Mali - Livestock Project

Report No. 538a-MLI U CO V Appraisal of a Livestock Project Mali January 10, 1975 Regional Projects Department Western Africa Regional Office Not for Public Use Document of the Intemational Bank for Reconstruction and Development International Development Association This report was prepared tor official use only by the Bank Group. It may not be published. quoted or cited without Bank Grotup authorization The Bank Group does not accept responsibility for the accuracy of completeness of the report.  f CURRENCY EQUIVALENTS US$ 1 MF 50 MF 100 = US$ 0.2222 WEIGHTS AND MEAJURES 1 millimeter (mm) = 0.0394 inches 1 meter (m) = 39.37 inches 1 kilometer (km) = 0.6215 miles 1 hectare (ha) = 2.47 acres 1 kilogram (kg) = 2.205 pounds 1 ton (t) = 2,205 pounds 1 liter (1) = 1.056 liquid quarts ABBREVIATIONS ADB : African Development Bank BDM : Banaue de Developpement du Mali CFDT : Compagni.e Frangaise Dour le Dgveloppement des Fibres Textiles FAC : Fonds dtAide et de Cooperation FED : Fonds Europeen de Developpement IDA : International Development Association IEMVT : Institut d'Elevage et de M6decine V6t6rinaire des Pays Tropicaux IER : Institut d'Economie Rurale ILCA : International Livestock Center for Africa ILRAD : International Laboratory for Research on Animal Disenses ODEM : Op%6ration de D6velonpement de l'Elevnge de la 16gion de Mopti OPIBEVI : Office Malien du Betail et de la Viande Py : Project Year RMWA : Resident Mission in Western Africa of the World Bank SEDES : Socie6t6 d'Etudes pour le D6veloppement Economique et Social SOMBEPEC : Societ6 Malienne du Betail et des Peaux et Cuirs SONEA : Soci6te Nationale pour 1'Exploitation des Abattoirs USAID : United States Agency for International Development FISCAL YEAR January 1 to December 31  MALI LIVESTOCK PROJECT Table of Contents Page No. SUMMARY AND CONCLUSIONS ........................i .v I. INTRODUCTION . . .......... 1 II. BACKGROUND 1... A. General . . B. The Agricultural Sector. 2 C. The Livestock Subsector . . 3 D. Deterioration of the Pastoral Resource 6 E. Livestock Development Strategy . . 8 III. THE PROJECT AREA . 9 IV. THE PROJECT ........... v..................... 10 A. Summary Description . .10 B. Detailed Features . .11 Livestock Extension and Grazing Control 11 Animal Health Services . .13 Watering Facilities . .14 Abattoir and Hide-Drying Facilities 14 Livestock Markets . .15 Mopti Trial Station . ...................... 15 Personnel Training and Functional Literacy Programs . .16 Preparation of a Second-Phase Project 17 C. Organization and Management . . 17 Organization ...*..................... . 17 Staffing .................................. 18 D. Accounts and Audit .......................... 19 This report is based on the findings of an appraisal mission, comprising Messrs. H. Ochs, F.X. Leduc and E. Schertz (IDA), and R. Biscaldi, J. Gallais and D. Pratt (consultants), which visited Mali in January/February 1974.  TABLE OF CONTENTS (Cont'd) Page No. V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ........ 19 A. Project Costs .......................,..... 19 B. Financing ...................... 20 C. Procurement ...... ................ 21 D. Disbursement ....... ............... 21 VI. PRODUCTION, PRICES, MARKETING AND FINANCIAL RESULTS 22 A. Production ...... ................ 22 B. Prices ...................... 23 C. Markets ...................... 23 D. Financial Results ....................... 24 VII. ECONOMIC BENEFITS AND JUSTIFICATION .... .......... 25 VIII. AGREEMENTS REACRED AND RECOMMENDATION .... ...... 26 ANNEXES 1. The Fifth Region 2. Supply and Demand, Prices, and Taxation for Livestock and Meat 3. ODEM - Headquarters at Mopti-Sevare Table 1 - Investment Costs Table 2 - Operating Costs 4. Livestock Extension and Grazing Control Grazing Control Table 1 - Investment and Operating Costs Table 2 - 10 Tree-Nurseries: Investment and Operating Costs 5. ODEM - Animal Health Services Table 1 - Investment Costs Tab.le 2 - Operating Costs 6. Construction of Watering Facilities Table 1 - Construction, Renovation and Maintenance Costs of 50 Ponds Table 2 - Construction and Maintenance Costs of 70 Wells Chart - Hydrological Units of the 5th Region 7. Mopti Abattoir and Hide-Dryin Facilities Table 1 - Past and Projected Slaughter Rates Table 2 - Investment Costs Table 3 - Income and Operating Costs Table 4 - Cash Flow  TABLE OF CONTENTS (Cont'd) 8. Livestock Markets Table 1 - Past and Projected Throughput Table 2 - Investment Costs Table 3 - Income and Operating Costs 9. Mopti Trial Station Table 1 - Investment Costs Table 2 - Operating Costs and Income 10. ODEM - Staff Training Costs 11. Preinvestment Studies and Project Preparation 12. Cattle Herd Development Projections Table 1 - Without the Project Table 2 - With the Project Table 3 - Incremental Beef and Milk Production from the Cattle Herd 13. Incremental Meat and Milk Production from Sheep and Goats 14. Terms of Reference of ODEM Senior Staff 15. Summary of Project Costs 16. Project Cost PhasiMy 17. Financing Plan 18. Annual Disbursement of IDA Credit 19. Quarterly Disbursement of IDA Credit 20. ODEM Cash Flow 21. Government Cash Flow 22. Economic Rate of Return Calculation CHART Proposed Organization and Management MAP Locatiorn of Project Activities   MALI LIVESTOCK PROJECT SUMMARY AND CONCLUSIONS Background i. The Government of Mali has requested IDA assistance in financing a livestock project. The location would be the 5th Region, Mali's most important and high potential livestock area (89,000 km , 1.12 million people), which during the 1972/73 drought lost about 25 percent of its 1.7 million cattle and 10 percent of its 2.2 million sheep. It would be IDA's first livestock operation in Mali, and the first comprehensive effort in West Africa to increase range livestock production by pastoralists in the Sahelian zone. RMWA identified the project in October 1970, and subsequently prepared it supported by PAC-financed SEDES and IEMVT studies and relevant Malian Services. This report is based on the findings of an IDA appraisal mission in January/February 1974. Project Description ii. The project would aim at the rational use of land and water in the 5th Region and would help about 100,000 pastoralist families to rebuild and improve their herds and to protect them against future droughts. An essential feature of the project would be to develop effective grazing control, which offers the only means of creating and maintaining the con- ditions in which efficient and stable livestock production can be developed on the 5th Region's rangeland. iii. A combination of incentives, regulation and education is needed to make grazing control effective: regulation without education would mean friction between pastoralists and authorities; education alone would produce results too slowly; and neither would have any lasting effect in the absence of strong incentives. The incentives and measures used would be adapted to the different areas covered by the project. iv. In three special areas - one of about 5,000 km2 and the other two about 1,000 km2 together - permanent watering facilities would be provided, along with animal health and extension services. Pastoralists in these areas would have user rights to land and watering facilities which would be granted and safeguarded by the Government. This would provide the pastoral- ists with an incentive to use their land and facilities properly and an oppor- tunity to invest in further developments such as fencing and additional watering facilities. To facilitate regulation and control, the project would aim at setting up pastoralists as legally constituted groups. Other areas amounting to about 10,000 km2 would be provided with seasonal ponds and improved animal health services. The location of the ponds would be designed to increase the pasture available at the beginning of the dry season and thereby reduce the  - {i - pressure on the dry season pastures in the Niger Delta. As the areas to be provided with permanent and seasonal watering facilities only cover aboalt 20% of the 5th Region, and since the methods of introducing grazing control are new and untried, emphasis would be placed on the preparation of a seconc-phase project based on the experience provided by the first. v. The project would be carried out over the five years 1975-79 End would comprise: (a) introducing livestock extension services and grazing control in three special development areas; (b) providing improved animal health services throughout the 5th Region; (c) constructing 70 wells and 50 ponds; (d) constructing, and managing an abattoir and hide-drying facilities at Mopti-Sevare; (e) constructing