Somalia - Fisheries Exploration - Pilot Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 10983 PROJECT COMPLETION REPORT SOKALIA FISERIRES EXPLORATION/PILOT PROJECT (Cr. 1465-SO) JULY 28, 1992 CIO 61 Agriculture Operations Divisio Country Department II Africa Regional Office This document has a restricted distribution and may dsed by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CUJRRENCY EQUIVALENTS 1981 US$1 = So.Sh. 6.3 1982 US$1 = So.Sh. 1.8 1983 US$1 = So.Sh. 15.8 1984 US$1 = So.Sh. 20.0 1985 US$1 = So.Sh. 39.5 1986 US$1 = So.Sh. 72.0 1987 US$1 = So.Sh. 105.2 1988 US$1 = So.Sh. 170.5 1989 US$1 = So.Sh. 490.7 ABBREVIATIONS AIP Accelerated Implementation Program FAO Food and Agriculture Organization GOS Government of Somalia NECFISH Northeast Coast Fisheries Enterprise PCR Project Completion Report SDB Somalia Development Bank GOVERNMEN FISCAL YEAR January 1 - December 31  FOR OFFOCAL USE ONLY TAM WORLD BANK Washhton D.C 20433 U.SA Office of Director-General Operations Evaluation July 28, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on SOMALIA - Fisheries Exploration/Pilot Proiect (Credit 1465-SO) Attached, for information, is a copy of a report entitled "Project Completion Report on Somalia: Fisheries ExplorationlPilot Project (Credit 1465-SO)" prepared by the Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment ThiS document bas a restricd dl1srtbuUon gad may be used by tdphentB onl In the perfonmance oftbdr offBcia duties. Its contents may not XeaeLde be disloed without Word Bank autheroatilo.  FOR OFFICIAL USE ONLY PROJECT COMPLETION ORT SOMALIA FISHERES EXPLORATION/PILOT PROJECT (Cr.1465-SO) Table of CQntents PagM No. Preface .... .... .... .... ... .... .... .... .... ... i Evaluation Summary .m......... iii PART I PROJECT REVIEW FROM THE BANKS PERSPECTIVE ........ 1 1. Project Identity ............... ......................... 1 2. Background . .......................................... 1 3. Project Objectives and Description .......................... 2 4. ProjectDesign and Organizatiun ........................... 3 5. ProjectImplementation ..... . ........................... 3 6. ProjectResults ................ ......................... S 7. Sustainability . ......................................... 6 & Bank Performance ............. ......................... 7 9. BorrowerPerformaace .......... ......................... 7 10. Project Relationship ........... .......................... 7 11. Consulting Services and Studies ............................ 7 12. Project Documentation and Data ........................... 8 13. Lessons Learned .............. ......................... 8 PART H PROJECT REVIEW FROM BORROWER'S PERSPECIVE ...... 9 PART m STAISTICAL TABLES ...10 1. Related World Bank Loans and Credits ..................... 10 2. Project Timetable .10 3. Cumulative Estimated and Actual Credit Disbursement .11 4. Project Costs and Financing .12 5. Project Implementation .14 6. Project Results .15 7. Status of Covenants .17 8. StaffInputs .18 Map No. 17264 This document has a restricted distribution and may be wised by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECr COMPLETION REPORT SOMALIA FISHERIES EXPLORATION/PILOT PROJECr (Cr.1465-SQ) PREFACE This is the Project Completion Report (PCR) for the Fisheries Exploration/Pilot Project in Somalia for which Credit 1465-SO in the amount of SDR 12.9 million (US$13.5 million equivalent) was approved on May 1, 1934. The actual closing date was April 30, 1990, two and a half years behind schedule. SDR 60,d00 remains undisbursed. The last disbursement was on September 25, 1990. The credit account cannot be closed because the special account cannot be reconciled due to the civil war in the country. Parts I and Im of the report were prepared with the assistance of the FAO/World Bank Cooperative Program and finalized by the Agriculture Operations Division, Country Department II, Africa Regional Office. Parts I and mH cannot be sent to the Borrower for comment because of the c.vil war. Due to the security situation in Somalia, field visits did not take place. The report is a desk study based, inter alia. on the Staff Appraisal Report, the Development Credit Agreement, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda.  S ~~~~~~~~~~~~~~~~~~- iii - PROJECf7 COWLETON REPORT SOMALIA FISHERES EXPLORATION/PILOT PROJECT (Cr.1465-S2) EVALUATION SUMMARY Objectives 1. The project aimed to lay the foundation for Somalia to: (i) determine the feasibility and financial viability of offshore catching of a variety of pelagic species known to be present in considerabie abundance in North Somali waters: (ii) test critical assumptions for the development of the artisanal fisheries in the project area and to provide a framework for future income and employment generation to one of the poorest parts of the country; and (iii) develop an institutional framewvork for long-term public and private sector activities through the operation of an autonomous enterprise, providing services to the fisheries subsector. The project was to be implemented over a three-year period by the Northeast Coast Fisheries Enterprise (NECFISZI). Implementation Experience 2. The project became effective on October 12, 