Benin - Agricultural Services Restructuring Project

Docunment of The World Bank FOR OFFICIAL USE ONLY Report No. 9442-BEN A: J; d, ( , f./ X: >4 . 9' ,' * I 12 / / /JA )G 1 ; STAFF APPRAISAL REPORT REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT JUNE 3, 1991 Agriculture Operations Occidental and Central Africa Department I his document has a reted dIstbutIoa may he used by recdpints only in the perfonmance of theik officid duoes Its contents ny not odhervie be disoed whot Wodd Bank auth,rizatIon  CURRENCY EQUIVALENTS Currency Unit: CFA Franc (FAF) US$1 - CFAF 253* WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ABEDA Arab Bank for Economic Dovelopment In Africa AfDB African Development Bank APV Agent polyvalent do vulgerisation Polyvalent extension agent ATDR Agent toechnique de doveloppement rural Technical agent for rural development BOAD Banque ouest-africalne pour Is d6veloppoment West African Dovelopment Bank CARDER Centre d'action r6gionale pour Is doveloppoment rural Reglonal Action and Rural Development Center CCCE Caie.s centrale do coop6ration 6conomiqu- (France) Central Economic Cooperation Fund (France) CENAP Centre national d'agro-p6dologie National Agro-Podology Center CLCAM Caisse locale do cr6dit agricole mutuel Local Agricultural Savings Cooporative CPE Centre permanent d'exp6rimentation Permanent experimentation centor CR Collul- do restructuration Restructuring unit CRCAM Caisse r6glonale do cr6dit agricole mutuol Regional Agricultural Savings Cooperativo DRA Direction do Is rechorche agronomique Agrlcultural Research Diroctorate EDF European Development Fund FAC Fonds d'lide A Ia coop6ration (France) Fronch Economic Cooperation Agency FAO Food and Agriculturo Organization of the United Nations 3TZ Oermen Technical Cooperation Agency 3V Groupement villageole Village Group ICa International Competitive Bidding IFAD International Fund for Agriculture Development LCB Local Compettive Bidding LPDR Lettr do politique do d6v-loppement rural Rural Developmont Policy Letter MDRAC Minist&re du d6veloppement rural et de l'aoction coop6rative Ministry of Rursl Developmont and Cooperative Action NGO Nongovernmental organization ONC Office national dos c6r6alee National Cereals Offico PCS Permanent Civil Servant PHARNAVET Pharmacie nationale v6t6rinalre National Veterinary Pharmacy RAUR Recherche agricole en milieu riol Agricultural researeh In the real *nvironment R-D Research and development SEMP Sttes dexp6rimentation on milieu paysan Experimentation Sites in Farmer Environment SVS Subjoect Matter Specialist (Toechnicion specialls) SONAPRA Soci6t6 nationale pour la promotion agriColo National Agricultural Promotion Company UNDP United Nations Dovelopment Program a/ Exchange rate of January 1991. The parity of the CFAF with the French franc is fixed at 50/1.  FOR OMCIL USE ONLY REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page DOCUMENTS CONTAINED IN PROJECT FILE. . . . . . . . . . . . . . . . . . . ..iii CREDIT AND PROJECT SUMHARY . ............ . . . . . . . . . . . . . . . . . . v I. INTRODUCTION . . . . ..................... ................... ................. I II. THE AGRICULTURAL SECTOR . . . . . . . . . ......... . . 2 Natural resources . . . . . . . . - v . - v - . . . . 2 Land management and land tenire . . ........ ....... 3 Crops . .. .. .. .. .. .. .. .. .. ........... 3 Livestock production .. .................. 4 Food security . . . . . . . . . . . . . . . . . . . . . . . ... . 5 Women in agriculture ......... . . .. ......... 6 III. AGRICULTURAL INSTITUTIONS . . . . . . . . . . . . . . . . . . . . . . 6 Farmer institutions . . . . . . . . . . . . . . . . . . . . .. 6 Governmental institutions . . . . . . . . . . .. . ..... 7 Institutional studies already undertaken . . . . . . . . . . . 12 IDA's role and experience in rural development in Benin . . . .l12 IV. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . 12 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . 12 Strategy . . . . . . . . . . . . . . . . . . . . . . . . 14 Justification of IDA's participation in the financing of the project . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Project area . . . . . . . . . . . . . . . . . . . . . . . . . 18 Project components . ........... .......... 18 Detailed description . ................... . 19 1. Agricultural policy components . . . . . . . . . . . 19 2. Investment components . . . . . . . . . ..21 This report is based on the conclusions of the appraisal mission carried in October 1990 by a team consisting of Messrs. M. Asseo (mission leader), A. Ben Mayor (extension and research/development), T. Nadir (public administration), A. Srizzi (economist), M. Navot (agricultural technology), S. Bakayoko (financial analyst), H. Revol (training), and M. Ibrahim (architect) and Mrs. B. Hanan (financial analyst). Secretarial support was provided by Ms. A. Vasquez. The project advisor has been Mr. V. Venkatesan of the Africa Technical Department. Messrs. M. J. Gillette and ... Baah-Dwomoh are Department Director and Acting Sector Division Chief, respectively. This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  V. PROJECT EXECUTION .... . . . . . . . . . . . . . . . . . . . . . . 25 Institutional restructuring. . ............... . 26 Management of project activities . . . . . . . . . . . . . . . 27 On-lending of reinsertion loans ... ... . . . . ... . .4 o. 27 Management of training activities . . . . . . . . . . . . . . . 28 Coordination with regional projects . . . . . . . . . . . . . 28 Monitoring, evaluation and supervisiou . . . . . . . . . . . . 30 VI. COST s D F i maN N . . . . . . . . . . . . . . . . . . . . . . . . . 31 Financing . . . o . ....... ....... ....... . o .. . o........... ..... . 32 Financing of severance payments . . . ...... .. . . . . . .. . 33 Conditions for on-lending of reinsertion loans. . . . . . . . . . 33 Procurement. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Disbursement .....o .. o ... . . . . .... . 34 Accounts and audits. ...... . . . . . . . . . . . . . 35 Impact on the MDRAC budget ................. . 36 VII. JUSTIFICATIN AN DRIS . ................... . 36 Justification . . . . . . . . . 36 Environmental impact ............................... 36 Risks . . . . . . *. ... ... ....... . ..... ......... . . 37 VIII. AGREEMENTS AND RECOMMENDATION...o ........ 37 Organization chart of MDRAC organization chart of the CARDERs ANNEXES 1_ Letter of Rural Development Policy 2. Proposed Evolution of Agricultural Services 3. Restructuring of the Ministry (MDRAC) and the CARDERs 4. Agricultural Extension 5. Research and Development 6. Support for the Seed Sub-sector 7. Livestock Component 8. Implementation Schedule and Supervision Plan 9. Project Cost Summary 10. Summary Account Cost Summary 11. Financing Plan by Disbursement Category 12. Disbursement Estimate MAP OF BENIN  - iii - REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT DOCUMENTS CONTAINED IN THE PROJECT FILES A. STAP? WORKING PAPERS 'Composante Formation* -- Marc Revol Line of Credit -- Siaka Bakayoko Evaluation of Agricultural Technology -- Navot Matan B. DOCUMENTS AND REPORTS 'Benin, Projet de services agricoles, Rapport provisoire de prdparation,* 2 vol., March 19, 1990 -- A. Kawalec, et.al., FAO/World Bank Cooperative Program 'Restructuration et R*organisation des CARDER, Rapport gdn6ral,' December 1989 -- T. Nadir, et. al., FAOIUNDP idem, 'Plan de mise en oeuvre,' May 1990 idem, 'Synthfse des plans de mise en oeuvre,* December 1990 "Etude de restructuration des services centraux du MDRAC, Plan de mise en oeuvre," August 1990 -- T. Nadir, et. al., FAO/UNDP *Appui & la restructuration des institutions de ddveloppement rural, Document d'assistance prdparatoire,* January 1991, T. Nadir, et. al., UNDP/FAO 'Renforcement de la recherche agronomique au B6nJn, Rapport pr6liminaire,* August 1990 -- P. T. Perrault, ISHLAR *Synthbse des travaux du seminaire sur la strat6gie de ddveloppement du secteur rural de Juillet 1990,' Consultants Projet de document de politique de dtveloppement rural, Version provisoire,' December 1990 -- Lefebre, et. al., MDRACIADE *Loi no. 86-013 portant Statut general des agents permanents de l'Etat," February 26, 1986, Presidence de la Rdpublique; Modification approved on April 29, 1989 "Young Farmers Program in Atacora,' January 22, 1990, D. Drayton 'La politique semencibre en R.P.B.,' December 20, 1988, Conseil Ex6cutif National *The Benin Experience," Lilongwe Workshop on Agricultural Extension, February 1991, Adolfo Brizzi *Projet de Lettre de Politique de Developpement Rural,' May 16, 1991  REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Benin Beneficiary: Ministry of Rural Development and Cooperative Action (MDRAC) Amounts SDR 9.3 million (US$12.3 million) Terms: Standard IDA terms, with 40 years maturity On-lending Terms: Pravailing market rates Proiect description: The project would improve the provision of agricultural services in Benin by restructuring the country's agricultural institutions, including the central services of MDRAC, research and development (R-D) and seed production stations, and the six Regional Action and Rural Development Centers (CARDER), while focusing their operations or those normally undertaken by the public administration. The reorganization would entail a reduction of some 622 in the number of current CARDER and MDRAC employees, mainly among the two lowest staff grades. Compensation would be paid for these redundancies from nds outside the project. The project would include polic) -. investment components. The policy measures, spelled out in a Letter of Rural Development Policy, would consist of the (a) adoption of new statutes for MDRAC and the CARDERs; (b) dismissal of some 3,500 MDRAC and CARDER employees; (c) introduction of personnel management regulations for MDRAC and CARDER staff which would ensure the preservation of institutional memory and justify the expenditure on training financed by the project; (d) updating of legislation governing cooperatives, in line with the ongoing liberalization; (e) privatization of seed farms; (f) privatization of the State enterprise responsible for veterinary pharmaceutical imports; (g) appropriate taxation of imported meats; and (h) preparation of an action plan for animal health services, resulting in the adoption of a code for veterinarians. The proiect would finance the (a) provision and equipment of offices and replacement of vehicles for MDRAC; (b) equipping of a number of CARDERs to complement the assets already acquired under various projects; (c) internal training of MDRAC and CARDER personnel; (d) establishment and equipping  - vi - of a number of R-D units and supporting laboratories; (e) additional equipment to produce selected seed; (f) support for the reinsertion of former civil servants, in the form of training and credit lines; (g) assistance for project management; and (h) various studies. Estimated Project Costs Percent Local Foreign Total of Base (US$ million)---- Cost Restructuring of MDRAC 1.1 2.0 3.1 11.7 Restructuring of the CARDERs 4.4 4.0 8.4 32.4 Training 1.6 0.4 2.0 7.7 Research/development 2.0 1.4 3.4 12.8 Seed production 1.3 0.1 1.4 5.4 Livestock services 1.2 0.7 1.9 7.4 Reinsertion of personnel 2.8 0.3 3.1 12.0 Mandgement support 0.2 2.0 2.2 8.4 Studies 0.2 0.4 0.6 2.3 Total Base Cost 14.8 11.3 26.1 100.0 Physical contingencies 1.2 1.0 2.2 8.4 Price contingencies 0.6 0.7 1.3 4.9 TOTAL PROJECT COST 16.6 13.0 29.6 113.3 Financing Plan tcs million X IDA 12.3 41.5 French assistance 3.2 10.8 EDF 2.9 9.8 GTZ 0.9 3.0 IFAD 4.0 13.5 UNDP 1.5 5.1 Government 4.9 16.5 TOTAL 29.6 100.0  - vii - Estimated Disbursements of IDA Credit IDA Fiscal Year 92 93 9S 95 96 -----------------(SDR million)--------------- Annual 0.7 2.4 2.8 2.4 1.0 Cumulative 0.7 3.1 5.9 8.3 9.3 Benefits and Risks The project would yield two kinds of benefits: (a) for farmers and herders, Ci) the introduction of services better targeted at their real needs in terms of R-D, extension activities, literacy and support for the management of their farms, herds or cooperatives; and (ii) the development of private initiatives to provide, first, inputs, equipment maintenance and marketing and, later, a number of other services more effectively than public sector agencies; and (b) for the State, (i) a significant reduction in budget costs; and (ii) better control over its activities in the rural areas, and over monitoring and indicative planning in the agriculture sector. The social justification of the project lies in the emphasis it places on food crops to enhance the country's food security and on the poorest farmers, women and young people. The principal risks are: (a) the difficulties that may be encountered in the reinsertion of civil servants; (b) a temporary negative impact on agricultural production, particularly cotton, during the transfer of certain services to the private sector; (c) management of the civil service that does not meet project criteria for technical and financial effectiveness5 and (d) the limited capacity of trainin- centers to ensure timely execution of the numerous training programs planned. The measures designed to reduce these risks include training programs and credit lines for a large number of the civil servants to be made redundant, the temporary retention of certain activities under the CARDERs and the medium-term capacity of SONAPRA and village groups to take on the task of providing essential services to cotton producers, the introduction of new personnel regulations and the possibility of extending the project if necessary to enable training programs to be completed. A more general risk, of the project suffering from wider inadequate economic or social policies would be reduced by the close linkage sought between this project and the structural adjustment program of Benin. Internal rate of returns not applicable Mg: No. IBRD 22909  REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT STAFF APPRAISAL REPORT I. INTRODUCTION 1.01 Berin's per capita GNP in 1988 was of the order of US$340, despite its potential in terms of human and physical resources and its favorable climate. In view of the severe financial crisis affecting the country, and its public sector in particular, Benin is undertaking a five-year structural and financial restructuring program within a liberal and democratic framework. The program would aim at restoring a viable fiscal position, containing price and cost increases and achieving an economic growth rate superior to that of the population. Priority would be given to restoring the budgetary balance, restructuring public enterprises and the banking system, improving the institutional framework and implementing an e.nergency social program. The State has been gradually withdrawing from production and marketing activities and effecting large cuts in the numbers of staff remunerated out of the national budget. Measures have already been taken to allow market forces free play in determining price levels, the cost of money, and the choice of objectives and production methods. Changes in the legal framework will also be necessary to protect farmer and trade organizations from unwarranted government intervention in their establishment and the setting of their objectives, choice of their leaders and performance of their activities. 1.02 The strategic options adopted by the Ministry of Rural Development and Cooperative tition (MDRAC) and upheld by its staff at the seminar on the future of the rural sector (Cotonou, July 1990) are in accord with those objectives. Nonetheless, a fundamental change in civil servant mentality is essential, as are chauges in the technical and management training they receive and in their awareness of the needs and problems of the villagers they are to assist. 1.03 The proposed project is seen as one which will go a long way to streamline and reduce public sector involvement in a large number of rural services and seek a common approach between the Government, the Bank and other donors for the provision of such services. The project has gone through an extensive preparation and appraisal process of more than two years. First, a project implemented by the Food and Agricultural Organization (FAO) of the United Nations with United Nations Development Program (UNDP) funds has assisted the Government in the definition of the restructuring needs of MDRAC and its regional agencies. Then the FAO/World Bank Cooperative Program (CP), in close collaboration with Government and Bank project staff, ensured the preparation of the feasibility study. F:nally, numerous coordination meetings were held throughout preparation and appraisal with the Gover.-rnt. and major donors to (a) adjust the features of the project to a rural sector a:'iistance program combining a national approach to institution-building with tae regional approaches of various donors to investment in rural development; and (b) define the process and mileposts leading to a gradual transfer of public sector extension services to private operators (paras 5.09 through 5.16).  -2- II. THE AGRICULTURAL SECTOR 2.01 The country's economic performance is to a large extent determined by the performance of its agricultural sector. The primary sector (crops, livestock, fisheries and forestry) accounted for 40Z of GDP, over 802 of export earnings of domestic origin, i.e., excluding re-exports, and about 752 of employment in 1988. The Beninese Government is confident that agriculture can provide a basis for the country's general development. Food production, consisting almost exclusively of rainfed crops, iq relatively diversified and capable of meeting the country's food requirAments. Since there is such a variety of climates and soils, even greater crop diversi.?ication should be possible once the potential markets are identified. Natural Resources 2.02 By comparison with its Sahelian neighbors to the north, Benin in general enjoys a good climate; overall, its natural resources are sufficient to meet immediate food requirements despite the limits imposed by current agricultural technology. Rainfall is abundant but irregular in the southern regions, of the Guinean type, and is generally adequate (700-1300 mm) in the northern, Sudanese-type regions. Inadequate rainfall, 30-50Z below the norm, is observed on average one year out of five in the country as a whole, and seasonal irregularities, combined with increasing soil infertility, are having a negative impact on agricultural output. Water resources are plentiful but under-utilized: most of the water comes from the Niger, which runs through a region where good land is very scarce. Attempts, some 20 years ago, to develop rice-growing operations on the banks of the Oueme and Mono were unsuccessful. Little is known about the country's groundwater resources. 2.03 With a population on the order of 4.7 million (against 2 million a. the time of independence in 1960), unevenly distributed over an area of approximately 112,600 km2 and consisting of nine major ethnic groups, Benin suffers from overpopulation in the small ddpartements (formerly provinces) of the south, where 632 of the population is concentrated or 12Z of the land. This is particularly true of the ddpartement of Ouem6, which has the highest population density and the most serious soil deterioration problem, and which has so far received little development assistance. Population density is lower in the north, but the soils are poorer and weaker. Despite irregularities of climate, rudimentary production methods, and a literacy rate of only 152 for women and around 352 for men, crop farmers have so far managed to adapt their production, of food crops in particular, to price signals and effective demand. Rapid increases in the initially modest amounts of food imports of Benin since 1980 principally reflect increasing transit trade and the changing tastes of urban populations in favor of wheat flour and rice. Prolonged populatlon growth at the present rate of over 3? is to be feared since half of the population is below the age of 15 and contraceptive practice is limited. That plus continuing depletion of natural resources could disrupt the prevailing equilibrium between food supply and demand. The ddpartement of Oueme and, to a lesser extent, that of Atlantique, are already unable to meet their population's food requirements using traditional technologies or even, in the case of Oueme, semi-intensive technology. However,  - 3 - the introduction of simple soil improvement methods would allow the varieties recommended by agricultural research to yield their full genetic potential. Land Management and Land Tenure 2.04 The predominant form of land tenure in Benin is the small holding. Sales of land are rare, although they are on the increase in the south. Average farm size is about 1.7 ha for an average 7-person family; sizes vary, with a few rare exceptions, between 0.4 and 12.7 ha. Only 5? of the farms in the south and 202 in the north are bigger than 5 ha and, nationwide, 342 are smaller than 1 ha. Access to land is becoming i increasingly difficult proposition in the south. Farms, already very sm.ll, are getting smaller as they are divided up under the laws of inheritance. Following is becoming less and less common and in certain areas of the south has died out altogether. In regions where land is scarce, individual land allocations can no longer be revoked by the community. 2.05 The absence of legislation, or even of a rural land register, means that the land tenure system does not generate security, and, in the absence of a transparent market, does not make for optimum use of the land. The previous constitution (1ol fondamentale) provided for three types of land ownership: private, cooperative and public. The Government unofficially recognizes both traditional ownership and individual private ownership. In the past, however, in the absence of clear legislation in this field, the Government had no problem in expropriating lands with a view, for example, to creating State farms, or in requiring farmers to join cooperatives.85'The insecurity of the land-tenure system, combined with the absence of cultivation practices designed to make the most profitable use of the land, has caused the farmers to lose interest in maintaining and developing their properties. A pilot land registration operation is being prepared in Benin within the framework of a natural resources management project. If successful, this experiment would in the long run make it possible to establish modern land legislation rooted in traditional rights. Steps should also be taken to regulate territorial rights and rights of usufruct for inland fisheries. Crops 2.06 Approximately 502 of the cultivated land is devoted exclusively to food crops, one third to food and cash crops on an alternating basis, and 13?, mainly in the north, to cash crops only. Cash crops accounted for 272 of GDP in 1988. Benin's principal export crops are cotton and palm oil. The cotton sub- sector is highly organized, guaranteeing a floor price to producers, supplying inputs on credit, and facilitating processing and marketing of the finished product. The results are highly satisfactory. The total area planted to cotton, presently close to 100,000 ha, is steadily expanding tc ard the desired maximum of 120,000 ha. Cotton and its byproducts currently account for some 802 of the exports out of Cotonou port. Palm oil accounted for 702 of the country's foreign exchange earnings before independence. Since then production has steadily declined, greatly handicapped over the last 20 years by unwarranted government intervention in plantation management and by low yields resulting from a chronic water shortage, which prevented competition with the principal world producers. Nevertheless, there is a domestic demand for palm oil, rich in Vitamin A, which  -4- could justify restructuring its production around improved artisen pzocessing units. The other cach crops, such as coffee, cocoa and tobacco, have not succeeded in establishing a place for themselves in national production. 