Senegal - Eastern Senegal Rural Development Project

Document of The World Bank FOR OMCIAL USE ONLY Rqewt Now 12546 PROJECT COMPLETION REWORT SENEGAL EASTERN RURAL DEVELOPPMET PROLJECT (CREDIT 1406-SE) NOVEMBER 24, 1993 Mi T CROGSRAPHI C3 Report No: 12546 Iype: PCR Agriculture Operations Division Sahel Department Africa Regional Office This document has a restricted distribution and may be used bY recipients only in the performance of their official duties. Its contents mav not otherwse be disclosed without World Bank authorization.  AlBREVIATIONS ABP Association de Base de Producteurs (Pre-Cooperative Mutual Guarmtee Village Group) AFVP Association FranVaise des Volontaires du Progrts (French Non-Governmental Organization) CBPP Contagious Bovine Pleuro-Pneumonia (Perie-pneumonie contagieuse bovine) CCCE Caisse Centrale de Coopdration Economique (Freiich Development Aid Agency) CFDT Compagnie Frangaise pour le Developpement des Fibres Textiles (French Company for Textile Fiber Development) CPSP Caisse de P4requation et de Stabilisation des Prix (Price Stabilization Fund) DSPA Direction de la Sante et des Productions Animales (Livestock Department) ERR Economic Rate of Return FAC Fonds d'Aide et de Coope:ation (French Aid/Cooperation Fund) FAO/CP United Nations Food and Agricultural Organization/World Bank Cooperative Program (Programme de Cooperation FAO/Banque Mondiale) ISRA Institut SWndgalais de Recherches Agricoles (Senegalese Agricultural Research Institute) PDESO Projet de Dveloppement de l'Elevage au Senegal Oriental (Eastern Senegal Livestock Development Project) PDRSO Projet de Developpement Rural au S&engal Oriental (Eastern Senegal Rural Development Project) SAL Structral Adjustment Loan. SODEFITEX Societ6 pour le Developpement des Fibres Textiles (Cotton Development Agency) SODEVA Societe de Developpement et de Vulgarisation Agricole (Agricultural Extension and Development Agency) FISCAL YEAR Government: July I - June 30 SODEFITEX: October I - September 30  OMCIAL US OLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Off,t of DlEr.toe-Gel November 24, 1993 Op. Wona Evaluaftio MMQORANDUM TO THE D RRECTORS ANM THE PI_DENT SUBJECD: Project Completion Report on Senegal Eastern Rural Develonment Proiect (Credit 1406-SE! Attached is the Project Completion Report on Senegal - Eastern Rural Development Project (Credit 1406SE) prepared by the Africa Regional Office. Part I was prepared by the Borrower. The project was cofinanced by CCCE and FAC (of Franc) and the Saudi Fund for Development who did not provide comment. The project aimed to reduce the region's dependence on groundauts by increasing the production of cotton and cerealL Secondary objectives were to privatize agricultural sevices (through farmers' groups), improve rural infrasct and health services, and to strengthen the cotton development agency (SODEFrIE. Physical implementation and results were impresse with respect to extension services, formation of farmers' groups and service privatization, agricultural research, agricultural credit (including recoveries), improved cotton ginning and storage facilities, feeder roads (although maintenance problems remain), vilage water supplies and primary health centers SODEFiEX'; capabilities were improved. Monitonng and evaluation activities were satisfactory. Accordingly, the Region as well as the Borrower consider the project a success. While Bank and Borrower performance were satisfactory, exogenous factors damaged project outcomes. Cotton production suffered severe shocks: adverse weather was followed in 1985 by world cotton prices collapsing and by decreased input subsiies in 1986. Cotton production feU by a third and never fully recovered, although maize production exceeded appraisal targets. Accodgly, the economic rate of return of the project is negati Despite significant innovations with respect to farming systems, rural infrastructure, and farmers' organiza- tions, the outcome of the project is rated as marginally unsatisfactory with unliely sustainability and partial achievement of institutional development objectves. tree problems remain the poor financial state of SODEFITEXK, the lack of road maintenance and the continuing need for a viable diversification strategy. The PCR is of good quality despite some presentational deficiencies mainly on project costs tables. An audit is underway. Attachment This docu_met ha a restrted distbudon and may be used by redpients ordy In the peformance of theiroff duties. kt contents may not otherwse be disclosed wiu Wold Bank authoretion.  FOR OFFICIAL USE ONLY (CREDIT 140-) Table gt Contents PREFACE ................. I EVALUATIONSUMMARY ..................... PART I - PROJECT REVIEW FROM BANrS PERSPEcTnvE . 1 A. Project Identiy ............, . I B. Project Background .I C. Project Objectves and Description. 2 D. Project Design and Organizadon. 3 E. Project Prepaaon and Implement. ..on 4 F. PojectResults ........... S G. ProjectSutainabiity. 8 H. Bank Performance .8 . Borrower Peformance. 8 L. Lessons Learned. 9 PART H - PROJECT REVIEW FROM THE BORROWERS PERSPECTVE .10 A. BankPerformance .10 B. Project Iplementaion .10 C. Performance of CofinancigPa^s ......................... 