Benin - Forestry Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. 4687-BEN STAFF APPRAISAL REPORT BE NI N FORESTRY PROJECT May 29, 1984 Regional Projects Department Western Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PEOPLE'S REPUBLIC OF BENIN FORESTRY PROJECT CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) US$1 = CFAF 418 1/ CFAF 1 million = US$2392 1/ The CFA Franc (CFAF) is tied to the French Franc (FF) in the ratio of FF 1 to CFAF 50. The French Franc is currently floating. ABBREVIATIONS ADB - African Development Bank CARDER - Center for Regional Action of Rural Development DEFC - Department of Forestry, Water and Hunting DRA - Agricultural Research Department (Direction de la Recherche Agronomique) FRG - Federal Republic of Germany GTZ - Gesellschaft fur Technische Zusammerarbeit KFW - Kreditanstalt fur Wiederaufbau MDRAC - Ministry of Rural Development and Cooperative Action (Ministere du D6veloppement Rurale et Action Cooperative) MFEEP - Ministry of State Farms, Livestock and Fisheries (Ministere des Fermes d'Etat, de l'Elevage et de la Peche) MESRS - Ministry of Higher Education and Scientific Research (Ministere de l'Enseignement Sup6rieur et la Recherche Scientifique) ONAB - State Wood Company (Office National du Bois) SNAFOR - National Forestry Development Company (Societl& Nationale pour le Developpement Forestier) UNSO - United Nations Sudan-Sahel Office FISCAL YEAR January 1 - December 31 PROJECT YEAR July 1 - June 30  FOR OFFICIAL USE ONLY BENIN Forestry Project Table of Contents Page No. I. Introduction . ............................. ^........... ............... 1 A. Background. . ................. ..... . 1 B. The National Economy . ................. ....... ....... . 1 C. The Forestry Sector . ............... . ..... .............. . 3 (a) Forest Resources ... ...... . . . .............. -...... ...... 3 (b) Production and Demand .. . ..... .............. 4 (c) Institutions and Training 5 .......... o .............. 5 (d) Forestry Policy and Strategy ...7o.............. 7 (e) IDA Involvement ................. o......... 8 II. The Project Area .* .... ..8.... . ... .. 8 III- The Project *-o ....................... - ....- -4-.0-0.0.0.0.0 10 A. General Overview ..................... 10 B. Detailed Features ... ........................ ......... 11 (a) Strengthening DEFO .. . . ..... ..... oo .. 11 (b) Lama Plantation . . .... .............. . .v. ........ .... 12 (c) Pilot Plantations . .. - .. .... .. ........ 14 IV. Organization And Management .................... ...... ...... 14 A. General .............. - . , .14 B. Plantations .......... o...... ..... ... o..o.-...... .... 14 V. Costs And Financing Arrangements . ... .... ..... 15 A. Project Cost Estimates .......o ...... P-................. 15 B. Proposed Financing ....... ... .. . ...... o.. ... 16 C. Onlending Arrangements ........... ..... . . 19 D. Procurement .... ..o ........................... 19 E. Disbursement . ......... ........ ......... 20 F. Accounts, Audit and Reporting Requirements ...... .......... 21 VI. Production, Markets, Prices And Financial Results ........ .. .. 21 A. Production ........ ....... 21 B. Markets and Prices .... ...21 C. Financial Results ...................... ..23 This report was prepared by Messrs. Fishwick and Crown and Ms. Jaisaard of the Western Africa Projects Department with the part-icipation of Mr. W. Hanover, consultant. Ms. Playfair-Scott was primarily responsible for report typing. Figures and calculations were checked by Mr. D. prayton. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedl without World Bank authorization.  - ii - VII. Benefits, Economic Justification And Risks .... ..... .... 25 A. Benefits ...... .. ......... ., 25 B. Economic Justification *...........................e..... 26 (a) Economic Analysis and Rate of Return (ERR) .......... 26 (b) Sensitivity ................................. .... .. 26 C. Risks .....* *..... ...O.....#.......... O.... 27 VIII. Assurances And Conditions ......................... 28 Annexes 3. Organigram ... ... .......... 29 5.1 Project Cost Estimates ..... . . . ...... . .... . ........... 30 5.2 Disbursement Schedule .................. .... ...... ,..... 31 6.1 Government Cash Flow .......*..#.*......... 