Sierra Leone - Second Integrated Agricultural Development Project (Vol. 1 of 2) : The main report

CIRCULATING COPY Report No. 644a-SL ID BE RETURNED TO REPORTS DESK Appraisal of Integrated Agricultural Development Project 11 RETURN TOI Sierra Leone PIEPORTS m--Z-. Volume 1: The Main Report WITI 'N | April 8, 1975 ON E VW ' Western Africa =0 COP0fakY Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS Currency Unit - Sierra Leone Leone Le 1 = US$1.20 US$1 = Le 0.833 WEIGHTS AND NEASURES 1 acre (ac) = 0.405 hectare (ha) 1 mile = 1.61 kilometer (km) 1 sq. mile = 640 acres = 259 ha 1 ton = 2,240 pounds (lb) 1 hundredweight (cwt) = 112 lb = 51.02 kg 1 bushel husk rice = 60 lb ABBREVIATIONS ARI Agricultural Research Institute EAP Eastern Area Project EAPMU Eastern Area Project Management Unit FFC Farmer Finance Conpany LBA Licenced Buying Agent MANR Ministry of Agriculture and Natural Resources NAP Northern Area Project NAPMU Northern Area Project Management Unit NDB National Development Bank PAC Project Advisory Committee PESU Project Evaluation and Services Unit SLG Sierra Leone Government SLPMB Sierra Leone Produce Marketing Board SLPMC Sierra Leone Produce Marketing Company FISCAL YEAR July 1 - June 30  SIERRA LEONE APPRAISAL OF INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT II TABLE OF CONTENTS Volume 1 Page no. Summary and Conclusions ................................... i - iii I. Introduction ....................................... 1 II. Background ........................................... 2 A. General ....,...................................... 2 B. Agricultural Sector . . 2 C. Institutions ..................................... 3 III. Project Area ......................................... 4 IV. The Project .......................................... 6 A. General .......... .......... 6 - Northern Area Project ......................... 7 - Eastern Area Project .......................... 8 - Central Support Services ................9 B. Detailed Features ...... .......................... 9 - Civil Works .............................. 9 - Farm and Crop Development .......... ........... 10 - Investigations and Research ................. .. 11 - Central Support Services .......... ............ 12 V. Cost Estimates and Financial Arrangements ..... ....... 12 A. Project Costs .................................... 12 B. Proposed Financing ............................... 14 C. Procurement ...................................... 15 D. Disbursement ..................................... 16 E. Budgetary Control, Funding Procedures, Accounts and Audit ............................. 17 VI. Organization and Management ..... ..................... 18 A. Organization .................. ................... 18 B. Staffing and Consultants .......... .. ............. 20 C. Staff and Farmer Training ........... ............. 21 D. Farm Inputs, Procurement, Distribution, and Credit Procedures ............... .. ............. 21 This report is based on the findings of an appraisal mission composed of Messrs. Grimshaw and Arben (Bank) and Calkin, Fleming, Reader, and Tagoe (Consultants) which visited Sierra Leone in June 1974.  Table of Contents (continued) Page no. VII. Production, Markets, Farmers' Benefits, and Financial Implication to Government ................ ... 24 A. Production ........................................ 24 B. Markets and Prices ................................ 25 C. Farmer Benefits .......... ......................... 27 D. Financial Implication to Government ............... 29 VIII. Economic Benefits and Justification ..... ............. 29 IX. Agreements reached with the Borrower .* ................ 31 Annexes 1. Administration and Institutions 2. Marketing, Markets, and Prices 3. Organization and Staffing 4. Costs of Central Support Services 5. Summaries of Project Costs and Financial Details 6. Economic Benefits and Costs Analysis Maps 1. Location of Project Areas 2. Eastern Area Project 3. Northern Area Project  SUPPLEMENTARY VOLUMES Volume 2 Northern Area Project Annexes 1. Project Area 2. Farm and Crop Development 3. Civil Works 4. Marketing and Farm Inputs 5. Northern Area Project Costs Volume 3 Eastern Area Project Annex 1 Performance of Ongoing Integrated Agricultural Development Project Annex 2 Project Area Annex 3 Farm and Crop Development Annex 4 Marketing and Farm Inputs Annex 5 Project Costs   SIERRA LEONE APPRAISAL OF INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT II SUMMARY AND CONCLUSIONS (i) The Republic of Sierra Leone (SLG) has requested Bank assistance to finance an agricultural development project in the Northern Province of Sierra Leone and to extend the development of the ongoing integrated Agri- cultural Development Project in the Eastern Province financed under IDA Credit 323SL of June 30, 1972. The project was prepared by the Sierra Leone Government with the assistance of- the Resident Mission for Western Africa and consultants financed under the first credit. This report is based on the findings of an appraisal mission that visited Sierra Leone in June 1974. (ii) Under the present economic circumstances of the declining, formerly dominant, diamond mining industry it is becoming increasingly important for Sierra Leone to expand its export crops, to reduce food imports, and to in- crease rural incomes. Farmers in the north have a per capita income of only US$30 per annum, compared with US$60 in the east, and the average per capita income for the country is about US$160. The difference between the East and the North reflects mainly better soils and climatic conditions, lower popula- tion density and the predominance of export earning tree crops in the