16 PART m - STATISTICAL INFORMATION ............................. 17 1. Related BankLoausand/orCredi . ..17 2. Project rTiuble ..17 3. Credit Disbursements .18 4. Project Implementtion... 19 A. Cotton Production ................................ 19 B. Maie Production.19 C. Feeder Road Consucton .20 D. Vilbge War Supply .............................. 20 5. Projec Costs and Fiacing ..21 A. Projec Costs .21 B. Project FDancing.21 6. Proje Results ..22 A. Project Benecari.22 B. Economic Impa . 22 C. Fnanci Impact. .23 7. StatusofCovenan . ..24 8. UseofBank Resources ..29 A. Staff Inputs .29 B. Missions .29 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ' - PROJECT COMPLETION REPOQRT SENEGAL EASTERN RURbL DEVELOPMENT PROJECT (CREDIT I4f6SE} PREFACE This is the Project Completion Report (PCR) for the Eastern Senegal Rural Development Project in Senegal, for which Credit 1406-SE in the amount SDR 14.9 million was approved on August 2, 1983. The Development Credit became effective on October 5, 1984. The Credit was closed on June 30, 1991, two years later than envisaged and was fu;, disbursed. The Project was cofinanced by the Saudi Fund for Development, the French Ministry of Cooperation, and the Caisse FranVaIse de dveoppement (former CCCE). The PCR was prepared by the Agricultural Operations Division, Sahel Department, Africa Region. The Borrower provided Part II of the report. The draft PCR was sent to the cofinanciers for comments, but no comments were received. The PCR is based, inter alia, on the Staff Appraisal Report, the President's Report, the Credit Agreement, supervision, Borrower, and Cofinanciers' reports, and correspondence contained in the Bank's project files.  - iii - PXW CI CMPETIO REPORT BSISR RURA IEVELD PROJECT --CREI) T I4 E) gYALUAnON SUMMA6Y V Tbe Project was itended to assist farmers outside the densely populated groundu basin and at the same time to diversify Senegal's agriculture-dependent economy from groundnts into cotton. Specific objectives were, over a five-year period, to: (a) increase production of cotton and cereals - maiwy sorghum/millet and mize; (b) develop livestock actvities through the promotion of animal traction, improvement of animal health and improvement of feed quality; (c) improve essential rural infrastructure, especially feeder roads, village water supplies, and primary health care; (d) assist village farmer groups; and (e) strengthen the project executing agencies. jectLDesiegn ii) Except for the Northern Livestock subcompotent, the Project was to be implemented by SODEFITEX, a Senegalese parastatal responsible for the country's cotton sector. As executing agency, SODEFITEX wa-s responsible fo, the country's 'fture coton", a comprehensive cotton development program spanning all aspects, from research - in cooperation with the national agricultural research agency - to extension, agricultural credit, markedng Qocal and foreign), and processing. Ihe project's livestock-related activities were to be implemented by PDESO, a government unit created under the Eastern Senegal Livestock Development Project (Cr. 633-SE). iii) Major project components included (a) strengtheningof SODEFITEX management capacity; (b) support to SODEFITEX and farmers in the development/improvement of cotton and cereal production; (c) improving SODEFITEX cotton processing and storage facilities; (d) assistance to farmer village associations (ABPs); (e) upgrading and/or construction of about 800 km of feeder roads; (t) construction of village tubewells and open wells; (g) renovation of village health posts; (b) stengthenng of applied research with special emphasis to establish closer links between research and extension; and (i) assistance to livestock development in the project area and consolidation of achievements of the First Livestock Project (para ii). Implementation Experience iv) The Project was identified by the French agency, CCCE, and prepared by a consulting firm. Appraisal took place in May/June 1982. Following Board approval on August 2, 1983, Credit effectiveness was delayed by almost a year, due to lengthier-than-expected legal preparations in Senegal (changes in the legal status of producer groups) and the inordinate time required for the signing of cofinancier agreements.  iv - v) Once the Credit became effective, project investments progressed as envisaged. Cotton development was negatively influenced by the sharp decline of world cotton prices. This had serious repercussions for the finances of SODEFITEX, and -the problem remained unresolved until project completion. These difficulties were further exacerbated by poor rainfall in some project years, which led farmers to reduce acreage under cotton. Project achievements were closely monitored through Bank and CCCE supervision efforts. The Bank-supported Monitoring and Evaluation Unit provided valuable insights into production costs, farm budgets, etc. Project accounts were kept up to date and audited regularly. Procurement of project-financed goods and services was in accordance with the Bank's procurement guidelines. Projec Execution vi) Implementation of most Project components went well once the Credit became