2.07 One eighth of the country's total area is cultivated each year. and over one half is available (but not always usable for lack of water resources) for stock raising. The country's major food crops are maize, carsava and yams. The rapid growth of cotton production 'n tne northern ddpartements has led to a substantial increase in the production of maize, which is often grown in the same fields as cotton and thus benefits from modern factors of production made available for cotton-growing. Maize covers an area varying between 380,000 ha and 480,000 ha, depending on the year, sorghum 133,000 ha, cassava 113,000 ha, yams 88,000 ha, snow peas 86,000 ha, and groundnut 100,000 ha. Millet and niebe beans are also extensively grown. Some areas in the south have a yet untapped potential for vegetable production. As maize production has increased, rice production has considerably declined (12,000-16,000 ha planted per year), while rice consumption is steadily rising and has to be supplied from abroad. Difficulties occasionally arise with a supply in traditional cereals higher than prevailing demand. Tuber and groundnut production has stagnated since independence. The use of fertilizers has been extremely low outside the cotton/maize areas. This is attributed in part to their high farmgate price, possibly due to substantial marketing margins levied bv the State agencies. 2.08 Animal traction has spread very rapidly in the cotton/maize areas, and has led to a spectacular increase in the areas under cultivation, perhaps at the expense of rational management of natural resources. Elsewhere, only simple traditional tools are utilized. Cultivated areas have encroached upon some 25S of forests and woodlands over the past 20 years. In general, there is no appreciable increase in yield per unit of farm labor or of area for crops other than cotton. This stagnation reflects a shor%age in effective demand or in perceived opportunities on external markets, as well as production constraints due to the deterioration in soil fertility. Livestock Production 2.09 Livestock production represents some 42 of GDP or about 92 of the primary sector's production. There are some 1 million head of cattle in the country (against a potential of approximately 2.5 million if water were easily accessible). About 852 of the total herd is held by around 19,000 Peuhl herder families in Borgou and Atacora. Each family has an average of 50 animals. The herds in the central and southern regions are smaller, generally belonging to sedentary villagers who entrust them to the Peuhl shepherds. The latter have little interest in adopting new methods, especially if this would cost them money. There are also some 2 million sheep and goats, principally in Atacora and Borgou, over 400,000 hogs, and some 7 million free-range poultry. Around 30,000 pairs of oxen are used for animal traction over some 100,000 ha, i.e., 102 of the cultivated lands. Four State ranches, located on land unsuited to such a use, are in a very critical adminiscrative and financial situation. They are being reconverted into extension and supply centers for surrounding herders. Their land has largely been reoccupied. The main constraints upon stock raising are the shortage of easily accessible water in most of the country and the absence  - 5 - of a pastoral organization to ensure proper rangeland management. Other factors are poor integration of herders and farmers, a lack of appropriate health, research and extension services, failure to process agro-industrial (cotton and palm oil) waste into animal feed, and dumping of meat by some exporting countries. 2.10 Efforts are under way to operate and manage surface water in the north, where three fourths of the country's cattle are to be found. Small stock raisers, who are mainly located in the center and south of the country and who raise sheep and goats, are constrained chiefly by mental blocks against cattle raising, the result of a lack of training. Any attempts to remove those constraints would succeed only among the younger farmers. A further problem is the lack of preventive care for sheep and goats. 2.11 Meat production is around 30,000 tons a year. To this can be added some 40,000 tons of milk -- in the north, the herdsmen's main dietary staple and the principal item bartered with the villagers -- 200 million eggs, and 20,000 tons of game. Meat exports to Nigeria, whose market has enormous potential but is presently unfavorable because of the devaluation of the naira against the CFAF, are offset by imports of deep-frozen meat from Europe (around 2,500 tons a year) and, during Ramadan, of sheep and goats from the Sahel. Some 2,000 tons of powdered milk are also imported for the urban centers in the south. Consumption of locally raised meat is low (6-7 kg per inhabitant), due partly to low income levels. 2.12 Fish provides between one third and one half of the animal protein consumed in Benin. However, the fisheries sector represents only 2? of GDP or 5? of primary sector production, which demonstrates how the fishery sector's potential is undervalued. Fish is generally sold very close to the fishing grounds, and the some 52,000 fishermen are among the poorest groups of the population. Around 602 of the fish is caught in the coastal lakes and lagoons. The rest comes from the continental shelf running along the 120 km of coastline, which has limited potential, and from the rivers. The lakes and lagoons are suffering from changes to their ecosystems caused by over-fishing, water hyacinth infestations, and an irreversible process of silting as the banks erode. Fish catches (less than 10,000 tons in the sea and some 30,000 tons in other areas) are more or less the same as they were 30 years ago, following a sharp decline around 1980. This means a halving of per capita consumption over the same period. Food Security 2.13 Certain studies estimate that close to one fifth of Benin's population suffers from one form or another of food insecurity, often seasonal rather than permanent. The locaLj.ns affected differ from one year to the next. The local doctors describe the malnutrition they observe as "moderate." While available statistlcs show that the growth of food production has more or less matched population growth over the past few years, it is nonetheless true that supply is irregular, providing a barely adequate calorie intake, and that shortages of protein, which is particularly important for pregnant women and children, are still high. The food situation in the cities, originally less precarious than in the countryside, has been aggravated by inflows of migrants  - 6 - and rising levels of unemployment. During the years of drought, production in the southern region is more severely affected than in the north. Food aid accounts for only a minuscule part of Benin's food imports. Women in Agriculture 2.14 Women, often outnumber men in the rural areas. They play an important role in food crop production and in primary and intermediate trade. However, most agricultural sarvices are not oriented toward women, and they have less access to credit than men. The status of women varies from one ethnic group to another but is always lower than that of men. Generally speaking, they may not inherit rural lands. Despite their low literacy levels, the many menial tasks they have to perform and the increasing difficulty of fetching water or firewood, the women of Benin have often demonstrated an entrepreneurial spirit. They have of their own accord formed groups to handle the processing and marketing of their production. A small number of women's associations receive some degree of literacy, technical or marketing training. Although a few women do hold senior government positions, work needs to be done to make middle-level civil servants aware of the importance of women at all levels of society. There are few women providing agricultural services, and the need to have women extension agents reaching women farmers is a subject of debate. III. AGRICULTURAL INSTITUTIONS Farmer Institutions 3.01 Vtllaie groups. A first attempt, in 1965, at grouping villagers around comme.cial and service activities, in which the farmers were intended to share the means for and results of production has failed. The village groups (GV) established later in the cotton growing areas have been more active. The success of the cotton-growers' groups, !n the north, is explained by three factors. First, in the north these groups represent a transposition of social structures to economic relations. Next, these are commercial rather than production groups. Third, the economic advantages of collaborating for the marketing of cotton are clear. In the south, the nuclear family is more important than the village community or lineage; relationships are increasingly based on trade rather than tradition. The government-promoted farmer cooperatives have also fallen into discredit in the south, owing to the failure of the big palm plantations that were nationalized under the aegis of the cooperative movement. 3.02 Aaricultural credit. The financial system of Benin is undergoing rapid change which was supported by the Bank under the structural adjustment program. The three State-owned banks were liquidated and four private banks have been established recently. Regional financial policies of BCEAO were improved over the last two years. including the rationalization of the interest rate structures and improvements in supervision of banking activities. The provision and administration of agricultural credit still encounter serious difficulties. The National Agricultural Credit Bank (CNCA) having been liquidated, various donors, including IDA, have helped rehabilitate the Local Agricultural Savings Cooperatives (CLCAM) and Regional Agricultural Savings Cooperatives (CRCAM)  through the Rural Savings and Loan Rehabilitation Project (2086-BEN). In the immediate future, these cooperatives are unlikely to have the capacity or any interest to serve as distribution channels for external credit resources to the mutualist system. The four private banks have so far focused exclusively on the urban markets and have not yet assumed the kind of risks inherent in rural credit. 3.03 Nongovernmental orRanizations. A certain number of nongovernmental organizations (NGO) are involved in the promotion of voluntarily established village groups and in development of the poorest rural communities. Impressive results have been obtained in Atacora in the north. These NGOs are all foreign, such as organizations of volunteers from various countries or religious charities. Beninese NGOs are in an embryonic stage and are not yet capable of playing a significant role in agricultural development. Five pilot food security operations financed by IDA are, after a slow start, being run by organizations of foreign volunteers who have agreed to help bring local NGOs into being and assist with their training. Governmental Institutions 3.04 Agricultural Policy. Benin has not, up till recent date, had an explicit agricultural policy or objectives aside from some declarations that have rarely been put into practice. The previous government attempted to pursue a marxist-leninist policy. The first two development plans did not go beyond general ideological considerations and were short on economic analysis. Neither the second nor the third plan was published. A first structural adjustment program, comprising changes in agricultural policy, was started in June 1989. The second tranche of the relevant credit was disbursed in June 1990 and a second program to proceed simultaneously with this project. 3.05 In order to better define Benin's future agricultural policy, a detailed diagnostic study of the rural sector was made by consultants in 1989. The sector objectives deriving from this study and the structural adjustment objectives were the subject of a seminar on development strategy for the rural sector held in Cotonou in July 1990, which enjoyed a wide attendance. The seminar discussed the sector's main objectives, the future role of the State and of rural development projects in a market economy with a view to enhanced food security and better natural resource management, and the resultant financial implications. Since then, the Caisse centrals de coopEration Economlque (CCCE), in agreement with the Bank, has financed the preparation of a report on rural development policies, which was issued in December 1990. 3.06 Administration of aariculture. The main government institutions dealing with agricultural development and assistance to farmers and herders are MDRAC and six Regional Action and Rural Development Centers (CARDER). A number of State corporations, organizations and agencies are overseen by MDRAC, such as the National Agricultural Production Company (SONAPRA) and the National Cereals Office (ONC). 3.07 MDRAC's present structure is characterized by a multiplicity of directorates (13), departments (88) and divisions (220). The links between  departments are very weak, their activities are fragmented and duplications are frequent. The directorates do not have clearly defined objectives or responsibilities, and authority is too concentrated at the top. The monitoring system is badly organized and the sheer number of reports produced each year (about 1,500 by the old Studies and Plannxlg Directorate alone) makes them difficult to use. Work methods and discipline need to be improved. The geographic dispersal of the directorates in 10 different locations in Cotonou and Porto Novo adds to costs and delays and aggravates communications difficulties. MDRAC's operating costs were of the order of CFAF 1.4 billion in 1988. MDRAC employs nearly 1,960 persons, of whom 750 work in the Agricultural Research Directorate (DRA). About 20? of total MDRAC employees is contract staff; the others have permanent civil servant (PCS) status. Senior staff make up 18? of the total, and middle-level professionals 171. Nearly three quarters of the staff have a very low level of training. Staff profiles do not match the positions and there are not enough professionals trained in organization and programming. Staff are frequently moved from one position to another, which prevents them building up practical knowledge. In general, and as in the rest of the public administration, there are no clear career development, appointment, evaluation, training or motivation policies. The Livestock Directorate of MDRAC employs 398 professionals, 84 of them senior staff, who receive little supervision and are poorly trained and too numerous in relation to the country's livestock population. Veterinary care is provided almost exclusively by public services despite the fact that the country has a score of young graduate veterinarians who are unemployed. Some of them are reported to be providing uncontrolled services in the north of the country. 3.08 The CARDERs were set up in 1975. They are integrated rural development organizations covering all sectors as sole suppliers of services to rural producers, with the exception of the marketing of foodstuffs, which is handled by private operators. There is one CARDER in each of the country's six ddpartements (Atacora and Borgou in the north; Zou in the center; Mono, Atlantique and Ou6md in the south). The CARDERs were designed, in principle, to provide advice concerning production and to train producer organizations, to act directly in the commercial and financial sectors, to carry out or arrange for the execution of works of public interest, and to perform administrative and regulatory tasks in the agriculture sector. Several of these services involve contradictory responsibilities. Because of their financial resources, the CARDERs have also been drawn into playing a political role. 3.09 The CARDERs quickly expanded their activities into too many areas, and their present organization suffers from blockages in information flows, jurisdictional conflicts and difficulties in organizing t1e work in the field. The commercial or production activities of the CARDERs divert them from their primary purpose of assisting and providing technical support to producers. Neither have these activities been consistent with economic or financial criteria. The only permanent contact with the farmers is through the agricultural extension agent, who therefore has to turn his hand to everything. About 75Z of the personnel do not possess the required qualifications. This problem is particularly serious in the case of the extension agents, who do not generally have the necessary level of training ("Agent Technique de Ddveloppement Rural," ATDR, equivalent to two years of post-baccalaureate studies) to be able  to dialogue effectively with the farmers. The total personnel of the six CARDERs numbers around 4,910 (602 technical and 40? administrative). Only a tenth are professionals with university degrees. However, the latter have little experience. Of the total number, 142 are contract staff and 86? are permanent employees. Half of the contract staff claim entitlement to permanent status (Annex 1, Attachment). 3.10 Operating costs of the CARDERs were CFPF 5.6 billion in 1988, 25Z of which was covered by commercial receipts while the rest was funded in more or less equal proportions by the national budget (which pays, in principle, the salaries of CARDER staff) and foreign donors who use the CARDERs to manage projects they support. The mandate of the CARDERs should be narrowed, their personnel reduced and their financial management improved. 3.11 Regional development proiects. Each of the ddpartements is covered more or less effectively by an integrated development project benefiting from external assistance that finances the major investments involved and the CARDERs' non-wage costs (the CARDERs also perform some other activities not financed by those projects). The projects financed by external assistance, and consequently the CARDERs, enjoy considerable operational and planning autonomy compared with the MDRAC central services, partly on account of the latter's intrinsic weakness. 3.12 The International Development Association (IDA) is financing: (a) the Zou project, in conjunction with the CCCE and the Fonds d'Ade d la Coopdratlon (FAC); and (b) the Borgou project, with the CCCE, the International Fund for Agricultural Development (IFAD) and the West African Development Bank (BOAD); it is supervising the Atacora project which is financed by IFAD and the Organization of Petroleum Exporting Countries (OPEC). The Atlantique departement had for some time been receiving technical assistance and funds from the German technical cooperation agency (GTZ). GTZ is proposing to introduce fundamental changes into its future assistance in the ddpartement. The European Development Fund (EDF) has provided the Mono CARDER with grant funds under the Lome Convention, supplemented by a credit from the AfriLan Development Bank (AfDB). The Islamic Development Bank, the Arab Bank for Economic Development in Africa (ABEDA) and AfDB have recently initiated a project for the Oueme ddpartement. In the past, AfDB has concentrated the bulk of its agricultural assistance in Benin in the livestock sector, especially the state ranches. Other projects concerning pastoral water resources are being financed by GTZ, EDF, FAC and PAO/UNDP. The sustainability of these operations and their possible impact on the environment remain to be assessed. The design of the regional projects has often reflected the ideas and intentions of each donor rather than a national planning approach. 3.13 SONAPRA. The CARDERs' industrial responsibilities were transferred to specialized operators in 1987. Cotton credit, marketing, ginning and exports are now handled by SONAPRA, an enterprise under MDRAC supervision. SONAPRA was recently strengthened and reorganized under the Borgou II project. The CARDERs still perform certain collection and input transport services under contract for SONAPRA. 3.14 Agricultural research, conducted up till 1977 by French experts and taken over thereafter by Beninese researchers, has been placed under the DRA  - 10 - since 1984. In addition, each CARDER has a division, employing a university- trained agriculturalist, responsible for liaison with research and development (R-D). The School of Agronomy and the Beninese Center for Scientific and Technical Research, both under the Ministry of NatiGnal Education, also perform agricultural research activities. A National Agricultwral Research Committee, with secretarial services provided by DRA, has had respLusibility, since 1963, for guiding and programming research and ensuring dissemination of the findings. This committee has not met since 1986. About 312 of Benin's budget for crop research has been covered by foreign donors. The food technology laboratory has had no funds available for some considerable time. The dispersion and small size of the research units has meant that foreign financing has placed great pressure on the research priorities of various units without any overall coordination being possible. Outside the cotton sector, agricultural research has come up with a few promising proposals but has had little if any impact yet on yields. 3.15 DRA has four research stations: Niaouli, in the ddpartement of Atlantique, and Ina, in Borgou, for food crops; Pobe, in Oueme, for palm oil; and Seme-Podji, also in Ou6m4, for coconut palms. Other research units cover cotton and fibers, coffee/cocoa, forestry, stock breeding and veterinary research. There are also four support laboratories, including the National Agro-Pedology Center (CENAP) in Agonkamey. The cotton/fiber research unit does not have a station but does have a network of permanent experimentation centerui. Three R-D projects have already been or are being implemented. The one in Zou, financed by the FAC, was completed in 1990. The one in Borgou, financed by IFAD. has just started under the supervision of the Ina research station. The one in Mono, or Agricultural Research in Real Environment (RAMR) project, has been ongoing since 1986, with assistance from the International Institute for Tropical Agriculture (IITA) and Dutch financing, and is expected to continue until 1994. The project's aim is to better identify, set-up, adapt and transfer technologies appropriate for the local farmers. 