East. (iii) To correct this imbalance, Government is placing greater emphasis' on development in the north even though economic returns are substantially lower than in the southern and eastern areas. The ongoing Integrated Agri- cultural Development Project in the east has prover thnat under good manage- ment and with adequate services and inputs farmers respond well. The success of the project has encouraged Government to look for similar developments elsewhere; at the same time SLG appreciates the need for continued develop- ment in the higher potential eastern and southern areas. (iv) The project covers two separate areas referred to as the Eastern Area Project (EAP), which is identical to the ongoing Integrated Agricul- tural Development Project area, and the Northern Area Project (NAP). EAP comprises 4,300 sq. miles, 65,000 farm families and is divided into 32 chiefdom administrative divisions. Some 6,000 EAP farmers would be directly affected by the project. NAP comprises 1,300 sq. miles, 14,000 farm families and 8 chiefdoms; 8,000 NAP farmers would be affected by the project. In each area farm sizes are small, less than 6 acres, and NAP has limited areas of inland swamp (6,000 acres utilizable), compared to unlimited swamp areas in EAP (estimated at more than 60,000 acres). (v) The project would provide physical infrastructure, support services and farm inputs to ensure for the future a sound agricultural and development base. For NAP it would construct 20 miles and improve 280 miles of crop extraction roads, 200 village wells, 5 market centers, a farmer training  - ii - center, staff houses, stores and offices; it would provide extension and other farmer services, including a project established seed multiplication farm, vehicles and equipment, and improved production, through short- and medium-term loans, of 6,000 acres of inland swamp rice, 25,000 acres of upland rice and 10,000 acres of groundnuts; it would investigate the potential of livestock development in the Northern Province; and would research into methods of increasing wood fuel for future expansion of tobacco production. For EAP the project would construct 12 market centers, additional staff houses, stores, and offices; in conjunction with improved farmer services it would provide short-, medium- and long-term credit to increase the production of 1,800 acres of inland swamp rice and 36,000 acres of upland rice; would develop 4,200 acres of inland swamp for rice production; and establish 1,000 acres of cocoa and 1,600 acres of small holder oil palm; it would establish a farmer finance company to assume the existing activities of the revolving credit fund. For EAP and NAP production increases would be brought about by using improved seeds, fertilizers and pesticides. (vi) The project would provide support to central Government institu- tions, including establishing and staffing a Project Evaluation and Services Unit (PESU) in the Ministry of Agriculture and Natural Resources (MANR) to provide operational and financial support for NAP and EAP; and would stren- gthen MANR's planning capacity by hiring specialist consultants. (vii) The existing EAP management unit (EAPMU) would be expanded, and a new project management unit (NAPMU) would be established for NAP. Both units would be responsible to the Permanent Secretary of MANR. (viii) The proposed IDA credit of US$5 million and a Bank loan of US$5.0 million, repayable at 8-1/2% over 25 years including a five year grace period for principal, during which interest and commitment charges would be paid, would be made to the Republic of Sierra Leone. The loan/credit of US$10.0 million would be 73% of total project costs, estimated at US$13.7 million, and would cover all the foreign exchange costs estimated at US$6.0 million and 52% of local costs estimated at US$4.0 million. Of the US$10.0 million, US$1.0 million would be for support services to centralized Government in- stitutions; US$2.3 million for EAP, US$4.3 million for NAP; and the remainder US$2.4 million would be for contingencies. SLG would finance 26% of the project costs amounting to US$2.9 million and the remaining 1%, US$0.2 million, would be contributed by participating farmers in the form of cash payments for seasonal inputs. (ix) Procurement of vehicles, plant, equipment, fertilizers, pesticides and tools for contracts with a value of more than Le 20,000 (US$24,000) would be through international competitive bidding (ICB), and would have an estimated value of US$1.7 million. A maximum limit of US$200,000 would be set for those items purchased through contracts of less than US$24,000. Contracts for the construction of buildings, houses, and the purchase of construction materials and furnishings valued at US$1.3 million would not be suitable for ICB, due to their dispersed location and small size of individual contracts and orders;  - iii - for these items contracts would be awarded on the basis of competitive bidding advertised locally and in accordance with local procedures satisfactory to the Bank; in the latter case, foreign firms and suppliers would not be precluded from bidding. Road construction and improvement would be undertaken on force account due to the shortage of suitable contractors. Wells would be con- structed by villagers using project supplied materials. The estimated cost for road and water development is US$1.3 million. A large part of project costs, US$7.6 million, would be for labor, staff salaries and allowances, hiring of consultants, vehicle and maintenance operations, farm planting materials and general services, and would be unsuitable for competitive bid- ding. The remaining US$3.1 million would