and managing five livestock markets; (f) establishing and managing a 150-ha livestock and pasture trial station; (g) providing personnel training and testing a functional literacy program for pastoralists; and (h) preparing a second-phase livestock project. Project Execution vi. The Government would establish the Operation de Developpement d! l'Elevage de la Region de Mopti (ODEM), which would be a branch of the Ministry of Production responsible for all livestock development in the 5:h Region and for the execution of the proposed project. ODEM would have legal authority to grant user rights to grazing lands and watering facilities aad to prescribe conditions for their use. It would include a planning and r'ange management unit, and services for livestock extension, animal health, livi.i- stock marketing and processing. It would employ 12 senior staff and about 500 support staff. In the absence of qualified and experienced Malians, expatriates would probably need to be recruited for at least the followinji: Deputy Director, Range Management Officer, Water Development Officer, and Pasture Agronomist. They would be replaced after four or five years by Malians who would have been trained witlhin the project and abroad. The prO- ject would also provide for eighteen man-months of consultant services for studies related to project implementation and preparation of a second-phase project.  - iii - Cost Estimates and Financial Arrangements vii. The project cost for the five-year period, 1975-79, including taxes and duties is estimated at US$17.3 million. Taxes and duties account for about 14% of project costs before contingencies. It is proposed that an IDA Credit of US$13.3 million be made to the Government on standard terms, cover- ing 77% of project costs. The Credit would finance the project's foreign exchange costs (US$9.0 million) and 52% (US$4.3 million) of local currency cost. The remaining 48% (US$4.0 million) of the latter would be met from Government budgetary allocations (US$3.4 million), ODEM's revenues (US$0.4 million), and livestock owners (US$0.2 million). Procurement and Disbursements viii. Contracts for all items in excess of US$50,000 would be awarded on the basis of international competitive bidding (ICB) in accordance with IDA guidelines. This would aggregate about US$7.8 million, covering: (a) build- ings and structures, US$3.0 million; (b) installation of 40 wells in the Seno Mango area, US$2.2 million: (c) vaccines, US$0.9 million; (d) vehicles, machinery, and equipment, US$0.8 million; and (e) well construction and main- tenance equipment for the Ministry of Public Works, US$0.9 million, to con- struct 20 wells in the Seno Mango area and 10 wells west of the Delta by force account. These 30 wells are widely dispersed in remote areas and would be constructed over a three to four-year period. Contracts for all items below US$50,000 would be awarded on the basis of competitive bidding adver- tised locally and in accordance with local procedures, which are satisfactory to IDA. Domestically manufactured goods procured for the project would be allowed a 15% price preference (or the level of applicable import duty, whichever is lower) over foreign goods; and for civil works, domestic contractors would be granted a 7.5% preference over foreign contractors. The services of ex- patriate staff and consultants (US$0.8 million) would be obtained according to procedures acceptable to IDA. The construction and/or rehabilitation of 50 ponds, widely dispersed in remote areas, would be carried out by the Rural Engineering Department by force account, at a cost of US$0.8 million. ix. The IDA Credit would be disbursed over five years to cover: (a) 95% of local expenditures for the incremental local staff of ODEM, expenses for staff of the Mopti abattoir for its first year of operation, and local training expenses of ODEM staff -- US$1.3 million; (b) 100% of foreign expenditures for expatriate personnel, consultant services and training of ODEM's staff abroad -- US$950,000; (c) 75% of total expenditures for civil works (including preparatory work) -- US$3.6 million;  - iv - (d) 100% of fcreign or 75% of total expenditures of vehicles and equipment, and of livestock for the Mopti trial station US$450,000; and (e) 75% of ODEM's operating expenditures during the disbursement period excluding expenditures for the Mopti abattoir beyond PY 1 -- US$3.1 million. US$3.9 million would be unallocated. Markets x. The market outlook for meat is very favorable in West Africa. Meat is increasingly scarce due to the recent droughts, rapid population and urbanization growth, and the strength of demand is shown by rapidly rising prices. Since the incremental production of the project at full develolmant would not exceed about 12 percent of predrought domestic output, it shoulld find a ready market. The hides and skins can easily be exported, or boughit by the Bamako tannery; the milk would improve the nutrition of about 100,(00 pastoralist families and neighboring farmers and any surplus would find a ready local market. xi. Livestock marketing in the country is reasonably efficient, and the project would improve the marketing facilities in the 5th Region. Slaughtering facilities are adequate, since the Bamako slaughterhouse operates at only about 50 percent of capacity, and the simple abattoir to be construc- ted under this project: would cover the needs of Mopti, the only large town in the project area. Meat is retailed by an adequate network of butcher shops. Benefits and Justification xii. The principal direct benefits from the project would be incremcni:al annual livestock production worth Mf 3.5 billion (US$7.8 million) in 1974 terms, yielding net foreign exchange earnings of the order of MF 1.7 billion (US$3.8 million). Some 100,000 pastoral families would increase their aver age cash incomes from livestock production from MF 65,000 (US$144) to MF 100,)O0 (US$222), and almost 400 jobs would be created. xiii. The economic rate of return of the project is estimated at 51%, and is not very sensitive to increased costs or reduced benefits. xiv. Without the changes that would be introduced under the project, it is likely that the 5th Region would continue to deteriorate as a grazing resource, aLs more and more rangeland would be destroyed by overgrazing anc degraded by shifting millet and rice cultivation. xv. Risks. The proposed project is risky because it is difficult to assess: (1) the degree to which pastoralists will respond to the grazing control measures introduced by the project; (2) the degree to which other pastoralists will be prevented from encroaching on the grazing rights of participating groups; and (3) the frequency and extent of future droughts.  - v - Should the grazing control measures fail to be effective, the project would be conducive to overgrazing and consequently to the deterioration of range- lands. However, the project would proceed by phases and on the basis of a development plan previously agreed between Government and IDA; each successive phase would be undertaken only on the basis of evidence that the previous phase had been completed successfully. These safeguards would make the pro- ject adaptable to the lessons of experience and would allow the discontinuation of activities which show high probabilities of being economically undesirable. As for the second risk, should participating groups be prevented from cooperat- ing with the project by encroaching pastoralists, sound resource management would be impaired and overgrazing would likely result. It can, however, be expected that the Government would take appropriate measures to protect the rights of project participants. Turning to the third risk, the project area may be affected by two different types of drought: (a) moderate droughts which may typically occur every four or five years; and (b) catastrophic droughts such as the 1972/73 one. Moderate droughts are not expected to affect substantially the economic viability of the project. In fact, to the extent that the project promotes a proper balance between cattle and land, the project area would be better prepared to withstand such a drought than otherwise. Historical data show that catastrophic droughts occur every 40 to 50 years. Should this pattern hold, the project will have been success- fully implemented and extended throughout the region before the next catas- trophic one occurs. An appropriate balance between cattle and land would have been achieved and the region would be in the best possible position to withstand a serious drought with minimum losses. However, in the unlikely event that a catastrophic drought should repeat itself in the near future, it would be very difficult to maintain discipline in the project area and to prevent invasion by outside pastoralists; and as a result the project would be in serious jeopardy. Nevertheless, the potential benefits of the project are so important relative to this risk that the risk is worth taking. Recommendat ion xvi. The project is suitable for an IDA credit of US$13.3 million.   