3.16 The weak points of agricultural research in Benin are: (a) the lack of national planning and of global priorities consistent with the economic importance of the activity (yams, cassava and livestock are relatively neglected and no research at all is being conducted on the alarming natural resource degradation, while the rice, coffee and cocoa programs no longer correspond to any priority); (b) a poor spatial distribution of research, with more than half the researchers in Cotonou or Porto Novo, staff dispersed over too many small stations, and programs and units that are insufficiently integrated and are pursuing differing and geographically limited objectives; (c) with a few exceptions, a failure to identify topics and messages meeting the actual needs of the sector and ready for dissemThation, especially in areas of low fertility; (d) ill defined R-D responsibilities; and (e) a low level of training, and assignment of heavy administrative responsibilities to the most experienced researchers. 3.17 Seed production. Up till recently, there was a seed farm and packaging equipment in each CARDER as well as two other seed farms run by the national seed service. Despite these facilities, the coverage rate for certified improved seed is only 1U, production costs are three to five times higher than if the seed were produced by the farmers, and many buy seeds from neighbors who  - 11 - have achieved good yields on their own or from across the border. The seed farms have lacked varieties suited to the needs of the southern farmers, who prefer greater income security, less work and better organoleptic qualities over higher yields. The farms were, for the most part, located in poor soils and there was no national coordination. The number of farms has since been reduced to two, Alafiarou in Borgou and Agbotagon in Atlantique, in accordance with recommendations made in an FAO study. Pre-basa seed is produced in the Niaouli and Ina research centers. Multiplication of base seed will be entrusted to selected farmers, and the seed will then be processed and packed by the seed farm. The land belonging to the remaining six farms would be redistributed, with the best land possibly being allocated to those selected to perform seed multiplication. The equipment of the two farms retained has been supplemented by that from the others, mainly cold-storage chambers. Current plans call for seed stores to be financed by UNDP. A study on the traditional cultivars of the main food crops has already been completed by FAO. Wo-' .ng capital for base seed production will be needed in Atlantique, but is already available for Borgou. Working capital and some equipment will be needed for pre-base seed production. 3.18 Agricultural extension is the exclusive responsibility of the CARDER. In general, the systems in place are based on the training and visit method, with variable results. While noteworthy results have been obtained for cotton, the impact on food crops has been well below what was expected. The technical messages proposed have not meshed with the declining soil fertility, the markets for agricultural products or the availability of agricultural credit, which has led to a dearth of messages suited to the farmers' needs. This situation is due to: (a) failure on the part of extension and research staff to listen to farmers, coupled with the intrinsic weakness of research; (b) inadequate training of extension agents; (c) poor use of extension tools and methods; (d) separation of plant and livestock extension; (e) failure to observe extension schedules, because staff spend disproportionate time with influential farmers or are tied down with administrative work; (f) over-staffing, with a hierarchic structure that is too weighty; (g) failure of the training system; and (h) purely administrative monitoring of the results. 3.19 National Cereals Office CONC). Established in 1985, ONC is a semi- independent agency attached to MDRAC whose initial objectives were to buy, store and market cereals, regulate the market for them, carry out industrial processing and manage food aid. ONC has silos with a total capacity of about 37,500 tons which have never really been used for their original purpose. It also owns a maize mill at Bohicon which has never operated. ONC's personnel consists of seven professionals and seven or eight auxiliaries. The agency no longer performs commercial functions, but is planned to be entrusted with managing the early warning system, plus providing information concerning production and markets, advising on food policy and providing logistic support for village storage, as well as, possibly, the management of a modest central emergency stock (7,000 ton maximum). A study to this effect is being carried out with German assistance. In 1989, ONC's personnel did not have the profile needed for its new functions. ONC would be reorganized to properly fulfill these functions. Its future status remains to be agreed upon. 3.20 National Veterinary Pharmacy (PHARNAVET). Importation of veterinary pharmaceutical products has recently been assigned to PHARNAVET, a para-public  - 12 - enterprise which has just started operations using German financing. Half of the relevant import credit has already been released, and the other half will be disbursed around mid-1991. Future privatization of PHARNAVET is envisaged by the German project. It would be desirable for this to occur as early as possible, the more so since distribution of veterinary products will no longer be handled by the CARDERs. If importation of veterinary products were to remain the preserve of a public enterprise, the absence of an assured regular supply could seriously imperil the income security of private veterinarians and pharmacists. Institutional Studies Already Undertaken 3.21 MDRAC and the CARDERs have already been the subject of a number of studies. The first, made by FAO with UNDP financing, related to the restructuring and institutional reform of the CARDERs. The second, made by the same team with Borgou II project financing, considered the reform of MDRAC's central services. The third, ma%i by the FAO/World Bank Cooperative Program, made use of the proposals of the preceding studies and has led to a preparation report on the basis of which this agricultural services project has been appraised. Another FAO report formulated some specific proposals, now being implemented, for the reorganization of seed production. IDA's Role and Experience in Rural Development in Benin 3.22 IDA has participated in the financing of seven agriculture sector projects in Benin since L;69. The first one was designed to help the Government in establishing oil palm plantations and ended in failure. An impact evaluation report was made by the Bank's Operations Evaluation Department (OED) (Report No. 5029). The second project, aimed at the development of the Zou and Borgou provinces (1972), was closed early for technical reasons and because of inappropriate agricultural policies. Subsequent projects, initiated after a ten- year gap and co-financed by various donors, were much more successful. They related to integrated regional development in Borgou (Credits 1127-BEN of 1982 and 1877-BEN of 1988) and Zou (Credit 1314-BEN) (para. 3.11). The second Borgou project focused especially on reform of cotton production nationwide. The agriculture portfolio now being prepared has three main aimss strengthening of the national institutions, protection of natural resources and improvement of food security. This approach has already given rise to a project to reform the CLCAMs and CRCAMs (Credit 2086-BEN). A national natural resource protection project, being appraised, would follow on the current forestry project (Credit 1505-BEN). A food security project is currently providing preliminary financing for five pilot operations, which should lead to the preparation of a larger-scale project in 1992. The regional development projects have made it potsible to test agricultural services in rural areas. More recently, IDA and the CCCE, in the context of the second Borgou project, have helped Benin in the study of its rural sector and the formulation of a global strategy for the sector. IV. THE PROJECT Obiectives 4.01 The Beninese Government's objectives in the rural sphere are to put farmers more firmly on their feet, disen3age the public sector from activities  - 13 - that are better performed by the private sector, reduce costs payable from the national budget and decentralize the State's activities. The priority assigned to restructuring agricultural institutions in the wider context of administrative reform in Benin is justified by the agriculture sector's significance in the country's economy, by the fact that MDRAC is the only ministry with significant decentralized agencies, and by the availability of existing studies of high quality that have received the approval of the Beninese authorities and spell out both the actions to be undertaken and their cost. 4.02 The fundamental objective of the project is to give the Beninese State, within its financial constraints, better control over rural development activities in order to cope with the evolution of the balance between supply and demand for agricultural products due to the country's increasing urbanization, the degradation of its natural resources and movements in international trade. The project would define rural service programs from the bottom up, i.e., starting from public or private units working directly with the farmers. It would improve the quality and suitability of the services provided to Benineso farmers and herders, and would create additional employment opportunities in the private sector. It would also lead the agricultural services to pay more attention than in the past to food crops and livestock and to training staff to meet the specific technology needs of women and the most disadvantaged rural communities. 4.03 The project does not propose to finance regional or nationwide rural development actions directly; these will continue to be handled by other projects. However, the project would develop an invaluable tool for the planning, implementation and monitoring of such operations, whatever their source of financing. This tool would also provide design support for rural development activities carried out by private institutions or enterprises. To do this, the project would restructure MDRAC's central services, including some of its dependent agencies, and the six CA%DERs, to implement those activities that fall naturally within the public purview, to enhance the quality and efficiency of their services and ease the burden on the budget. Outright elimination of certain functions and reduction of .he number of positions in other-,. such as extension, as a result of these improvements would reduce MDRAC and CARDER personnel by around 63Z of the present total (para. 6.04). The envisaged number of redundancies would represent about 6? to 10? of all Benin's public employees. 4.04 The function of the restructured MDRAC and CARDERs would comprise both public service activities and, in the case of the CARDERs, activities that do not fall exclusively in the public sphere and which could gradually be taken over by the private sector. In the medium or long term, the CARDERs would retain purely public service activities, i.e. t (a) planning and supervision of measures for the conservation of natural resources, including rural legislation and the setting up of a rural land registry; (b) monitoring and orientation of the crop and livestock sectors and their potential markets, including early warning operations; (c) livestock and plant health controls; and (d) acting as owner for State-financed rural infrastructure projects and providing technical advice when requested for works financed by village communities. The activities that the public services will have to carry out as long as and where no other mechanisms are available would be provided by the Extension and Farmer Organization  - 14 - Directorate (DVAOP) (organization chart 2). They aret (i) agricultural extension, the impact of which must be expanded beyond cotton growing to food crops, livestock and other possible export products, and to the most disadvantaged rural communities; and (ii) management advice to village groups. Veterinary services, currently provided by the CARDERs, and importation (by PHARNAVET) and distribution (by the CARDERs) of veterinary products, would be privatized as early as possible. The organization charts of MDRAC and the CARDERs would be defined by law or decree. The staffing of each CARDER's various units would be adapted to local needs. 4.05 Agricultural extension will require a reform of the concepts on which it is based. The aim would be to help the farmers improve their decision-making capacity, their production system at farm level, their productivity and their knowledge of the domestic and international socioeconomic environment. The extension system should also promote the conservation and rational management of village lands, once it has improved its own knowledge of the environment; it should provide demonstration, support and advisory services meeting the objectives and specific constraints of the villagers in an evolving context. It should also provide equal access to women and to the most disadvantaged rural communities. At present, the CARDERs are the only bodies capable, after reform of their structures and methods, of providing this service to a substantial segment of the rural population. The CARDERs should have the flexibility to adapt their staffing and objectives to the emergence of new private and professional organizations in their respective regions. Strategy 4.06 Sectoral strategy. The strategy proposed to assist the development of Benin's rural sector would combine complementary and coordinated national and regional approaches (geographic and topic-based projects). The national approach would aim at refining and decentralizing the State's structures and procedures. The regional approach would focus on strengthening the farmer organizations, young people, women and the most disadvantaged groups and would finance specific rural development projects. A draft OLetter of Rural Development Policy' would be prepared by MDRAC and presented at negotiations to the institutions financing this project. It would be signed by the Government before Board presentation. 4.07 Project strategy. The project strategy would combine agricultural and administrative policy reforms (para. 4.19) with the investments necessary for the proper functioning of the restructured institutions (para. 4.20). The implementation of this strategy would be built around four successive and complementary components: (a) restructuring of the institutions concerned, involving downsizing of their personnel and providing of equipment they will need in light of their new functions and dimensions and their existing resources; (b) financial compensation for permanent redundant staff and technical and financial assistance for those who submit viable projects for reentry into the private sector; (c) reassignment and strengthening of the capabilities of the remaining personnel, thereby ensuring the sustainability and efficacity of the institutions concerned; and (d) systematization of the working methods of the various services, focusing on regional diversification of the action programs and on expanding opportunities for the private sector while allowing effective monitoring by the central government. The criteria and procedures for the  - 15 - gradual transfer of the management of agricultural services to private operators would be studied. The project would be carried out over a period of about three years. However, the redundancies would be eliminated according to the calendar shown in Annex 1, para. 22. Lessons from experience in agricultural services projects in Benin and elsewhere in Africa have led to the design of an improved approach, as described in paras. 4.08 through 4.14. 4.08 Central coordination. The reorganization of PDRAC would be based on (a) effective separation of administrative and political functions; (b) simplification of hierarchical structures and decision circuits; (c) definition of each manager's responsibilities around clearly spelled objectives; and (d) clear correspondence between the structures of HDRAC and those of the CARDERs. The MDRAC central services should be responsible, through appropriate structures and duly qualified staff, for: (a) defining Benin's rural development policy; (b) aligning the ministry's objectives with its human and financial resources; (c) studying and programming the actions that the CARDERs, as decentralized MDRAC agencies, should undertake, in particular as regards assistance to the most disadvantaged and on the subject of food security; (d) introducing rural land tenure legislation; (e) further liberalizing national regulations to facilitate private initiatives in the spheres of production, marketing and processing of agricultural and livestock products, the manufacturing of agricultural equipment and the provision of agricultural services; (f) orienting and coordinating regional or specific external financial assistance to ensure that it is used in complementary and productive investments; (g) monitoring and evaluation of all projects under its supervision; (h) producing sector analyses and projections of markets, climate, technology and other needs, etc.; and (i) preparing and enforcing rules and regulations concerning livestock and plant health, quality of inputs and agricultural and livestock products, and protection of the environment. The ministry's structures would reflect their function of support and follow-up for CARDER activities and the concern for continuity in public sector actions, while clearly distinguishing between technical and policy activities. The CARDERs would be answerable to MDRAC for all their activities. Direct communications would be set up for that purpose between the technical directorates of MDRAC and their counterpart structures at CARDER level. The latter would, however, be accountable to the Director General of the CARDER. 4.09 Agricultural research. Benin's strategy on applied agronomic research would focus on six specific aspects. The research teams, which are currently too heavily concentrated in the south of the country, would be decentralized. Research would be reorganized to prevent duaplication. A multi- disciplinary approach would be adopted in research programs. Applied research would be better linked with R-D. The proportion of research (currently focused almost entirely on varietal research and input use) devoted tot (a) processing and preservation of agricultural products, especially foodstuffs, to meet the country's food security concerns; (b) natural resource management and conservation; and (c) cultivation practices, would be increased taking climatic and ecological changes into account. Research programs in each ddpartem,nt would be adjusted to the principal local constraints, such as the risk of desertification and shortage of labor in the north and low soil fertility in the south.  - 16 - 4.10 The Government of Benin intends to have applied agricultural research performed through an autonomous institute, whose restructuring and research programs would be funded from other sources. The institute would plan the strategy and supervise the implementation of all agricultural research in Benin besides conducting research on its own. This project would finance the applied research reorganization study (Annex 3, para. 16). 4.11 Research and development would be performed similarly to the RAMR project (para. 3.15) on Experimentation Sites in Farmer Environment (SEMP), where research would be done through a collaboration between applied researchers, extension agents and the farmers. It would be organized to ensure that the farmers' problems are heard and their knowledge utilized to adjust the topics of applied research in accordance with these observations. R-D would also allow a better use of the existing CPEs through a more thorough integration of cotton research with research on other crops. These CPEs could also provide systematic trials on innovations identified on the SEMPs. Production of improved cereal seed would make greater use of local traditional varieties, which would be multiplied by small private farmers. 4.12 Extension. The system proposed for managing the extension staff comprises a set of rational, basic practices applied to the organization, supervision and continuing training of field agents working throughout the entire country and to their working relations with the farmers and agricultural research. The training and visit system, from which the proposed system is derived, is already used, though poorly, by the CARDERs. Provision will be made under the project to encourage a flow of information from farmers to extension staff and researchers. Selection of extension agents who are sufficiently trained and motivated to dialogue with the farmers and prepared to provide eventually their services on a contract basis rather than as government employees, will be one of the measures adopted. Other necessary steps will be adaptation of the extension messages to local cultivation systems and physical, climatic, social and commercial conditions, better participation by researchers in the field, and flexibility in the visit schedule. Once the reorganization of the CARDERs completed, extension or farmer organization agents would be recruited only on a contractual basis. 4.13 Compared with what has been done up to the present, the proposed extension system would maintain three fundamental principles. Meaningful and measurable socioeconomic objectives would be set, against which the extension agents' results would be judged. A work program that is clear and easy to supervise would involve regular meetings between agents and farmers or herders. Continuous on-the-job training of extension personnel would enable them to act as general agricultural advisers. The proposed system would, however, introduce many innovations. Work programs (content and schedule) would be defined in collaboration with the farmers rather than by a central unit covering an entire region. The extension agents' results would be evaluated on the basis of the farmers' accomplishments rather than the (often theoretical) number of farmers touched by the system. This will lead to the extension agents' efforts being concentrated on farmers displaying a real interest in the service provided. On- farm research would be expanded as the basis for determining the content of extension programs, taking into account the problems affecting the community, such as availability or otherwise of natural resources, village land development,  - 17 - water supply and transhumance, instead of disseminating technical messages developed in a vacuum by appl.ed research. Demonstration plots would be located in the farmers' fields rather than in plots reserved for the extension agents. The work would be done by the farmers, on issues of their choice. Meotings between agents and farmers would be scheduled according to the agricultural calendar for the different regions and in such a way as to permit, during the less busy times of the year for the farmers, exchanges of views and advice on the socioeconomic environment. Special attention would go to the introduction of techniques that permit conservation and improvement of soil fertility, something that has not been done so far. Stock raising and agriculture would be integrated by means of the introduction of cover crops and alley crops in the south, mixed cropping or rotation of cereals with leguminous fodder crops and establishment of fodder silo technologies in the north, animal traction, use of crop byproducts for stock feed and of livestock byproducts for organic fertilizer. Measures would be taken to reduce the heaviest constraints on women, such as segregation by sex for credit or the heavy work involved in drawing water and gathering firewood. Participatory training of extension agents would be sought, benefiting from contributions by all participants, rather than trickle-down training working down progressively from subject matter specialists (SMS) to supervisors to extension agents and, finally, to farmers. Increasing participation of farmer organizations would be sought in the administration of the extension service, as described in the following paragraph. 