvalued in dollar terms and between 1983 and the project closing in 1984 there was an accumulated official devaluation in excess of 1200%. 7. The PCR raises issues on (a) project design which failed to provide for the difficult geographic location of the Upper Region and was over ambitious in its infrastructural objectives and its projections for both crop and livestock production; (b) management problems arising from attempting to take on 'the entire Ministry of Agriculture services in the Region; and (c) the failure to maintain an effective dialogue between the Bank and Government which contributed to the inconsistency in farmer Incentives. 8. The following important lessons are highlighted: - project design should not be over-complex, the number of components should be kept commensurate with the management capabilities of implementing agencies who should participate fully in the design process; - integrated area development projects which demand a high level of managerial skill and are relatively costly in use of financial resources are unlikely to be cost-effective in Ghana's economic conditions with agricultural support services widely rundown; - until Government salaries are raised it will difficult to attract suitably qualified management staff or motivate field staff to contribute more than a small part of their working day to project work; - development projects should not be implemented in the absence of an effective dialogue on agricultural policy and pricing.  - vii - PROJECT COMPLETION RTIPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT _ (Loan 1291-T-GH) BANK OVERVIEW I. GENERAL Introduction 1.01 The Completion Report was prepared by the Project's Monitoring and Evaluation Unit (PMEU) with the assistance of a consultant. The report provides a fair account of how the project was iaplemented but, because of the lack of firm production data, is short on quantitative analysis of project achievements. The overview draws some conclusions on project impact and elaborates on the issues raised and lessons learned. 1.02 The project was identified and prepared in 1974 and appraised in November 1975. Board approval was obtained in Jtne 1976 and the project became effective in April 1977. The project closed in September 1984 following two extensions totalling 21 months. The United Kingdom provided technical assistance and cofinancing, while the Netherlands Government provided independent funding for an agricultural training institute, in the Upper Region, which assisted the project. Project Design 1.03 The project, which was the first broad-based agricultural development project to be financed by the Bank in Ghana, was designed to increase production (foodclops, cotton and livestock) and family incomes in an area covering 27,300 km wbich supported 125,000 farm families and 40X of Ghana's livestock population. The project was expected to be implemented over five years and to include: (a) Farm Development: establish 90 Farm Service Centers (FSC); provide farm inputs, better animal health services and establish 10 livestock ranches; assist applied research and a functional literacy program; expand radio broadcasting;  - viii - improve on-farm grain storage, nutrition and health services and staff training; (b) Physical Infrastructure: construct 120 small dams and rehabilitate 100 to provide for dry season gardening, development of fruit trees and fish ponds and water for cattle; improve soil and water conservation; construct 700 wells, stores, FSCs, houses and offices; and two cotton ginneries; (c) Institutional Support: establish project management unit and a Farmers Services Company; strengthen the regional branch of the Agricultural Development Bank and the Upper Region Development Corporation; (d) Development Planning: prepare ten year development plan for areas in the Upper and Northern Regions freed from Onchocerciasis. 1.04 Project design followed the custom in the mid'70s of funding both improved agricultural development services and the filling of obvious gaps in nutritional, health, literacy and water supply programs which might otherwise constrain agricultural development. In addition, the project' Introduced an innovative approach to improving the supply and distribution of farm inputs (fertilizer, seed, chemicals, tools) with the creation of a Farmers Services Company (FASCOM) in which farmers would build up an equity interest, and eventually ownership, through a 2i percent mark-up on sales. A feeder road program was not included since it was expected that some 800 km of feeder roads would be improved during 1977/80 under a separate highway project (Cr. 594/Ln. 1182-GH). In the event, only a small part of the road program was implemented. 1/ 1.05 The project represented a major shift in Government policy which, since 1960, had concentrated on schemes for direct production by the state and assistance to larger farmers (particularly mechanized rice farming). Attempts to improve agriculture in the Upper Region date back to the 1930s and, by the late 19508, ox cuiltivation and use of soil and water conservation techniques were well established particularly in the densely populated eastern sector around Bawku. Although Government assistance to small holders decreased after 1960, a number of non-governmental organ'.zatinns (NGO) continued to operate in the Upper Region, and in the early 1970s, the Federal Republic of Germany also provided assistance for fertilizer distribution. It was expected that the Upper Region Agricultural Development Project (URADEP) would build on the work of one NGO (The Christian Service Committee of the Christian Council of Ghana) in spreading improved agricultural practices through extension and provision of inputs, and to assist, inter alia, dry season gardening, bullock training and supply of farm implements. 