MALI LIVESTOCK PROJECT I. INTRODUCTION 1.01 The Government of Mali has requested IDA assistance in financing a livestock project, estimated to cost US$17.3 million. The project would be carried out in the country's most important livestock area, the 5th Region, and would help to reconstitute that area's drought-afflicted herd and to pro- tect it against future droughts. 1.02 The project was identified by RMWA in October 1970, and prepared by RMWA supported by FAC-financed SEDES and IEMVT studies and relevant Malian Services. It would be IDA's first livestock operation in Mali; three previous IDA credits have been made for agriculture: (i) the Mopti Rice Project (Credit 277-MLI, US$6.9 million) in 1972, which is proceeding satisfactorily; (ii) the Drought Relief Fund Project (Credit 443-MLI, US$2.5 million), approved in November 1973, which is proceeding satisfactorily; and (iii) the Integrated Rural Development Project (Credit 491-MLI, US$8 million) which was signed only in July 1974. 1.03 This report is based on the findings of an appraisal mission, com- prising Messrs. H. Ochs, F.X. Leduc and E. Schertz (IDA), and R. Biscaldi, J. Gallais and D. Pratt (consultants), which visited Mali in January/February 1974. I1. BACKGROUND A. General 2.01 Mali has an area of about 1.24 million km 2 about 2.5 times the size of France, and a population of about 5.2 million. It is landlocked and the closest seaports are Abidjan and Dakar, both about 1,200 km from Bamako, the capital. Two-thirds of the country receives less than 400 mm annual rainfall and only one-quarter more than the 550 mm needed to sustain any viable farming. Rainfall fluctuates widely, causing large variations in crop yields and live- stock production. There were serious droughts in 1968/69, 1970/71, 1972/73 and 1973/74. The Niger River flows northeast through the country and provides a large irrigation potential that as yet is largely untapped. 2.02 With a per capita GDP of about US$70, Mali is one of the poorest countries in Africa and one of the world's 25 "least developed" countries. GDP at current prices was estimated at AIT 177 billion (US$393 million) in  1972, having increased by about 5% per year in constant prices since 1)70. Figures for 1973 are not available, but because of the severe drought l decline of at least 3% is likely. Agriculture and services (including trans- port, trade and Government) each account for about 40% of GDP, and indistry for the remainder. 2.03 The main potential for development lies in agriculture, the iainstay of the economy. Expansion is impeded, however, both by natural constr6,its -- the landlocked location of the country, and the vagaries of the climati -- and by chronic budget and balance of payment deficits. The latter mainly titem from previous policies of rapid expansion in industry and the tertiary sector, and the creation of unprofitable state enterprises. 2.04 The present Government, which came into power in 1968) launchaed a three-year "Rehabilitation Plan 1970-72" aimed at balancing the budget itd external trade through developing the productive sectors of the economy. Although some improvements have been made in the performance of state eater- prises, and in removing restrictions on private trade, the basic ob4ectLves of the Plan have not been achieved. The main difficulties have been ha~,ty project preparation, lack of finance and technical know-how, and the repseated droughts. Of the MF 116 billion (US$257.8 million) proposed investmenti, only about half have been made. In the livestock subsector the situatit,n is even worse with only 20% of the investment target being met. The balan::e of payments deficit on current account, after declining from MF 12 billion (US$26.,' million) in 1968 to less than MF 4 billion (US$8.9 million) in 1970, in(:reased to over MF 6 billion (US$13.3 million) in 1972 and to almost MF 8 billic;n (US$17.8) in 1973. Budgetary deficits increased from MF 2.2 billion (UlS$4.9 million) in 1970 to over MF 6 billion (US$13.3 million) in 1973. The Gclvern- ment is aware of the need to improve the situation and the forthcoming Ltve- Year Plan, now being prepared, will continue to give priority to productive investmenit. B. The Agricultural Sector 2.05 Agriculture accounts for virtually all exports and provides the livelihood of 85% of t:he population. Since 1969, it has accounted for 4 % of GDP. In 1972, the value of agricultural output amounted to MF 75.5 bill:ox: (US$167.8 million), of which farming accounted for 49%; livestock, 40%; `iah- eries, 5%; and forestry, 6%. In 1973 it fell by about 20% due to the drought. 2.06 Farming is carried out on some 500,000 farms of 2-5 ha, mostly at: the subsistence level. Sorghum and millet are the most important cereals, followed by rice and maize; cassava, yams, sweet potatoes and vegetables ire also grown in the higher rainfall areas of the south or under traditional irrigation. Production of seed cotton, one of the two most impcrtant casi crops,i rose steeply between 1967 and 1971, from 39,000 tons to 74,000 toni, while that of the other, grounduuts, increased from 119,000 tons to 152,0 1c  -3- tons of shelled nuts. These increases reflect Government investment and support, as well as favorable world markets. In contrast, the Government has done little to stimulate food crop production and its policy of holding officially controlled producer prices at very low levels has been counter- productive; consequently production of millet and sorghum declined steadily, cereals have been in short supply, and the need for imports has increased, a situation that has been exacerbated by the drought. The Government is now anxious to increase food production,and plans to attain self-sufficiency in cereals by 1978/79. This requires increasing production of millet, sorghum, and maize by 200,000 tons, and paddy rice by 100,000 tons per year. In this connection, the Government agreed during negotiations of IDA's Integrated Rural Development Project to fix, no later than September 1974, producer prices for millet and sorghum at no less than IF 25 per kg, which at prevail- ing prices would have made them more competitive with the cash crops; and to carry out a study on the producer prices and marketing arrangements of millet and sorghum. In line with this agreement, the Government increased the con- trolled producer prices for millet and sorghum from MF 20 to NF 32 in June 1974, and those for paddy rice from MF 25 to MF 40. Although the producer prices of foodcrops were increased in absolute terms, relatively there have been no substantial changes vis-a-vis prices of cotton and groundnuts which were also increased in June 1974. However, by end 1975, the Government and IDA will review the study's findings. 2.07 Fishing is the principal source of livelihood for about 30,000 families in the Central Delta of the Niger. About 10,000 tons of dried or smoked fish are exported to neighboring countries each year. 2.08 Forestry produces shea butter nuts, a cocoa substitute, with an annual value estimated at about MF 2.0 billion (US$4.4 million), firewood and building poles. C. The Livestock Subsector Numbers, Output and Exports 2.09 Until the drought started to cause major losses in 1972, livestock numbers had more than doubled in the past 25 years; and for cattle, from 1960-1970, the annual rate of increase was almost 6%. In 1970, the livestock population included 5.4 million cattle and about 11 million sheep and goats. Losses during the 1972/73 drought, the worst in 50 years, were most serious in the cattle population and about 15-20% of the country's herd was lost. 2.10 Livestock's share of GDP declined from 20% in 1969 to 17% in 1972, mainly due to the repeated droughts, and almost certainly declined further in 1973. In 1970, total meat and offal production was estimated at 146,000 tons, including 84,000 tons from cattle. Milk production for human consumption --from cattle, sheep, goats and camels--was estimated at 360 million liters.  - 4- 2.11 From 1960 to 1972, livestock exports more than doubled and reached a yearly level of 220,000 live cattle and 210,000 sheep and goats, or about 30% of annual livestock production and 40% of all exports. The main custom- ers are Ivory Coast and Ghana, though exports to the latter have decreasec considerably due to import and currency restrictions. Carcass meat expor.ts have been insignificant, 500-1,000 tons per year, and are mainly air freighted to Liberia and Libya. The Traditional Producer 2.12 About 40% of Mali's cattle are raised by Peuhls, 30% by Touaregs and Bellas and 10% by Maures; these mainly semi-nomadic pastoral groups com- prise only about 10% of Mali's population. The remaining 20% of the cattle are raised by Bambara, Malay, and Dogon farmers. Only about 250,000 pure nomads are left in Mali; even the Touaregs and Maures, the most dedicated to nomadism, are reported to be settling. Transhumance remains the predominant: production system. Except for calves and milking animals, which remain at the homestead, cattle go northwards during the rainy season to feed on wet season pastures and either southwards or to the Niger delta, the "bourgou", during the dry season wlhere they feed on the natural pastures supported by the receding Niger flood, and crop residues. Herds typically comprise 50-80 cattle and 10-30 sheep and goats owned by family groups consisting of 2-3 families each averaging 6 family members. Sheep and goats are kept in small flocks around villages and usually do not follow the cattle on transhumance. Productivity 2.13 The annual milk and meat production of a typical herd is estimated at 15% (US$900) of the herd value (US$6,000) of an average herd. About haLf of this production (valued at US$450) is consumed by the family group, about one-third (US$300) is scild and the balance (about US$150) represents the increase in the value of the herd. At market prices this production repretzeats a per family cash income from livestock production in the range of US$100-15) a year, which, including the value of subsistence consumption of animal anmi agricultural products and miscellaneous activities, is roughly equal to the national average per capita income of about US$70. Livestock productivity is low due to poor nutrition, and weight losses of 20-30% during the dry season are normal. Liveweight gains average only 30-50 kg per animal annuailLy compared to 150-200 kg in Europe and North America. The calving rate is lcow at around 60%, and mortality rates are high -- about 20% for female and 40a; for male calves, and 5% for adults. The normal herd offtake is therefore only 9-10%; and average carcass weights are only 125-150 kg, or less than half those in Europe and North America. Animal Health 2.14 Rinderpest, once Mali's most serious animal disease, is now under control as a consequence of an immunization campaign financed by FED and USAID in 1964-1969. This campaign was the main reason for the rapid growth of the  - 5 - national herd until 1972. Mali has made great efforts to combat the other principal diseases (para 4.12), although mortality rates from disease remain high because the Livestock Service (para 2.17) has inadequate operating funds to sustain its prophylactic activities. Marketing 2.15 Livestock and meat marketing is carried out by a large number of established private traders and butchers, and by SOMBEPEC (para 2.19). Trading generally takes place once a week at simple primary and secondary livestock markets. Animals are sold on appearance and are not weighed; sales usually are for cash; most animals are trekked to markets on the hoof over well- established stock routes, but transport by truck to final processing centers is increasing and transport by boat from Mopti to Bamako (Koulikoro) is being developed. Taxation 2.16 Livestock taxes normally constitute 8-10% of public revenue. The head tax of MF 400 for cattle was suspended in 1972, however, because of the drought, and the revenues so lost have been replaced by offsetting FED grants in 1973 and 1974. Cattle export taxes amount to about MF 5,000 per head and slaughter taxes are usually MF 300 per head. Although these taxes are very unpopular, and probably less than half are actually collected, they are the only proven way of raising revenue from livestock. The Bank Group is financ- ing studies in Chad and Nigeria to see whether more effective taxation can be devised, possibly through passing taxes further down the marketing chain. Similar work would be carried out in Mali under this project (Annex 11). Institutions 2.17 The Livestock Service has six regional departments organized into 42 sectors. The Service is relatively well staffed for its present commitments with 40 veterinarians, 26 livestock officers, 150 assistant livestock officers, 300 animal health assistants and 110 inoculators. It is responsible for (i) free vaccinations; (ii) supervision of abattoirs, cattle markets and butcher shops; (iii) production of vaccines; and (iv) supervision of the Bamako dairy plant. The Service is oriented towards the veterinary medical aspects of livestock and, so far, has been only little involved in assisting pastoralists to improve their husbandry, for example through better nutrition and pasture management. Lack of funds has limited the Service's activities since the end of the antirinderpest campaign in 1969, but recently the Service has been strengthened, at least temporarily, by international drought relief programs, which have provided vehicles and other facilities, and in some cases operating expenses. 2.18 OMBEVI (Office Malien du Betail et de la Viande), assisted by a five-man FAO team, collects marketing statistics and advises Government on meat marketing. It is working on recommendations covering domestic retail meat prices and improved marketing (para 6.04).  -6- 2.19 SOMBEPEC (Societe Malienne du Betail et des Peaux et Cuirs) a State enterprise, has a monopoly of exports of carcass meat (para 2.1:), hides and skins, and also manages the Bamako abattoir. SOMBEPEC has serious financial and management problems, and finds it difficult to compete with private entrepreneurs for its supplies. The Government is aware of this and intends to reorganize SOMBEPEC this year. 2.20 IER (Institut d'Economie Rurale) is responsible for training eLnd research. Training is concentrated on Animal Health Assistants (35 pe. year), Livestock Officers (30-40 per year) and Veterinarians (8-10 per year, abroad). In addition, there is a four-month practical course for Animal Health Assis- tants in animal husbandry at the Sotuba Livestock Research Center. The train- ing programs are of a high standard, and the output of trained personnel is sufficient for the country's requirements. 2.21 Livestock research is carried out at the Sotuba and Niono stations, which are located near Bamako and in the 4th Region respectively. Prorising results have been obtained in cattle fattening; and in milk production w:th Jersey x local cattle crossbreeds, although these results have not yet been taken up by private farmers and pastoralists due to limited extension anld credit facilities. Livestock Development: Projects 2.22 Several aid agencies are assisting Mali in developing its livestock industry. USAID is providing about MF 2 billion for a veterinary laboratory near Bamako, and is starting a MF 1.7 billion cattle fattening program -.nvolv- ing feedlots, smallholders, and butchers/cattle dealers between Bamako and Segou. FED is beginning a MF 1.4 billion project for selecting and distri.- buting N'Dama cattle in tsetse infested areas and intends to finance a fattening ranch at Niono in Mali's 4th Region. It is also providing MF 12l billion for improving livestock water supplies, MF 300 million for vaccities and MF 50 million for mineral licks. D. Deterioration of the Pastoral Resource 2.23 The principal problem facing the development of Mali's livestock industry, and especially the traditional industry of the Sahelian zone, is the progressive degradation of pastures, which in the northern areas is result- ing in the advance of desertic conditions. The recent drought years have accelerated this condition which results from overstocking and overgrazin;, of cattle. Overstocking is a consequence of a number of interdependent aAid mutually reinforcing factors that together have resulted in too many anim,als being dependent upon a diminishing pasture resource. 2.24 This situation arose because existing economic circumstances mai.e maximizing herd size the most rational production objective of the average pastoralist. These economic circumstances are:  -7- (a) Pastoralists have no legal rights to the use of grazing land, which is state-owned and used communally; consequently each livestock owner grazes as many cattle as he can in an attempt to maximize his share of the common resource. (b) In the absence of banking facilities and any other investment opportunities, cattle provide the only means of accumulating wealth. (c) Milk is an important component in the pastoral family's diet and its sale is usually the only source of regular cash income. Consequently, the proportion of cows is deliberately kept high, which permits the herd to expand rapidly when grazing cond,itions are favorable. (d) Large cattle numbers are an insurance against the risks of losses from drought and disease. 