be for physical and price contin- gencies. Internationally recruited staff and consultants would be employed under terms and conditions acceptable to the Bank. (x) Proceeds of the Bank Loan and IDA Credit would be disbursed to cover: (a) 100% of the CIF cost of directly imported vehicles, heavy plant and equip- ment or 87% of the costs if procured locally - US$0.9 million; (b) 100% of the CIF cost of directly imported fertilizers - US$0.5 million; (c) 100% of the costs of internationally recruited staff and consultants - US$1.3 million; (d) 70% of the total cost of buildings, houses, furnishings, construction materials for roads and wells, local staff, support services, and vehicle and plant operation - US$3.8 million; (e) 70% of farm inputs other than fertili- zers, including pesticides, fungicides, herbicides, tools, hired labor, spray- ing machines - US$1.0 million; and (f) an unallocated amount totalling US$2.4 million. Disbursements would be made against import documentation, contracts and certified records of expenditure. (xi) 14,000 farmers would directly beneAit from the project. The annual incremental production at full development, inclusive of the initial phase of EAP would be 10,500 tons of white rice, 3,200 tons of palm oil, 550 tons of cocoa and 1,100 tons of groundnuts. The project would indirectly benefit a further 65,000 farmers through provision of better communications, water supplies and markets. Intangible benefits include the improved health of the population through better water supplies, improved trading and social services due to better communications, the strengthening of Government institutions, improved evaluation and planning of existing and future projects, and the commercial reorientation of credit and farm supplies. The internal economic rate of return is estimated for NAP at 14%, for EAP 36% and for the overall project 26%. The net per capita income of directly affected persons would rise in EAP from US$60 to US$100 and for NAP from US$30 to US$40. The per capita incomes of participants increase by about 6% and 11% per annum for NAP and EAP respectively over the full development period. (xii) On the basis of the assurances and conditions set out in Chapter IX, the project is suitable for an IDA credit of US$5 million and a Bank loan of US$5.0 million.   I. INTRODUCTION 1.01 This report appraises an application made to the Bank Group by the Government of the Republic of Sierra Leone (SLG) to assist in financing a new project in the Northern Province and an extension of an ongoing project in the Eastern and Southern Provinces of Sierra Leone that is financed under Credit 323-SL. The projects would benefit farm families whose incomes are about US$30 per capita in the North and US$60 in the East. A total of some 14,000 farm families would directly participate and some 65,000 additional farm families would receive indirect benefits from the projects. 1.02 The feasibility study for the Northern Area Project (NAP) was financed partly under Credit 323-SL and was prepared by SLG with the assistance of United Kingdom technical assistance, consultants, and the Bank's Regional Mission to Western Africa (RMWA). Plans for the extension of the Eastern Area Project (EAP) were prepared by SLG on the basis of the results of the ongoing project and after discussion with various Bank supervision missions. 1.03 The ongoing Eastern Area Project, now more than half completed, has had good farmer response. The Credit was signed in June 1972, and became effective six months later. The project's primary objective was to provide farm services, credit and input supplies to about 3,000 farmers to help them develop swamp rice, cocoa and oil palm. It also provided for the construction of a modern palm oil mill; and for the execution of rice milling and marketing, forestry and northern agricultural project studies. Although slow starting the project Is Inow oil schedule and in some instances has more than achieved its targets. 3,300 acres of swamp rice have been developed (110% of appraisal estimate), 475 acres of cocoa (190%), 508 acres of plantation oil palm (100%) and 955 acres of smallholder oil palm (96%). All the studies except for the forestry study have been completed, and the palm oil mill is under construction. The IDA credit has been committed and it is expected that the project will be substantially completed in October 1975, six months ahead of appraisal esti- mate, and that 6,000 acres of swamp rice, 750 acres of cocoa, and 2,260 acres of oil palm will have been successfully established. 1.04 The ongoing EAP has provided a means of testing farmers' responses to new techniques; however, it was necessary because of the weaknesses of Government's agricultural services to set up EAP as a semi-enclave operation. Under the proposed extension EAP project management unit would become more closely associated with the Eastern Provinces regular agricultural services, in that the latter would fall under the administration of EAP. Thus it is expected that by 1978 when the extension to EMP would be complete a fully integrated agricultural service would be functioning to provide the majority of Eastern Province farmers with an adequate service. 