32 Map - IBRD 17325  - iii - BENIN FORESTRY PROJECT Documents Available in the Project File Section I A. Basic Technical and Cost Tables Table 1 Calculation of Delivered Cost and Operating Costs of Project Vehicles and Equipment Table 2 Calculation of Fuel, Lubricant Requirements, Costings, Tax Duties, Foreign Exchange for all Engine Driven Equipment Table 3 Equipment and Labor Inputs/ha of Plantation Table 4 Plantation Costs/ha Table 5 Plantation Programme and Equipment Requiremnts Table 6 Teak Volume Production/ha Table 7 Teak Plantation Project Production B. Project Cost Tables Table 1 Investment Costs for Vehicles, Machinery and Equipment Table 2 Vehicles Operating Costs Table 3 Plantation Operating Costs Table 4 Civil Works Table 5 Additional Personnel: Lama Plantation Table 6 Road/Track Construction and Maintenance Costs Table 7 Lama Component--Technical Assistance Table 8 Pilot Plantation Program Table 9 DEFC Strengthening Summary Tables - Summary Account by Time - Project Component by Time - Summary Account by Project Component - Project Cost Summary Section II - Financial Tables Table 1 Teak Plantation Stumpage Value for Sawn Timber Table 2 Teak Plantations Stumpage Value for Poles and Fuelwood Table 3 Stumpage Value at Roadside of Salvage Logging in Lama Table 4 Production and Stumpage Value of Wood from Salvage Logging of 3,800 ha in the Lama Area Table 5 Calculation of Financial and Economic Salvage Value of Plantation Machinery at Project Year 5 Table 6 Debt Services Table 7 Calculation of Weighted Stumpage Fees According to Defferent Forest Products for Lama Forest Plantation Table 8 Calculation of Stumpage Fees  - iv - Section III - Economic Tables Table 1 Teak Plantation Stumpage Value for Sawn Timber Table 2 Teak. Plantation Stumpage Value for Poles & Fuelwood Table 3 Stumpage Value at Roadside of Salvage Logging in Lama Table 4 Opportunity Cost of Existing Bush Savannah and Land Utilization by Farmers Table 5 Economic Costs of the Project Table 6 Economic Benefits, Economic Costs and Net Benefit Streams of the Project Section IV - Remarks on Proposal for the Establishment of a Fuelwood Plantation of Toui Forest Reserve Section V - Evaluation of Profitability of Charcoal Production Section VI - Forestry Research Also Available: Projeot Preparation Report: FAO/World Bank Cooperative Program Report No. 5/83 C1P - BEN9 Document No. 128.904 (2)  v PEOPLE'S REPUBLIC OF BENIN FORESTRY PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of Benin Amount: SDR 5.1 million (of which SDR 2.5, IDA; SDR 2.6 IDA Special Fund) Terms: Standard IDA terms Co-financing: Federal Republic of Germany Project Description: As principal objectives, the project would: (i) reorganize and increase the technical capacity of Government's Forestry and Hunting Department (DEFC), to increase its effectiveness in (a) collection and use of basic information for the formulation of an appropriate forestry strategy, (b) planning, coordinating and executing programs to implement the strategy, and (c) design and administration of fiscal measures influenc- ing the forestry sector; and (ii) execute an industrial plantations program to reduce future dependence on imported sawn timber, and generate revenues for further forestry development. To achieve these objectives, the project would consist of: (a) the establishment of a permanent unit within DEFC responsible for strategic planning and programming, and administration and control of sectoral finances, with material, logistical and technical support; (b) the establishment and maintenance of a 3,800 ha teak sawlog plantation in the Lama Forest Reserve; (c) the establishment and maintenance of 410 ha of pilot plantations within Toui and Lama Reserves to test improved species and sources of seed, establishment and maintenance techniques, and charcoaling methods; and (d) the execution of studies in support of the formulation of a forestry strategy, improved plantation establish- ment and preparation of possible future forestry development projects.  - vi - Benefits and Risks: The project would result in reorganizing the DEFC so that it could formulate and execute Government's policy for the forestry sector. This would include planning and executing programs for reforestation as well as controlling forestry exploitation and managing revenues generated by forestry activity. The industrial plantations established would produce a total of 1.8 million m3 of sawn wood, poles and fuel wood and help Benin limit imports of sawn wood after the year 2015 when substantial deficits would otherwise be expected. The project does not face abnormal technical or managerial risks.  - vii - Estimated Costs 1/ ----US$ million------- Local Foreign Total Strengthening DEFC 0.20 0.82 1.02 Teak Plantation 2.56 4.75 7.31 Pilot Plantations 0.20 0.38 0.58 Total Base Costs 2.96 5.95 8.91 Physical Contingencies 0.21 0.44 0.65 Price Contingencies 1.53 1.87 3.40 Total Costs (including taxes and duties) 4.70 8.26 12.96 Taxes and Duties 1.41 -- 1.41 Total Costs (net of taxes) 3.29 8.26 11.55 Financing Plan -------US$ million------- Local Foreign Total IDA Special Fund 1.00 1.80 2.80 IDA 1.10 1.46 2.56 FRG -- 5.00 5.00 Government 2.60 -- 2.60 Total 4.70 8.26 12.96 Estimated Disbursement (US$ million) IDA Fiscal Year FY85 FY86 F87 FY88 FY89 FY90 FY91 FY92 Amual 0.5 0.6 1.0 1.1 1.0 0.7 0.4 0.1 Cumlative 0.5 1.1 2.1 3.2 4.2 4.9 5.3 5.4 Ebonomic Rate of Return: 14.5 percent Appraisal Report: 4687-BEN dated May 29, 1934 Map: IBRD 17325 1/ Costs estimates are based on exchange rate of US$1 = CFAF392 which prevailed at the time of negotiations; November 1983.   