1984, four months after signing. The conditions of credit effectiveness were met and initial implementation of the offshore component was good. A consulting firm was hired to design and execute the exploratory fishing program. Under this contract, there was also a subcontractor for scientific services. Later in 1985, however, the relationship between the consultant team and NECFISH became problematic. The contract was * terminated in mi-1986 and the subcontractor carried on the remainder of the program. A final report was produced at the end of 1987. - 3. The inshore program ran into problems from the start. The contribution from the Arab Fund, which was supposed to provide $3.5 million for this component, could not become effective because of Govemment of Somalia (GOS) arrears to the Fund. After its withdrawal, DANIDA became the cofinancing agency. The component was reformulated with a cost of about $9.5 million, $3.0 million higher than appraisal estimates. This resulted mainly from the increased cost of construction of the turnkey shore facilities and the incremental costs of interim facilities. Construction was on schedule. 4. Following results of initial operations at Candala, it was found that because of the extremely hot climate, it was impracticable to store fish on ice at the receiving station and transport it to Bossaso for freezing. The quality of the fish could not be retained. Thus it was decided that the  - iv - original concept of a fresh fish collection and transport system should be replaced with a system of freezing fish as soon as possible after landing at each of the stations. This meant equipping the collector vessel with 20-foot containers for frozen fish and the installation of additional freezer plants. 5. The lack of autonomy of NECFISH in financial and employment matters also created problems iluring implementation. Contrary to stipulations that NECFISH should be financially autonomous, it experienced Government interference that affected its ability to operate in a commercially effective manner. NECFISH had to depend on the Government for budgetary allocation, which was often inadequate. The Government also flxed fish prices and interfered with setting salaries and hiring. Despite these shortcomings, training was provided for the plant workforce at Bossaso, fish purchase and credit staff and fishermen. Control, monitoring and reporting systems for fish purchasing, fuel and gear sales and credit sales of fishing boats were established. The staff to operate the systems were recruited and trained. The project closing date was extended twice to April 30, 1990. Total project cost was estimated at US$22.4 million equivalent, 13 percent over appraisal estimates. Results 6. The offshore component was successful in providing information that d'etermined the feasibility of large scale offshore fishing in the area. Although the results were negative, the objective was met. As for the inshore component, the failure of transporting catches on a fresh fish basis increased capital and operating costs to the extent that its financial rate of return was negative. Consultants prepared a feasibility study for the future of the inshore facilities. It concluded that the facilities were not financially viable unless additional investments were made to increase levels of throughput and utilization of facilities. Sustainability 7. The inshore facilities as at the end of the project were not sustainable. A study carried out with DANIDA and IDA technical assistance concluded that several conditions were necessary for the operations to become viable. It recommended that a foreign commercial company be invited to assist in the operations of the facilities. Such company should have direct access to fish markets and to refrigerated reefer transport in the area, have experience in dealing with small scale fishing operations and marketing of tropical fish and offer a support package to assist small scale fishermen. Two joint venture candidates were identified, but since the country was thrown into a state of civil war in 1990, nothing has materialized. There is no question of sustainability for the offshore component, since all operations have come to an end. Lessons Leamed 8. The lessons learned are summarized as follows: (a) It was wise to carry out pilots before rushing into large investment projects; (b) A pilot project should include the minimum investments for testing out technologies. While the offshore component was correctly designed, the size of the inshore program  -~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~V was incommensurate with its pilot nature. When the technology failed, the Government was larded with a network of unprofitable facilities. (c) After an institution has been set up, there is often vested interest within the Government to maintain the status quo. While the Bank saw the establishment of NECFISH as a transitional development to private sector involvement, the Government resisted relinquishing control and restructuring the enterprise. (d) Project results show that offshore fishing in the project area is unlikely to be profitable. Inshore fishery has demonstrated potential but a number of issues need to be resolved, such as the technology for transporting fish and catching high value species, the involvement of the private sector and the transformation of NECFISH into a commercial enterprise. When the Bank resumes lending in Somalia, these issues should be looked into carefully in our future involvement in this sector.  