4.14 As the village groups reach a technical level and financial stability enabling them to manage their extension needs themselves, the supervision and, at a later stage, the administration of the extension function could be transferred to associative, professional (such as a Chamber of Agriculture or NGO) or commercial organizations. In an initial interim phase, these local bodies could be associated with the CARDERs in joint management of services intended for farmers, which would prevent either a sudden disruption in provision of services or the instituting of disjointed extension systems cut off from the communication system linking R-D, extension activities and the farmers. Ultimately, the farmer associations would take over the management of extension and the CARDERs would withdraw from it. The schedule for these transfers would vary from region to region depending on the actual organization of the farmers in a given area in solid associations vacked by regional projects or the CARDERs themselves. One of the State's permanrnt roles in such an association would be to prevent extension activities tending to serve only the most developed farmers and those best able to organize themselves, at the expense of the most disadvantaged. This would be achieved in part by maintaining a core of targeted public extension services beyond the introduction of private extension. Another State function would be to train farmer organizations to assess the quality and technical validity of the inputs and advice provided by merchants, manufacturers or veterinary pharmacists when selling equipment, products or services. The Order of Veterinarians would also be responsible for assuring the ethical conduct of its members. 4.15 The project strategy in the field is to keep the total number of polyvalent extension agents (APV) in the CARDERs low (766) with respect to the number of agricultural production units (40,000) in Benin. At the same time, a high number of SMSs (206) and supervisors (127) would be maintained. These figures result from the following assumptions: (a) reduction of the number of  - 18 - sectors from the current 79 to 41 in the future; and (b) the possibility of an intensive working relationship of each APV with a core of 120 to 190 farmers. This proportion would vary according to the particular features of each region and would be accompanied by faster dissemination of innovations beyond the core group, also using mass media. 4.16 SupPort for farmer organizations. The support for farmer organizations would be designed to help villagers who desire to organize themselves around activities of coiimon interest. It would also enable unions of these groups to take over management of the marketing of crops such as cotton, and to identify and meet their members' needs in terms of functional literacy, cooperative management, formulation of applications for financing or preparation of development projects. Legal and administrative oversight of these organizations by the State would be reduced to a strict minimum. The assistance of specialized private entities or villager associations that have already gained experience in this respect would be sought in the context of regional projects to help the new organizations develop (para. 5.16). Justification of IDA's Partirdpation in the Financing of the Project 4.17 The proposed project is nationwide in scope and forms a kev and leading component in Benin's structural adjustment program. This program is supported by IDA and the other main donors. IDA, as well as the other donors financing the project, have considerable experience of collaboration with the CARDERs in Benin and in setting up agricultural service systems in various African countries. The project is consistent with those already financed by IDA in Benin, while at the same time bringing a new and more comprehensive perspective. It would provide the institutional background for other agricultural projects to be financed by IDA and the other donors in Benin, such as the Natural Resources Management project. Project Area 4.18 The project will impact the Government's activities in each of the country's six ddpartements. Close coordination will be established in each of these ddpartements with the various ongoing regional or thematic development projects. Proiect Components 4.19 The project would contain two types of components: those concerning agricultural policy, and the investments to be made once the necessary policies have been adopted. General policy measures have been spelled out in a Letter of Rural Development Policy (LPDR) describing the policy orientations of rural development in Benin, establishing a calendar for the implementation of the various policy measures and listing studies which are needed for the Government to further its reform and reorganization process in rural areas. The LPDR was agreed between the Government and the donors financing the project during the project negotiations. An unofficial translation is provided in Annex 1. The policy components of the project form part of the general policy matrix for Benin's structural adjustment program and consist of: (a) adoption of the new  - 19 - statutes for the CARDERs and MDRAC including the profiles for the positions to be included; (b) updating of legislation on cooperatives; (c) release of more than 3,500 staff from the CARDERs and MDRAC, excluding the agricultural research directorate, and reallocation of surplus equipment belonging to the CARDERs, preferably to agents moving into the private sector; (d) privatization of the seed farms; (e) drafting of a veterinary code; (f) privatization of PHARNAVET; (g) taxation of subsidized meat imports; and (h) preparation of a health services action plan for the livestock sector. 4.20 The investments would comprise: (a) restructuring the central services of MDRAC; (b) restructuring the six CARDERs; (c) internal and external training for MDRAC and CARDER staff remaining in public employment; (d) R-D programs; (e) strengthening of the two remaining seed production facilities; (f) targeted support for the livestock services; (g) financial and technical assistance for redundant stafC settling on their own; (h) technical assistance in support of the organization and management of the project; and (i) various legal and technical studies, including that on the future of applied research. Detailed Description A. Agricultural Policy Components 4.21 New statutes for MDRAC and the CARDERs. The new organization of MDRAC and the CARDERs, the profiles of the positions to be staffed and also the manner in which these institutions will interact with the rural sector following the changes proposed by the project will be laid down in new statutes and organization charts. The statutes should be consistent with the arrangements envisaged for the shift to joint management of the extension services by the CARDERs and the farmer organizations. These statutes would be accompanied by regulations setting the procedursl for implementing the reorganization of personnel and reallocation of equi;pant. 4.22 Personnel management rules. The adoption of an improved personnel management code is envisaged under the structural adjustment program for the totality of the civil service. Without such rules, staff stability cannot be ensured and no institutional memory ca-. be preserved, neither can the significant training costs included in the project. be Justified. 4.23 Cooperative legislation. I-nin's legislation on cooperatives is on the whole well designed but, as app: ie in the past, has led to numerous instances of disruptive intervention by rhe State in the functioning of villager or professional organizations. This legislation would be revised in accordance with the objectives of liberalizing the economy and with a view to ensuring independence vis-&-vis the Government for the organizations g ouping producers, merchants and other professions, with respect to their objectives, statutes, choice of officers and various financial dspects. Assurances were received during negotiations that the code would be reviewed and, if need be, revised before June 30, 1992. 4.24 Reduction of redundant staff. Effective use of the resources provided by the project and the balancing of the national budget require a considerable reduction in MDRAC and CARDER staff numbers (para. 6.04). The LPDR  - 20 - states the Government's agreement to lay off some 3,500 permanent or contractual MDRAC and CARDER staff (900 PCSs by December 31, 1991; 900 more PCSs by May 31, 1992; another 500 PCSs, of the lowest administrative echelon, by January 31, 1993; some 800 contractual staff by May 31, 1992; the remaining 400 staff, through normal retirement, by the end of 1992). The situation of some 300 other staff, involved in cotton marketing activities to be taken over by the private sector or found in the applied nutrition and processing quality control units of MDRAC, planned to be transferred to other ministries, would be the object of further studies. The transfer to the private sector of many CARDER activities will leave the CARDERs with a certain quantity of equipment (maintenance, transportation and office equipment) and facilities that they will no longer need. The best use of these assets would be sought through their sale to the staff who will be leaving the CARDERs. The estimated value of these sales could be deducted from the severance pay involved. Assurances were received during negotiations that the Government: (a) in accordance with the normal rules applicable in Benin, would settle the CARDERs' debts and claims at the time their statutes are changed; and (b) would allocate their surplus equipment to other uses or institutions after drawing up an inventory of same and ensuring that the equipment is maintained in good condition during the transfer phase. 4.25 Privatization of seed farms. The seed farms presently belong to the CARDERs, which buy the improved seed at a preset price and provide a label of certification. Assurances were received during the negotiations that the two remaining farms would be privatized before June 30, 1992, with the CARDERs retaining their certification function, which is a State responsibility. 4.26 Privatization of PHARNAVET. The conditions for the privatization of PHARNAVET, with the State divesting itself of at least the majority of its shares in the enterprise, and promotion of free competition in the import and distribution of veterinary products would be studied at the start of the project. As intended at the time of its establishment, PHARNAVET would be reorganized in accordance with commercial management principles to handle wholesale importation and distribution at ddpartement level by its own resources (para. 4.38) Retailing of the products would be the business of private sector veterinarians or veterinary agents. MDRAC would keep an updated list of veterinary (and plant- health) products which could be imported and would introduce rules concerning the symbols to be used on packages for illiterate users. The principle of privatization of PHARNAVET is stated in the LPDR. The procedures for its privatization are intended to be developed under the structural adjustment program in collaboration with the German donors. They are expected to be approved before June 30, 1992 and put in place before December 31, 1992. 4.27 Taxation of subsidized meat imports. The elimination of meat market distortions through appropriate customs tariffs would open the way for appropriate stock raising techniques to be adopted by Beninese herders. The interception and taxation of subsidized imports at the border has been facilitated by similar measures taken by Togo. The impact of subsidized imports on local production and on low-income consumer budgets, as well as the introduction of a system for taxing these products through customs duties which fully compensate for the level of foreign subsidization in line with the GATT agreements would be the subject of a local study to be financed by the project  - 21 - (para. 4.38) complementing those already made in C8te d'Ivoire and in the context of the general reform of Benin's customs tariff. The adoption of the new customs tariffs would be sought under the structural adjustment program. Application of similar taxes on other subsidized agricultural products would depend on adoption of comparable measures by neighboring countries. 4.28 Action plan for animal health services. The action plan would comprises (a) an inventory of the human and physical resources of the public and private livestock health services; (b) a timetable for transfer of responsibilities to private veterinarians; (c) a list of equipment that the CARDERs would transfer to private veterinarians; (d) a plan for installing veterinarians in the country's various ddpartements; (e) setting of minimum tariffs to be charged by the public services for veterinary care and vaccinations; (f) the rates that the State would pay the veterinarians for the vaccination and inspection services it would subcontract to them; and (g) the role and statutes of the Order of Veterinarians, which would be prepared as part of a study financed by the FED. The principles underlining the action plan are spelled out in the LPDR. Agreement on the action plan with the donors would be a condition for disbursement for the livestock component of the credit. The LPDR also states that the plan would be prepared and reviewed with donors by May 31, 1992 and that its major components would be translated into a veterinary code by December 31, 1992. The code would comprise (a) the method of transfer of veterinary services to private operators; (b) the tariffs and subcontracting fees established by the Government; (c) the duties, rights and responsibilities of public and private sector animal health agents; and (d) an authorization for private agents to combine the functions of veterinarian and veterinary pharmacist and to provide public care services on a subcontracting basis in order for them to achieve sufficiently attractive incomes. Such a code would be indispensable for the successful transfer of livestock health agents to the private sector and for young graduate veterinarians wishing to set up in business on their own account. 3. Investment Components 4.29 Restructuring of MDRAC central services. According to studies completed with the help of FAO, the reorganized MDRAC would comprise, under the Minister, a Directeur de Cabinet to whom ten directorates would report through an appropriate intermediary structure. These would consist of the administration (personnel and finance) and human resources and training directorates and eight technical directorates: sector analysis, natural resources, rural works, extension and R-D, rural promotion and legislation, crop production, livestock and fisheries (organization chart No. 1). The office of the Minister would consist of a private secretary, an expenditure control unit, an internal audit unit and a number of technical advisers. Three or four special task leaders (chargds de mission), reporting to the Director General could eventually be entrusted with the coordination of larger agricultural investment projects along the main lines of the country's rural development strategy, i.e., the management of natural resources, diffusion of information and training, animal and plant health and rural works. A reduction in MDRAC's personnel from its present level of 1,200, excluding the Research Directorate, to about 740 (and after relocation of another 180 staff, to about 560) would follow. Subject to some further  - 22 - clarifications to be sought prior to their enactment, the new structures of MDRAC have been agreed upon with the Government. 4.30 MDRAC would need, in theory, office space of about 5,000 me to house all its future directorates. The first option would be that a suitable building of that size (even needing rehabilitation on completion), such as the unfinished building originally intended for the Ministry of Plan, be made available by Government. An alternative but less satisfactory option would be that a new building (about 2,000 a? in area) be put up near the present MDRAC headquarters with limited financing already obtained by the Government I rom BOAD, of the order of US$300,000, complemented by project funds. This optio1 would only allow (a) bringing to Cotonou the MDRAC directorates presently located in Porto Novo; and (b) providing office space to the Directorate of Livestock, which has lost its present lease. In either option, the project would provide civil works, office equipment (furniture, telephones, telex, etc.) and data processing facilities. It would also finance the replacement of the ministry's vehicle fleet. 4.31 Restructuring of the CARDERs. The restructured CARDERs would have their staff reduced from about 4,910 to some 1,870 (and later to some 1,750). It is proposed, subject to final agreement between project donors and Government prior to enactment of the corresponding legislation, that each CARDER comprise an administration and finance directorate and five technical directorates (organization chart No. 2). The extension and villager support directorate would, at least initially, be the largest in terms of numbers of personnel and the most significant in view of its involvement with the actual farms. The other directorates would be those of (a) planning, monitoring and evaluation; (b) natural resources, forestry and plant health control; (c) rural works; and (d) rural institutions and legislation. The restructuring of the CARDERs will not entail major investments in most cases since they have already been equipped by the regional projects and the volume of their operations and personnel is to decrease. The project would finance the construction or rehabilitation of some buildings, logistic support and the replacement, as needed, of vehicles. 4.32 Personnel training. The training of personnel remaining in the MDRAC and CARDERs would comprise six components. Training would be provided, under project financing of tutorial expenses and trainee travel and subsistence costs, to (a) the MDRAC (36) and CARDER (108) directors and other management staff, in programming, monitoring and evaluation, data processing and management; (b) 44 sector chiefs, in programming, organization, monitoring, outreach and communication techniques, knowledge of the environment and simple management; (c) 12 operational training managers, in programming and organization, teaching and communication techniques, management of teaching tools and follow-up; (d) 414 SMSs, in knowledge of the human and natural environment, identification of development constraints, assessment of the farmers' needs and motivations, preservation of the ecological balance, experimentation and teaching techniques and identification of small projects, with a complement varying according to specialty (livestock or crop production, support for farmer organizations, etc.); (e) 126 supervisors, in knowledge of the human and natural environment, local production techniques, outreach and communication and monitoring; and (f) 766 APV, in knowledge of the human and natural environment in their area, types of farms, natuiral resource production and conservation techniques, assessment of farmers' ueeds and constraints, outreach, communication, keeping of simple  - 23 - records and preparation of farm activity schedules. The latter training would be provided on a continuous basis, on the job, by SMSs backed by the CARDERs' operational training service, utilizing the slack times in the agricultural production cycle (para. 5.08). Further intensive training for some 25 A?VS every six months would be provided by one of the two training centers planned to be established under the Zou project. This project would finance the correspondir.g costs. 4.33 Research and development would allow the spreading of tests at the farm level and in the 10 SEHP which have been identified (Annex 5) on and above the three RAMRs already found in the Mono. Three of the new sites would be in the Atacora, three in Borgou, three in Zou and one in Oueme. Two higher level research technicians would work on each site. CARDER supervision agents would participate in R-D activities as part of their normal work. The project would finance simple offices and warehouses, mopeds and inputs for research. The ten new SEHPs and those existing in the Mono would receive the support of four multi- disciplinary rese.rch teams, each attending to three SEMPs. These teams would comprise an agronomist, an animal husbandry specialist and a socio-economist, with part-time participation of thematic researchers. Part-time employment of a forestry specialist and a soils expert is planned under the Natural Resources Management project. The teams would be based in Natitingou for the Atacora, at Ina for Borgou, at Dassa for the Zou and at Niaouli for the three coastal ddpartements. Insofar as two of these R-D centers would be located within the premises of the Ina and Niaouli research stations, the project would finance housing for researchers at Ina, a hookup of the Niaouli station to the Allada power station as well as pumping equipment and, in both stations, livestock research equipment. Housing is available for rent at or close to the other centers. The Natitingou offices would be located in CARDER or other facilities, which are available but would have to be upgraded by the project. Offices for the other three centers would be financed by the project. The project would also fund light equipment items, construction of stores and offices, office and data- processing equipment and the transportation means and costs of the researchers. CPEs expanding cotton research to new lines based on a farming system approach which would integrate food crops and livestock activities would also be strengthened. Improvements of the food technology laboratory would comprise the rehabilitation of existing equipment, the purchase of a pick-up truck, and the cost of outside services and of analyses and documentation (Annex 5, para.5). 