1.05 The Northern Area Project (NAP) would concentrate on stimulating the production of rice and groundnuts. NAP management would have the same high level of autonomy afforded to EAP and administrative and technical procedures  would be those that have been proven in the Eastern Province. At a later stage of NAP development it would be integrated with the regular agricultural services provided by the Ministry of Agriculture and Natural Resources (MANR). II. BACKGROUND A. General 2.01 The Republic of Sierra Leone covers about 28,000 square miles and has a population of about 2.8 million. GNP in 1973 was estimated at Le373 million (US$448 million) equivalent to Le133 (US$160) per capita. The economy comprises two main sectors: a well developed, export-orientated mining sector, dominated by the diamond industry, which employs 4% of the economically active population and produces 16% of GNP and about 80% of total exports; and a poorly developed agricultural sector that provides livelihoods for 75% of the popula- tion, 32% of GNP and about 20% of total exports. B. Agricultural Sector 2.02 Sierra Leone has two distinct ecological zones. The northern half of the country has long dry seasons, and supports a system of shifting annual crop cultivation in which rice, groundnuts and sorghum are the principal crops. The southern half has a rainfall and climate suitable for the profitable cul- tivation of three crops especially cocoa, coffee, and oil palm which are Sierra Leone's main export crops, as well as for rice and other annual crops. The south has the best agricultural potential, and because most mining and indus- trial activities are located in the south, it has a rural economy that is much more cash orientated than that of the north which is basically a subsistance economy. 2.03 Rice is the staple food of Sierra Leone, and until the early 1950s the country was self-sufficient in this commodity. During the last 20 years, however, an average of some 30,000 tons of white rice have been imported annually, and in 1973/74 rice imports totalled 42,000 tons at a cost of some US$17 million. These imports reflect an average per capita consumption of 250 lb, the highest in West Africa, and the inability, so far, of Government to effectively stimulate domestic production. 2.04 Export crops accounted in 1973 for foreign exchange earnings of about US$30 million, and comprised 32,000 tons of palm kernels, 6,000 tons of cocoa beans, 12,000 tons of coffee beans, and 400 tons of ginger. Of all agricultural exports only about 16% was produced in the northern zone. 2.05 Government's major aspirations for the agricultural sector include: (a) self-sufficiency in rice; (b) increasing production of the main export crops and thus foreign exchange earnings and export tax revenues; and  (c) correcting regional income imbalances, particularly between the north and south. Incentives for rice and export crop production are now being provided through higher Government guaranteed prices for these key crops and the evidence is that farmers are responding. Longer term production objec- tives should be achieved through development projects providing effective extension, credit and input supply services to farmers. The objective of correcting regional imbalances will be more difficult to achieve primarily because the natural resources of southern Sierra Leone are superior to those of the north. Per capita incomes in the north are only half of that estimated for the south, and there is a real need to attempt to correct this imbalance, though seemingly a very difficult task. Government's main assistance to northern farmers to date has been through subsidized tractor hire services and fertilizers. Much of these have been employed in uneconomic activities and only a small number of farmers, usually the more wealthy, have benefited. The proposed northern project is designed to help improve farm incomes in the north but as shown later in this report investments in agriculture in the north cannot generate such high return as in the south. C. Institutions 2.06 Government agencies and institutions that would be concerned with the projects are described in Annex 1. The most important are the Ministry of Agriculture and Natural Resources (MANR), the Sierra Leone Produce Marketing Board (SLPMB), the Rice Corporation, and the National Development Bank (NDB). 2.07 The Ministry of Agriculture and Natural Resources (MANR) is currently reviewing its own organization and needs, especially planning, training and research, in order to better equip it to carry out Government's objectives. The improvement in agricultural research is critical if these objectives are to be achieved. It is important that a research policy is drawn up that would ensure: (a) support to existing and planned agricultural development programs, (b) coordination of the programs undertaken by the individual research in- stitutions in Sierra Leone, (c) rationalization of the terms and conditions of employment for research workers, and (d) adequate financial planning for the research program. During negotiations assurances were obtained from Govern- ment that by March 31, 1976, it would prepare, for review with the Bank, pro- posals for a research policy for Sierra Leone. 2.08 The Sierra Leone Produce Marketing Board (SL1MB), established in 1949 is responsible for marketing the country's main export crops and fixing, in conjunction with Government, cocoa, coffee and palm kernel producer prices. SLPMB is required to maintain a price stabilization fund; and since 1967 has contributed Le500,000 annually from its operating surpluses to the Government budget. SLPMB operates through Licensed Buying Agents (LBA), who are respon- sible for purchasing, grading, storing and evacuating produce to the port of shipment; and through the Sierra Leone Produce Marketing Company (SLPMC), a London subsidiary, for overseas sales. Currently SLPMB is run very conserva- tively, and reserves now stand at Le2.5 million. Unfortunately this con- servatism hrs generally meant that producer prices have been too low to -it->ulate production.  