1/ See Project Performance Audit Report No. 5189, June 27, 1984.  - ix - 1.06 The thin research base and complexity of the mixed cropping patterns in use tiroughout the Region was recognized in the Staff Appraisal Report 2/ as was the difficulty of estimating production responses from the mixed cropping system. Some 70% of gross benefits were expected to stem from increased production of cotton and rice for which improved technology was available - although, in the case of cotton, it would involve a change to pure stand cropping. Much of the increase in production was expected to come from greater use of fertilizer. At appraisal the Economic Rate cf Return was projected at 40%. Project Implementation 1.07 The PCR highlights major problems in implementation due to management and country conditions as well as technical considerations arising from project design. The project was implemented during a period of considerable political change and steady decline of the country's economy and physical infrastructure. There were five changes in government and following the advent of the present government in December 1981, the creation of Workers' Defense Committees and Peoples' Defense Committees which were expected to participate in management and resource allocation nationwide$ added a new factor to project management. Senior MOA staff in Accra did not provide the necessary support in assigning suitably qualified and experienced staff to the project or allocation of inputs. Even the Regional Administration was not always supportive in allocation of raw materials and made unreasonable demands on logistical support from the project. 1.08 Problems of changes in the national political scene c'mpounded what was from the start a difficult relationship between the project and the Ministry of Agriculture. The project was the first major attempt to decentralize agricultural services to the reglonal level. At the time, departmental directors in Accra controlled all technical and administrative decisions, including staff movement, and it was not until towards the end of the project that responsibility was shifteu to Regional Agricultural Directors and Deputy Secretaries for Agriculture appointed to regional administrations. Unfortunately, at about the same time that these changes were introduced in 1983/84, the senior civil service echelon in the Ministry of Agriculture (MOA) was dismissed leaving MOA, Accra ill equipped to play its essential role of framing policy and resource allocation. The project never received the support of Accra based departmental directors and as a consequence was often excluded from the allocation of the few inputs procured by MOA. As a result, Government did not meet its expected contribution to non-incremental costs. 2/ Appraisal of Upper Region Agricultural Development Project - Ghana. Report No. 1061a-GH, June 3, 1976.  1.09 At the regional level the project effectively took over all the services of the Ministry of Agriculture in the Upper Region. This proved too large a task for project management and, compounded by oversights in staff recruiting procedures (PCR para 5.02), led to serious unrest which affected implementation. Poor management was a major factor in the suspension of disbursements by the Bank in 1980 and although management aubsequently improved it was unable to deal effectively with the changing political situation and rapid decline in the economy 1980/83. Although the major staff problems in URADEP were resolved in 1981, trouble in FASCOM surfaced early in 1S82. FASCOM's senior management was dismissed and the company wr- - through a difficult time until the appointment of the present Managing Director in June 1984. 1.10 Initially (PY1-3) the project was successful in increasing the supply of farm inputs, mainly fertilizer, to the Region and stepping up animal health services (see PCR table 1 and PCR Annex 2, Tables 1 & 2). Later animal health services continued in line with target but input supplies fell well below target as country conditions worsened. However it took between two and three years to start construction of physical infrastructure and achievement fell way short of target (PCR Table 1). The PCR (para 3.44) highlights delays 'i implementation due to the time taken to complete procurment of the dam building equipment financed under the UK loan. The equipment was delivered in 1979 and construction did not start until 1980/81 four years after project effectiveness. Subsequently fuel shortages (particularly acute during 1981-1983) constrained implementation. Implementation of the broadcasting component was also made difficult by the complexity of the final design of the broadcasting station compared with the provisions at appraisal (PCR para 3.23). 1.11 Implementation of key components was also affected by the failure of other agencies. The project lost control over seed supplies in 1979 when the Government transferred responsibility for seed production nationwide to the Ghana Seed Company. The key cotton component (38% of projected gross benefits) was affected by the failure of the Cotton Development Board (CDB) to purchase seed cotton on time or provide inputs. Indeed the relationship between URADEP and CDB and role of each in provision of extension and input supply services was never properly defined. As a result, the project did not have sufficient control over a key component. While the road program (para 1.04) was not implemented as expected this is not regarded as a significant factor in the project's failure to meet its production targets - except to the extent that the worsening access to the south effected the access of traders to the Region. 