4.34 Seed production. The project would finance equipment such as maize shellers, dryers and irrigation pumps, a small truck, training and consultant time, the necessary operating funds, and the equipment for producing pre-base seed in the two remaining farms of Alafiarou in Borgou, and Agbotagon in Atlantique. 4.35 Livestock services. The project would testructure the livestock services so as to strengthen central and regional surveillance and control of the major epizootics, veterinary public health, livestock and meat imports and exports, imports of veterinary pharmaceutical products and livestock feeds, and inspection of foodstuffs of animal origin. The livestock directorate of MDRAC would be responsible for inspection at quarantine and border posts ar.d providing animal health services until the latter are privatized. To the extent possible,  - 24 - public livestock health actions would be entrusted, under State contracts and financing, to private veterinarians whose installation would be supported by the project through training and about 20 individual loans not exceeding CFAP 4 million each for veterinarians and veterinary agents moving into private practice. Livestock extension would be unified with crop extension within the CARDERs. This restructuring would reduce the central and departmental livestock services staff to 167. The project would finance, beyond the equipment and vehicles provided under MDRAC restructuring, (a) a central laboratory for epidemiological diagnostic work and routine analyses providing services on request to the veterinarians and supporting the public inspection services for foodstuffs of animal origin; and (b) four quarantine and border veterinary posts (Nikki and Madekali in Borgou, Kaboua and Toui in Zou) in addition to the four posts financed by EDF. The project would finance periodic technical assistance to the laboratory and the technical assistance and equipment needed by the Order of Veterinarians covering public and private sector veterinarians. Livestock research to be based on four of the CPEs, in various ecological environments in Atacora, Borgou, Zou and one coastal ddpartement, would entail the financing of mopeds, improved CPE offices and stores and simple research equipment. The project would not become involved in pastoral water supply development, which has already been the subject of numerous projects of a more or less pilot nature and needs a further period of experimentation. 4.36 Reinsertion of redundant personnel. The project would aim to facilitate the return of a part of the MDRAC and CARDER personnel to private sector activities by financing two training components and credit lines reserved exclusively for those leaving government employment. One training component, intended for staff resettling in commercial activities and focusing on simple business management and marketing, would be run in each ddpartement in the form of short practical seminars. It would be intended for a maximum of 250 former middle or higher level staff and 150 mechanics and truckers. A second type of training would be provided in the second of the two training centers being established in the 2ou (para. 4.32), to some 150 civil servants returning to the land. This training would be for groups of some 25 participants and last about six months. It would focus more particularly on crop/livestock integration. The credit component, subject to changes in accordance with needs emerging during the project, would comprise, besides the loans to the veterinarians, (a) up to 150 loans of not more than CFAF 2 million each for repairmen or truckers leaving the CARDERs; and (b) up to 200 loans of not more than CFAF 1 million each for resettlement in the rural sector, involving either procurement of production or processing equipment, or on-farm works. Requests for loans would be submitted in the form of simple projects using models to be prepared by the Restructuring Units (para. 5.03) with the help of the financial intermediaries (para. 5.07) paying due attention to environmental concerns. .he amounts indicated would presume a substantial contribution (between a thirc and a half of the cost) on the part of the borrowers from their severance pay. Assurances were received during negotiations that the credit lines would be on-lent to eligible financial intermediaries within procedures acceptable to IDA, at the prevailing long term savings interest rate, and that loans to the final borrowers would be made at interest rates close to those charged in the prevailing Beninese market. Projects offering an enhanced market for agricultural production would receive priority. Technicians and veterinarians would be encouraged to purchase the  - 25 - equipment and facilities previously used by them on preferential terms, as part of their personal financial contributions. In line with Operational Directive 11.00 of the Bank, such equipment, though used, could be financed under IDA lending, considering that procurement of other, new, material would result in prohibitive financial costs to the buyers and economic losses to the State, which has no alternative use for this equipment. The total cost involved would be less than US$1 million. The equipment would have to be evaluated prior to sale. This equipment could then be sold to the highest bidder, with a slight preference (not to exceed 10 or 15X) to be given to departing staff. 4.37 Assistance for proiect management. The project would finance the technical assistance needed for coordination and monitoring of the restructuring and start-up of MDRAC's and the CARDERs' new activities. This assistance would comprise: (a) one principal expert in public institution organization and management, for 24 months; (b) one financial expert to set up the new budget procedures, for 24 months; (c) one expert in agricultural R-D in the real environment, also for 24 months, with a possible extension; (d) one expert in training course preparation and monitoring, for a total of nine months in three missions; (e) approximately two months' assistance fort (i) setting up a monitoring and evaluation system; and (ii) the epidemiological laboratories; and (f) shorter missions to support the various types of training. 4.38 Studies. The project would finance: (a) the drafting of legislation setting out the operating statutes and organization charts of MDRAC and the CARDERs, together with the restructuring procedures (para. 4.21) and the personnel management rules for MDRAC and the CARDERs (para. 4.23); (b) updating of the legislation on cooperatives (para. 4.24); (c) drafting of a veterinary code on the basis of the animal health action plan (para. 4.28); (d) a study on the privatization of PHARNAVET (para. 4.26); (e) a study of meat taxation levels and procedures (Para. 4.27); (f) a study of the strategy and programming of agricultural research in Benin (paras. 4.09 and 4.10); and (g) a study of the detailed criteria and procedures for the gradual transfer of the management of agricultural services from the public to the private sector (para. 4.07). The first of these studies has been initiated with UNDP financing in the context of a preparatory assistance project. It will be implentnted in close collaboration with the various project donors. The other studies would be financed by the project. The project would also finance preparation of a critical assessment of the technical messages available for extension activities and of their consistency with actual conditions in the field. The project could further finance studies the need for which would have been identified in the LPDR. V. PROJECT EXECUTION 5.01 The project would be executed by MDRAC, although some of the policy components will need to be jointly agreed with other ministries. A steering committee comprising representatives of the Government and project donors would review this project's annual implementation nlans, evaluate progress in the restructuring of the rural institutions and propose and adopt complementary measures, as necessary, to ensure adequate and speedy implementation. It would not, however, interfere in any way in the day-to-day management of the project. The two principal aspects of project managemtc.t would be, first, the  - 26 - restructuring of agricultural institutions, of limited duration, and second, the management of the permanent functions of MDRAC. Institutional Restructurina 5.02 The restructuring of MDRAC and the CARDERs would be carried out under the direct supervision of the Minister of Rural Development. It would be done in accordance with the rules and procedures established for the reform of the public sector in general and for the project itself (institutional organization charts and position descriptions) as well as cost projections, all of which would be approved beforehand by the Government, specifically by the national authorities responsible for structural adjustment, and set out in enabling legislation. Detailed information is already available from FAOIUNDP on the expected numbers of redundant staff by employment category, number of years in the civil service and proximity to retirement age for MDRAC and all the CARDERs (Annex 3, Attachment). 5.03 Before restructuring begins, the Government would ensure, as a condition of credit effectiveness, (a) the adoption of legal texts agreed upon with the donors defining (i) the modalities and regulations for the restructuring of MDRAC and the CARDERs; (ii) the functions and organization of these institutions, specifying their new relations with new staff and budgeting rules including analytical accounting and performance evaluation procedures; and (iii) the regulations establishing the restructuring units, their powers and procedures, and determining their material and financial resources; (b) the nomination of the members of the restructuring units and their training in matters pertaining to the restructuring regulations and procedures; (c) the implementation of an information campaign on the objectives of the restructuring, to which labor union representatives would collaborate with MDRAC staff: and (d) the definition of procedures and establishment of a calendar for the transfer to private operators of CARDER activities in the fields of cotton, rural works and repair shops. 5.04 The procedure for restructuring MDRAC and the CARDERs would be as follows: (a) appointment by the Minister of Rural Development of the senior MDRAC and CARDER personnel; (b) proposals of appointment, in light of studies already carried out by UNDP/FAO and predetermined criteria, of the personnel to remain with the CARDERs and MDRAC, to be made by seven selection committees (one for MDRAC and one for each CARDER) consisting of all the directors of the institution in question, and reporting to the Directeur do Cabhet of MDRAC; (c) confirmation of these appointments by a national committee chaired by the Minister of Rural Development and containing representatives of the Ministries of Finance and the Civil Service, whose task would be to verify that these staffing proposals are in line with the ministry and departure budget estimates and organization charts previously defined, and to facilitate any transfers that may be required among the various CARDERs and MDRAC; (d) administration of the new appointments and provision of assistance to departing staff by restructuring units (CR) to be provisionally established in each CARDER and in MDRAC, including (i) determination of severance paymernts and other entitlements for redundant personnel, to be submitted to the national committee for ratification; (ii) proposals to be submitted to the national committee regarding the reallocation  - 27 - of CARDER and MDRAC assets as part of the privatization or elimination of some of their activities; and (iii) assistance for personnel leaving the civil service in the form of guidance on training opportunities or help with the preparation of loan applications; and (e) the establishment of an appeals committee presided over by a judge and including representatives of the institutions involved (CARDERs, MDRAC, Ministries of Finance and the Civil Service) and of the staff, which would hear grievances from redundant staff and submit its opinions to the Minister of Rural Development for his decision. 5.05 The selection committees would have two months to prepare their proposals for the staffing of their respective CARDER or MDRAC, and the national committee one month to confirm them. The salection committees would have to be dimensioned to be able to review on average 20 to 30 individual files per day. The first list of PCS and contractual personnel to be released would be announced no later than December 24, 1991 and the departures would take place during the following week. Similar procedures would apply for the departures planned for May 31, 1992 and January 31, 1993. During negotiations assurances were received that around mid-1992 the Government and donors would make an interim evaluation of progress In the implementation of the initial restructuring process, covering (a) the calendar of staff departures; (b) the appointment of adequate staff to the various positions in the new organization charts; (c) project monitoring procedures; (d) staff performance evaluation and remuneration procedures; (e) measures taken for services to reach young farmers and women; (f) progress in the implementation of studies; (g) transfer of CARDER activities and equipment to the private sector; (h) measures taken for the reinsertion of departing staff; and (i) the main difficulties encountered in project implementation. Satisfactory implementation of the review would be a condition of disbursement against the staff training and CARDER vehicles and equipment categories of the credit. Within the wider context of privatization of agricaltural services, measures would be introduced to ensure the gradual though early departure from the CARDERs of personnel responsible for marketing and financial operations in the cotton sub-sector, and rural works and repair shop personnel, amounting in all to some 120 employees. Management of Proiect Activitiens 5.06 The Human Resources and Training Directorate of MDRAC, assisted by the Personnel Departments of the CARDERs, would manage staff training. The Administrative and Finance Directorate in the ministry and the Budget Departments of the CARDERs, supported by expatriate and local technical assistance, would prepare bidding documents and monitor their implementation. The new centers for on-farm applied research, based on the RAMR project model, would be administered by the DRA. The CPEs would also remain under the DRA. Arrival in Cotonou of the three long-term experts (para. 4.37) would be a condition of credit effectiveness. On-lending of Reinsertion Loans 5.07 Given the only recent reestablishment of a banking system in Benin, the new banks have limited financial and administrative capacity to service the targeted recipients of project on-lending. The implementation of the credit component will therefore depend on the identification of financial institutions  - 28 - interested in and having a sufficient level of technical know-how, domestic network and monitoring capacity to manage the component. In any case, potential financial intermediaries--banks or other local institutions--would be requested to take a substantial share of the non-repayment risk upon themselves. The financial institution responsible for managing the credit lines would make the final selection from the applications forwarded to it by the various CR through the financial director of MDRAC. The Livestock Directorate would also be consulted as regards decisions involving veterinarians and other veterinary agents. This would ensure that appropriate measures are taken to avoid unfair competition between MDRAC and private sector veterinarians and to encourage private veterinary practice in remote areas. The choice of credit line beneficiaries would be made using criteria designed to ensure that funds are lent to the most deserving and capable applicants. Assurances were received during negotiations that procedures and criteria acceptable to IDA for the selection of credit lines beneficiaries would be worked out by MDRAC with the selected intermediaries. Management of Training Activities 5.08 Training would be provided by local or regional institutions according to programs to be prepared with external technical assistance. Professional training facilities are scarce in West Africa. Training abroad, particularly in industrialized countries, is not adapted to local conditions. Business training would be provided by an agency such as the Business Personnel Training Center. Cooperative development agents would be trained by the Pan- African Cooperative Training Center (CPFC). The complementary practical training designed to integrate livestock and crop farming would be provided by the DRA and the School of Agronomy. The APVs would be trained on the job by the CARDERs with assistance from the School and an external center. The extension agent training centers at Ina and Porto Novo are not regarded as capable of training the APV to the level aimed at by the project. After reform, these centers could be oriented toward the training of young farmers using the model of the Tempegre rural training center in Atacora. The Italo-Beninese NGO, Hanitese, which already operates the Tempegre center, would be entrusted with the management of the two training centers established in the Zou (para. 4.32). Further analysis of the availability and capability of local and regional training institutions to fulfill project objectives and of the additional technical assistance required, and the preparation of a detailed training program will be undertaken as part of project start-up activities, with preliminary IDA assistance. Coordination with Regional Proiects 5.09 Both this project and the regional rural development projects financed by various donors will impact the provision of agricultural services in Benin. The objective of the regional projects within this specific context would be to enable, through training and advice, farmer and other professional organizations to take over the management of rural services presently provided by the CARDERs. This transfer of responsibil4ties would be gradual and extend well beyond the implementation period of this project (para. 5.13). The regional projects would help establish an institutioial set-up within which the CARDERs would formulate and monitor the impact of agricultural service procedures and policies while the farmer organizations would take increasingly upon themselves  - 29 - their management on the field. Coordination between this project and those regional projects which would not be managed directly by a CARDER would be ensured through operational arrangements to be agreed upon between MDRAC and each regional project's autonomous management unit. 5.10 The CARDERs currently depend for almost all of their investments and about one third of their operating budget on funds made available under external assistance projects. The management and financing of -hese projects vary as regards the organization, nature and diversity of field activities, the coverage of operating expenses (inclusion or otherwise of salaries), or reward and bonus systems. The harmonization of regional agricultural policies will require close coordination of projects by the Government. Coordination between national project and regional project activities would be ensured both in overall terms and at the level of specific responsibilities. 5.11 Overall, ongoing project activities in Mono and Borgou would be adjusted to facilitate institutional restructuring and the departure of redundant civil servants and to adapt the activities of the CARDERs to the resulting operational implications. In Atacora, the prcject currently being prepared with IFAD assistance is designed, as in Mono and Borgou, to finance both the costs of the national project in that ddpartement and the activities deriving from the IFAD project's regional focus. A similar approach, excluding the financing of CARDER operating costs, is proposed by German donors for the Atlantique. The annual work programs of these projects would be established in close coordination with those of the national project. In Zou, the national project would finance all CARDER equipment and activities. A strategy similar to the above-mentioned approaches must be agreed between MDRAC and ABEDA for the departement of Oueme. 5.12 As regards specific issues, four points must be considereds (a) the gradual process whereby extension activities come to be managed largely by the farmers rather than the State; (b) the technical assistance required to assist farmer groups in the design and implementation of specific local development works; (c) execution and dissemination of the results of R-D; and (d) support for farmer organizations. 5.13 Extension activities. The project is designed to avoids (a) the sudden disappearance of existing services and communications networks providing a basis for effective agricultural extension activities; (b) over-exclusive concentration of extension activities around the best-organized, and therefore most developed, village groups; and (c) interruptions in extensior services and support when the projectb financing them terminate. Farmer associations would gradually take over the management of extension activities from the State as and when they request it. In the initial phase, the villagers would share in planning the work of the APV. Subsequently, an interim joint management phase would link the village groups to the CARDERs through extension management committees, established initially in sub-sectors (containing from 10 to 15 villages) in which the farmers have already achieved a level of organization enabling them to intervene rationally and effectively. This process would subsequently be extended to complete sectors and finally to an entire ddpartement. The management committee would approve the timetable and content of the APVs' field work programs and the size of the bonus that would reward the quality and  - 30 - relevance of their work. Appropriate training would be given to the management committees. The increasing participation of farmers in this management process would be accompanied by financial support from the farmer organizations' own resources to pay for part of the extension services, particularly bonuses for field agents. Another option would be for farmer organizations which have developed the necessary structure and financial capability to call upon commercial extension services, with State participation in the financing of these services to be negotiated with MDRAC on a case by case basis. Part of the financing would, again, have to come from the farmers' own resources. The services would have to be provided without being cut off from R-D activities or from the communication network linking farmers, resesrchers and extension agents. The degree of success of the first such attempts would be evaluated jointly by the Government and the donors before being further extended. As part of the reorganization, and as soon as the new civil service regulations are published, the Administration and Finance Directorate of MDRAC would review the structure of CARDER salary scales in order to benefit agents working in the field as compared to thoce performing office tasks. 