PROJECF COmpLEON REPORT SOMALA FISHERIES EXPLORAT7)N/PILOT PROJECr (C. 14654S J) PART I: PROJECr REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name Fisheries Exploration /Pilot Project Credit No. : 1465-SO RVP Unit Africa Region Country Somalia Sector Agriculture Sub-sector : Fisheries 2. Background 2.1 With an average per capita income of about US$ 170, Somalia is among the poorest countries in the world. Moreover, the hostile physical environment, the general lack of physical and institutional infrastructure, and scattered population centers have created serious obstacles to development of the country. 2.2 The 1981 Somalia Agricultural Sector Review emphasized thc need to strengthen and develop certain key areas of the sector. Important were those which generate increased production and exports in the short-run. The sector strategy called for the development of underutilized resources (including activating sunk capital), the expansion of private sector incentives and opportunities, and the establishment of additional export markets to increase foreign exchange earnings. The Review also identified the potential importance of the fisheries subsector to the country. T`he subsector was still largely underdeveloped not only because of envirommental and infrastructure obstacles, but also because of inadequate subsector strategy, and financial and manpower constraints. 2.3 Situated in the northeastern corner of Africa, Somalia has a coastline of about 3,000 kilometers. Adverse conditions that hamper a fullei exploitation of the fisheries resources include: lack of natural hai bors; a continental shelf which is too narrow and too rough for large scale trawling; the absence of adequate physical and institutional infrastructure; and uncertainties about seasonal variations in distribution and abundance of fish resources. Data gathered by fishery research vessels in the area, the most notable being that of the FAO/NORAD survey ves,cl R.V. Fridtjof Nansen, indicate good availability of pelagic stocks. The major resources are the small pelagic species located off the north and northeast coast. However, because no successful modern commercial fishery has been conducted, it is recognized that the first attempts should be exploratory and expanded only as more experience and data are gained.  -2- 2.4 The strategy of the Government of Somalia's (GOS) five-year development plan called for modifications of fisheries policy including: privatization of vessel ownership; abolition of the fixed price system for fish marketing; liberalization of trade in fish and fish products; cessation of free s;upply of boats and gear, and institutional changes. As a first stage, the Ministry of Fisheries had created two autonomous enterprises in the fishing industry. 3. Project Objectives and Description 3.1 The project aimed to lay the foundation for Somalia to: (i) determine the feasibility and financial viability of offshore catching of a variety of pelagic species known to be present in considerable abundance in North Somali waters: (ii) test critical assumptions for the development of the aitisanal fisheries in the project area and to provide a framework for future income and employment generation to one of the poorest parts of the country; and (iii) develop an institutional framework for long-term public and private sector activities through the operation of an autonomous enterprise, providing services to the fisheries subsector. 3.2 The project was to be implemented over a three year period by the Northeast Coast Fisheries Enterprise (NECFISH) and had three components: (a) Offshore Fisheries: financing of two chartered purse seiners to be deployed in North Somali waters for a period of up to two years, a vessel to provide the necessary support services, purse seine fishing trials in order to determine the catch rates, species composition and seasonal variation of pelagic fish stocks in the project area; and concu;rrent biological and oceanographic observations critical for evaluation of the future financial and economic basis of a pelagic fishery. (b) Inshore Fisheries: (i) Bolimog. Provision of fish receiving, processing and transport facilities, supported by low capital cost shore facilities. (ii) Bossaso and Candala. Installation of additional modestly scaled fish receiving facilities at these points including repairs to existing jetties and facilities to service outlying fishing villages. (iii) Fish Collection and Trans-shipment Vessels Provision of two vessels to support inshore activities, a vessel for fish collection from coastal villages, and a trans- shipment vessel to deliver frozen product from Bolimog to the cold storage at Berbera and to resupply Bolimog. (iv) FLshing Boats and Gear. Purchase of small fishing boats and appropriate gear under a credit program administered by the North East Coast Fisheries Enterprise (NECFISH) in collaboration with the Somali Development Bank (SDB). (c) Technical assistance to: assist in the management, setting up and operation of the inshore facilities, provide training to pro"-ct area fishermen mainly in the areas of boat,  -3. gear and engine maintenance, supervise and carry out the offshore exploratory fisheries program and provide training for senior and mid-level cadres in the specialized fields of fisheries management and ddministration; and training of personnel capable of operating fully eqgipped modern fishing vessels, gear and engine room equipment. 