BENIN FORESTRY PROJECT I. INTRODUCTION A. Background 1.01 The Government of the People's Republic of Benin has requested IDA and IDA Special Fund credits totalling US$5.4 million equivalent to assist in financing a five-year forestry project with an estimated cost of US$13 million. The project would be the first IDA assisted project devoted entirely to the forestry sector in Benin. 1.02 The project was identified by a World Bank forestry sector mission to Benin in November 1981 based on earlier work undertaken by UNDP/FAO, and a forestry mission report prepared by a team from the Federal Republic of Germany in 1979. The project was prepared by a World Bank/FAO Cooperative Program team which visited Benin in October 1982, and was appraised by an IDA mission comprising Messrs. Robert Fishwick and Robert Crown, Ms. Rapeepun Jaisaard (IDA) and Mr. Wolfgang Hannover (consultant), which visited Benin in March 1983. B. The National Economy 1.03 The People's Republic of Benin is bordered by Nigeria to the east, Togo to the west, Upper Volta and Niger to the nrth and the Gulf of Guinea to the south. With a total land area of 112,000 km , the country is divided administratively into six provinces--Mono, Atlantique, Oueme, Zou, Borgou and Atacora (Map, IBRD 17325). The economy is predominantly agricultural and productivity is mainly dependent on rainfall. The agroclimatic zones in Benin are the equatorial zone to the south, with a bimodal rain distribution and the Sudano-Guinean zone in the north with a mono-modal rainfall pattern. The topography of Benin is generally flat with medium to low quality soil types. Mineral resources available include limestone, phosphate and off-shore oil. 1.04 Benin has a population estimated at 3.4 million (mid-1980) with a growth rate of 2.6% per annum. Seventy-one percent of the people live in rural areas and 95% of the rural labor force is engaged in agriculture. The country has three definable population regions: the northern region composed of Borgou and Atacora provinces, covers 73% of the area but has only 29% of the total population with an average density of 12 people per km2; the central region, covered by the Zou province, represents 17% of both the land area and of the country's population with an average density of 30 people per kmi2; and the southern region including Oueme, Atlantique and Mono provinces, covers 10% of the land area and has 54% of the total population with an average density of 164 people km . Thirty-six percent of the southern region's population is urban. The population is composed of a number of  -2- ethnic groups of which the most important are the Fon (55%), the Yoruba (13%), and the Bariba (12%). While each ethnic group has its own language, French is the official language. The literacy rate is low; 11% for the population as a whole and only 5% for those over 35 years of age. The educational refor.m of 1975 emphasized primary school attendance and scientific and technical training. 1.05 Benin is one of the world's poorest countries, with per capita income estimated at US$310 (1980). In 1981 Gross Domestic Product (GDP) was US$733 million. The annual growth rate of GDP (constant values) averaged 3% during 1971-75, was stagnant during 1976-1980 and rose to 1.8% in 1981. Agriculture, commerce and the public sector were the major contributors to GDP representing some 76%. 1.06 Agriculture is the most important sector of the Beninese economy. It employs 74% of the active population and provides 45% of GDP and 55% of the country's foreign exchange. Benin is self-sufficient in food and has been able to generate significant foreign exchange earnings from the export of cotton, oil palm products and groundnuts. Benin has also recently exported about 20% of total food production to neighboring countries, mainly to Nigeria. In 1981 agricultural production was valued around US$330 million, of which 85% was derived from crops and 15% from livestock production. The area used for agricultural production in 1981 was 908,000 ha (only 15% of the arable land). Food crops, mainly yam, cassava, and maize represented 90'% of total agricultural production by value. Industrial crops, primarily oil palm products, cotton, and tobacco, contributed only 10% but this percentage is expected to increase substantially in the near future. Three major integrated rural development projects 1/ which began in 1981, 1982, and 1983 respectively and which are cofinanced by IDA, IFAD, CCCE and the Government, are expected to improve the productivity of both food and industrial crops. 