5.14 Technical assistance for specific local works would be provided by the regional projects. The CARDERs with qualified personnel in the area of rural projects could help plan and monitor the works, the relationship being that of a service provider (CARDER) and his client (farmers or projects). 5.15 Execution and dissemination of the results of research and development. A national coordinator at the DRA would be in charge of the R-D program. He would closely collaborate with the Extension and R-D Directorate of MDRAC. He would ensure the coordination of R-D activities among regional development projects and the national project as well as between these activities and extension work of tne CARDERs. 5.16 Support for farmer orRanizations. One of the main aims of the regional projects will be to provide assistance to farmer organizations, essentially through qualified private entities. However, these projects do not have the resources to extend such assistance to all the small farmers in Benin. The CARDERs would intervene in the zones not reached by the regional or topic- based projects and would adjust the nature of their activities in areas already serviced by private development entities. Monitoring. Evaluation and Supervision 5.17 The innovative nature of the project and its significant social and political implications make the establishment of an effective monitoring and evaluation system vital. The evaluation criteria would focus mainly on the impact of the project's activities. The monitoring process would assess project performance in light of the projections for the dismissal, transfer and retraining of government employees in order to evaluate the social, economic and financial impact of these operations. The principal indicators would measure: (a) the cost of project actions and the financial impact on the ministry's budget; (b) improvements in services provided to farmers; and (c) the status of personnel reinserted into private sector activities. The monitoring of stock raising would focus on the impact of (i) a unified extension service on the development of mixed production systems; (ii) the privatization of veterinary  - 31 - services; and (iii) the training provided to herders. Monitoring would be performed by the staff of MDRAC and the CARDERs. The evaluation would be conducted, first, for the interim review (para. 5.04) and then at the end of the project, under the aegis of the Government and donors and would be the responsibility of an independent specialized institution. The choice of the institution and the preparation of a monitoring plan would be conditions of credit effectiveness. 5.18 Given its complex innovative aspects, and the need for coordination with numerous regional projects and for policy and technical support from donors, the project will require close supervision. In particular, it will require specialists in management during the initial institution restructuring period, and in personnel training and agricultural extension activities during the subsequent phase. During the first year a mission should be planned for every four months. VI. COSTS AND FINANCING Cost Estimate 6.01 The total cost of the proposed project has been estimated at about CFAF 7.5 billion (US$29.6 million), of which some CFAF 3.3 billion (US$13.0 million) or 441 is in foreign exchange. The estimates are based on prices prevailing in July 1990 and the ex2hange rate of the US dollar of January 1991; they include US$3.5 million in physical and price contingencies. Physical contingencies of 252 for training, 152 for civil works and 101 on all other items have been included, with the exception of technical assistance, for which there are no physical contingencies since clear specifications are available. Project costs exclude domestic taxes. SUMMARY OF PROJECT COSTS Percent Local Foreign Total of Base -----(US$ million)---- Cost Restructuring of MDRAC 1.1 2.0 3.1 11.7 Restructuring of the CARDERs 4.4 4.0 8.4 32.4 Training 1.6 0.4 2.0 7.7 Research/development 2.0 1.4 3.4 12.a Seed production 1.3 0.1 1.4 5.4 Livestock services 1.2 0.7 1.9 7.4 Reinsertion of personnel 2.8 0.3 3.1 12.0 Management support 0.2 2.0 2.2 8.4 Studies 0.2 0.4 0.6 2.3 Total Base Cost 14.8 11.3 26.1 100.0 Physical contingencies 1.2 1.0 2.2 8.4 Price contingencies 0.6 0.7 1.3 4.9 TOTAL PROJECT COST 16.6 13.0 29.6 113.3  - 32 - 6.02 Price contingencies on foreign costs are based on Bank projections of incernational price increases (4.9? per year from 1992 through 1995). Local price contingencies are based on Bank forecasts of domestic inflation in Benin (2.7? per annum in 1992 and 1993, 2.2? per annum thereafter). Project cost does not include the cost of making some 3,500 government employees redundant, of whom about 2,700 are PCSs, 400 to be separated through regular retirement and 2,300 with a right to full compensation. It does, however, include incremental operating costs of the MDRAC and CARDERs, other than salaries, which in the aggregate should decline in relation to the pre-project situation. Summary project costs are provided in Annexes 9 and 10, and detailed project costs are to be found in the Project File (Staff Working Paper No. 4). Financ ing FINAUCING PLAN US$ million ? IDA 12.3 41.5 French assistance 3.2 10.8 EDF 2.9 9.8 GTZ 0.9 3.0 IFAD 4.0 13.5 UNDP 1.5 5.1 Government 4.9 16.5 TOTAL 29.6 100.0 6.03 The IDA credit of US$12.3 million would finance 48? of the foreign exchange costs and 36? of the local costs out of a total project cost of CFAF 7.5 billion (US$29.6 million). The share of the other donors, in joint or parallel financing, would be some US$12.4 million, with the Government providing the remaining US$4.9 million. This latter figure represents on average about half of the project's operating costs, over and above salaries, which are paid from the regular Government budget. The Government's share in financing non-salary operating costs would be kept to 20? until the end of 1992, brought up to 50? in 1993 and to 80? thereafter. The IDA credit would finance vehicles, equipment, civil works and some operating costs for the MDRAC (including the livestock services), the Zou and Borgou CARDERs, the seed farms and the and R-D units, including the Food Technology Laboratory and specific expenditures in the regional research centers of Ina and Niaouli, in the Zou, Borgou, Atlantique and Oudme ddpartements. It would also finance staff training costs and reinsertion credits in the Atlantique and Ou6me ddpartements, as well as technical assistance to assist in R-D activities. French assistance would finance the costs of staff training and reconversion in the Borgou and the Zou, studies, and technical assistance other than that related to project management or R-D, for a total amount of FF 20 million (about US$3.5 million). EDF would finance all project investment and a share of operating expenditures related to the Mono ddpartement out of the funds of its ongoing project in that ddpartement. Similar arrangements are envisaged in their upcoming projects, with IFAD in Atacora (about US$4.0 million) and with GTZ in the Atlantique. The GTZ project would include DM 1.8 million for CARDER institution-building but would not finance operating costs. Expenditures related to the operations of the Ou6md CARDER are not included in  - 33 - project costs. They are expected to be covered by the ongoing AfDB/ABEDA project there. Training and reconversion costs of the Oueme staff are, however, included in the project. A substantial portion of the technical assistance to support project management, and the study of the future of applied research, would be financed by UNDP. Financing of Severance Payments 6.04 The project would entail the departure of some 3,800 staff from MDRAC ard the CARDERs (including the 300 subject to further study) within the next two years, or 62Z of the total of 6,120. These figures exclude the DRA, whose reorganization would be the subject of a subsequent study. Almost all (94z) of the redundant personnel are support stsff in the two lowest civil service grades. MDRAC is in the process of identifying irregular staff or staff who have committed major professional faults, not entitled to departure compensations. Other permanent civil staff employed by MDRAC and the CARDERs on the date on which recruitment was frozen as part of the first structural adjustment program and who are anticipated to leave the civil service under this project and departing contractual staff would be entitled to compensation for dismissal. Budgeting by the Government of the funding of these redundancies would be a condition of credit effectiveness. Under the structural adjustment program, the Government has undertaken not to rehire PCSs who leave within the program. Conditions for On-lending of Reinsertion Loans 6.05 Assurances were received during negotiations that the financial intermediaries responsible for managing the reinsertion loans meet financial, operational and technical criteria satisfactory to IDA. The Borrower would sign an agreement with each participating intermediary, the terms of which would have to be approved by the IDA; this would be a condition for disbursement of the credit lines. Additional assurances were received during negotiations that (a) the credits would be approved in light of simple feasibility studies, using models whose general principles would be agreed with IDA; and (b) the studies for agricultural investments would pay attention to environmental concerns, within a format to be agreed with IDA. The exchange risk would be borne by the State, with the risk of non-recovery borne by the intermediary. There would be regular monitoring of the performance of financial intermediaries, including loan xecovery. The proposed system would provide an opportunity for additional training of the staff of the intermediaries selected and for an expansion of their action areas. Procurement 6.06 All goods and services financed by the IDA credit would have to be procured in accordance with IDA guidelines. Contracts for vehicles or equipment that exceed US$200,000 equivalent, up to a total of US$1.9 million for vehicles, and up to US$2.1 million for equipment, would be awarded by International Competitive Bidding (ICB) and would be grouped into lots equal to or exceeding this amount as far as possible. Local Competitive Bidding (LCB), using procedures approved by IDA, would be permitted for contracts not exceeding US$200,000, up to a total of US$600,000 over the course of the project. Contracts for civil engineering works (Us$2.3 million) would be too small and  - 34 - dispersed to attract international bidders. They would be awarded through LCB. In the ICB procurement of goods, local manufacturers or contractors may be granted a margin of preference of 15Z or the applicable customs duty, whichever is lower. Given the specific nature of the training services, these contracts would be negotiated directiy with institutions or individuals agreed by IDA. Part of the technical assistance and of the studies, estimated at US$1.0 million and US$0.5 million respectively, would be financed by UNDP using the regular procedures of these institutions. Technical assistance financed by IDA would be contracted according to IDA guidelines. Bidding documents and proposals for the award of all contracts financed by IDA whose cost exceeds US$200,000, purchases of data processing equipment and technical assistance contracts would be submitted to IDA beforehand for approval. PROCUREMENT ARRANGEMENTS (US$ million) Proiect Component ICB LCB Other N.A. Total Cost Vehicles 4.1 4.1 (1.9) (1.9) Equipment 2.3 0.9 3.2 (1.5) (0.6) (2.1) Civil Works 2.7 2.7 (2.3) (2.3) Technical Assistance 2.1 2.1 (0.6) (0.6) Training 4.3 4.3 (1.9) (1.9) Credit 2.4 2.4 (0.8) (0.8) Operating Costs 10.1 10.1 (2.7) (2.7) TOTAL 6.4 3.6 7.1 12.5 29.6 (IDA share) (3.4) (2.9) (2.5) (3.5) (12.3) Disbursement 6.07 Given the Government's limited ability to pre-finance project expenditure, a special account denominated in CFA Francs would be opened at a commercial bank and maintained and operated on terms and conditions acceptable to IDA. IDA would make an initial deposit into that account of US$1 million equivalent (about four months of IDA-financed components of project operation) immediately after the credit became effective. The account would be replenished monthly, provided requests in excess of US$100,000 equivalent had been made. The special account would be used for all expenditures of less than US$20,000 equivalent to be submitted for IDA financing. 6.08 The IDA credit would be disbursed over a period of three years. Contracts up to US$20,000 (or US$50,000 for civil works) would be disbursed on  - 35 - presentation of Statements of Expenditure (SOE) by the administrative controller of NDRAC. For all other contracts full substantiating documentation would be required. The relevant substantiating documents would have to be retained for presentation to IDA's supervision missions. Disbursements on operating costs would be at an 80? rate until the end of 1992, 50? in 1993, and 202 thereafter. Since the main objective of the project is to ensure the administrative reorganization of MDRAC and the CARDERs through the dismissal of redundant staff and the training of the others, the project life and corresponding disbursements are not expected to expand beyond throe years. If some difficulties were to be identified in ensuring full staff training within that time, that specific component alone would be extended for the necessary period. The IDA credit would be disbursed according to the following schedules DISBURSEMENT OF IDA CREDIT Amount Percentage (USS million) Financed by IDA Vehicles 1.7 100o Equipment 1.9 100? Civil works 2.0 1002 Technical assistance 0.5 1OOS Training 1.4 100? Credit 0.7 1OO0 0 & M 2.4 (variable) Unallocated 1.7 TOTAL 12.3 Accounts and Audits 6.09 MDRAC and the CARDERs would maintain separate accounts for the project in accordance with international accounting practices. Each agency would prepare its annual budget and work program. The administrative controller of MDRAC would be responsible for consolidating the accounts, financial statements and work programs, which he would submit to IDA, including those of the CARDERs not directly financed by the IDA credit. He would also be responsible for budget monitoring and the preparation of applications for withdrawals of funds. 6.10 Project accounts would be audited by competent independent external auditors, whose appointment would be a condition of credit effectiveness. Audited accounts and reports would be submitted to IDA not later than six months after the end of each fiscal year. The auditor's report on project expenditures would include an examination of the documentation substantiating expenditures and a verification that: (a) goods and services had been procured in countries accepted by IDA as suppliers; (b) goods had been received or work performed; (c) payments had been made; (d) all expenditures had been legitimate; (e) loans extended by the financial intermediaries were legitimate, and lending and recovery procedures were adequate; and (f) the special account had been used appropriately; along with an opinion on the reliability of the SOE procedures and on whether the goods and services acquired under the project were being utilized  - 36 - in accordance with its aims. Assurances were received on these points during negotiations. Impact on the MDRAC Budget 6.11 The project would reduce the operating costs of MDRAC and the CARDERs by more than half (from CFAF 7.8 billion in 1989 to CFAF 3.6 billion after restructuring). This would in principle enable them, after the departure of the redundant staff, to meet their entire operating expenses within the present envelop of State outlays (i.e., the greater part of the CFAF 4.9 billion of salary costs), and without recourse either to commercial resources that the CARDERs would no longer have, or to external assistance. However, while salary costs of the MDRAC and CARDERs are intended to be covered entirely by the Government budget, considering that (a) non-salary operating costs have been financed by foreign donors, including IDA, in the past; (b) the three year duration of the project corresponds to a period of fundamental reorganization of the agricultural institutions; (c) it would be important to ensure a proper financing ratio between salary and non-salary costs; and (d) the 1992 budget has already been established within the structural adjustment agreements and has little provision to meet such expenditures, about half, overall, of the non- salary operating costs would be financed by the foreign donors, on a declining basis. The short-term demands of project investments on MDRAC's budget would be negligible, since the bulk of these costs would be covered by the financing of this project. VII. JUSTIFICATION AND RISKS Justification 7.01 The project is justified on economic, financial and social grounds. The economic and financial justification derive from the opportunity it offers to provide services of a quality at least equal te those provided in the past, but at a lower cost. An additional, non-quantifiable economic gain would be an increase in agricultural production. In the area of livestock production, the project would improve animal husbandry and increase the supply of inputs and advice to livestock farmers, thereby reducing animal mortality, raising production and ensuring the sustainability of production systems. The project's social justification lies in the fact that the emphasis in agricultural services will be on food crops, thus enhancing Benin's food security, tae least privileged farmers and the rural activities of women, which will ensure more equitable distribution of incomes from agriculture and will allow women more opportunity to perform their maternal and household management functions. Environmental Impact 7.02 The investments and activities entailed by the restructuring of MDRAC and the CARDERs will have no direct impact, positive or negative, on the environment. However, the project would provide an essential tool for (a) the successful execution of the natural resources project currently in preparation; (b) improving agricultural yields through the application of sustainable farming practices, thereby reducing the pressure on the land; (c) the integration of  - 37 - stock raising and crop farming, whose absence prejudices the preservation of natural resources. The agricultural extension and R-D specialists and technicians would be trained to consider land management factors, so as to promote the preservation of resources. The R-D operations would make villagers participating in them more aware of the methods available for preserving their land and forest assetc. Risks 7.03 One of the most striking results of the project would be the departure of some 3,800 former civil servants, many of whom, with low skills, will have to re-enter the traditional agricultural production system. A large minority can be expected to engage in small-scale production and private commercial activities. The success of the former group depends on their capacity to return to the land as producers, a process that will be facilitated by the fact that most of them already have access to cultivable plots. The success of the latter group should be facilita..ed by Benin's solid commercial traditions, although these have suffered from the state control policy applied by the previous regime. Additional measures to facilitate this group's integration into their new environment will be studied as part of the social dimensions of adjustment program. The other main project risks are: (a) a temporary negative impact on agricultural production resulting from the transfer of certain activities from the CARDERs to the private sector; (b) management of the civil service that does not respect the project's technical and financial efficiency criteria; and (c) the inability of the available training centers to meet the demand for training created by the project. SONAPRA's spare capacity and the involvement of the private sector in equipment and transportation maintenance operations should minimize the impact of the CARDERs' disengagement from these activities, but measures have been included in the project to ensure that they are transferred at a pace compatible with local conditions. The introduction of a new civil service code as part of the structural adjustment program would be supported by this project in the area of agriculture. The duration of the project would be extended if the training program became a constraint. The risk of seeing the project suffer from a wide departure of Government policies from the structural adjustment strategy in rural areas would be reduced by the close links sought between this project and the structural adjustment program as a whole. VIII. AGREEMENTS AND RECOMMENDATION 8.01 During negotiations, assurances were received from the Boirower regarding: (a) review and completion of the legislation on cooperatives before June 30, 1992 (para 4.22); (b) settlement of the debts and claims of the CARDERs upon their change of status and preservation of their surplus assets in good condition until their reallocation (para. 4.24);  - 38 - (c) privatization of the two remaining CARDER seed farms before June 30, 1993 (para. 4.25); (d) credit lines to be on-lent to financial eligible intermediaries within procedures acceptable to IDA, at the prevailing long term savings interest rate, and the interest rate charged to final users on the reinsertion and veterinary loans to be similar to those generally applied in the Beninese market (para. 4.36); (e) a mid-project evaluation to be made in conjunction with donors around mid-1992 (para. 5.05); (f) the beneficiaries of the project's credit lines to be selected in accordance with procedures and criteria agreed with IDA (para. 5.07); Cg) the financial intermediaries responsible for administering the reinsertion loans to meet donor criteria, and these loans to be made on the basis of simple feasibility studies, in line with models based on principles agreed with IDA (para. 6.05); and (h) the project's accounts to be examined and audited in accordance with IDA criteria (para. 6.10). 