1.12 As a result of the serious implementation problems that had developed, a joint Bank/ODA mission recommended in October 1980 that the project scope be scaled back. Project staff prepared a revised two year program which was agreed with the Bank and ODA in November 1981 (PCR para 3.06), Even this program proved over ambitious with the deterioration in conditions 1981/83. As the project geared up its capacity to implement the infrastructure program, so the supply of raw materials began to dry up. At the request of the Government, the project closing date was postponed twice  - xi - for a total of 21 months to aid inter alia the completion of village stores, the cotton ginnery, radio broadcasting station and dam construction and rehabilitation program, as well as to fund agricultural inputs and to provide short term financial assistance for a nationwide Rinderpest vaccination program. Although by project rompletion reasonable progress had been made on the village store program, the cotton ginnery had been completed and 'mothballed' and the broadcasting station building had been completed, the broadcasting equipment had still not been commissioned. ODA agreed to provide additional technical assistance through December 1985 for the small dam program and continued to assist URADEP and the Ghana Broadcasting Corporation with the commissioning of the broadcasting equipment. II. PROJECT IMPACT Project Objectives 2.01 The project had two principal objectives: first to increase agricultural production and thus farm incomes; and second, to establish permanent farmer support services. The project was expected to do this by redefining the role of agricultural services and intensifying extension for crop and animal production and human nutrition; by developing associated physical infrastructure, including an intensive effort to halt the rapid rate of soil erosion; and by developing specialized institutions to service the commercial and financial requirements of the Region's farmers. Impact on Production and Farm Incomes 2.02 The Project's Monitoring and Evaluation Department (PMED) failed to produce reliable data on the impact of the project on agricultural production. The project inherited a large and unwieldy organization from MOA and in spite of recommendations from t-wo Bank supervision missions the hiving off of a small unit specifically to monitor project progress was never implemented. The unit was without a qualified head between 1980 and 1983 and did not receive the necessary support from project management, but continued to service the wider needs of MOA, Accra. The failure of the monitoring and evaluation system was addressed in the design of the other Bank supported area development project in Ghana - the Volta Region Agricultural Development Project which is on-going. A small unit, independent of MOA's Economic Research and Planning Services, was set up and has been supervised regularly by technical assistance which also provides back up services. 2.03 Cultivated area and production fluctuated during the project period due to varying rainfed conditions, supply of inputs and producer incentives. Data prepared in 1980 showed a decline in area cultivated and production between 1975/76 and 1978/79 but an increase in yield attributed to the increased supply of inputs, mainly fertilizer. Following drout;it in 1981/82, foodcrop prices rose through 1984 and the area under cultivation  - xii - increased in 1984. Fertilizer availability rose sharply between 1977 and 1980 (PCR table 1) but fell thereafter as Government had difficulty in financing imports. 2.04 At appraisal the distribution of net benefits between crop production and livestock production had been estimated at 60:40. Some 38% of gross benefits from crop production were projected to be derived from cotton and 32% from maize and rice. In the event, cotton production fell steadily between 1976/77 (PY1) and 1984. Following a sharp increase in price (from J0.10 to 40.35/lb) in 1974/75, profitability declined as price for seed cotton was held constant 1974/75 to 1977/78 and subsequent increases did not match the rise in foodcrop prices. The Cotton Development Board ran into sericus problems of transport and shortage of funds so that seed cotton was not bought on time. Rice production was affected by fluctuating rainfall. 2.05 Targets on livestock production from provision of improved veterinary services were met but the ranch program and stock improvement program proved over ambitious and without a sound sociological or technological basis. In addition the funds allocated to the emergency Rinderpest vaccination program contributed to the containment of the disease at a time when the Veterinary Department was very short of funds. The project also introduced a program for vaccination of village poultry flocks against Newcastle Disease. 2.06 Overall, only 25% of the small dam construction and rehabilitation program was implemented, with difficulty. Nevertheless the social and economic value of the schemes has been demonstrated and it is a component which deserves continuing support. However a more effective institutional vehicle for implementation would be required to organize farmer participation and assure supplies of fuel and raw materials. 