1.07 The Government's first three-year development plan (1978-80) aimed to raise agricultural productivity, to improve the standard of living, strengthen economic policies, promote participation and implement economic and social change. The plan also allocated a large portion of the budget for industrial development. The ratio of investment to GDP in Benin during the first three- year plan period was 18% against 16.5% from 1972-76, reflecting the Govern- ment's effort to accelerate the development of its production capacity. A special incentive scheme in the plan aimed at stimulating investment including investment in smaller enterprises. Large and medium-scale projects were invested in by the State in association with foreign capital. Foreign aid to the public sector financed 65% of the investment program over the period 1978-80. 1.08 The country has recently successfully eliminated the national budget deficit by implementing rigorous measures with regard to the control of 1/ Bougou Province RDP, US$20.0 million IDA credit 1127-BEN, 1982; cofinanced with IFAD. Atacora Province RDP; cofinanced by IFAD and OPEC Fund, 1982; IDA administering. Zou Province RDP; US$20.0 million IDA credit 1314-BEN, 1983; cofinanced with CCCE, FAC.  -3- expenditures and improvement of debt collection services. During the first three-year plan, the country had an average $7.6 million budget surplus. A number of public enterprises, which had been operating in deficit, were recently liquidated by the Government. Inflation averaged 11% per annum during the first three-year plan period which may be considered moderate as compared to developing country experience in general. 1.09 The second economic and development plan (1983-87) defines a develop- ment strategy, designed to secure greater economic independence with emphasis on increasing domestic demand and an adequate surplus for capital formation. The creation of a domestic market large enough to constitute a consumption base is necessary for industries producing consumer goods. Surplus production is required to generate savings and mobilize investment, reducing the country's dependency on foreign capital. Priority is again given to the improvement of agricultural productivity and the expansion of cultivated land for both food and export crops. Government is currently attempting to translate these general objectives into concrete investment plans. Nonethe- less, the forestry project is in line with Government strategy by providing raw-materials (logs) for saw mills which would generate surplus revenues that could be mobilized for future investment. C. The Forestry Sector (a) Forest Resources 1.10 About 60 percent of Benin's area of 11.2 million ha are covered with forests or bush of varying densities. Most of the productive high forest has been destroyed and converted to savannah woodland by farmers using fire as the major means of clearing land for agriculture use. The remaining area of closed semi-deciduous high forest now includes remnants of the forest reserve of Lama in the south, probably less than 5,000 ha in total. This reserve is being further reduced annually by new infiltrations through illegal farming. In addition, there are remnant islands of valuable high forest and gallery forests in the central west region covering about 870,000 ha. These are estimated to contain between 0.7 and 1.5 million m3 of timber over 40 cm in diameter, providing logs for veneer and sawn lumber. These forests have also been exploited by the Societe Nationale pour le D6veloppement Forestier (SNAFOR) to supply two small sawmills. These reserves are also being depleted by fire and uncontrolled conversion to farming. Most areas of Benin are relatively well wooded with extensive areas of savannah woodlands especially in the center where there is about 1 million ha of legally protected forest reserves, and about 1 million ha of national parks and "wildlife zones" along the northern grontier. The savannah woodlands are estimated to carry between 5 m3 and 25 md/ha of wood and produce mainly fuelwood and poles. They play an important role in the protection of the environment. 1.11 The forest plantation resource consists primarily of about 7,000 ha of teak plantations, of which 6,350 ha are located in the Lama region, namely in the Toffo, Djigbe and Agrimey forest reserves. They are between 9 and 32 years old. These plantations, which in the past have not been regularly  - 4 - thinned or maintained present, however, a valuable saw log resource. A systematic thinning program has started recently to make use of the resource (para 1.12). Furthermore, in the more densely populated southern areas, small private teak plantations, producing mainly small poles and fuelwood can be found in considerable numbers. There is no census of these plantations. Other plantations include about 1,000 ha of Casuarina and 11,000 ha of cashew nut plantations which are established and