8.02 The conditions for credit effectiveness are: (a) (i) the adoption of legal texts agreed upon with the donors defining the modalities and regulations for the restructuring of IDRAC and the CARDERs; the functions and organization of these institutions, specifying their new relations with new staff and budgeting rules including analytical accounting and perforsiance evaluation procedures; and the regulations establishing the restructuring units, their powers and procedures, and determlning their material and financial resources; (ii) the nomination of the members of the restructuring units and their training in matters pertaining to the restructuring regulations and procedures; ($ii) the implementation of an information campaign on the objectives of the restructuring, to which labor union representatives would collaborate with MDRAC staff; and (iv) the definition of procedures and establishment of a calendar for the transfer to private operators of CARDER activities in the fields of cotton, rural works and repair shops (para. 5.03); (b) the arrival in Cotonou of the long-term experts in project management (para. 5.06); (c) the preparation of a monitoring plan and selection of a project evaluation agency (para. 5.17);  - 39 - (d) budgeting by the Government on funding the departures of redundant staff (para. 6.04); and (e) appointment of independent external auditors (para. 6.10). 8.03 Agreement on a livestock health services action plan would be a condition of the disbursement of credit categories related to the livestock component (para. 4.28). 8.04 Satisfactory review of progress in the restructuring of the MDRAC and CARDERs would be a condition of the disbursement of the training and MDRAC and CARDER vehicle and equipment categories of the credit (para. 5.05). 8.05 The conditions for disbursement of the credit category would be the approval by IDA of the agreements regarding the administration of the reinsertion loans, to be signed between the Borrower and the selected financial intermediaries (para. 6.05). 8.06 With the above assurances and conditions, the project would be eligible for an IDA credit of US$12.3 million. June 3, 1991  Oroanizaton Chart No OROANIZATIOIe OAfAT OlF PRAC s Ipcton Dir. do ci ind audit task leaOders secetaias ...................... ................... :................................ ~_ _ _I &ftentsion Rural wrabo$* min. _bm Analysis. Ib"turl Rural Activites, Prootion crop Li vestock Fiseries, a Resources a Forecaeting ResOUrce8 ark* a Rsearch/ N roduction Finance Training A Synheis, Cevelopsa-nt Leg isntIon F_ Trn7n7nB ^ 58t7- ORW DCR IDE nRift CRO OP o_*agsvs Pe sonnl Rationalizatior Sector Inventory Rur rh/ Promotion Plant Li vestoc Castal Of h anlyi A deo t dsv. dvelont of rme: production prodciont fisheries Resources forecastino of ntura i nfra- institutions proso,tion & eeomn reowurces structure development 9udgt Training Projectis _ nt * Technical Su"port Promotion of Promtion of Animl halth Freshastar Upgrading tchn 1 replnishmt studies a for rtelon youn grifood fisheries cooration natural works. activitie s frCe vt techno7log * s* uac* ture resources inspection - sOma activities Control A Land Plant Anisel EVipmnt Stt7ti t7ce A protection onership rotction fodtff dometation of natural us A health a fd resource rurel surveil lanc control legislation AdIM.sal;  Organtzatlon Chart Nm. 2 ORGANIZATION OCART OF HE CARDER. General Directorte S cr tnrlnt Mail Files | Administration Planning, Extension Forestry a Rural Works A Plan Hanlth Directorate. A Finance Nonitoring Activities & ProtOctlon of Infrastructure Control DAF Evaluation Support for Natural DAER OCVP WPSE Farmers Resources Organizations DFPRN DVAOP Personnel Planning, Extension, Study of natural Studios A Food Inspection monitoring, resarch/ reource development ector & developmnt sacivities oevluation _ tuOnt Oodget Monitoring Support for Monitoring & Support for Crop health human farner' prctectlon of workS & Inspection resoures orpgnizations natural activities resouresn technicl control Equipment A Statistics A Operational Maintennce documentation traintng Sector 1 r _ Sector n RDR RDR a Responoiblo for tS .................................... rural development CSS .................................... or sector chie APV TS a SubJect matter Specialist CSS a Subsoctor chief or supervisor APY * Polyvalent extens ion get A:RC.em  - 45 -- Annex 1 Page 1 of 8 REPUBLIC OF BENIN RURAL DEVELOPMENT POLICY STATEMENT LETTER The Republic of Benin intends to undertake a program of restructuring of the institutions responsible for implementing its rural-sector policy and furnishing services to the agricultural sector. This restructuring vill take place in the context of the rural development policy and the specific commitments of the Government summarized in this letter. Rural development policy obiectives 1. The main objectives of the Beninese Government's rural development policy will be to raise rural living standards by winning markets for and improving the competitiveness of Benin's small farmers rather than simply pursuing regional or national self-sufficiency. The resulting priorities are as followss (a) to redefine the Government's role and enhance the efficiency and lower the cost of its action; (b) to improve (i) the services and (ii) the infrastructures to which the rural population groups have access; (c) to increase export earnings, in order to compensate for the small size of the domestic market, by rais,.ng yields and diversifying production; (d) to combat food insecurity in the more vulnerable geographic areas and time periods; (e) to preserve the nation's natural assets through resource management that exhibits increased concern for its protection. 1. In the context of: (a) the general objectives described above; (b) the goals of the structural adjustment program, which is designed inter alia to: Ci) restore public finances equilibrium; (ii) restructure the major ministrie3 and public enterprises; (iii) pursue restructuring of the financia: sector, and (iv) promote development of the private sector, and (c) the general diagnostic study of the rural sector conducted in 1989, and also the conclusions of the seminar on rural development strategy held in July 1990, as summarized in the report of December 1990 and the document (Draft Rural Deve:.opment Policy Letter) dated May 16, 1991, which highlighted (i) the weaknesses of the transportation and storage infrastructure and their impact on the  - 46 - Annex 1 Page 2 of 8 domestic market; (ii) the deficiencies in the services offered to farmers and stockraisers; (iii) the large seasonal variations in the prices of food products; (iv) the mismatch between agronomic research and the sector's real problems; (v) the currently unfavorable impact of the naira exchange rate on Benin's agricultural sector; (vi) the lack of competitiveness of palm oil and groundnuts on the world market; (vii) the lack of private processing or artisanal enterprises; (viii) the failure of the industrial and commercial public e.aterprises; and (ix) the agricultural credit management problems, the Government recalls herein the major actions it has already undertaken in this field and its intention to institute the development policies described below. Action already accomplished 3. The Government has already undertaken; (a) restructuring of the cotton sector through (i) transfer of the industrial and commercial activities of the Regional Rural Development Action Centers (CARDERs) to the agricultural promotion company Soci$te Nationale pour la Promotion Agricole (SONAPRA); (ii) abolition of input subsidies, and (iii) linking of producer prices to world market prices; (b) rehabilitation of the regional and local agricultural savings cooperatives (CRCAMs and CLCAMs); (c) preparation of an agricultural services restructuring program which is the basis for the proposed financing And which makes the Ministry of Rural Development and Cooperative Action (MDRAC) the first to propose a strategy in line with the goals of the structural adjustment program; (d) design of an environmental action-plan embodying a natural resources management project; (e) creation of a rural-sector investment programming unit which, in order to meet the concern to reconcile project management autonomy with the need for policy coherence, will establish a three-year sliding program which, after approval by the Government, will constitute the rural sector's contribution to the Priority Investments Program, and update it annually in light of the development of priorities, resource availabilities and donors' proposals. Atreements under the structural adiustment program 4. In uddition to the reforms already initiated, commercial and financial reforms have already been agreed on in the context of the structural adjustment program. They concern in particular a communications infrastructure development  - 47 - Annex 1 Page 3 of 8 plan to be drawn up by the end of 1991, the future of the plantations (status of the palm groves), agricultural industrial enterprise, (SONICOG factories and Sava sugar mill) and commercial activities (privatization of PHARNAVE', , the cotton- sector development strategy, the strategy of protection of th'. domestic meat market, strengthening of the financial sector and savings mobilization, and social policy. The structural adjustment program also provides for continuation of the early warning system in the context of the national cereals office, Office Nationale des Cereales (ONC), and restructuring of the latter after its mission has been redefined. It further provides for a program for helping staff leaving the public service and unemployed young people to re-enter the economy. Agricultural policy compnents 5. MarketinR and processing. Priority will be given to (a) opening up and maintaining rural roads; (b) relaxing customs and export procedures and improving the discipline of the road control services; (c) developing techniques and financial instruments that facilitate storage of agricultural food products on the farm and at all stages of marketing; (d) the slaughtering and animal health products conservation and health control infrastructure; (e) regional integration of agricultural markets and their protection, where appropriate, against imports subsidized at origin; (f) installation by the end of 1992 of a system of support for exporters and local dealers, including in particular a system of continuous information on domestic and world market prices and conditions, which would be managed by the ONC; and (g) a national policy of promotion of small and medium- scale *?nterprises that process agricultural products or furnish services to farmers. 6. Food production. The Government's objective is to achieve the desirable balance between the concerns to maximize agricultural income and to preserve and improve the country's land assets. Market conditions do not in most cases justify the use of expensive inputs to rebuild soil fertility or raise production density as a means of slowing the expansion of agricultural area. The goal will be to foster crops, such as nieb6, that make it possible to rebuild soil fertility, integrate animal and vegetable productian activities, and increase farming value added through primary processing and by promoting simple mechanization (such as draft cultivation), to enhance labor productivity, in appropriate areas. 7. Industrial or export crops. The Government ia in process of drafting the arrangements for withdrawing from the industrial units of the national fats industries company, Societe Nationale des Industries des Corps Gras (SONICOG) and reassigning ownership of the existing palm groves. The Government will encourage the creation or strengthening of small private units or cooperatives for artisan extraction and domestic marketing of palm oil. The reforms initiated in the cotton sector will be pursued and means sought for integrating cotton production into more diversified and ecologically more stable production systems. Diversification of agricultural exports will be encouraged through agronomic research and by establishing, in collaboration with the professional o-ganizations and with the help of the donors, proper production and marketing conditions. The agricultural services will give special attention to high- quality crops such as niebe and cassava that find an external outlet.  - 48 - Annex 1 Page 4 of 8 8. Animal production. The Government will continue to monitor and evaluate the water point construction experiments with a view to replicating them widely with due respect for environmental constraints. It will encourage integration between farmers and stockraising and promote the development of private veterinary services. It will prepare an animal health action plan and define the arrangements for privatizing veterinary care and the importation and distribution of veterinary pharmaceutical products by May 31, 1992. A code of veterinary practice will be adopted by the end of 1992. The public ranches will be put into liquidation. Their partial reorientation toward animal husbandry research and improvement of local breeds could be studied. Short-cycle stockraising activities wi.l be encouraged. Maritime fishing techniques will be strengthened. Lake and offshore fishing will be regulated by a domestic fishing code. Beef and farm products will, so far as necessary, enjoy tariff protection against competition from products whose export is subsidized at origin. 9. Natural resources management. The basic components of Benin's environmental policy will comprise (a) monitoring of resource degradation phenomena, as the basis for defining action priorities; (b) development of technical solutions acceptable to the population groups concerned; (c) improvement of the basic land tenure legislation, w.th due regard to the rights and responsibilities of individuals, communities andl the State, as recognized by all, and (d) information and training. A natural resource management project is in course of appraisal; it would aim to ensure implementation of the first phase of a long-term program. Its goals will also be taken into account in all future regional development projects. The national parks protection project under way in northern Benin would be extended to consolidate the gains achieved in the Pendjara national park, extend them to the W park and integrate its activities with those of neighboring countries. 10. Aaricultural credit. The CRCAMs/CLCAMs rehabilitation project will be continued and the management autonomy of these p^ivate institutions will be respected. The Government will ensure that any loan facilities put in place carry interest rates not lower than those charged or the Benin financial market. It will foster competition on the rural financia: market by encouraging the commercial banks to operate there. The role of the Government 11. Government functions in the rural areas will be divided into two categoriess exclusively public functions, and functions to be performed by the Government pending their takeover by private operators. 12. The exclusive functions comprises (a) orienting national rural development policy by (i) formulating strategies and programs; (ii) developing legislative and regulatory instruments; and (iii) taking incenti7e measures (particularly financial measures); (b) monitoring and supervising implementat:on of these policies and of related support measures;  - 49 Anney 1 Page 5 of 8 (c) compilation and dissemination of inforration; (d) designing, programming and supervising natural protection measures, including institutionalizing the land tenure rights of individuals and local authorities; (e) orienting and coordinating external aid at the design and execution levels; (f) managing public rural infrastructures and supervising compliance with technical standards in works projects executed by private persons or local authorities. 13. The non-exclusive functions, which can be exercised by the Government or by private operators or professional organizations, comprises (a) agricultural extension; (b) management advisory assistance to farmers; and (c) support for producers' organizations. The Government would aim to avoid (i) abrupt dioruption of existing communication networks among extension agents, research and development and applied research; (ii) exclusive concentration of services around the more developed village groups; and (iii) interruption of these services when the projects that finance them come to completion. The farmers' or professional associations would progressively take over management responsibility for extension activities. 14. Agricultural extension will be assigned precise goals, measurable in economic terms. Action will be taken to improve the level of the extension agents and step up their training and guidance. They will be trained to be alert to farmers' problems and to respond to the specific concerns of population categories not previously reached, such as women and young people. Their activities will extend to both plant and animal production and both commercial and food product activities and aim at improving natural resource management. 15. Support for farmers' organizations and functional literacy will be assigned priority. The farmers will eventually have to define their training needs themselves and progressively take over management of the necessary resources through 4heir organizations. 16. The regular personnel training programs of the agricultural institutions will stress: (a) the need to adapt to market and ecological constraints and potentialities and the means for doing so8 and (b) management techniques for individual enterprises and professional organizations. 17. InRut and seed distribution will be privatized in due course but the Government will continue to play a role in (a) input supply in the cotton-growing area through SONAPRA, with the support of village groups; and (b) cottonseed production. Pre-base seed of other crops would continue to be produced in the agronomic research centers; base seed would be produced in the two seed farms of Borgou and Atlantique, which would be privatized by June 30, 1993; propagation of these seeds would be done by selected farmers. Agronomic research would provide technical support and quality monitoring on the two fArms and among seed- propagation farmers.  - 50 - Annex 1 Page 6 of 8 18. Agronomic research will be reorganized as an autonomous institute and will seek to (a) decentralize the research teams, currently over-concentrated in southern Benin, while maintaining close linkage among them; (b) ensure better research planning to take account of agriculture's true priorities (such as product processing and conservation, improvement of soil fertility and environmental protection, farming/stockraising integration and exploitation of livestock byproducts), replace unjustified research lines, better define responsibilities and avoid overlapping with the work done in neighboring countries and within Benin; and (c) ez.sure a multidisciplinary approach and better linkage between applied research, research and development and extension. 19. Professional organizations and other non-governmental organizations. In accordance with its objectives of democratizing Benin society, the Government will encourage the setting up of these organizations and their contribution to rural development, within respect for the existing regulations. It will ensure, by means of an appropriate legislative framework, that these entities comply with the basic rules of management transparency and honesty. Complementarity between public action and that of private organizations will be governed by contractual relationships within a legal framework which remains to be defined. Agricuitural policy reforms to be implemented as par. of the restructuring of agricultural services 20. The Government requests the International Development Association (IDA), French Aid, the European Development Fund, Genrian Aid, the International Agricultural Development Fund and the United Nations Development Programme to finance the agricultural services restructuring project. Since the purpose of the project is to respond to the considerations set forth in sections (a) and (b) (i) of the first paragraph of this letter, the Govi.rnment hereby undertakes to execute the following administrative, financial and economic reforms within the framework of the project, reforms whose implementation would have in impact on its successful execution: (a) lightening oi the MDRAC and CARDER strictures, resulting in better matching of personnel profiles to the profiles of the posts to be filled and in a substantial reduction in MDRAC and CARDER staffs; (b) revision of the cooperative legislation, and progressive institution of a new framework that favors representation of the agricultural and professional organizations on the various rural development bodies; (c) privatization of seed farms; and (d) settlement of the CARDERs' debts. The Government will inform all the donors that are helping finance the development of the rural sector of these actions to enable them to harmonize their activities with the restructuring goals and the development policy described in this letter.  - 51 -- Annex 1 Page 7 of 8 21. The preparatory steDs for trimmiing the MDRAC and CARDER aaencies will comprise the following actions, essential to its successful executions (a) adoption of legislative instruments agreed upon with the donors, defining: (i) the methodology of and regulations governing restructuring of the MDRAC and the CARDERs; (ii) the functions and organization of those institutions, specifying their new relationships with the rural sector; (iii) their new personnel and budget management regulations, including a cost accounting system and performance evaluation criteria; and (iv) regulations creating the restructuring entities, prescribing their powers and their procedures and defining their physical and financial resources; (b) appointment of the members of the restructuring agencies and their training in regulations and procedures; (c) launching of an information campaigV concerning the purposes of the restructuring exercise, in which the representatives of the civil service unions would participate along with MDRAC personnel; (d) definition of the procedures and tims-table for transferring the CARDER activities relating to the cotton subsector, rural works projects and repair workshops to private operators. 22. The Government undertakes to effect as soon as possible selection of the personnel who would be appointed to the various posts defined in the new MDRAC and CARDER organizational charts and to finance the departure of redundant staff. This would involve the departure of about 900 permanent civil servants (PCS) by December 31, 1991, about 900 PCS by May 31, 1992 and the remaining 500 or so PCS, essentially staff of category E, the lowest civil service level, by January 31, 1993. About 800 contract staff would be let go by May 31, 1992. Termination of some 120 staff members associated with input management, mainly for cotton production, will take placa in step with the transfer of the corresponding functions from the CARDERs. Termination of about 80 staff of the Agricultural Products Packaging Control Directorate and about 100 staff of the Food and Applied Nutrition Directorate will be defined after the audit of the ministries to which they are proposed to be transferred is completed. Studies to be conducted 23. As part of the continuous upgrading of iti rural-sector policies and activities, the Government proposes to undertake cfrtain studies, of which the chief ones are summarized in the following paragraphs, and to seek the necessary funds for their execution where they are still lacling. 