4. Project Design and Organization 4.1 The original project proposal was prepared by the FAO/World Bank Cooperative Program at the request of GOS. The project identified followed a traditional approach to the development of artisanal fisheries, almost entirely relying on existing Government institutions and oriented to the public sector. The Bank thought that such a design was unlikely to lead to sound future development. Subsequently, the Bank and IFC sent a mission to Somalia to identify ways to promote private sector involvement in fisheries. Following a period of discussions and investigation, an IFC/IDA review concluded that this project would not be attractive to conventional commercial investment because of the high risks due to uncertainties regarding catch rates, species composition and seasonal variation. Consideration of these uncertainties led to an IDA proposal for an exploratory pilot project. 4.2 The exploratory nature of the project was correct and was the key to the success of the offshore fisheries component. With a modest amount of funds, GOS was able to determine whether a profitable commercial offshore operation was feasible in this area before undertaking any major investment in infrastructure. The inshore component, however, was not as sharply focused because of a divergence in intentions between GOS and the Bank. The Bank had wanted to carry out the pilot for offshore fisheries before making any other investment for fishery in this area. GOS, however, insisted on a larger capital investment project to develop one of the poorest parts of the country. The Bank eventually gave in and agreed to include an inshore component but only on a pilot scale to test out the technology for artisanal fisheries. The final design, however, involved a scale of operations incommensurate with the pilot nature. 4.3 The implementing agency was the newly established NECFISH, an enterprise wholly owned by the Government with legal and financial autonomy, and powers to recruit on acceptable pay scales. The establishment of NECFISH was seen as a necessary step to provide the mechanism for future private sector and possible IFC investment in the fisheries sector. Given the uncertainties of the operation and unwillingness of the private sector to participate at this stage, this was considered the best option. The drawback was that once established, it might be difficult to discontinue support to the enterprise even when the operation proved to be non-viable. 5. Project Implementation 5.1 The project became effective on October 12, 1984, four months after signing. The conditions of credit effectiveness were met and initial implementation of the offshore component was good. A consulting firm was hired to design and execute the exploratory fishing program. Under this contract, there was also a subcontractor for scientific services involving collection, analysis and reporting of data related to exploratory fishing operations. For logistical reasons, it was decided that the consultant team should be based in Djibouti where the project vessel could receive adequate servicing. Later in 1985, however, the relationship between the consultant team and NECFISH  4- became problematic. The friction was due to the absence of agreed procedures for administration, financial control and reporting, which were not clearly defined in the contract. There were also differences in opinion on the fishing meth(;ds and gear. Attempts for the two parties to enter into a supplementary agreement on administrative guidelines failed. The contract was finally terminated in mid-1986 and the subcontractor carried on the remainder of the proj'ram. A final report was produced at the end of 1987 (see para. 18). 5.2 The inshore program ran into problems from the start. The contribution from the Arab Fund, which was supposed to provide $3.5 million for the shore and processing facilities, the purchase of small fishing boats and gear and the refit of the support vessel, could not become effective because of GOS arrears to the Fund. Afier its withdrawal, pending resolution of the funding impasse, the GOS decided in December 1985 to reallocate some IDA credit funds to launch an Accelerated Implementation Program (AIP) as a means of establishing interim facilities in the project area that would allow initiation ot fisheries development activities up to the start of the next fishing season in September 1986. Government also contacted DANIDA as a potential cofinancier. Finance for the processing facilities was provisionally committed by DANIDA in May 1986 and finally approved in October 1986. AIP was reformulated into an Extended AIP in order to make maximum use of the fishing seasons up to the time the DANIDA funded facilities would be completed at the end of 1987. 