productive. (b) Production and Demand 1.12 The demand for sawnwood in 1982 was estimated to be about 23,000 m3. Part of this demand or 11,000 m3 is supplied from exploiting existing natural forests, the logs being processed by small sawmills and pitsawyers. The balance is imported. This demand is expected to grow in proportion to the increasing urban population, and would reach 39,000 m3 in the year 2000, 71,000 m3 in 2020 and 128,000 m3 in 2040. With good management now being introduced with the support of a FRG Technical Cooperation project, the exlsting teak plantations could supply the bulk of this demand up to about the year 2015, after which substantial annual sawnwood deficits up to 43,000 m3 would be experienced. This would be equivalent to about 86,000 m3 of standing timber. 1.13 Roundwood or pole demand in 1982 was estimated to be about 17,000 m3. The private sector supplies about 12,000 m , of which 2,000 m comes from private teak plantatio3s. Government teak plantations provide from thinnings the balance of 5,000 mi. By the year 2000, the annual demand is expected to grow to about 37,000 mi, increasing to 66,000 m3 in 2020 and 119,000 mv in 2040. Adequate supplies of the most valued poles from the teak plantations would be assured up to about the year 2015, but thereafter substantial deficits of about 30,000 m3 could be experienced. 1.14 In the absence of development of new domestic supplies of wood, in addition to that provided by ongoing projects (para 1.20), Benin would experience dramatic increases in wood importation and/or over-exploitation of remaining natural forests to cover deficits projected to occur after 2015. This would be harmful to the Beninese economy and natural environment. An alternative would be to expand industrial plantations in the near future and replant existing plantation sites when mature trees are felled. The project would support Government efforts in this regard. Establishing the 4,000 ha of new plantations as proposed in this project would be within the executing capacity of Benin's forestry institutions (para 1.18) and would help meet expected demands after 2015 (para 6.03). 1.15 The current annual demand for fuelwood is estimated to be about 2.7 million m3. Of this total, the small towns and rural demand amounting to about 2.4 million m3 is supplied by uncontrolled exploiting nearby farm fallow land and woodlands. These traditional sources are expected to be sufficient to meet the increased demand in the future. The present demand, amounting to over 300,000 m3 annually, of the two coastal towns of Cotonou and Porto Novo is provided by exploiting the extensive natural woodland and farm fallow land adjoining the road network up to 200 km to the north. The annual consumption of fuelwood by these two towns is expected to reach 650,000 m3 by 2000 and 1.4  -5- million m3 by 2020. Increasing transport costs and low population densities would limit the radius of economic exploitation of the woodlands in the center of the country, and the more heavily farmed and populated region in the south would bear the brunt of the increased fuelwood cutting. Government plans include the planting of fuelwood plantation along the coast and 80 km to the north of Cotonou (para 1.20). These plantations when established and exploi- tation commences, together with fuelwood from logging and sawmill wastes of the intensified exploitation of the teak plantations would assure supplies for the increased urban demand. Nevertheless, Government should devote more efforts to the protection of the rural environment by the production and distribution of suitable trees to replace those cut for fuelwood, and by improved management of the natural woodland currently being exploited and burned without restriction. The special problem of fuelwood supplies for the wood-scarce region of the arid north, is being tackled by the Government with the assistance of an UNSO project (para 1.20). The project would assist Government in monitoring progress of these other projects through the establishment of procedures by the new DEFC Advisory/Policy Unit (para 3.05). (c) Institutions and Training 1.16 The Ministry of State Farms, Livestock and Fisheries (MFEEP) is responsible for all aspects of the forestry sector, covering legislation, planning, reforestation and the management including exploitation of the state forestry reserves and plantations. It executes its responsibilities for legislation, planning and forestry management through its Direction des Eaux, Forets et Chasse (DEFC) (para 1.17). Social and rural forestry projects, which are of comparatively small significance at present, and forestry surveillence are conducted by the provincial CARDERs under the administrative responsibility of the Ministry of Rural Development and Cooperative Action, but working in liaison with DEFC. Until 