2.25 Additionally, external intervention has further decreased the ratio. of grazing land to animals because: (a) Livestock projects have concentrated on providing improved animal health care and watering facilities, and neglected the need for control to ensure a balance between animal numbers and the carrying capacity of pastures. They have led to a rapid increase in livestock numbers and serious overgrazing. (b) Due to population pressure more and more farmers have moved into traditional pasture lands and started to cultivate there. (c) Increasing numbers of cattle have moved in from Upper Volta and Mauritania, from the former because of the population pressures described in (b) and from the latter because of deteriorating pasture conditions. 2.26 Finally, until recently, cattle movements and the duration of grazing in each area have been governed by strict traditional rules. Tradi- tional authority is now breaking down and there has been little if any effort to identify an alternative. 2.27 If one of Mali's principal resources is to be preserved, and if the impact of future droughts is to be minimized, livestock numbers must be regulated. The range must never be grazed so hard that it deteriorates and fails to regenerate sufficiently quickly to prevent permanent damage.  E. Livestock Development Strategy 2.28 An international emergency effort has been mounted in an atterpt to relieve some of the effects of the drought on the livestock industry Mostly this is in the form of financing small, short-term projects with quite limited objectives. While these projects, among which is the IDA finani:-ed Drought Relief Fund E'roject (para 1.02), are aimed at helping people in tae drought affected areas to reestablish their self-sufficiency, there is Lfn urgent need for longer term projects aimed at a more rational land and pasture use in the Sahelian zone, and at the development of more efficient beef and milk production in other parts of the country. 2.29 The objectives of Government's livestock development strategy are to increase the productivity of livestock resources and to expand the volume of livestock exports, principally, through: (a) helping nomads and semi-nomads make the best use of pasture land; (b) opening up rnew grazing areas; and (c) helping farmers in higher rainfall areas take up beef and milk production. 2.30 Achievement of the first objective requires an integrated approach such as would be implemented under the proposed project. 2.31 In the case of the second objective, Mali still has large areas cf underutilized rangeland that could be more efficiently used through providling better watering facililties. A benefit of this approach would be to relietre pressure on the present grazing areas. An important water development pro- gram in the 5th Region is included in the proposed project. The Governmert also plans to combat trypanosomiasis in large areas south of latitude 130 north, and has already started to study the methods to be applied. 2.32 In pursuit of the third object, much is already being done to help farmers take up livestock production. Modern techniques are being tested ard demonstrated at two research stations, a FED-financed ranch, and in the "Office du Niger" irrigation scheme. A USAID scheme is to provide training, extent-ion, and credit for cattle fattening by farmers. To make cattle fattening more attractive and to help rebuild the national herd, Government has prohibite:1 exports of agroindustrial by-products, such as groundnut and cotton seed cELke, and fixed their retail prices well below border prices. Feeder steer markit- ing to serve fattening schemes would be developed under the proposed proje:t. Finally, as the area around Bamako is suitable for milk production, the Go';ern- ment intends to start a smallholder dairy scheme there which will include artificial insemination, pasture improvement, and fodder growing.  -9- III. THE PROJECT AREA 3.01 The project would cover the 5th Region (Annex 1; Map), which consti- tutes the most important and high potential livestock area in Mali, and pro- vides an excellent testing ground for the range management methods provided by the project. The area is about 89,000 km2 and has a population of about 1.12 million people. Annual rainfall increases from about 300 mm in the north to 700 mm in the south and occurs from June through September; a dry and cooler period follows through February, and a dry and hot season from March through June. The main ecological feature is the 38,300 km2 Central Delta of the Niger River, which divides the Region into two parts. The Niger and its tributaries overflow every year in August/September, reach maximum flood in October/November, and then recede, with the lowest flow in June/July. 3.02 There are two main pastoral groups: the Peuhl, who make up 36% of the total population but own 80% of the livestock, and who depend on the "bourgou" for dry season grazing; and the Touaregs, about 5% of the 5th Region's population, who frequent the northeastern part of the 5th Region and the grazing areas of the northern lakes. The remaining 60% of the total population are mostly Marka, Dogon and Bambara cultivators. The regional capital, Mopti, has about 35,000 inhabitants, almost double its population of a decade ago. It is the commercial center for fish exports to the south and for rice and millet marketing. 3.03 In 1972, the 5th Region had about 30% of Mali's cattle (1.7 million) and 20% of the sheep and goats (2.3 million). As a result of the 1972/73 drought, about 25% of the cattle were lost, and 10% of the sheep. All cattle are Zebus and trypanosomiasis is not a problem. During the hot period of the dry season, most of them graze on the rich pastures of the Delta; in June, with the first rainfall and the beginning of flooding, they move on and until November graze on the ample Sahelian pastures in Mauritania, in the Mema region in the north-west, and in the Seno/Gandamia and Gourma areas in the east. In November, cattle return to the borders of the inundated Delta and, as the water recedes, they spread into the Delta itself. 3.04 The ratio of grazing land to animals has steadily decreased over the past decade as the cattle population has doubled and, as a consequence, pastures are being depleted. In addition to the build-up of local herds, there has also been an influx of about 300,000 cattle from surrounding regions that have been more severely affected by the drought. At the same time, both pasture area and quality have diminished, due principally to the repeated droughts and the encroachment of farmers on traditional grazing areas.  - 10 - IV. THE PROJECT A. Summary Description 4.01 The project would aim at the rational use of land and water in the 5th Region and would help about 100,000 pastoralist families to rebuild a.d improve their herds and to protect them against future droughts. An essential feature of the project: would be to develop effective grazing control, wh:.ch offers the only means of creating and maintaining the conditions in whicns efficient and stable livestock production can be developed on the 5th Region's rangeland. 4.02 A combination of incentives, regulation and education is needec. to make grazing control effective: regulation without education would mean friction between pastoralists and authorities; education alone would produiue results too slowly; and neither would have any lasting effect in the absence of strong incentives. The incentives and measures used would be adapted to the different areas covered by the project. 4.03 In three special areas - one of about 5,000 km and the other two about 1,000 km2 together - permanent watering facilities would be provided, along with animal health and extension services. Pastoralists in these areas would have user rights to land and watering facilities which would be granted and safeguarded by the Government on condition that the land and facilities were properly used and that grazing was controlled. This would provide the pastoralists with an incentive to use their land and facilities properly .md an opportunity to invest in further developments such as fencing, additiol,al watering facilities, et.c. To facilitate regulation and control, the projcct would aim at setting up pastoralists as legally constituted groups. Othel: areas amounting to abou.t 10,000 km2 would be provided with seasonal ponds and improved animal health services. The location of the ponds would be designed to increase the pasture available at the beginning of the dry season and thereby reduce the pressure on the dry season pastures in the Niger Delta. As the areas to be provided with permanent and seasonal watering facilities only cover about 20% of the 5th Region, and since the methods oE introducing grazing control are new and untried, emphasis would be placed t)r the preparation of a second-phase project based on the experience provided by the first. 