5.3 When DANIDA reappraised the component, it was reformulated in this way: (a) relocation of the main processing facilities from Bolimog to Bossaso. The reason was that the infrastructure in Bossaso was to be strengthened by Italian aid. (o) construction of the main shore facilities on a turnkey basis; and (c) relocation of a substation from Bossaso to Habo which would be closer to the main plant. The reformulated component was to be implemented over a 30-month po-riod from DIcember 1986 till Jur.e 1988. The reformulated cost of the inshore program (including contingencies) was about $9.5 million, $3.0 million higher than appraisal estimates, This resulted mainly from the increased cost of construction of the turnkey shore facilities and the incremental costs of interim facilities under AIP and EAIP. 5.4 Construction started on schedule. During 1987, most of the facilities were imtalled; rehabilitation of seven boats was completed within the budget. By June 1989, the plant at Habo. a-s delivered and put into operation, collecting chilled and frozen products. Fourteen imported fishing boats arrived and were distributed to fishermen, some on credit, others for cash. There were problems with the project's .najor vessels. AWDAL, a government-owned vessel was designated as a collector vessel for transshipment of frozen product from Bossaso to Berbera. Its refurbishment, however took more than five months and exceeded the original estimate by 50 percent. In March, 1989, the main engine of AWDAL broke down and reduced the ability to transfer fish to Berbera. Repair work of a second fish collector and a landing craft was also delayed.  -5- 5.5 Following results of initial operations at Candala, it was found that because of the extremely hot climate, it was impracticable to store fish on ice at the teceiving station and transport it to Bossaso for freezing. The quality of the fish could not be retained. Thus it was decided that the original concept of a fresh fish collection and transport system should be replaced with a system of freezing fish as soon as possible after landing at each of the stations. This meant equipping the collector vessel with 20-foot containers for frozen fish and the installation of additional freezer plants at Habo and Bereda. 5.6 The lack of autonomy of NECFISH in financial and employment matters also created problems during implementation. Contrary to stipulations that NECFISH should be financially autonomous, it experienced these difficulties stemming from central control: (a) inadequate budgetary allocation; (b) restrictions on retention of foreign exchange earnings; (c) Government interference in setting salaries and hiring; (d) fixing of fish purchase prices by the Ministry of Fisheries and (d) other bureaucratic impediments such as controls on the use of NECFISH's bank accounts and various requirements imposed by the Ministry of Finance in relation to the utilization of and accounting practices for local currency funds. The effect of these problems was to reduce the ability of the enterprise to operate in a commercially effective manner. 5.7 Training was provided for the plant workforce at Bossaso, fish purchase and credit staff and fishermen. This enabled production at the plant to be built up in a short time. Control, monitoring and reporting systems for fish purchasing, fuel and gear sales and credit sales of fishing boats were established. The staff to operate the systems were recruited and trained. Training of fishermen was done by the Masterfisherman. But the low sales of equipment under the credit did not suggest that new fishing methods had been adopted to any extent. 5.8 The project closing date was extended twice to April 30, 1990. Total project cost was estimated at US$22.4 million equivalent, 13 percent over appraisal estimates. While the offshore component was less than estimated, the inshore component was almost twice as high as the original estimate (Table 4). 6. Project Results 6.1 The offshore component was successful in providing information that determined the feasibility of large scale offshore fishing in the area. Although the results were negative, the objective was met. Results showed that purse seining was not a feasible method of harvesting commercial quantities of either large or small pelagic in the project area. Most schools of fish were small and scattered. Large pelagic were generally susceptible to purse seining for only three months (October- December) each year. Small pelagic were below required levels either for food fish or for fish meal and oil, and world prices were poor for these fish species. Other fishing methods were used, such as trawling, long lining, gill netting and jigging, but the catch rates showed that commercial offshore fishing was not feasible in this area.  -6- 6.2 As for the inshore component, the failure of transporting catches on a fresh fish basis increased capital and operating costs to the extent that its financial rate of return was negative. A1 Based on experimental fishing, process.ng and marketing results, consultants prepared a feasibility study for the future of the inshore facilities. It concluded that the facilities were not financially viable unless additional investments were made to increase levels of throughput and utilization of facilities. It prepared financial analyses of several options for additional investments and found that they could have acceptable internal rates of return if the full costs of the pilot project were written off as sunk costs. The profitability of the operations would also depend on a significant lobster throughput. The Bank and DANIDA thought that it was premature to proceed with the development of such operation and a corresponding follow up project because of the still very limited operational experience in inshore fishing, the uncertainties surrounding the institutional/ownership structure of the operating company and the justification and feasibility of continued exclusive public sector financing. 6.3 In consideration of these issues, the Government and NECFISH proposed a Transitionary Phase of one or two years. The project closing date therefore was extended twice to April 30 1990. The scope of activities during the extension period would be focused on: (1) the gradual expansion of production by utilizing essentially the existing facilities, and (2) working towards transforming NECFISH from an agency administering exploratory activities into a commercially self-sustaining enterprise, by adopting appropriate organizational and management structure and seeking additional financial and management resources through mixed ownershipfjoint venture arrangement. However, at project completion, a suitable institutional/policy framework for the company was not defined, and the efforts of project management were not successful to transform NECFISH into a commercially self-sustaining enterprise. 7. Sustainability 7.1 The inshore facilities as at the end of the project were not sustainable. A study carried out with DANIDA and IDA technical assistance concluded that several conditions were necessary for the operations to become viable. It recommended that a foreign commercial company be invited to assist in the operations of the facilities. Such company should have direct access to fish markets and to refrigerated reefer transport in the area, have experience in dealing with small scale fishing operations and marketing of tropical fish and offer a support package to assist small scale fishermen. Two joint venture candidates were identified, but since the country was thrown into a state of civil war in 1990, nothing has materialized. 7.2 There is no question of sustainability for the offshore component, since all operations have come to an end. There is, however, a need to preserve the data generated by the fishing trials. When the Bank resumes operation in Somalia, this issue should be taken up with the Government. The trials have yielded a wealth of information on fishery resources in the area. A record of the results would avoid future duplication of such efforts. 1/ Calculated in Final Feasibility Study November 1988.  -7- & Bank Performance 8.1 The Bank was correct in intending to refrain from committing large capital investments before finding out the availability of resources in the area. However, it failed to resist GOS pressures to include an inshore program aimed more at area development instead of a pilot program for testing the technology for artisanal fishing. The appraisal mission was candid in discussing project risks, including the logistical problems associated with the area's remoteness and Government interference in the operations of NECFISH. However, it did not discuss the possibility that the results of the trials would be negative. At the end, there was considerable Government pressure for the Bank and donors to continue support for NECFISH even when the operations were not lucrative. 8.2 Bank supervision in 1985 (4.4 staff weeks) was particularly low but picked up in subsequent years, though the ratio of supervision time to preparation/appraisal remained a low 1:3. Some supervision missions weie staffed with fisheries specialists. Their input was found useful by NECFISH management and contributed substantially to the project's successful implementation. Bank supervision missions also worked hard to bridge the financing gap and modify the schedule of activities so that the momentum of initiatives was not lost while new financing was being finalized. 9. Borrower Performance 9.1 The Borrower's objective of developing the country's poorest region was justifiable. However, in view of the uncertainties concerning the resources and the appropriate technology, the scale of operations it pushed for was incompatible with the exploratory nature of the project. During implementation, GOS's interference in NECFISH's affairs affected its effect on NECFISH's ability to operate commercially. Despite these problems and the lack of experience, NECFISH implemented the project basically as designed. 