1982, a state company reporting to MFEEP, the Societe Nationale pour le DIveloppement Forestier (SNAFOR), under- took forest exploitation, sawnilling, marketing and reforestation, on Govern- ment's account. However, SNAFOR became over-extended financially and was dissolved in 1982. With a recent change in policy (para 1.21) Government has transferred responsibility for reforestation to DEFC. The remaining SNAFOR responsibilities are being assigned to a new commercially orientated state company, the Office National du Bois (ONAB), which can also carry out reforestation programs under contract (paras 1.17, 1.18). Forestry research is carried out by the Direction de la Recherche Agronomique (DRA) of the Ministry of Higher Education and Scientific Research (MESRS) and at present, adequate l iaison with DEFC is being maintained. Given a clearly specified program and the means with which to carry it out as would be the case under the project, the research staff would be able to expand its efforts. 1.17 DEFC currently employs or liaises with about 150 professional, senior technical and technical staff, whose mandate includes monitoring forestry exploitation and legislation, research, reforestation, liaison with CARDERs and administration and finance. Most of the 10 professional and senior tech- nical staff at DEFC headquarters are young and almost all lack practical experience since DEFC has had virtually no operating budget, equipment or vehicles with which to work. Thus, the field staff, numbering about 140 who are under the administrative control of the CARDERS, do not receive adequate  -6- technical guidance or support from DEFC. This results in poor control of forestry resource use by farmers and loggers. The headquarters staff is organized in several fragmented units, each lacking the critical size necessary for efficient performance. All units report directly to the Director, as shown in the organigram (Annex 3). However, as the office of Director is considered to be advisory to the Minister, the incumbent has heavy commitments outside of managing DEFC, which limits his ability to give meaningful direction to daily operations. Government has recently confided the responsibility for forestry regeneration to DEFC; however, it has been found necessary to organize independent project units within DEFC, for the execution of recently negotiated reforestation projects (para 1.20) because of DEFC's weaknesses. Each of these units also reports directly to the DEFC Director, which further fragments DEFC's management and loosens control. Given that these projects would undertake to plant about 12,000 ha over the next six years, the present managerial and administrative capacity of DEFC has been exhausted. Moreover, there is a grave risk to the remaining forestry resources of delay in developing a coherent forestry strategy, proper admin- istration and monitoring of forestry exploitation and reforestation programs. Therefore, Government recognizes that it is critical that DEFC be reorganized and strengthened as rapidly as possible to allow it to lead this development and exercise its mandate (para 1.21). 1.18 The ONAB, which is in the process of assuming the commercially oriented functions of SNAFOR, including forest exploitation, processing ELnd marketing of wood and wood products, has and continues to receive substantial assistance under a project financed by the Federal Republic of Germany (FRG). The majority of the former SNAFOR field staff continues to be employed by ONAB. They are organized into units which include inventory, logging and extraction, saw milling and sales. ONAB also has a small staff for reforesta- tion, whose activities are currently confined to conducting trials, but which could be expanded to fulfill contracted reforestation works. An embryonic studies and planning unit has also been established, to provide DEFC with forestry inventory and tree measurement data. Its workshops, garages, and office buildings have been substantially improved as a result of the FRG supported project, and ONAB has begun mechanized forest clearing to establish forest sawlog plantations from which revenues from salvage logging are beginning to be generated. Government has now formally established ONAB, and is recruiting senior management personnel, and arranging for adequate working capital for the firm. 1.19 Professional staff are presently being educated at the Forestry Faculty at the University of Ibadan, Nigeria. Senior technical staff are educated at the Institute of Agriculture, Bouake, Ivory Coast. All candidates for forestry education must have completed an agricultural course at the Faculty of Agriculture, National University of Benin. Total staff employed by the public sector number about 150, of which only 10 are professional or senior technical grades. Thus, when the three