4.04 The project would be carried out over the five years 1975-79 and would comprise: (a) introducing livestock extension services and grazing control in three special development areas; (b) providing improved animal health services throughout the 5th Region;  - 11 - (c) constructing 70 wells and 50 ponds; (d) constructing and managing an abattoir and hide-drying facilities at Mopti-Sevare; (e) constructing and managing five livestock markets; (f) establishing and managing a 150-ha livestock and pasture trial station; (g) providing personnel training and testing a functional literacy program for pastoralists; and (h) preparing a second-phase livestock project. 4.05 At present, the sole Government agency concerned with livestock in the 5th Region is the Regional Livestock Service of the Ministry of Produc- tion, which only provides veterinary service. The implementation of the proposed project, however, would require placing a number of diverse programs under unified control. For this purpose, the Government would establish the Operation de Developpement de l'Elevage de la Region de Mopti (ODEM), under the Ministry of Production, to carry out the project. B. Detailed Features Livestock Extension and Grazing Control 4.06 The Pastoral Service, which would be one of the arms of ODEM, would provide livestock extension services and be responsible for introducing graz- ing control (Annex 4) in the 5th Region. The difficulties in introducing efficient grazing control on a large scale should not be underestimated, due to the Region's harsh environment, remoteness and poor infrastructure. Not the least of the problems will be that the pastoralists will be suspicious of Government interference and skeptical of the benefits to them. On the other hand, they have been seriously afflicted by the recent droughts and should now be more receptive than ever before to innovations, particularly when, as under the project, a number of incentives to adopt these innovations would be presented. 4.07 As a first step, the Pastoral Service would develop its activities in the three areas scheduled for well development, which cover about 7% of the 5th Region (para 4.17). The initial task of the Pastoral Service would be to elaborate the decree Government would use as the instrument of establish- ing groups of pastoralists and providing these with user rights for grazing lands and watering facilities. The groups so constituted would consist of sedentary or semi-nomadic village associations each with 10 - 50 families of 6 persons on average and a total of 200 to 1,000 cattle per group. Each group would receive the exclusive user rights over 2,000 to 10,000 ha -- about 10 ha per head of cattle -- and related watering facilities. During negotiations,  - 12 - assurances were obtained that the Government would issue a decree, sai:is- factory to IDA, giving ODEM the authority to: (a) grant user rights :o grazing land and watering facilities in the 5th Region; and (b) issue and enforce grazing control regulations. 4.08 The user rights to grazing land would be granted to pastora:-i3t groups contingent upon their agreeing to follow sound range and cattlt. mana- gement practices prescribed by, and under the supervision of, ODEM. "has, they would be expected to agree, inter alia, to avoid over-grazing throligh rotational grazing and the limiting of stock numbers; adopt more raticnal breeding policies; apply the animal health measures recommended by ODIM; maintain their watering points; control bushfires; plant, water and pro:ect fodder tree/shrub saplings and participate in functional literacy programs. These management practices would constitute the key medium to achieve a rational utilization of rangelands in the project area. In the light of the presently favorable attitudes of pastoralists to adopt innovations (para 4.06), it is believed that the opportunity to obtain exclusive grazing rights would constitute strong incentives to follow ODEM's advice. This belief is sub- stantiated by the response of pastoralists in East Africa to similar oppor- tunities, and by aslpirations expressed in Mali by pastoralists to the ap- praisal mission and Malian officials. While these incentives would favor the objectives of the project, it would be unwise to rely solely upon them (para 4.02). Therefore ODEM would need to have the power and means of enforcing compliance to the management covenants. On these matters, ODEM would act through the Governor of the 5th Region who, on the advice of ODEM, would first warn participants whlo fail to cooperate that they may lose their grazing right. Subsequent and persistent failure would then lead to the imposition of fines and, ultimately, to the cancellation of the grazing right, and another group would be invited to replace the offending group. The Governor of the ..ith Region would also be responsible for preventing the encroachment of other pastoralists on the grazing land vested in a participating group; to t].at effect, the Governor would take appropriate action on the advice of ODIM. During negotiations, the Government indicated that the Governor of the 5th Region would take appropriate action, on the advice of ODEM, to enforce: 'he agreements arrived at between pastoralist groups and ODEM. Under presen: circumstances, it is believed that the proposed arrangements would be su:.fi- cient to obtain the adequate cooperation of pastoralists. Indeed, it i.s ex- pected that, after four to five years of implementation of the program, wihen pastoralists should feel that their rights are secure, it should be poss:.ble to require them to pay grazing fees (para 6.10). The ultimate goal of the program would be to create the environment in which the groups would be pre- pared to invest their own labor and money in additional land developmentEs such as fencing and watering facilities. 4.09 Since fires destroy up to half of the Seno Mango rangeland an:itally, the Pastoral Service would introduce fire-control measures in that area, As a trial, two units, leach consisting of a vehicle, a water tank sprayer, and auxiliary equipment, would be purchased in PY 3. In addition, the Past:)ral Service, through education and example, would enlist the help of the lo::al population in fire control.  - 13 - 4.10 In order to combat desertification and to provide supplementary feed, the Pastoral Service would promote the planting of fodder trees and shrubs (Annex 4, Table 2), making use of the transport provided for fire- control. Saplings would be provided free of charge and, to begin with, would be planted around villages, thus serving not only as feed but also as wind- breaks and for firewood, which would be very much appreciated by the villagers. These locations near villages would, at the same time, facilitate the protec- tion and watering of the saplings. In this connection, ODEM would maintain close liaison with the Water and Forest Service, and the project would assist the latter to rehabilitate eight tree nurseries and to establish two new ones. 4.11 Over the project period, the Pastoral Service would recruit a Head of Service, four Extension Officers, 11 Assistant Extension Officers, 24 Exten- sien Assistants and 25 other staff. There should be no difficulty in recruit- ing the staff required. In PY 1, two extension posts and six outposts would be built; and two further posts and two outposts would be built in PY 3 (Map). Vehicles would be provided, and horses for some outposts (Annex 4, Table 1). Animal Health Services 4.12 Provision would be made for a five-year Region-wide vaccination campaign against rinderpest, contagious bovine pleuropneumonia (CBPP), anthrax, blackleg and bovine/ovine haemorrhagic septicaemia (Annex 5). In the special development areas (para 4.07), drugs, insecticides and mineral blocks would also be made available. To act as an incentive for their use and to induce pastoralists to participate in the pasture control programs, all these services would be provided free of charge during PY 1 and 2; subsequently, and to guard against the danger of epidemics, only vaccination against rinderpest and CBPP would be provided free. The collection of charges for the other services is likely to be difficult, but is desirable in order to decrease Government's recurrent costs. During negotiations, assurances were obtained from the Government that it would entrust ODEM with the collection of charges for animal health services and would ensure control of the major infectious diseases after December 31, 1979. 