2.07 While PMED was unable to calculate an Economic Rate of Return (ERR) for the project, it is clear, based on the shortfa: in input supply for foodcrop production in the latter years, the decline in cotton production and the failure to develop the ranch program, that it would fall far short of the 40% estimated at appraisal. Sensitivity tests in the appraisal report indicated a 9% ERR given a 75% reduction in incremental crop and livestock direct costs and benefits. However in the context of the deteriorating economic situation the "without" project situation could have been substantially worse than the actual situation during the life of the project. Nevertheless, in view of the cost overruns and substantial shortfalls in production the ERR was clearly below the acceptable 10% cut-off point. Impact on Agricultural Services and Institutions 2.08 The project, which was the first attempt to decentralize MOA activities, had a major impact on the organization of agricultural services through its effect on decentralization, agricultural extension and input supply. The principles of the "Training & Visits" System of Agricultural  - xiii - Extension were introduced with farmers organized into groups around proposed input delivery points. This was the first time that the system had been tried in Ghana and it faced considerable problems not least of which was the existence of a number of parallel services covering crops, livestock and home extension all with vested interests in remaining independent. Good progress was made in reorganizing services during the project but achievements will not be sustainable without further technical assistance and, above all, an improvement in staff salaries and payment of travelling expenses. 2.09 The establishment of the Farmers Services Company (FASCOM) was a major innovation for the improvement of input distribution in an area with extremely difficult access to the ports and suppliers in the south. The company after a successful launch experienced serious management problems in 1982 (PCR para 5.04). The Regional Administration successfully tackled these problems with the assistance of a consultant study. By project closing, FASCOM had been reorganized under competent management. The time required to resolve these problems was a major factor in the Bank agreeing to extend the project closing date. III. ISSUES 3e01 The PCR faults project design on grounds that it failed to provide for the difficult geographic location of the Upper Region, that it set over ambitious targets for construction and over estimated livestock producers' incentive to maximise income. The area selected, which was a disadvantaged region, was an obvious candidate for the integrated agricultural development projects designed at the time to focus on attacking poverty and agricultural production. Furthermore, it was expected that the Onchocerciasis eradication program would allow people to return to the more fertile river valleys and that the project would prepare the agricultural services for meeting these future demands. However, the location of the project area posed considerable logistical problems which were exacerbated not only by the rapid decline in country economic conditions, but also by the limited support given by the Government in Accra for the duration of the project. The deterioration in conditions of infrastructure and transport between 1975 and 1983 was considerable. The country's transport fleet became completely rundown without spares and tyres, and fuel supplies dried up. Road maintenance ceased and journey time between Accra and Bolgatanga increased twofold. Transporters were unwilling to risk their vehicles on the roads without the project providing new tyres. With hindsight, given the conditions that ultimately prevailed, the project can be said to have been overdesigned and this was recognized in 1980 when the program was reviewed and cut back. Construction targets were ambitious bearing in the mind the complexity of the project and the problems which arose on procurement point to the need to take greater account of delays inherent when a number of organizations with different criteria are involved.  - xiv - 3.02 The Region agrees that potential for increasing cattle production through private ranches was over estimated and did not take into account sociological factors. Similar experiences have been recorded in livestock components on projects throughout West Africa and lessons learnt have been taken into account in the design of new projects. The area also posed considerable problems for the increase in crop production since the research base was thin for the particular soils and rainfall regime. While project design made provision for an agricultural research component to adapt available technologies, the component was poorly implemented and a number of separate sections were retained to cater for individual personalities. It was not until towards the end of the project that these were brought together and even then petty rivalries persisted. 3.03 The second issue which the Region would like to highlight is that of management. The project set out to build up the capacity of the agricultural service institution and in attempting so to do effectively took on the entire Ministry of Agriculture services structure in the Upper Region. The problems and mistakes made are summarized in the PCR (para 5.01/5.02). The successful integration of a target orientated project within the civil service bureaucracy proved impossible, in spite of the increased resources available and degree of financial autonomy provided. One result was that staff numbers increased considerably. However, here also, the decline in economic conditions exacerbated the situation. As a result of rapid inflation and devaluation, the real buying power of civil services fell dramatically to the point where they provided no more than 20% of minimum subsistence needs. As a result there was, and still is, little motivation to stay on the job and the majority have to farm on their own account. 3.04 Experience with URADEP highlights the need for sarong management and support from the centre as well as the Regional Administration, if decentralization is to work. The most appropriate organization og Regional Agricultural Services is an issue to be addressed under the Agriculture Sector Rehabilitation Project now under preparation. 