Somalia - Second Agricultural Extension Project

D_eeasEo The World Bank FOR OMCAL USE ONLY Ck. ,'7W7-SC Report No. P-4461-SO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 10.1 MILLION TO THE SOMALI DEMOCRATIC REPUBLIC FOR A SECOND AGRICULTURAL EXTENSION PROJECT April 20, 1987 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY AND EQUIVALENT UNITS Somali Shilling (So.Sh.) = 100 cents US$1.00 (at appraisal - Sept. 1986) = So.Sh. 83.0 (Official Rate) = So.Sh. 136 (Free Market Rate) US$1.00 (January 1987) - So.Sh. 91.4 (Official Rate) = So.Sh. 136 (Free Market) y WEIGHTS AND MEASURES 1 Hectare (ha) = 10,000 m2 1 Square Kilometer (km) = 100 ha 1 Metric Ton (mt) = 1,000 kg ABBREVIATIONS ADF - African Development Fund AFMET - Agricultural Farm Management, Extension and Training (Project) ARI - Agricultural Research Institute BRADP - Bay Region Area Development Project CARS - Central Agricultural Research Station CSBS - Commercial and Savings Bank of Somalia DEO - District Extension Officer ETC - Extension Training Center FEA - Field Extension Agent FMETC - Farm Management and Extension Training Center GOS - Government of Somalia M&E - Monitoring and Evaluation MOA - Ministry of Agriculture PMU - Project Management Unit REO - Regional Extension Officer SMS - Subject Matter Specialist SOE - Statements of Expenditure T&V - Training and Visit System (of Extension) FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY SOMALI DEMOCRATIC REPUBLIC SECOND AGRICULTURAL EXTENSION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of Somalia Beneficiary: Ministry of Agriculture Amount: SDR 10.1 million (US$12.7 million) Terms: Standard Onlending Terms: Not applicable Financing_Plan: Government US$ 3.6 million ADF US$10.4 million IDA US$12.7 million TOTAL US$26.7 million Economic Rate of Return: Not applicable Staff Appraisal Report: Report No. 6615-SO IThis document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE SOMALI DEMOCRATIC REPUBLIC FOR A SECOND AGRICULTURAL EXTENSION PROJECT 1. The following report on a proposed development credit to the Souali Democratic Republic for SDR 10.1 million (US$12.7 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms and help finance the Second Agricultural Extension Project, including research components. The project would be cofinanced by ADF for SDR 8.3 million (US$10.4 million equivalent). 2. Background. Somalia is among the poorest countries, having a per capita income estimated at US$270 in 1985. Large and sparsely populated, its 5.8 million inhabitants are unevenly distributed over nearly 638,000 square kilometers of semi-desert. About 50% of the population are nomads and semi-nomads who depend on livestock for their livelihood. About 13% of the land is suitable for cultivation, but only about 8.5Z of this land is cultivated, with water the main constraint. Crop production is centered mainly upon bananas for export, and sugar, sorghum and maize for the domestic market. About 39% of GDP, and 80% of export earnings, stem from livestock production-, while crops generate about 12% of GDP. Although overall agricultural performance during tha fifteen-year period 1970-84 was poor, crop production during the first half of the 1980's increased by an Impressive 63Z, from 634,200 metric tons to 1,034,400 metric tons. This was spurred by good weather, combined with a dramatic improvement in pricing incentives provided by the Government's shift toward a more market-oriented policy framework. IDA has supported this policy change with quick-disbursing Credits for imports of agricultural inputs and fuel (Agricultural Inputs Program, CR., 1612-SO, 1985 and Agricultural Sector Adjustment Program, Cr. 1711-SO, 1986). 3. In addition, IDA has assisted the Government in introducing extension services based on the training and visit method in eight of 10 arable regions (Cr. 905, 1979). The project has also assisted the Ministry of Agriculture (MOA), responsible for extension services and agricultural research, to improve its capacity to manage extension activities. The Agricultural Farm Management Extension and Training Unit (AFMET), established in MOA, has gained the confidence of farmers in the project area. By following simple, improved farming practices, contact farmers in irrigated areas have had substantial yield increases in their main food crops and more modest, but still significant gains have been recorded in rainfed and drought-prone areas. The next phase of this effort calls for expanding training and visit coverage to include all 158,000 farm families in the regions concerned, strengthening the delivery of extension messages based upon the experience gained, and improving the quality and quantity of the messages. The last-mentioned entails linking extension to agricultural research activities, to identify plant varieties and cultivation techniques suited to local conditions and available technology. To do this, the  - 2 - Government will need to manage better its research program by setting priorities and coordinating donor participation. The proposed project focuses upon these key elements of extension and research development. 