2.09 The Rice Corporation, established in 1965, imports milled rice and buys, mills, and markets domestically produced husk rice. Minimum producer prices, recently raised from Le3.20 to Le5.00 per bushel for husk rice, are maintained through a floor price system. Very little husk rice has been purchased by the Corporation in recent years because its floor price has been lower than market value. This has resulted in inadequate supplies for its three rice mills which have operated at a loss. The Corporation has become more active and in addition to a guaranteed floor price it intends to employ mobile buying teams. These would initially function in EAP and NAP areas. Full details on marketing are at Annex 2. 2.10 National Development Bank (NDB) provides development credit for industrial and agricultural purposes. NDB is closely linked to the Bank of Sierra Leone and to the commercial banks. NDB makes medium- to long-term loans and restricts its lending to -loans of between US$9,000 to US$75,000. Thus small farmers are excluded from its program. The cooperative movement is in disarray, and except for credit provided by EAP to project farmers, Government has so far been unable to provide any effective farm credit system. NDB is interested in the possibility of being involved in small- holder credit, although realizing the problems involved. Under the project a Farmer Finance Company would be established in EAP in which NDB would participate through equity (para. 6.21). III. THE PROJECT AREA 3.01 General. The Northern Area Project (NAP) centered on Makeni in the Northern Province covers 1,300 square miles and affects 14,000 farming families (172,000 people) in all. The Eastern Area Project (EAP) centered on Kenema covers 4,300 square miles and supports 65,000 farm families (400,000 people), of which initially 60,000 will be affected. Together the two project areas comprise 20% of the total land area of Sierra Leone and accomodate 20% of its population. 3.02 Northern Project Area (see Supplementary Volume 2) has a rainfall over 100 inches falling in a 6 month wet season. There are two major soil groups: the Rokel River series, of which the so called bolilands are part 1/; and the granite and acid gneisses from which the inland swamps and upland soils are derived. Up until now assured ways of developing the bolilands economically have not been evolved, consequently the project would be confined largely to the non boliland soils which now support 90% of the population. Except for isolated inselburgs, the NAP area is moderately to gently rolling. 3.03 NAP is divided into eight chiefdoms each administered by a Paramount Chief and chiefdom councillors who exert considerable influence and authority. 1/ These are low lying areas that cover 40% of the project area. The boli- lands have an inherent infertility and are subject to flooding during the rains.  -5- The main tribal groups in order of importance are the Temne, the Foulah, the Lunba and the Loko. The Foulah are the major cattle holding community in the country. 3.04 Communications are based on a north/south all weather spine road which is adequate, and numerous small but poorly maintained earth surfaced feeder roads and tracks. Most of the roads and tracks are impassable during the wet season. 3.05 Health and education facilities in the project area are at least average for Sierra Leone. The project area contains twelve dispensaries, six health centers and four hospitals. Similarly education facilities are adequate. Neither health nor education standards are considered a likely constraint to achieving project objectives. Village water supplies are in- adequate, and improvement of these supplies under the project are likely to have a significant impact on the health of the villagers. 3.06 The farming system for upland soils is one of shifting cultivation, in which 1 - 2 years cropping are followed by 5 - 10 years of bush fallow; upland rice and groundnuts are the main crops. Most of the inland valley swamps (8,000 acres) are used for rice and for other crops such as cassava leaf and groundnuts grown mainly for home consumption. The fertility of both upland soils and swamps is declining in the face of population increases, and the lack of any practical alternative to shifting cultivation. It is estimated that 24% of the population cultivates swamps only, 55% uplands and swamps, and 21% uplands only. The average farmer cultivates between 5 - 6 acres annually of which 1 acre is swampland. 3.07 Land is owned by the community as a whole and ultimate responsibility for primary allocation is that of the paramount chief. Once land has been allocated, the usufruct is both retainable and inheritable for as long as it is claimed. Actual occupants of the land comprise those with land title and those who have acquired land from title holders. The latter type of acquisi- tion is generally short-term for uplands and long-term for swampland and is unheritable. Land so acquired is referred to locally as "begged-land", but the actual transaction is accompanied by cash or gifts in kind. As the value of swampland will increase under the project, a tendency could develop for title holders to press for recovery of "begged-land". As this would be to the disadvantage of the present occupants, project management would pay partic- ular attention to this issue and would make every effort to agree on arrange- ments with the traditional authorities to ensure that swamp developers have satisfactory security of tenure to ensure their participation. Fortunately it is estimated that only 15% of the swamps are occupied as "begged-land", and consequently even should problems develop the success of the project would not be jeopardized. 