3.05 The project was more successful in the establishment of the Farmers Services Company (U/R) Limited (FASCOM). The company went through a difficult perlod (PCR para 5.04) but now, following the efforts made during the period of project extension, is under strong Ghanaian management. In an area of difficult access for the private sector FASCOM has a role to play in supplying the input requirements particularly of small farmers. It will need to work with the private sector and farmer groups to minimize costs and will need the support of Government in working out the appropriate organizational form. The unconventional proposal in the SAR to issue shares to farmers through a mark up on sales, proved difficult to implement and was not properly resolved at project completion. The consultants (para 2.09) have proposed that amounts reserved for farmers' equity be issued as share capital to the FSC Committees. This approach appears the most satisfactory in the circumstances.  -xv- 3.06 A third issue is the impact of the failure to maintain an effective dialogue between the Bank and the Government of Ghana during Implementation. The project was implemented during a period when the dialogue effectively ceased; while on-going projects continued to be supported by the Bank, no new projects were presented to the Board. The customary macro-economic dialogue ceased and contributed to the failure to implement successfuly the agreement to review agricultural pricing and subsidy policy (PCR para 5.12), with disastrous effects on cotton production. The Government paper on the subject requested by 6/30/77 was never submitted, and it was not until the dialogue had resumed in 1983 and the first stage of the Economic Recovery Program put together, that, in meeting the run up to the first Rehabilitation Import Credit, fertilizer subsidy was abruptly removed. This coincided with a devaluation of about 1000% and the consequent tenfold increase in price of fertilizer seriously eroded small farmer confidence; even though foodcrop prices were sufficient to yield an attractive financial return to fertilizer use. The failure to maintain an effective dialogue also led to difficulties in procurement of the project's share of inputs and raw materials. 3.07 In view of the continuing problems which beset the project, the question should be asked whether or not the project should have been closed down when the macro-economic dialogue broken down and key conditions, such as provision of an overdraft facility (PCR para 3.03), were not met. The question was actively discussed at the time, particularly in the run-up to the decision to suspend disbursements informally in December 1980, and the Region concluded that it would be better to complete unfinished infrastructure and use remaining funds to provide farm inputs and, later, restructure FASCOM. Conditions set for the resumption of disbursements included appointment of a strong manager and a chief accountant, action on the Committee of Enquiry's (PCR para 5.01) recommendations, reshaping of the project and Government to provide adequate local funds and fertilizer. Disbursements were resumed in April 1981 when these conditions had either been met or satisfactory action initiated. IV. LESSONS LEARNED 4.01 Lessons learned from URADEP have been taken into account in the development of the Bank's lending program to Ghana and in the design of the proposed Agriculture Sector Rehabilitation Project. Important lessons are: - project design should not be over-complex, the number of components should be kept commensurate with the management capabilities of implementing agencies who should participate fully in the design process; - integrated area development projects which demand a high level of managerial skill and are relatively costly in use of financial resources, are unlikely to be cost-effective in Ghana's present economic conditions with agricultural  - xV! - support services widely rundown and civil salaries insufficient to attract high calibre managers; until Government salaries are raised it will difficult to attract suitably qualified management staff or motivate field staff to contribute more than a small part of their working day to project work; development projects should not be implemented in the absence of an effective dialogue on agricultural policy and pricing.  - 1 - PROJECT COMPLETION REPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (Loan 1291-T-GH) I. BACKGROUND 1.01 The Upper Region Agricultural revelopment Project (URADEP), which was the first broad based agricultural development project financed by the World Bank (IBRD) in Ghana, was designed to increase farm production and family incomes and to establish permanent farmer support services in the region. In addition to the World Bank, the United Kingdom Government provided financial support and technical assistance, while the Netherlands Government provided independent financing for a training institute which trained project staff. 1.02 Average farm size in the Upper Region is estimated at 2.4 hectares and is mainly planted to food crops of which millet and sorghum are the most imp6rtant. Principal cash crops are groundnuts, rice and to a lesser extent cotton. Cowpeas is an important legume for consumption and sale. The Region carries about 60% of Ghana's cattle population. 1.03 The project was prepared against a hackground of poor performance in the agricultural sector. Emphasis in the 1960s in Ghana was given to large capital state farms which resulted in high costs and registered little or no impact on the majority of the population. Lack of an effective program to increase smallholder productivity and the weak agricultural support services accounted for the country's reliance on food imports even for commodities which it had the potential to produce. URADEP represented a major attempt to switch attention to the small farmer sector. 