4. Project Objectives. The project supports (i) the expansion and improvement of the extension service established under Credit 905-SO; (ii) improved research planning, coordination between research agencies and the strengthening of research-extension linkages; (iii) strengthening the capacity of the Somali research system to identify farmers' production constraints and to find solutions through relevant adaptive research. 5. Project Description. The project comprises: (i) Extension Services: improving field services in eight regions of southern Somalia by providing technical assistance, vehicles, staff housing, operating costs and improvements to headquarters facilities; (ii) Training: local and overseas training of extension and research staff, constructing and improving training centers, providing adequate equipment and staffing; and (iii) Research: establishing a research directorate, financing to operate the dryland research station at Bonka, and a fund for additional adaptive research. The project would be implemented over eight years. A Project Preparation Facility of US$1.2 million provides bridge finance until the effectiveness of the proposed project and funds to accelerate the start of improved training programs. The total cost of the project is estimated at US$26.7 million equivalent, with a foreign exchange component of US$19.7 million. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement, and disbursements and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the Status of Bank Group Operations in the Somali Democratic Republic are given in Schedules C and D, respectively. A map (No. IBRD 20121) and the Staff Appraisal Report No. 6615-SO, dated March 10, 1987, are also attached. 6. Rationale for IDA Involvement. The Bank's strategy in Somalia is to identify areas of greatest growth potential and assist in their development. Agriculture has been identified as the major source of medium-term growth, specifically crop production, livestock and fisheries. The Bank's involvement in Somalia's agriculture focuses both on policy adjustments, to remove constraints affecting the sector, and on development of basic services and infrastructure, to provide the needed technical/physical complement to the new policies. The Association plays an important part in donor coordination for agricultural extension and under the proposed project, would expand its role into agricultural e research. 7. Actiors. During negotiations, agreement was reached that the Government will: (i) by December 31, 1987 establish a Technical Coordination committee for extension and research activities and appoint a Research Advisor acceptable to IDA; (ii) appoint a Director of Training in AFMET, acceptable to IDA by June 30, 1988; (iii) formulate and implement a national research program and review it annually with IDA; (iv) implement specified procedures for research/extension linkages and for donor coordination for research; (v) make provisions annually in its budget to increase gradually its contribution to the recurrent costs of the project,  so that by completion, the Government would cover annually 100% of such recurrent costs; (vi) follow agreed criteria governing the use of the research support fund; (vii) prepare annual work programs and budgets and submit them to IDA for prior review each February. As agreed, the Government has established a Research Directorate and, prior to effectiveness, will appoint a Director General to head it. 8. Justification. Benefits under the proposed project are expected from improving extension and research capacities and their impact on agricultural productivity and farmers' incomes. About 158,000 farm families are expected to be covered by the improved extension service, including 35,000 families not covered under previous project. Assuming that the entire farming population served by the project would achieve yield increases equivalent to those obtained by contact farmers under the first project, annual maize and sorghum production would increase by about 135,000 tons and those of sesame and pulse by about 80,000 tons. The additional maize and sorghum production alone would represent an increase of about 20 percent over current production levels. 