10. Project Relationship 10.1 The relationships between the Bank and the Borrower appear to have been agreeable with both sides willing to accommodate the other's wishes for changes in the project when these became necessary. The close cooperation between the Bank and NECFISH was exemplary. The relationships between NECFISH, the Govemment and the consulting techriical assistance staff were generally smooth. Towards the end of the project, DANIDA took issue with the Bank for not maintaining sufficient interest in the project until a joint venture had been negotiated. This was subsequently remedied by a ioint mission, where agreement was reached with GOS on a plan of action. 11. Consulting Services and Studies 11.1 The project financed the posts of the general manager and the financial controller of NECFISH. Consultants' services for planning, execution and analysis of the offshore exploration/pilot program, as well as the implementation of the inshore fisheries program were financed by the project. It was recognized at appraisal that project implementation would be heavily dependent on the use of expatriates, because qualified Somalis were not available. Except for the difficulties with the initial consultant team manager for the offshore component, technical assistance was effective.  -8- 11.2 The project financed a corporate feasibility study under the Project Preparation Facility. llie concept and design which emerged from the study recommended having legally separate but integrated private sector Somali companies develop the exploitation of the North Somali fish resources. Towards the end of the project, a final feasibility study was conducted. It summarized the findings of the pilot components, evaluated their viability and proposed options for future development. 12. Project Documentation and Data 12.1 The SAR was well understood by all parties concerned and was useful in monitoring project progress throughout. The consultants retained by tb- . rower produced reports regularly. These were complemented by detailed reports commiss;-..ed by,. ANIDA. 13. L}ssons Learned 13.1 The lessons learned are summarized as folows: (a) It was wise to carry out pilots before rushing into large investment projects; (b) A pilot project should include the minimum investments for testing out technologies. While the offshore component was correctly designed, the size of the inshore program was incommensurate with its pilot nature. When the technology failed, the Government was landed with a network of unprofitable facilities. (c) After an institution has been set up, there is often vested interest within the Government to maintain the status quo. While the Bank saw the establishment of NECFISH as a transitional development to private sector involvement, the Government resisted relinquishing control and restructuring the enterprise. (d) Project results show that offshore fishing in the project area is unlikely to be profitable. Tnshore fishery has demonstrated potential but a number of issues need to be resolved, such as the technology for transporting fish and catching high value species, the involvement of the private sector and the transformation of NECFISH into a commercial enterprise. When the Bank resumes lending in Somalia, these issues should be looked into carefuDly in our future involvement in this sector.  ~~~~~~~~~~~-- - 9 - PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE It Due to civil unrest in Somalia, Parts I and Im cannot be sent to the Borrower for comment.  - 10- PART III: STATISIICAL INFORMATION Table 1. Related World Bank Loans and Credits There were no related Bank Loans or Credits to the subsector. Table 2 Project Timetable Item Date Planned RevisedDate j Actual Date Identification April 1981 April 1981 Preparation June 1982 June 1982 Appraisal Mission February 1983 - February 1983 Credit Negotiations Credit Negotiations n/a - Board Approval May 1984 May 1984 Credit Signature June 1984 June 1984 Credit Effectiveness October 1984 October 1984 Credit Closing December 1987 April 1990 April 1990 Comment The official credit closing date was extended three times by 2-1/4 years to April 30, 1990 in order to complete civil and installation works for shore facilities, to allow for completion of the inshore exploratory program, and to transform NECPISH into a commercially self- sustaining enterprise, or to find a suitable joint venture partner. However, the credit account could not be formally closed due to the civil war in the country.  -~~~~~~~~~ 11 Table 3. Cumuative Estimated and Actual Credit Disbuuement (USS miiWon equivaent) Appraisal Egimate Actual Actual as % Fiscal Year Annual Cumulative Annual Cumulative of Appraisa Est. 1984 0.6 0.6 0.0 0.0 0.0 1985 3.9 4.5 2.0 2.0 44.4 1986 5.8 10.3 4.3 6.3 61.2 1987 3.0 13.3 4.8 11.1 83.5 1988 0.2 13.5 2.1 13.2 97.8 1989 1.2 11.4 1990 0.6 15.0 1991 0.1 15.1 111.9  - 12 - Table 4. Project Costs and Fmancing A. Project Costs (USS million equwvacnt) Appraisal Estimate Revised Estimate Actual Local Foreign Local Foreign Local Foreign Project Component Costs Costs Total Costs Costs Total Costs Costs Total Inshore Fisheries 0.9 4.5 5.4 1.6 7.9 9.5 1.8 8.9 10.7 Offshore Fisheries 0.1 5.7 5.8 0.1 4.9 5.0 0.1 4.5 4.6 Enterprise 0.2 0.5 0.7 0.2 0.5 0.7 0.2 0.4 0.6 Technical Assistance and Training 0.5 4.3 4.8 0.6 5.6 6.2 0.7 5.8 6.5 Base Costs 1.7 15.0 16.7 2.2 19.2 21.4 2.3 20.1 22.4 Physical Contingt.