1.04 The project was implemented during a period of serious economic decline and political instability in Ghana. In the five years between 1977 and 1982 there were five changes of government. Following the change in Defense Committees were created nationwide and played a role in management and resource allocation in all productive enterprises including URADEP. In January 1984 the Upper Region was, for administrative purposes, split into two regions - Upper East 1/ and Upper West 2/. Political instability was reflected in a continuous deterioration of the economy. In the period 1970-82, GDP declined at 0.5% per annum, real per capita income fell by 30% and there was a marked deterioration in physical infrastructure. 1.05 This Project Completion Report (PCR) was prepared by URADEP's Project Monitoring and Evaluation Department (PMED) with the assistance of a consultant. The PCR is based on the draft prepared PMED and the work of the consultant who reviewed data available at the World Bank, URADEP offices and obtained the views of certain officials and farmers involved in 1/ Bolgatanga, Bawku, Navrongo and Sandema districts. 2/ Wa, Lawra and Tumu districts.  - 2 - the Project. Preparation of the PCR has been constrained by lack of substantial statlstics and records of quantitative accomplishments. II. PROJECT FORMULATION A. Identification, Preparation and Appraisal 2.01 The project was identified by a World Bank mission in late 1974 and the preparation report was prepared by the Bank's Resident Mission in West Africa (RMWA) and Ghanaian staff in early 1975. At the request of the Government of Ghana, a pre-appraisal mission from the World Bank and the Ministry of Overseas Development (ODM), UK Government, visited Ghana in June 1975. The project was appraised in November 1975 by a joint World Bank/ODM mission. 2.02 The Government of Ghana raised a number of issues at appraisal, including: (a) concern over the number of expatriate staff proposed (total of 22); (b) need to give maximum support to irrigation, small dams, etc. as providing more reliable water sources was a major concern in the region; (c) large size of project which might absorb too many of scarce qualified staff; (d) on-iending rates for credit to small farmers which. were seen as too severe; and (e) provision for post project maintenance. It was agreed that: (i) the project should increase the provision for improving water supplies; and (ii) expatriates would only be employed where suitably qualified Ghanaians were not available. The issue of heavy subsidization of fertilizer (85%) was raised by the World Bank and Government agreed in principle that the subsidy should be reduced. No explicit or dated commitment was given, but Government agreed to submit a paper before June 30, 1977 on agricultural pricing policy, particularly focusing on the reduction and eventual removal of fertilizer subsidy. 2.03 At appraisal project costs were US$54.6 million, IBRD providing US$21.0 million (38%), UK US$11.0 million (20%), Government US$13.7 million (25%) and local financial Institutions and Farmers US$8.9 million (17%). The IBRD financial assistance was provided as a third window loan while the UK provided US$8.8 equivalent as a loan for UK manufactured goods and US$2.2 million equivalent for technical assistance. In parallel the Government of the Netherlands partially financed a training institute. B. Project Description 2.04 Objectives: The project had two principal objectives: first, to increase agricultural production and thus farm incomes, and, second, to establish permanent farmer support services. The project would redefine the role of agricultural services, intensify extension for crop and animal production and human nutrition, develop associated physical infrastructure, including an intensive effort to halt the rapid rate of soil erosion; and  - 3 - develop specialized institutions to service the commercial and financial requirements of the Region's farmers (125,000 farm families) 2.05 Components: (a) Farm Development. The project was to: - establish 90 service centers, to provide improved extension services to small farmers (1300 per center) and management advice to a relatively few larger farmers, - provide farm inputs (including insecticides, seed dressing, improved seeds, fertilizers, spare parts and farm equipment); - provide improved on-farm grain storage; - provide better animal health services and improve animal husbandry, and establish ten small (2,000 hectares) ranches for local livestock owners; - develop seven applied research and demonstration units together with an associated seed multiplication program; - establish a pilot functional literacy scheme; - expand Ghana Broadcasting Corporations's facilities for rural broadcasting; - improve human nutrition and health througb agricultural extension services, the functional literacy program and radio; and - provide in-service training for Project staff at the existing Navrongo Agricultural Institute, (b) Physical Infrastructure: - construct about 120 new small dams and rehabilitate about 100 existing dams, to develop dry season gardening, fruit tree nurseries, and fish ponds, provide water for cattle, and improve water conservation; - develop soil conservation measures to protect some 160,000 hectares of farm land; - construct 700 village wells; - construct stores and offices at farm services centers, district and regional Project offices, and houses for project staff;  - 4 - - provide vehicles and other equipment; and - construct two cotton ginneries. (c) Institutional Support - establish the Upper Region Agricultural Development Project Management Unit (URPMU) to implement the Project; - establish the Farmers' Services Company (UR) Ltd. - strengthen (i) the regional branch of the Agricultural Development Bank (ADB) and (il) the Upper Regional Development Corporation (URDECO), particularly the latter's transport and wholesale divisions. (d) Development Planning - establish an Onchocerciasis Area Survey and Planning Unit.  