9. Risks. The success of the project will depend on capable staff and adequate supplies of production inputs. Staff salary incentives, improved housing and transport, provided under the project would sustain the present high staff morale. The Government supports adequate incentives for farmers and free trade between the public and private sector which ensures adequate input supplies. These measures would minimize the risks to a low and acceptable level. With effective staff and a proven management team already in place, the risks for the project are within acceptable limits. 10. I am satisfied that the proposed credit would comply with the Articles of Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D.C. April 20, 1987  -4- Schedule A Estimated Cost Local Foreign Total USS Million - -~~~~~~~~~~ Component Project Bead Office 1.2 5.1 6.3 Field Extension Organization 2.8 4.7 7.5 Training 1.4 3.7 5.1 Agricultural Research 0.6 3.9 4.5 Total Baseline Cost 6.1 17.3 23.4 Physical Contingencies 0.5 1.3 1.8 Price Contingencies 0.5 1.2 1.6 Total Project Costs 1/ 7.0 19.7 26.7 Financing Plan IDA 2/ 2.1 10.6 12.7 ADF 2.2 8.2 10.4 Government 2.7 0.9 3.6 Total 7.0 19.7 26.7 1/ Taxes and duties are not included since Government investments are exempt. Totals may not add up due to rounding. 2/ Includes a PFF of US$1.2 million.  -5- Schedule B Procurement Schedule 1/ (USS Million) Project Component Procurement Method Total ICB LCB Other 2J N.A. 3J Cost Civil Works 4.9 2,9 0.2 - 8.0 Vehicles/Equipment 2.0 0.3 0.1 - 2.4 Technical Assistance, - - 7.3 - 7.3 Training & Studies (7.3) - (7.3) Local Salaries and - - 4.4 4.0 8.4 Operating Costs (2.0) (2.8) (4.8) Research Support Fund - - 0.6 - 0.6 (0.6) - (0.6) Total 6.9 3.2 12.6 4.0 26.7 (9.9) (2.8) (12.7) 11 Figures in parentheses are estimated amounts to be financed by IDA. 2/ Technical assistance according to Bank guidelines, operating costs (fuel and spares) international shopping with at least three price quotations and Research Fund according to agreed criteria. 3/ Local government procedures. Disbursements Category Amount Percentage (US$ million) Technical assistance, 7.3 100% training and studies Research Support Fund 0.6 100% Local Salaries and 4.8 57% Operating Costs Estimated Disbursements from IDA Credit (US$ Million) IBRD FY 88 89 90 91 92 93 94 Annual 0.9 2.4 2.5 2.2 1.9 1.5 1.3 Cumulative 0.9 3.3 5.8 8.0 9.9 11.4 12.7  -6- Schedule C SOMALIA SECOND AGRICULTURAL EXTENSION PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: Six months (b) Prepared by: Government with IDA financed consultants' assistance (c) IDA Identificatlion Mission: December, 1985 (d) Departure of Appraisal Mission: September, 1986 (e) Negotiations: March, 1987 (f) Planned Date of Effectiveness: August, 1987 (g) List of Relevant PCRs and PPARs: First Project not closing until June 30, 1987.  -7- Schedule D Page 1 STATUS OF BANK GROUP OPERATIONS IN SOMALIA STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1987) A m o u n t Loan or (US$ Million) Credit Less Cancellations Undis- Number Year Borrower Purpose Bank IDA bursed Eighteen credits fully disbursed 114.76 Cr. 905-SO 1979 Somalia Agriculture Extension/Res. 10.5 0.23 Cr. 906-SO 1979 Somalia Central Rangelands Dev. 8.0 0.42 Cr. 972-SO 1979 Somalia Bay Region Agriculture 12.0 3.46 Cr.1105-SO 1981 Somalia Fourth Education 10.2 2.73 Cr.1236-SO 1982 Somalia Second Mog. Water Supply 15.0 0.95 Cr.1324-SO 1983 Somalia Fourth Highway 23.0 2.10 Cr.1464-SO 1984 Somalia Afgoy Gas Delineation 18.0 7.32 Cr.1465-SO 1984 Somalia Fisheries Explo. Prom. 13.5 4.82 Cr.1538-SO 1985 Somalia NW Region Agric. Dev. 10.6 10.23 Cr.1612-SO 1985 Somalia Agricultural Inputs Program I 10.0 0.88 Cr.1711-SO 1986 Somalia Agricultural Sector Adjustment Credit 30.0 22.48 Cr.A020-S01 1986 Somalia Agricultural Sector Adjustment Credit 32.6 22.94 Cr.1647-SO 1986 Somalia Livestock Health Serv. 4.3 5.27 Cr.1723-SO 1986 Somalia Ports Modernization 22.6 25.58 Cr.1774-S02 1987 Somalia Semi-Mechanized Rainfed Agric. 13.4 13.63 Total ----------------------------- 348.64 of which has been repaid 3.50 Total now held by IDA 345.14 Total Undisbursed 123.04 NOTE 1. Special African Facility. 2. Not yet effective.  -8- Schedule D Page 2 STATEMENT OF IFC INVESTMENTS (As of March 31, 1987) USS Million Fiscal Type of Amount Year Obligor Business Loan Equity Total 1981 Somali Molasses Co. Ltd. 0.37 - 0.37 1985 Polypropylene Bag Co. 0.95 - 0.95 Total Gross Commitments 1.32 1.32 Less cancellation 0.21 - 0.21 Total now held by IFC 1.11 - 1.11 Total undisbursed 0.95 - 0.95 SOMADM :ANNEXI I  IBRD 20121 -'-.44* -.,.ItJ ~~~~~~~~~~~41. .PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN -,, ./DJIBOUTI ) Mail ~~L j~ ~~~m1 Adil Smog. ,. + --