3.08 Crop yields are very low. Swamps yield about 1,200 lb husk rice/acre, and the uplands, under shifting cultivation and mixed cropping, about 500 lb husk rice/acre, mixed with beans, sorghum, maize and beniseed. Groundnut yields are about 900 lb unshelled nuts/acre.  - 6 - 3.09 There are about 15,000 head of cattle in the area, mostly owned by semi-nomadic Foulah tribesmen. The cattle are of the trypanosomiasis tolerant Ndama breed. Under current management conditions their productivity is low and genetic potential limited. With increasing population, competition for land between farmers and cattle owners has become more intense and there is a need to stabilize the situation. One possible means, which would be tested under the project, would be settlement of Foulah families on small scale ranches. 3.10 Eastern Project Area (see Supplementary Volume 3) is topographically more broken with clearly defined valleys. Rainfall is generally higher and more reliable than in the NAP area, and as the area has better upland and swamp soils, the agricultural potential is markedly better than in the north. 3.11 EAP is divided into 32 chiefdoms with similar traditional disciplines to those in the north. Most of the 18 ethnic groups of Sierra Leone are re- presented of which the Mende are dominant. The average family size of about 6 is half that of the typical northern farm family. 3.12 Road communications need improvement in extent of network and con- dition, and the inadequacy of crop extraction roads is a major production and marketing constraint. 3.13 As in the north, social and agricultural services to farmers are limited, although the latter are now being improved under the ongoing project. However, the need for improved water supplies in EAP is not so acute as in NAP and improvements can be delayed until some later phase of development. 3.14 The farming system reflects the greater reliability of the area's dry season rainfall, and its better soils. Thus cocoa, coffee and oil palm are of major importance; and there is greater potential for swamp rice devel- opment than in the north, due to a greater area of swamps and more favorable soils. Upland cultivation follows a shifting pattern and 20% of the upland areas are cultivated each year with fallow periods rarely exceeding 6 - 7 years. Due to increasing land pressure there is a tendency to move toward an increased exploitation of swamps. Average farm size is generally smaller, 2 - 3 acres of upland cultivation, and some 40% of the farmers cultivating in addition 1 - 3 acres of swamp. The land tenure system is basically the same as in the north, but because population pressure is less, the problems over "begged-land" are less likely to arise. 3.15 Yields levels of upland and swamp rice are similar to those in the north, 1,200 lb and 500 lb husk rice/acre respectively. .There is no accurate data on cocoa and coffee yields, but these are estimated at not more than 300 lb/acre annually. IV. THE PROJECT A. General 4.01 The Eastern and Northern area projects have two principal objectives. First, to increase agricultural production and thus farm incomes through pro-  - 7 - ject actions. Second, to establish in the Eastern and Northern areas systems of farmer support services that should remain in perpetuity to serve as the means for delivering further technology packages to their farmer communities. Currently Sierra Leone has a nation-wide agricultural extension service, but because in the past, due to the lack of staff, funds and clear programs, it has been unable to do much to help farmers; the general stagnation in the agri- cultural sector described in Chapter II is a consequence of this weakness. The establishment and operation of a complex of services for farmers is expensive, and while Bank Group funds would help initiate them, the impact and usefulness of the services so created would diminish rapidly if adequate support is not available after the proposed IDA credit and Bank loan have been disbursed. As Sierra Leone's fiscal situation is difficult, the risk that sufficient finance would not be available to support these services in the post project period should not be discounted; consequently it would be a feature of the two proj- ects that those service functions involving credit and input supply would be designed to permit transfer as soon as possible to farmer owned and operated commercial agencies. Once firmly established such agencies would not require Government financing for their operation. Additionally, projects of this kind enjoy during the disbursement period of project funds a high degree of autonomy and work relatively independently of the existing national agricultural ser- vices, though with a long-term objective of eventual amalgamation. EAP is currently at a stage where a degree of amalgamation can be undertaken; in con- sequence at the commencement of the extension to EAP, the Project Manager would be responsible for the project as well as those normal agricultural ser- vices operating outside the project area; the latter affects 20% of the Eastern Province. In 1978 the autonomy enjoyed by the management unit would fall away and its services would then be totally reintegrated with the national agricultural service, albeit that the operations of the service would thus be more highly concentrated than in other parts of the country. A similar change in the case of NAP is not proposed since a period of autonomy exten- ding beyond the loan/credit disbursement period is probably required before institutions are sufficiently well developed to permit the change. The North- ern Area Project would be carried out over four