-scies 0.1 0.4 0.5 Price Contingencies 0.2 1.6 1.8 Total 2.0 17.0 19.0 2.2 19.2 21.4 2.3 20.1 22.4  - 13 - B. Puqject FYancinZ Om qt) Planned Revised Final IlDA Vessels and Operating Costs 2.6 2.4 Charter of Purse Seiners 4.0 3.7 Fishing Gear, Vehicles and Office Equipment 0.4 1.1 Technical Assistance 4.3 5.6 Other Materials, Equipment and Services 0.7 1.8 Refund of PPF 0.5 0.5 Unallocated 1.0 Total 13.5 13.5 15.1 Arab Fund 3.5 0 0 DANIDA 0.0 5.8 a/ 6.4 Government 2.0 2.1 0.9 /b Total 19.0 21.4 22.4 a/ Equivalent to DKr 45 million. b/ The difference from appraisal estimate is due mainly to Ete drastic depreciation of the Somali Shilling aginst the U.S. dollar.  - 14- Table . Project ImDlementation Appraisal Estimate Actual Charter of purse seine vessels 2 2 Provision of Motorized Fishing Boats 28 14 Fish Processing Facilities Main Plant 1 1 Substations 2 2 Fish Transport System Collector Vessel 1 2 Transshipment Vessels 1 1 Technical Assistance 37 n.a. /1 (staff years) /1 Consultant team for the offshore component was employed from 8/85 to 12/87. The inshore consultant team consisting of about 6 persons worked from 1986 to the end of the project.  - 1S - Table 6. foc Real Summarv of Activities and Results of Offshore Project Aug 85 - JulB6 Au86 - Ma 87 Total No. of cruises 22 18 40 No. of sea days (2 vessels) 410 378 788 TOTAL CATCH 393.8t CATCH COMPOSITION(Overall) Tuna yellowfin 19.3 skipjack 9.2 longtail 6.1 Rays 8.8 Shark 8.3 CATCH RATE-S FISHING GEAR EFFORT CATCH RATE CATCH COMPOSITION, Purse Seining for Yellowfin 3,4 sets 2.9t/set (70% YF Tuna) Purse Seining for Skipjack 19 sets 1.8e/set (98% Skipjack) Purse Seining for Sardines 6 sets 2.6t/set (92% Sardine) Demersal Trawling 127 hrs towed 322kg/hour (diverse) Demersal/Pelagic Trawling 131 hrs towed 421.5kg/hour(24% Snapper Grouper 14% Sm.Pelagic) Pelagic Longline 5,379 hook sets 96kg/100 hooks (43% Tuna 48% Shark) Pelagic Gillnets 52,400 m set 112.6kg/lOOm set (14% Tuna 46% Shark) Demersal Gillnets 99,336 m set 18.8kg/lOOm set (35% Shark and Rays,27% Snapper, Grouper 18% Jacks) Handlines 3,247 line hrs 3.6kg/line/hr (84% Snapper Grouper, Emporer 14% Jacks) Droplines 12,293 Hooklines 19.1kg/100 hks (80t prime) Lobster traps 423 traps set 30.3kg/100 traps (6% lobster 7% shrimp, 68% crabs)  B inshore Fishini Operations Summazy Ot Shorewbased Facilities in the Project Area, 1989 Location Capacity of Main Facilities Bossaso Blast freezers: 2 X 2.5 tons per 4 hours Cold store: 2 X 100 tons Chill store: 1 X 30 tons Ice maker and store: 2 X 10 tons per day Habo Blast freezer: 2.3 tons per 8 hours Ice maker and store: 2 X 5 tons per day Cold/chill store: 3 X 7-8 tons Bereda Blast freezer: 2.3 tons per 8 hours Ice maker and store: 2.5 tons per day Cold store: 2 X 7-8 tons Note: All plants are also equipped with generators and water supply systems The final feasibility study estikaates the inshore component to have a negative financial rate of return. Cumulative losses for the period 1984/85 - 2004/5 would total $18.3 million. No financial rate of return was calculated at appraisal. C Studies Studies Status Impact Corporate Feasibility Study Completed under PPF Resulted in a proposal to develop Somalia's fisheries through private sector joint ventures. An IFC/IDA review concluded that such a project would not be attractive to commercial investment, thus leading to an IDA proposal for a pilot project. Fmal Feasibility Study Completed Summarized results of the fishing trials and proposed options for future development  -17 - Table 7. Status of Covens Covenant Subjet Statu Comments A. Credit Agreement 1. Section 3.01 (a) Support to Necflsh Partial compliance. Sufficient counterpart funds not always provided. Delays in awarding tax free import licene. B. Project Agreement 1. Section 2.01 (a) See A.1 above See A.1 above Se Al above 2. Section 2.01 (2) Borrower to report Partial compliance. Consuitants retained regularly to IDA and by Barnower supply Completion produced reports Report within six regularly. PCR was months after loan not provided. closing. 3. Section 4.02 Audit of accounts Partial compliance. Audit completed and financial only up to 12/31/88. statements. Audit of 1989 accounts was due to commence in August 1990 but was not undertaken because annual accounts were not available. Chances of receiving final accounts not good.  - 18- Table 8- A. Staff Inputs Stage of Project Cycle StaffWeeks Through Appraisal 122.1 Appraisal Through 77.5 Effectiveness Supervision 59.5 Total 259.1 B - Mssions Stage of ProJect Month/Year Number of Days In Field Speciaiizatlons Performance Types Of Persons Represented 1/ Rating Status Problems ee .2 3/ Identification 4181 by FAO 4 28 E,CE,FS,FS ID/Preparation 9/81 1 4 FA ID/Preparation 3/82 2 10 FA,FS ID/Preparation 7/82 1 4 iA Appraisa 2/83 5 30 FA, 3FS, EN Pre-riggotiations 10/83 2 5 FA,L Supervislon 1 11/84 1 5 FA I SPN 2 2/85 1 5 FA 1 SPN 3 11/85 2 11 FAFS 2 F SPN 4 10/86 2 12 E,FS 2 F,T SPN 3 9/87 3 11 A,E,FS 2 F,T SPN 6 4/88 1 3 A n.a. F,M 12S88 2 6 AFS 2 F,M 1/ A = Agriculturist; CE = Civil Engineer; EN = Engineer, E = Economist; FA Financala Analyst; FS - Fisheri3s Specialist; L = Legal Specialist 2/ 1 = Problem free or minor problems 2 = Moderate problems 3 = Major problems 31 F = Financial; T = Technical; M = Management  IBRD 17264 ;g. Z 'UNE 191 r .~/DJIBOUTI <