4.13 Staff of the Livestock Service operating in the 5th Region, who would be transferred to ODEM, would be strengthened by an additional 60 per- sons bringing the total to about 200. Staff schedules are in Annex 5. New staff would range from veterinarians, through livestock assistants, to skilled and unskilled workers. This increase can be met from the output of present training programs. 4.14 The infrastructure and equipment of the Regional Livestock Service would also be transferred to ODEM, and would be supplemented under the project by three veterinary posts, 10 vaccination yards and five cattle dips (Map); needed transport, veterinary and laboratory equipment also would be provided. During negotiations assurances were obtained from the Government that it would transfer to ODEM no later than one month after the Effective Date of the Credit the staff and facilities from its Livestock Service within its Fifth Region.  - 14 - Watering Facilities 4.15 Fifty ponds would be constructed or rehabilitated in the lower rainfall zones of wet season grazing areas to the east and west of the Niger Delta (Annex 6; Map). These would encourage herdsmen to delay their retu:n to the dry-season grazing areas of the Delta, thereby reducing both over- crowding at the borders of the Delta and friction between farmers and her.:[smen by preventing crop damage and enabling farmers to harvest their rice at fgill maturity. Moreover, as these ponds would dry up during the first half of each dry season, the danger of overgrazing around them would be minimized. Th,. ponds would only be located where sufficient grazing was available for adc'.itional livestock. The siting of new ponds would be agreed between the Government. and IDA (para 4.17), on the basis of criteria given in Annex 6. 4.16 The ponds would be constructed and maintained by the Rural Engir.eer- ing Department, of the Ministry of Production, with heavy equipment and stpar- visory staff financed by the African Development Bank. Pond maintenance costs are high, as every 5th year or so about 1,000 m3 of earth must be excavated from each pond; funds for pond maintenance in PY 5 are included in project: costs. 4.17 Seventy wells would be provided in the areas with higher rainfall (Annex 6; Map). Ten of these would be west of the Delta, to guarantee water supplies along traditional cattle routes; and 60 in the Seno Mango, a distinct socioeconomic unit of nearly 500,000 ha of good rangeland which, at present, is only very lightly grazed, due to lack of watering facilities. The location of the wells and the timing of their construction would be carefully plannec. and controlled. During negotiations assurance was obtained that the first season's well construction program, and the entire pond construction pro- gram would be preceded by a plan of action acceptable to IDA, and that the Government shall cause O)DEM not to proceed with the second and third seasoni's well construction programs until the Government, IDA and ODEM shall have re- viewed the results of grazing control around the wells constructed during L:he preceding well construct:ion season(s). 4.18 Forty wells would be built by contractors for which ODEM, in col:lai- oration with the Hydraulic Service of the Ministry of Public Works would pire- pare the bidding documents; and 30 wells would be built on force account bl; the Hydraulic Service with equipment financed under the project. 4.19 During negotiations, assurances were obtained from the Government; that it would cause all project financed ponds and wells to be maintained properly. Abattoir and Hide-Drying Facilities 4.20 The project would provide for the construction and operation by ODEM of a simple municipal abattoir and hide-drying facilities to replace the existing two primitive abattoirs of Mopti and Sevare (Annex 7). The  - 15 - replacement of the Mopti abattoir is particularly desirable as it pollutes the large stagnant lagoon of this town. The new facilities would be 15 km from Mopti and about 1 km south of Sevare, the nearest site not flooded during the rainy season; they would be on the all-weather Mopti-Bamako highway, and only 1 km from Mopti airport. The abattoir would meet modern standards of hygiene and would be able to slaughter 48 cattle and 100 sheep and goats per day. The hide-drying facility would have sufficient capacity to dry the daily output of hides and skins from the abattoir. Animals would be slaughtered by abattoir employees and carcasses and edible by-products would be delivered by the abattoir to butcher shops. Slaughter fees of about MF 2,000 per head of cattle and MF 350 per smallstock would be charged to make the facilities financially self supporting. These fees are about five times higher than the current slaughter taxes, and represent 5-10% of the value of the animals; but they would be acceptable to the butchers because they are anxious to reduce the significant losses arising from the present inadequate facilities. 4.21 ODEM would employ consultants to prepare detailed plans and tender documents for the facilities. An assurance was obtained during negotiations that the consultants and their terms of reference and conditions of employment would be acceptable to IDA. Construction would begin at the end of PY 1, be completed by the end of PY 2, and be supervised by the Rural Engineering Department. During negotiations, assurances were obtained from the Government that: (i) no slaughter would be licensed within the Mopti-Sevare municipality except at the abattoir to be constructed under the project; (ii) ODaM would be allowed to levy economic slaughter fees in this abatto4r; and (iii) the municipality would renounce the slaughter taxes presently levied. Livestock Markets 4.22 There are no properly equipped and organized livestock markets in the 5th Region. Improvements are needed in order to develop competitive trading, encourage pastoralists to sell surplus cattle and, at the same time, provide an incentive for settlement in the area. ODEM would, therefore, construct and operate five livestock markets. Details of these markets are in Annex 8 and their location is shown on the attached map. Each market would operate one day a week and their capacity would range from 400 - 800 head of cattle and from 1,000 - 1,200 head of smallstock. Market fees, MF 150 per cattle and MF 50 per-smallstock, would guarantee the financial independence of these markets. Cattle owners would be willing to pay these fees in return for access to both physical facilities such as watered paddocks, and to more competitive buyers from which a better price could be expected. The Rural Engineering Department would prepare the plans for the simple facilities required, and would supervise their construction. Mopti Trial Station 4.23 As current research and trial programs on livestock production in both Mali and elsewhere in West Africa are largely irrelevant to the unique problems of the Niger Delta and other seasonally inundated areas in West Africa, a 150-ha trial station for fodder and livestock studies (Annex 9) would be established 8 km north of Mopti to: (a) determine methods to  - 16 - protect, regenerate and improve the productivity of the pastures of the Central Delta, (b) establish the economics of different fattening techn>.ques, and (c) develop methods for the control of parasites and insects. Techiiiques worked out in the station would be tested in two nearby villages. The :tation would be operated by ODEM in close coordination with IER (Institut d'Ec4:,nomie Rural) and would also have the possibility of calling on ILCA and ILRAD as needed. 