years, 1975/76 - 1978/79, and the Eastern Area Project over two years 1975/76 - 1976/77. The projects would involve: (a) For the Northern Area Project (i) Civil Works - constructing 20 miles and upgrading 280,miles of crop extraction roads; - constructing 200 village wells on a self help basis; - establishing 5 market centers; - constructing a training center; - constructing houses, stores and offices for project management staff;  - 8 - (ii) Farm and crop development - establishing extension and other farmer support services, and providing these with staff, vehicles and equipment; - providing short- and medium-term credit through a revolving credit fund for labor, pesticides, ferti- lizers, and irproved planting material to increase the production of 6,000 acres of inland swamp rice, 25,000 acres of upland rice, and 10,000 acres ef groundnuts; - developing a seed multiplication farm; (iii) Investigations and research - investigating the potential for future livestock development and the establishment of three privately operated cattle ranches; - researching methods of increasing wood fuel produc- tion for tobacco farmers; (b) For the Eastern Area Project (i) Civil Works - establishing 12 market centers; - constructing houses, warehouses and offices; (ii) Farm and crop development - expanding extension and other farmer support services established under the first project; - providing short-, medium- and long-term credit for labor, pesticides, fertilizers and improved planting material to increase the production of 1,800 acres of inland swamp rice and 36,000 acres of upland rice, to develop 4,200 acres of inland swamp for rice produc- tion, and to establish 1,000 acres of cocoa and 1,600 acres of oil palm; - continuing the development and improvement of seed multiplication farms; - establishing a Farmer Finance Company to take over the activities of the EAP project's revolving Credit Fund; and  - 9- (c) Central Support Services - establishing and staffing a Project Evaluation and Services Unit in MANR Freetown to provide operational and financial support for EAP and NAP, and to assist the EAP Farmer Finance Company and the company that is to be established to manage the oil palm nucleus estate and mill developed under EAP; - assisting MANR to prepare new projects for the agricultural sector by providing consultants for short-term specialist assignments; 4.02 The existing project management unit at Kenema would be responsible for EAP activities, and a new project management unit would be established at Makeni for NAP. B. Detailed Features 4.03 To avoid repetition, proposals for NAP and EAP are treated together in the following paragraphs and in each case supportive data can be found in the respective Supplementary Volumes 2 and 3. Civil Works 4.04 Crop extraction roads. Under NAP 280 miles of existing crop extraction roads would be improved and 20 miles of new road constructed to ensure all weather access by light traffic in the wet and heavy trucks during the dry season. The existing road network is generally adequate in extent, but the roads are in disrepair and require some improvements including improved for- mation, drainage and culverting. Most of the soils have a high laterite con- tent and therefore very little surfacing is required. The road construction and improvement program would be over four years and would include the con- struction of 20 bridges and 900 pipe culverts. Nearly all construction work would be carried out by the project on force account since the amount and type of work is scattered in terms of location and time and would be un- attractive to major contractors. Petty contractors would be used as much as possible. 4.05 A minimum of 250 miles of crop extraction road construction and improvement are essential for the EAP to proceed satisfactorily, for which Government is seeking assistance from bilateral sources for these roads, and final arrangements are expected to be conducted shortly with USAID. During negotiations assurances were obtained that not later than December 1, 1975, arrangements would be made for the construction and improvement of roads in EAP that were satisfactory to the Bank. 4.06 Village wells. The project would assist villages in NAP to construct 200 hand dug wells. The villages would provide all the labor, and the project technical supervision, building supplies and hand pumps.  - 10 - 4.07 Market centers. The project would establish five market centers in NAP and twelve market centers in EAP for input distribution and produce buying. Each center would comprise a warehouse (8,000 ft3) for storage of fertilizers, seeds and pesticides, and offices. Facilities including scales would be provided at the center for both statutory and private marketing operations. 4.08 Training center. The project would construct a new 40 bed training center for NAP. The center would be used for farmer and staff training on the same basis as the successful training scheme currently operated by EAP. 4.09 Houses, offices and stores. The project would construct buildings required for project staff and operations. These include, for NAP, 8 staff houses, 7 offices, and 2 stores; and for EAP 4 houses and a store. All other accomodation for both EAP and NAP would be rented. Construction would normally be undertaken by contractors, available in both areas, and force account would be undertaken only in exceptional circumstances. Building supervisors would be employed to ensure that construction standards were satisfactory. Farm and Crop Development 4.10 Extension and farmer support services. Administrative, technical and commercial staff would be provided under the project. This would mean for NAP and EAP respectively employment of up to 104 and 136 staff of all categories. Where called for, staff would be provided with vehicles and other equipment. (Details are in Annex 3.) 