effective. Implementation experience for the various components can be summarized as follows: a) Extension Services: over the project implementation period, there was considerable improvement in the quality of extension personnel, which became largely competent to extend advice in agroforestry, livestock and natural resource mnagement. Most beneficial was the extension work in connection with assisting the establishment and operation of furmer village associations (ABPs). The number of ABPs increased in the project area from 160 in 1984185 to 492 by 1990191. The increasing role played by ABPs relieved the Government of responsibilities for marketing, storage, and credit management. b) lip purcbases were below expectations due to the difficuties encountered by the cotton sector (para. vii). Fertilizer and pesticide sales were lower than projected during appraisal, as was the sale of agricultural equipment, with the exception of ox-arts. c) Agriculturl credit in the amount of CFAF 1,071 million was made available to farmers. Due to the involvement of ABPs and introduction of legal action against defaulters, repayment rates increased from 78% in 1984 to 95% in 1990. d)The Ij1Wogk component performed well. The vaccination campaign against Rinderpest and bovine peripneumonia was successful. While supplementary feeding of draft animals was also successful, silage production and supplementary feeding of salts and minerals were relatively unsuccessfil. e) EeWer road construction exceeded the appraisal estimates (para. iii). However, the issue of periodic heavy road maintenance, which was to be performed by the Government's Public Works Services, was not resolved prior to project completion due to Government reluctance attributable to a lack of recurrent budget fiuds. f) Villag water supplies construcd or improved under the Project far exceeded appraisal projections. A total of 134 facilities (as against 60 foreseen at appraisal) were provided under the Project. g) Support to SODEFITEX was provided in the form of construction of two seed cotton silos, storage sheds for bales, office and housing facilities, etc. Equipment for existing  cotton ginneries was procured under the Project, which also financed the installation of fire ,ontrol equipment. h) The alth M permitted the improvement of 31 health posts and the establishment of five pharmaceutical depots. i) Under the Notern subcomponent, actions introduced under the IDA-financed First Livestock Project (creation of herders' associations, literacy training, range managent) were continued and expanded to include land and water conservation. vii) Cotton production fell substantially short of appraisal projections because farmers found groundnut cultivation more remunerative due to the relatively high groundaut producer prices set by the Government and the low return to labor on cotton. Ihe problem worsened with the reduction of cotton input subsidies in 1986. As a resut, cotton acreage declined and never reached pre-project levels during Implementation: total seed cotton production declined from 46,900 t in 1984 to 29,300 t in 1990 before rebounding however to 44,900 t in 1991. viii) Millet/sorghum production also fell short of expectations. Estimates had put the acreage under these two crops at 31,040 ha and per hectare yields at 1,100 kg for the year 1989/90, but only 27,186ha (88 % of estimated acreage) and 1,000kg/ha (91 % of appraisal estimate) were accomplished. ix) Only maize production exceeded expectations. The 1989/90 maize acreage was 14,237 ha, surpassing the estimated area of 13,000 ha, and yields of 2,250 kg/ha were above appraisal estimates (2,106 kg/ha). The return per labor day explains the success of maize under the Project. With yields of 2,500 kg/ha attained by Project farmers, returns per day worked were more than three times the reurns on cotton. x) The Economic Rate of Return (ERR) of the Project is negative due to the disappointing trends in international cotton prices, the resulting loss of farmers' interest in cotton cultivation, as well as the occurrence of poor weather during several years of project implementation. Cotton acreage and total output remained below pre-project levels, whereas sorghum/millet production remained more or less stagnant. As noted, maize production increased but, due to the relatively modest importance of this crop, this increase does not render the ERR positive. xi) Although the ERR was negative, the Project should not be qualified as a failure. Maize production increased considerably, the construction and rehabilitation of village wells far exceeded projections, and the creation of self-managed farmer/herder associations was highly successful. TIe livestock/agriculture integration exceeded its objectives through the high adoption rate of on-farm manure production and collection, and nural road construction has helped to open up a vast area previously inaccessible to any vehicle. xii) The literacy training campaign was a notable success and has contributed to rural development in the area. Some farmers within each village are now able to assume responsibility for group action, and extension is thereby facilitated. SODEF1TEX intends to develop a one-year (instead of two-year) program to further reduce-the-drop-out rate.  - vi ^ xiii) As long as world cotton prices remain at their current low levels, cotton development projects face serious thas in all Sahelia countries. Given its present economic situation and slim recurret budget resources, Senegal (like most countries of the Sahel) is not In a position to ensure maintenne of project-financed infrastructures. Additional donor assistance is likely to be needed to ensure maintece of project investments, especially feeder roads. Comm.as on Borrgwer's Views xiv) Ihe Borrower's views and assessment of project results Pat II of this report) is thorough and generally in agreement with Bank staff findings. The Borrower concludes its project review by stating that the Project "must be considered a success both as regards the quality of activities and the results achieved in overall development (iteracy, famers' associations, management training, livestock/agriculture integration, water supply and agricultural infrastructure, and extension technology)". There is no doubt that, in these respects, the Project has been successful. However, given the collapse of wodd cotton prices, combined with Senegal's very difficult economic situation, the Project did not achieve its main objectives, and the sustainability of project-financed investments is far from assured. The Borrower deplores the fact that Bank supervision in later project years focussed on the Project's financW aspects, leavig the supervision of more technical aspects exclusively to CCCE, and that the Bank therefore did not fully appreciate the Project impact on rural development in Eastern Senegal. That statement is correct insofar as Bank supervision missions in the later project years did indeed concentrate on the Project's financial aspects; it does not imply that the Bank was uninterested in any other aspects. It was felt that CCCE was in a better position to perform technical supervision because of the permanent presence of CCCE staff in Senegal and their excellent qualifications. The Bank was regularly informed by the CCCE, however, of Project progress and results. Closer technical supervision by the Bank would have had little impact on implemention. Ies ons Learned xv) First, ERRs should not be considered the only measurement of project success or failure. Despite the overall negative ERR based solely on the project's cotton results, a substantial number of project components were a -cess: (a) a substandal increase in maize production; (b) livestock/agriculture integration; (c) the creation of self-managed farmer/herder associations and literacy training; (d) village water supply; (e) primary health infrastructure; and (t) rural road construction. xvi) Second, probable farmer attitudes regarding favored farming/crop rotation systems should have been evaluated closely dunng Project preparation/appraisal. Maize production was successful becase of the bigh reurn per labor day input. While there are good prospects for developing this crop furither in the Project area, expanded production would require efforts towards improved research, extension, and markletig. Farmers favored groundnuts over cotton production. Although returns from cotton per hectare would have been slightly above per hectare returns from groundnuts, farmers' calculations seemed to center on returns per labor day input. Considering that land and family labor are available, this development should not come as a surprise. xvii) Third, integration of livestock into agricultwal activities can lead to important synergies and progress. The Project demonstrated the wisdom of on-farm organic manure production and the  - vii - consequent beneficial effect of this manure on crop yields.. It also showed the need to include soil conservation and soil fertility improvment measures in crop development projects. xviii) Fourth, establishment and support of farmer groups (ABPs, in the case of this Project) demonstated that several functions usually performed by the Governent, such as Input procurement, credit admisation, extension fnctons, marketing, maintenanei of village water supplies, etc., can be successfully transferred to these farmer groups. In order to operate successfully, however, these groups must have some literate members. xix) The Project-supported liteacy campaign was highly successful, and indications are that the smooth functioning of farmer groups increases with the number of literate membes The main factors explahing the success of the Project in this difficult area seem to be: (a) fatuiers' strong desire to be equipped to deal with the outside world; (b) the fact that farmers must invest time and money in their literacy training; (c) the competence and motivation of the extension agents who perforn the literacy training; and (d) the fact that producer groups that have enough literate people are encouraged by SODEFITEX to take on economic activities for which they are remunerated. Similar groups are coming into being in many parts of Senegal as part of the Goveroment's policy to encourage the emergence of producer groups.  PART I RLmi (Grr 1406 sD PART ,1A PROJECT FRMOR l M I