PROJECT COMPLETION REPORT GHANA UPPER REGION AGRICULTURAL DEVELOPMENT PROJECT (Loan 1291-T-GH) KEY INDICATORS 1977178 1978179 1979180 1980181 1981182 1982183 1983184 1984185 Farm Inputs Fertilizer - Actual sales (tons) 5,000 12,000 10,000 4,700 600 7,300 2,500 n.a. - Percent of AE a/ 1552 1461 115S 38S 31 421 141 Livestock - Veterinary Services Cattle Luminnsation Actual ('000) 187.2 307.6 229.6 358.4 301.2 162.3 252.8 n.a. Percent of Pre-project b/ 862 1421 1061 1651 1391 75Z 1161 Sheep/Goat Drehing Actual ('000) 130 21 57 152 171 24 11 n.a. Percent of AE 2601 211 411 1171 1431 201 91 Small Dam (no. accumulative) t Actualt New Dams -- -- -- -- -- 2 3 n. s New Dugouts -- -- -- 2 8 14 (181)c( n.a. s Rehabilitation -- -- -- 5 10 20 (3421 n.a. AEt eow DamslRehabilitation -- 55 110 165 220 -- -- FASCOM4 Stores (DSC + FSC) Actual -- -- lOdJ 35 42 58 69 n.a. AS 30 63 93 93 93 93 93 n.a. Percent of AE -- -- 11% 38% 45Z 62% 741 Disbursements accum. (IBRD Loan) Actual (US$ million) 0.8 6.0 11.9 13.8 14.5 15.2 16.1 20.3 AE (US$ million) 10.0 13.0 17.0 21.0 21.0 21.0 21.0 21.0 Percent of AE 81 461 701 662 692 722 77Z 961 a/ AE - Appraisal Estimate. Nutrient equivalent basis; see Annex 2, Table 1 for assumptions. b/ 1973174 records from Appraisal Report. cJ As percentage of AE. K dJ Estimate. Notes For other farm inputs see Annex 2, Table 2. I-  - 6 - III. IMPLEMENTATION A. Effectiveness and Start-up 3.01 The project was approved by the Board of the World Bank on June 22, 1976. The Loan Agreement was signed on June 28, 1976. There were six conditions of loan effectiveness, namely that: (a) Ghana Government (COG) had set up an account for URPMU with a Commercial Bank in Bolgatanga and had funded the account wit", an initial 03.0 million; (b) GOG would also arrange to establish suitable overdraft facilities for URPMU guaranteed by GoveLnment to an amount, reflected by the approved URPMU budget, of up to 03 million; (c) the Project Coordinating and Project Technical committees had been established; (d) Farmers Service Company (FASCOM) had been established with regulations acceptable to the Bank and a Managing Director appointed; (e) the Project Manager and Chief of Field Operations (CFO) had been appointed; and (f) Government had reached agreement with the UK Government on the terms and conditions of the UK loan. 3.02 Retroactive financing for up to US$750,000 available from Xay 1, 1976, was made available for the employment of key staff, purchase of related support vehicles and construc'ion of housing and office accommodation at Bolgatanga. The Ghanaian project manager was appointed in July 1976, but effectiveness was delayed by delays in appointment of the internationally recruited CFO and Managing Director, FASCOM, plus the time taken to set up FASCOM. The condition of appointment of the CFO was lifted by the Bank; an acting CFO was appointed in December 1976, but was confirmed only in the second half of 1977. The rest of the conditions were met and the project was declared effective on April 11, 1977. 3.03 In spite of a declaration to the contrary from the Commissioner for Agriculture at the time of loan effectiveness, an overdraft facility for not less than 03 million (3.01 (b)) was never made available to the Project. Also the paper setting out Government's proposed agricultural and subsidy policies which Government proposed to submit by June 30, 1977 (para 2.02) was never submitted. The fertilizer subsidy was, however, eventually removed in 1984. B. Changes in Project Design 3.04 The economic environment for the project during the first phase provided insurmountable problems of which the following were noteworthy: (a) the severe limitations caused by the near breakdown in communications either by road,telephone, mail or aJ!.; (b) below subsistence salary levels of middle and lower scales in the public sector (c) Government controls restricting local markets; (d) the virtual unavailability of spare parts, outside the public sector except in the unofficial, CFA-franc dominated market at over six times the official rate of exchange; (e) the unreliability of electricity and water supplies which particularly affected the processing of agricultural products; and (f) the severe budgetary constraints within the public sector.  - 7 - 3.05 Given these factors and that during its life the project operated under four different Governments (3 military and one civilian) and faced problems with each change-over, it became apparent in 1980 that the Project was too large, complex and was generally over-ambitious for a first stage project. It attempted to execute too many diverse activities (22 components) too quickly rather than develop methodically and slowly. Furthermore, some of the individual components of URADEP had been poorly designed, and paid little attention to local realities, e.g., (i) the cattle ranching proposals were based on an earlier IBRD project in East Africa; (ii) the dam constrh -ion and rehabilitation program targets were far too high reflecting the %.esire to achieve a predetermined economic rate of return on investment rather than what was physically feasible given local conditions and available resources. 