4.11 Inland valley swamp development. Based on EAP experience the project would improve the production of rice on 6,000 acres of inland valley swamp in NAP through better water control and drainage methods. In EAP some 1,800 acres would be improved, and 4,200 acres of undeveloped inland swamp brought into rice production, bringing the total EAP swamp development program to 12,000 acres. 4.12 Upland crop development. Uplands provide 60% of Sierra Leone's national rice production, and the project would aim at achieving production increases in rice and groundnuts providing improved seed under mass saturation programs 1/. In NAP, improved fungicide-treated rice varieties such as ROK I, II, and III (T52) and LAC 23 would be distributed to farmers. This should result in 25,000 acres of higher yielding rice; 36,000 acres of upland rice in EAP would be similarly improved. In NAP groundnuts are an important upland crop and using similar mass saturation techniques, improved varieties would be introduced over the 10,000 acres now sown to low yielding varieties. 1/ The complete evacuation of old seed from a rural unit (such as a village) in exchange for improved seed.  - 11 - 4.13 Little is known about the response of rice (particularly under mixed cropping) and groundnut to fertilizers under upland conditions in Sierra Leone. Consequently fertilizer application would be approached cau- tiously with emphasis being given initially to fertilizer use on the permanent- ly cropped soils that constitute about 10% of total. 4.14 Tree crop development. The project would extend existing EAP proj- ect oil palm plantings by 1,600 acres to 4,150 acres. Participation would be restricted to smallholders who would be permitted to plant a maximum of 10 acres. Oil palm seedlings produced by the Daru Oil Palm Company, that is to be formed under the project, would be purchased for distribution to farmers. The harvested fruit bunches would be purchased by the Company at road side buying points. A further 1,000 acres of cocoa would be planted (4 acres maximum per farmer) bringing total EAP project cocoa plantings to 1,750 acres. 4.15 Seed multiplication. NAP would establish a fully irrigated 100 acre seed multiplication farm, and the two existing EAP rice seed farms (total 50 acres) would be improved. The national Rice Research Station at Rokupr would supply foundation seed to the seed farms for multiplication and the project would sell improved seed direct to farmers or to registered seed pro- ducers for further multiplication. In the latter case the project would be responsible for cleaning and dressing seed prior to distribution. EAP would establish a new cocoa seed garden as a first step towards initiating an expanded cocoa development program envisaged from 1978 onwards. 4.16 Supply of inputs. Farm inputs would be provided to farmers both for cash and credit. Currently EAP operates a revolving credit fund, but prior to December 31, 1975, Government would establi3h a farmer finance company to take over its functions. NAP would establish a revolving credit fund as in the first stage of EAP. In both instances seasonal credit would be provided for fertilizers, seeds, and pesticides, and medium- and long-term credit for swamp development, and for the establishment of cocoa and oil palm. Details on the organizational arrangements for credit are at Chapter VI. Investigations and Research 4.17 Livestock development. The project would develop three 1,000 acre privately owned and operated pilot cattle ranches, and would provide technical assistance and limited credit for stall-fattening of cattle and for pig breed- ing. The investigations into cattle and pig production would be a forerunner for an expanded livestock program that might be developed over a wider area in the north at some future time. 4.18 Wood fuel production. The Rokel Tobacco Leaf Company has established a modest fire cured and flue cured tobacco program in Northern Sierra Leone. The project would not include any aspect of the Company's successful program but would assist the Forestry Division of MANR to undertake a series of trials to determine a future wood fuel plantation program to provide fuel wood for tobacco curing.  - 12 - Central Support Services 4.19 Project Evaluation and Services Unit (PESU) would be set up within MANR Freetown to provide operational and financial support for NAP, EAP and other special agricultural projects that might be developed in the future (see para. 6.04). PESU staff and support costs would be funded under the project. 4.20 Support to Daru Oil Palm Company. The existing EAP, Government op- erated, oil palm estate and mill would be taken over by a compan,7, the Daru Oil Palm Company (see para. 7.06) to be formed for that purpose. The project would provide funds to cover the cost of an experienced and internationally recruited General Manager. During negotiations it was agreed that the General Manager would be appointed on terms, conditions and with qualifications satis- factory to the Bank. V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS A. Project Costs 5.01 Project costs are estimated to be Le 11.4 million (US$13.7 million) of which the foreign exchange component would be Le 5.0 million (US$6.0 mil- lion) or 44% of total project costs. 5.02 The breakdown of project costs is detailed in Annex 5, in Supplemen- tary volumes 2 and 3, and is summarized in the following Table:  - 13 - 6broa, 06 FOojeot C00to -------------- la.000---- -.1U8$ '000