24. Animal and fishery production activities. A study to assess the efficiency of the financial circuits, technical competence, s:aughterhouse infrastructure and conservation and health control, to be carried out by June 1992, will provide the basis for a project for improving the organization and training of the various professions involved in the animal and fishery product industries. In the livestock areas the Government will undertake an inventory of pasture  - 52 - Annex 1 Page 8 of 8 resources and carrying capacity, as the basis for securing more systematic management of grazing lands. An action plan for the whole of the livestock sector will be drawn up by the end of 1992. A study of livestock product tariff protection needs will be conducted by June 1992. 25. ExRorts. A comparative study of export procedures, taxes and costs will be stasted in the second half of 1992 with the object of comparing the costs borne by Bcnin exporters with those of exporters of neighboring countries and analyzing the services made available to them. 26. Credit. & study will be conducted of credit constraints and the types of credit best suited to the storage problems of food and animal product producers and dealers; this study could be carried out in collaboration with the commercial banks and the CRCAMS/CLCAMs. 27. A medium-term cotton development strategy document integrating the macro- and microeconomic and ecological dimensions will be completed by December 1991. It will include prospective cotton acreage and production development and industrial development components. 28. A general study, as the basis for redefining agricultural research policy, structures and activities will be conducted as part of the agricultural services restructuring project by June 1992. 29. MDRAC and the Ministry of National Education will carry out a joint study with a view to reform of a gricultural sector staff training, with emphasis on basic training, message quality and teaching methods, personnel competence, and training geared to self-employment. 30. The Government will draw up the new internal statutes of MDRAC by the end of June 1991, together with civil service career management regulations. 31. Finally, in the areas of land tenure and natural resources, the Government will prepare, by the end of 1992, a legal study oZ the respective rights and responsibilities of individuals, local authorities and government. Done at L.ashington, D.C. May 31, 1991 For the Government Mama Adamou-N'Diaye Minister of Rural Development and Cooperative Action  - 53 - ANNEX 2 Page 1 of 2 REPUBLIC OF BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT PROPOSED EVOLUTION OF RURAL SERVICES 1. Implementation of the agricultural services restructuring process will entail a gradual evolution which, in the middle to long term, would lead to a redefinition of the institutional arrangements for the provision of these services and a redistribution of responsibilities between public sector agencies on one hand and private or professional organization undertakings on the other. This redefinition would provide the various economic and social agents of the country with the possibility of developing their own initiatives within an agreed legal framework, in partnership or competition with each other, according to their perceived interests. The reallocation of responsibilities which had until now been concentrated within a highly centralized administrative system among decentralized rural operators would help revitalize and restructure the rural environment. 2. The proposed division of future responsibilities would confirm the preponderance of the public sector in the (a) establishment of rural development policies, strategies and programs, of legal and regulatory dispositions, and of incentive measures; (b) monitoring and control of the implementation of these policies and measures; (c) collection and diffusion of information towards individuals, organizations and enterprises; and (d) implementation of applied agricultural research along needs identified by the rural populations. 3. This would leave the need for an eventual transfer of some functions and activities to private or professional organizations. This transfer would, in a first phase, deal with industrial and commercial activities, as well as some services which could be immediately provided by the private sector (such as veterinary services or seed multiplication). As new organizations in a given geographical area become capable to oversee on their own the provision of management advice, training, extension services, studies and the diffusion of information, the transfer would gradually extend to these activities. 4. The time frame of this evolution would depend on the speed at which private or professional organizations which are recognized to be capable to assume the corresponding responsibilities will emerge. This emergence would be facilitated through promotional activities (such as an improvement of the legislative framework, training, and management support), some of which could preferably be undertaken by agencies outside the public sector. Even so, public funding would be necessary to ensure these promotioral activities and, later, to help defray the operating costs pertaining to the provision of private agricultural services. Funding could be provided either through joint management arrangements or through contractual agreements betwcen the State and the private operators, reached on a case by case basis. 5. As these transfers occur, the regional services of MDRAC would have to adapt their staffing and organization to the ptevailing situation. In the  54 -- ~~ANNEX 2 Page 2 of 2 long term, this would result in the desired concentration of MDRAC staff on purely public sector activities. However, MDRAC would never totally divest itself from training, management assistance, studies or extension activities, since it would need to (a) ensure coordination among private agencies, as well as between them and research -ad R-D activities; (b) provide neutral and objective arbitration among socio-professional groups; and tc) guarantee full access to agricultural services to all rural populations, including the poorest strata. The organization chart proposed for the CARDERs (Organization Chart 2) is built on these principles and would allow the Directorate of Extension and Support to Farmer Organizations (DVAOP) to adjust its structures to a gradually reduced need for involvement. 6. The agricultural services restructuring project constitutes one of the facets of the proposed evolution towards lighter administrative structures focused on public sector responsibilities and the establishment of a legislative and institutional frame facilitating the ptoposed redistribution of responsibilities between the public and private sectors. The activities of the project would be completed and later expanded through the regional development projects. One of the objectives of the regional projects would be to help establish and strengthen private or professional organizations and to assist them in their interface with public sector institutions.  - 55 - ANNEX 3 Page 1 of 12 BENIN AGRICULTURAL SERVICES RESTRUCTURING PROJECT RESTRUCTURING OF THE MDRAC AND THE CARDERS I. INTRODUCTION 1. In view of the worrying situation of the public rural development institutions, characterized by poor performance and operating costs that represent an intolerable burden on the public finances, the Benin authorities have decided to restructure them within the joint framework of the Structural Adjustment Program (SAP) and this project. 2. The main purpose of this restructuring--which would be applied initially to MDRAC and the CARDERs--is to provide the Government with institutions through which it can perform its rural development efficiently and at a cost commensurate with their true activities and with the country's afinancial capacity. The redefined role of these public institutions would lead the Government to withdraw from commercial and productive activities in order to give better attention to the tasks of fostering initiative, guiding and coordinating development efforts, issuing and enforcing regulations, and providing certain forms of development support, notably agricultural research and management training. 3. In 1989 and 1990, the Beninese Government, with the help of FAO, UNDP and the World Bank, conducted a series of studies designed to ensure that restructuring would be implemented under the best possible conditions. These studies culminated in proposals for restructuring MDRAC and the CARDERs which are summarized below. II. RESTRUCTURING PROPOSALS 4. On the basis of the Government's redefined role in rural development, an assessment of the farmers' needs, in light of local conditions and a clear distinction between the roles of MDRAC, at the central level, and the CARDERs, as decentralized entities, the studies proceeded to redefine the functions of MDRAC ind the CARDERs, draw up their organization charts and job profiles, and determine their operational human, physical and financial resource requirements. Ortanization and Responsibilities of tha MDRAC 5. The MDRAC's proposed organization is depicted in Organization Chart No. 1. MDRAC would comprise, under the authority of the Minister: (a) the Office of the Minister, consisting of a private secretary, technical advisers and an internal inspection and audit unit for the Ministry; and (b) a Directeur de Cabhnet (or Director General) who would direct and coordinate the activities of  - 56 - ANNEX 3 Page 2 of 12 nine technical directorates and an Administration and Finance Directorate, which have a total of 26 departments. Three or four coordinators, or task managers, under the Director General, would be made responsible for the administration of larger projects corresponding to the major strategic objectives of the ministry, i.e., natural resources management, diffusion of information and training, elaboration and supervision of legislation, and ruwal works. 6. The Office of the Minister would assist the Minister, in particular by preparing the necessary summary reports, based on the work of the directorates, especially the DAPS, to enable him to keep abreast of developments in the rural sector and form judgments concerning the activities of the departments, decision-making and trade-off factors, and dossiers to be submitted to the Government. 7. The Directeur de Cabinet (or Director General) of the Ministry is responsible for directing, coordinating and monitoring the activities of the directorates and the CARDERs, and for ensuring that the country's agricultural policy is implemented and its development goals achieved. The special coordinators would assist him, each in his specific field, in ensuring an optimal response to the established strategic objectives by calling, as needed, on the various technical directorates. 8. The Administration and Finance Directorate (DAF) would be responsible for managing the Ministry's personnel, budget and equipment. Its personnel functions would be limited to administratlve management in application of the regulations in effect. 9. The Analysis, Forecasting and Synthesis Directorate (DAPS) would have "horizontal" responsibilities, geared mainly to data gathering, processing and distribution (statistics, data bank, documentation, activity and project monitoring briefs, and so on) for the purpose of kee.ing abreast of developments in the agricultural sector, monitoring project execution, preparing analyses and projections, and formulating agricultural strategies and policies. It would also be responsible for preparing and negotiating technical cooperation projects. 10. The Human Resources and TraininR Directorate (DRPF) would be responsible for continuously evaluating personnel needs and human resource training and utilization across the rural development instiLutions. It would propose needed improvements in terms of numbers, quality and assignments; prepare training programs and monitor their implementation evaluate training results; and maintain continuous liaison with the traini'd tstablishments so that their services can be adjusted to the requirements of tne development process. It would centralize instruction instruments to form mn agricultural information center and furnish teaching support to the CARDERs and the other rural development institutions in the areas of continuint and refresher training. 11. The Natural Resources Directorate (DRi) would be responsible for maintaining the natural resources inventory (soils, surface and groundwater, and land and aquatic flora and fauna), assessing their potentials and classifying them. It would define authorized thresholds a.ad suitable harnessing and utilization techniques and issue regulations for r.atural resource protection-  ANNEX 3 Page 3 of 12 monitor natural resource trends; participate at the national or local level, through the CARDERs, in the formulation of land use and development plans and environmental protection policies; and help promote natural resource protection and regeneration initiatives. 12. The Rural Works Directorate (DGR) would decide, on the basis of the DRNI's conclusions, on natural resource utilization equipment and technical requirements, particularly in the area of agricultural water works, land improvement and development, and village water facilities. It would define standards, techniques and models to facilitate the study and execution of rural infrastructure works. It would participate at the national level and, through the CARDER, at the local level in land infrastructure planning. It would help promote enterprises specializing in rural studies and works, and support the CARDERs in their work of assisting farmers in studying and executing infrastructure and other rural projects. 13. The Extension Activities and Research/Development Directorate (DVRD) would maintain direct and continuous relations with the CARDERIDVAOP and the research institutes. It would direct and coordinate consultation between the CARDER/DVAOP, the research institutes and farmer organizations at various levels on all aspects of extension, research/development and advisory assistance to farmers. On the basis of the information furnished by the CARDERs and the assessments made by the farmer organizations, it would evaluate the extension and advisory assistance activities and propose all appropriate improvement measures. With the CARDERs and the research institutions, it would maintain a continuously updated inventory, and a system of dissemination, of the knowledge acquired in the country. It would collect validated research results and present them to the various users in a dissemination-ready form; store all the information collected and maintain a data bank with a simple and rap'.d system for updating and utilizing it; foster and direct exchanges of technical information and transfers of experience among the CARDERs; and propose measures to promote management of extension and advisory assistance by farmer organizations and monitor their application. 14. The Crop Production, Livestock and Fisneries Directorates would be responsible, each in its own field, for monitoring production trends, identifying the technical, economic and commercial factors and mechanisms that determine them, and studying and proposing suitable measures for revitalizing them. They would draw up--each in its own field--agricultural policy proposals and goals, evaluate the resources required to achieve them, and discuss them with the DAPS to ensure that they are consistent in themselves anl with the country's general rural development guidelines and policy. They would monitor--again, each in its field--the installation of production facilities and the implementation of agricultural policy measures (trade, credit, extension, etc.). Finally, the Crop Production and Livestock Directorates would be responsible for ensuring health protection of plants or livestock and for control.ing foodstuffs of plant or animal (including fishery) origin and production factors (seed, plant health products, fertilizer, livestock feed, veterinary pLoducts, etc.). 15. The Rural Promotion and Lenislation Directorate (DPLR) would be responsible for monitoring and studying the evolution of the rural institutions, particularly the farmer organizations and their unions, and for proposing policy,  -58 - ANNEX 3 Page 4 of 12 legal and socioeconomic measures designed to foster the development, diversification and expansion of their activities to enable them to furnish greater and better support upstream and downstream of farm production. More particularly, the DPLR would study the condition of rural youth and women and propose all measures, of whatever kind, for promoting and developing their economic activities and improving their social condition. To that end it would draft proposals for creating farms and rural activities related to farm production, providing all possible facilities for rural women and youth. At the request of the other directorates, and on the basis of proposals presented by them, it would prepare draft laws and regulations in conformity with the applicable legislation, and archive legal instruments and bring them to the attention of the departments affected. It would provide liaison between the Ministry and the professional organizations and arrange for information exchanges and consultation between them on the preparation of agricultural policies and the terms of their implementation by the farmers. Agricultural Research 16. Responsibility for the planning, coordination and implementation of agricultural research is intended to be entrusted to a semi-independent entity linked to but outside the MDRAC. The present reorganization plan does not therefore extend to agricultural research. A study, financed by the project, would make specific and detailed proposals to that effect, covering, among other things, the integration of the Cotton and Fiber Research Unit into the national research system. Ultimately, the scientific staff of the livestock, socioeconomic and forestry research units would be transferred to research stations where these specialties are currently not represented. For efficiency reasons and to ensure a multi-disciplinary approach, the analysis laboratories would be concentrated in a multipurpose central laboratory, located in the present premises of the National Agropedology Center (CENAP), after strengthening of CENAP. The present laboratories of the Foodstuffs and Applied Nutrition Directorate (DANA), slated for elimination, and the food technology and crop protection laboratories, could also be placed under CENAP. Veterinary research would be concentrated on the epidemiologic and economic aspects of disease control. Oraanization and Functions of the CARDERs 17. The new CARDER organization is depicted in Organization Chart No. 2. Each CARDER would be headed by a Director General (DG) who would at the same time be the representative of the Ministry of Rural Development at the ddpartement level. The Director General would be answerable for all activities of his CARDER to the Minister and the Director General of the Ministry, with whom he would maintain a hierarchical relationship. He would be the go-between of the Ministry's directorates, from which he would receive technical instructions for implementation by his departments. This must not interfere with the direct technical and functional relations between MDRAC directorates and the CARDER departments, which would continue to be accountable for their activities to the DG of the CARDER to which they report.  -59-. ANNEX 3 Page 5 of 12 18. Each CARDER would consist of two entities acting under the authority of the DG: (a) the general directorate, and (b) the rural development *sectors.' The General Directorate would comprise, in addition to the Administration and Finance Directorate, five technical directorates: (i, The Planning. Monitoring and Evaluation Directorate (DPSE). Like the Ministry's DAPS, the DPSE would be responsible for disseminating working methods to the other departments, gathering and processing data on the rural sector, performing analytical studies of rural sector trends, and proposing rural development measures to the Ministry. It would also be responsible for monitoring development projecta, evaluating the activities of CARDER departments and functions, and continuous upgrading of human resources and their adaptation to rural development needs. (ii) The Natural Resources. Forestry and Plant Health Directorate (DFPRN). This Directorate would maintain functional relations with the Ministry's DRN, within which it would participate in the work of maintaining an inventory of natural resources and assessing their potentials and in drawing up technical requirements and regulatory measures for their conservation. It would perform natural resource monitoring and surveillance tasks and enforce the regulations. It would prepare technical recommendations as required, tailored to local conditions, on the preservation of natural resources and disseminate them among the farmers through the DVAOP and the CARDER extension network. The Plant health section would be responsible for enforcing the plant health regulations in the country in liaison with the CARDER field agents; performing epidemiological diagnostic studies and deciding on and organizing anti-epidemic action, and inspecting food products of vegetal origin and production factors (plants, seed, plant health products, livestock feed, and so on). A land registry would also be set up in this directorate, first on a pilot basis to be gradually extended to cover the whole national territory. (iii) The Rural Works and Infrastructure Directorate (DAER). On the basis of data and recommendations transmitted by the Natural Resources Directorate (DRN), this Directorate would study rural land use and infrastructure development plans and help to draw up the land use development plan at the department or local level. It would draw up technical standards and specifications, in light of local characteristics, as the basis for selecting the most economical agricultural equipment and rural infrastructure works, tailored to the natural environment and the farmers' technical capacity. It would furnish technical assistance to the farmers and farmer groups in s udying and executing rural infrastructure and agricultural improvement and water works projects, and exercise technical supervision of the work. (iv) The Rural Institutions and LeRislation Directorate would provide assistance to all rural institutions within its geographic area, provide information for the elaboration of rural legislation and oversee its implementation. (v) The Extension Activities and Support for Farmer Organizations Directorate (DVAOP). The DVAOP's activities would be geared to direct support for farms and farmer organizations. It would accordingly maintain operational  - 60 - ANNEX 3 Page 6 of 12 relations with the sectors (see para. 19). These