3.06 Following the suggestions of a joint World Bank/ODA supervision mission in October 1980 and guidelines prepared by World Bank mission in April-May 1981, Project Management prepared proposals for a revised 2-year development program 3/. The report was submitted in July 1981 and fol- lowing discussions in Washington and later with a World Bank ODA supervi- sion mission in November 1981, it was agreed the project should: (a) continue the rainfed crop extension program while improving the mobility of staff, maintaining a training program and implementing a T&V system; (b) implement a modest dam building and rehabilitation program using existing equipment. The target was to build four new dams and rehabilitate fifteen dams and nine dugouts in 1981/82, rising in 1982/83 to the building of eight new dams and rehabilitation of twenty dams and nine dugouts; (c) maintain veterinary services with support for improved staff mobility and supply of drugs and vaccines; (d) complete the Farm Service Center (FSC) construction program of the remaining 48 construction bases still to be completed, 57 prefabricated stores to be erected and associated low cost housing for field staff; (e) complete construction of the Ghana Broadcasting Studio and installation of transmitters; (f) complete the Tumu Ginnery; (g) set up an improved Monitoring and Evaluation Unit; 3/ A reappraisal of URADEP for World Bank funding prepared by management staff of URADEP, July 1981.  -8- (h) concentrate the Agricultural Research Program on three sites; East, Central and the West and to improve coordination within the Region; 3.07 At the request of the Government, the project closing date was postponed twice. In December 1982, it was postponed by 12 months to complete the revised 2 year program launched in 1981 (para 3.06). A second postponement was agreed to in December 1983 - to September 30, 1984 - in order to complete the restructuring of FASCOM, implement a National Emergency Rinderpest Vaccination Campaign (for which the project agreement had been amended) and finance additional farm inputs. C. Physical Implementation 1. Farm Development 3.08 Field Organization: To implement the farm development program around the Farm Service Centers, URADEP created a Field Operations Department comprising the units previously under General Agriculture (Crop Extension, Home Extension and Plant Protection) the Department of Animal Husbandry and Fisheries, the Department responsible for small dams and irrigation plus four new specialized divisions - Horticulture, Farm Management, Agronomic Research and Plant Breeding. The Department was headed by the Chief of Field Operations whose main function was to coordinate work programs and to represent the Department at the regional level. Activities of district divisional heads were coordinated by a District Development Officer (DD), while at the community level (Farmers Service Center), extension work was carried out by a Development Officer (DO) and three Development Assistants (DA). The DA was responsible for a zone with 3 zones per Farmers Service Center (FSC). 3.09 The arrangement of the Field Operations Department worked as well as could be expected under the prevailing conditions. Problems of management at all levels were experienced but in the districts the problems were more acute as the resources were limited. There were constant disputes over the use of the one vehicle and the small quantities of petrol, oil, etc. received. Withi- the context of general economy decisions as to who had the use of the vehicle and who got a gallon of petrol became major areas of concern. The DDO, as the District Coordina- tor, usually commandeered the use of the vehicle (a landrover of high petrol consumption) and the "major share" of fuel. Staff resentment affected his technical role as a coordinator. The resentment arose over resource allocation and his authorization of travel claims. In the initial years, this led to severe morale difficulties and staff allegiances were often misplaced. After the initial excitement of receiving a motorcycle or bicycle, staff motivation to work, dropped off noticeably. In 1978/79 and 1979/80, there were serious disruptions in field activities as Project Management imposed control over salary payments and supervision of the Civil Servants (seconded 3taff).  3.10 Extension Services The Project introduced radical changes in the organization and management of the extension service, including the intro- duction of a unit within General Extension to deal specifically with animal traction. Extension services were organized around the ninety-seven FSCs. A modified version of the training and visit system (T&V) wars introduced and staff training in T&V was initiated at IFCAT early in 1979/80. Under this system, between 5 and 15 farmers would form a contact group and work on a demonstration plot of between j to 2 acres. Each Development Assistant (DA) was responsible for conveying the technological package of improved seed, fertilizer and guidance on how to cultivate the crops to 16 such groups. A Development Officer (DO) supervises 4 DAs, or between 90 and 240 contact groups with a total of over 450 farmers. Unfortunately, political changes together with a shortage of fuel resulted in setbacks to the implementation of the T&V system. Although DAs were able to reach farmers by bicycle, the DOs and DDOs were unable to supervise their staff effectively. Groups were formed but left unsupervised,while the uncertainty of getting inputs inhibited DOs from setting up other groups. In all, a total of 1495 such groups were formed as against 4,656 planned (32% achieved). Some 1872 contact farmer groups cultivated improved maize (Composite IV) and 623 groups cultivated sorghum (Naga White). These groups were initially supported by a small-scale loan scheme, with each group getting about