4.24 Dike construction and preparation of 50 ha for irrigation and simulated flooding regimes at the station, financed under IDA's Drought Relief Fund Project, already have been carried out. The proposed project would finance buildings and construction, equipment and livestock, and running costs of the station over the five-year disbursement period. Tha Rural Engineering Department would elaborate plans and tender documents Ec,r the station and would supervise the construction works. During negotiat:Lcns, assurances were obtained that the plans and specifications for the establish- ment of the station and its annual work program for the five-year disbursement period would be acceptable to IDA. Personnel Training and Functional Literac_ Programs 4.25 Although training in livestock production in Mali is of a high standard and can meet the recruitment needs of the project, some additional specialized training would be needed for ODEM's medium and lower grade technical staff, particularly in extension methods and range management. The project would finance four-month courses in these subjects -- for 30 participants in PY 1 a:nd PY 2 and for 20 participants in PY 3, PY 4 and P' 5 -- using existing facilities of the National Livestock Research Center at Sotuba (Annex 10). There would also be: (a) a 2-3 day seminar for all project staff in Mopti once a year at which the project's progress and future work programs would be reviewed: (b) six two-month fellowships for senior ODEM staff to vi.sit livestock projects in other parts of Africa; an.d (c) four man-years of overseas training, mainly in development planning ard management, for four Marlian graduates. 4.26 To reinforce the impact of the training programs under the projec:, functional literacy would be organized under arrangements similar to those in the Integrated Rural Development Project (Credit 491-MLI). The Pastoral Service would, with the aid of the National Functional Literacy Center, design, develoo and evaluate a functional literacy program for pastoralisti; which would be the first of its kind in West Africa. To this end, the Pastoral Service would identify and set up approximately twenty functional literacy groups which would be instructed by specially trained cattle owners selected by the Service., using materials developed in the local language, Peuhl. At the end of the course, the participants' comDrehension and appl:.ca- tion of the new procedures introduced by the Pastoral Service would be assi-ssed and compared with those of a control group of illiterate pastoralists in the Project. The cost of a specialist in functional literacy has been includec in the budget of ODEM tcgether with other costs pertaining to the design arid development of materials and the initial operation of the functional literacir  - 17 - groups. During negotiations, assurances were obtained from the Government that it would cause the National Functional Literacy Service to make avail- able, no later than one year after the Effective Date of the Credit, to ODEM an experienced and qualified officer. Preparation of a Second-Phase Project 4.27 Areas in which the full package of grazing control, water develop- ment and veterinary services would be provided would cover only about 20% of the 5th Region. Thus, one of the main tasks of ODEM would be to assist IER to elaborate, with the assistance of specialized consultants as required, investment proposals for the whole of the 5th Region in the form of a Regional Livestock Development Plan (Annex 11) to be implemented under a second-phase project. For this purpose, the Region would be divided into "development areas", and the main emphasis of the Development Plan would be the achievement of better utilization of the rich pastures of the Delta. A tentative list of development areas is given in Annex 1, Chart 1. Most could be developed like the Seno Mango area, since they have reliable dry-season grazing; in other cases the herds would need to obtain assured access to a designated dry-season grazing area in the Delta. All "development areas", however, should have in common that they were intertribally acceptable, fitted into the present land use pattern, and contain sufficient watering points. The Regional Livestock Development Plan would draw from the experience gained during the project and thus it is important that the progress and achievements of this project be properly monitored. To that effect, the Government would cause IER to prepare a program to monitor the project to be submitted to IDA for approval no later than one year after Credit Effectiveness, and to make a livestock specialist permanently available for monitoring and evaluating the project. Appropriate assurances were obtained during negotiations. 4.28 Many innovations would be tested and developed in the proposed project, which would be carried out, initially at least, in a climate of uncertainty as to how the pastoralists will respond. For this reason, the project should be thoroughly reviewed after about three years experience. Any necessary modifications would be introduced into the ongoing project and incorporated into the second-phase project. The second project could then be appraised in PY 4 and start in PY 5, thus facilitating the continuity of the program. C. Organization and Management Organization 4.29 The Operation de Developpement de l'Elevage de la Region de Mopti (ODEM) would be a branch of the Ministry of Production responsible for all livestock development in the 5th Region and for the execution of the proposed project. ODEM would be headquartered at Mopti-Sevare, and the Rural Engineer- ing Department would prepare the plans, specifications and bidding documents  - 18 - for ODEM's headquarters and staff houses and supervise their construction. ODEM would have legal authority to grant user rights to grazing lands and watering facilities to pastoral groups in this Region, to issue and eiiforce grazing control regulations (paras. 4.07-4.08), and to prescribe cond:.tions for their use. It would be a Condition of Credit Effectiveness that I)DEM had been established with responsibilities and powers acceptable to I;;DA. Staffing 4.30 ODEM would employ 12 senior staff and by PY 5 about 500 support staff. It would be headed by a Director and would include (Annex 3; Chart): (a) Field Services, comprising the Pastoral Service, the Animal Health Service and the Livestock Marketing and Processing Service, each under a Head of Service; (b) the Mopti Trial Station, headed by a Livestock Research Officer assisted by a Pasture Agronomist; (c) a Planning and Range Management Unit, consisting of a Community Development Officer, a Livestock Economist, a Range Management Officer, and a Water Development Officer, and headed by one of ODEM's Deputy Directors; and (d) an Administ:rative and General Service, under an Administrative Officer. 4.31 The terms of reference of ODEM's 12 senior staff (listed above) are at Annex 14. As it is unlikely that qualified and experienced Malianas would be available to fill all the senior posts, expatriates would proba.ly have to be recruited for at least the following: Deputy Director, Range Management Officer, Water Development Officer, and Pasture Agronomist. Eighteen man-months of consultant services to be employed in preparation of the Regional Livestock Development Plan to be implemented under a second-phase project would also be provided under the project (para 4.27 and Annex 11). During negotiations, assurances were obtained from the Government that tl:e qualifications, experience and terms of reference of the project's 12 sellior staff and the consultants would be acceptable to IDA, and that it would callse ODEM to employ, no later than October 15, 1975, eight senior staff. It would be a Condition of Effectiverness that the Director, two Deputy Directors aad an Administrative Officer had been employed by ODEM. 4.32 Training Malians to replace expatriate staff would be an important function of the latter., Malians would not be appointed as counterparts t,-: expatriates, but would hold posts with specific responsibilities. Promotion to succeed an expatriate would be contingent upon acquisition of approprizta experience during project implementation. The timetable for the replacemen: of expatriate personnel would be along the lines of the schedule of Annex 3.  - 19 - D. Accounts and Audit 4.33 ODEM would keep records consistent with sound accounting practices and adequate to reflect its operations and financial condition, and would employ independent and qualified auditors. Assurances were obtained during negotiations that: (a) ODEM would appoint auditors acceptable to IDA; (b) copies of ODEM's audited accounts and of the auditor's report thereon would be submitted to IDA within five months of the end of each financial year; and (c) the report of the auditors would be of such scope and in such detail as IDA may reasonably request. V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS A. Project Costs 5.01 Total project costs for the five-year disbursement period, 1975-79, are estimated at US$17.3 million, including a foreign exchange component of US$9.0 million. The costs are detailed in Annexes 15 and 16, and summarized below: StMl.O