professionals and several technical staff now in training in Nigeria and Ivory Coast return to duty in Benin, the level of formal training among this staff will be substantially increased. The professional and technical staff required by the ADB assisted fuelwood and the IDA/FRG sawlog plantations projects would number 11. Some of these would be supplied by a reorganization of the present staff duties, but  -7- even with formal training considerable in-service training would be required for all staff. There is a forestry course at the Agricultural Polytechnic, Sekou, which trains controllers, most of whom are employed in rural forestry carried out by CARDERs. (d) Forestry Policy and Strategy 1.20 Government's present forestry policy objectives are to ensure ade- quate supplies of wood and wood products for the population, promote small and medi-um-scale forestry industries to supply these needs, and to manage the forest resources making use of sound environmental practices. Government has attempted to translate this policy into practice through rural and village tree planting schemes, and by reducing uncontrolled exploitation of natural woodlands by the establishment of plantations. Projects include: (i) assistance to ONAB to manage and exploit about 6,000 ha of teak planted between 1950-68, including the construction of a sawmill at Bohicon, and provision of technical assistance, financed by FRG; (ii) establishment of 3,500 ha of pole and fuelwood plantations in the coastal zone and 2,500 ha of fuelwood plantations in the degraded parts of the Lama forest reserve, financed by the African Development Bank (ADB); (iii) execution of rural forestry plantations and tree planting in the Atacora and Borgou provinces, financed by the United Nations Sudan- Sahel Office (UNSO); (iv) support for small scale, low cost village/rural forestry, with technical advisors and modest investments, through resident FAO staff; and (v) extension of charcoal technology with the participation of bilateral volunteer groups. The plantation program in the project would complement these projects by supporting expanded saw log production. 1.21 However, Government has not been able to strengthen the institutions required to sustain reforestation efforts in the long run, or to improve the level of management and control of forestry resources. This has resulted from a long-standing division and confusion over the responsibility for forestry policy and management. Before 1982, DEFC was given loosely defined monitoring and advisory functions without sufficient resources to be effective in the field. At the same time, SNAFOR was established both to conduct forestry exploitation, as if it was a private enterprise, and to regenerate forestry resources in the public interest. As a result reforestation has been minimal, amounting nationally to no more than 200 ha per year. Moreover, because DEFC did not have the staff, funds or experience it did not fulfill its monitoring, analysis and planning functions adequately (para 1.17). Thus, the support given the forestry sector to date has not been well coordinated or linked systematically to emerging needs for wood, forestry resource management and  - 8 - environmental protection. Approaches taken to execution and costs of various projects have varied and analysis of costs and performance of the different approaches, which would lead to efficient use of forestry resources, has not been made. As a result, Government's forestry strategy is not soundly based. Moreover, funding arrangements for most forestry sector activities remain ad hoc, without a financially sound approach to the assessment and collection of forestry royalties, taxes, and exploitation fees (stumpage fees) being taken. As a first step in strengthening its strategy and strategy making process, Government has issued decrees reassigning forestry regenera- tion, which is in the public interest, to the Government department, DEFC. To the extent that there is state participation in forestry exploitation, it would be exercised through ONAB. As well as clarifying the mandates of Government's institutions, this arrangement avoids imposing the burden of investments with long gestation periods and needs for long term financing on a conmercial enterprise such as OB which is unsuited for the task. The strategy also opens the possibilities for future private sector participation in ONAB's development. However, making Government's new policy for forestry institu- tions operational will require a transition period, since experienced staff will have to be reassigned, long term funding arrangements developed, and working relationships altered. The project would aid this transition. (e) IDA Involvement 1.22 The project would be the IDA's first direct involvement in the forestry sector of Benin. The two areas selected for rural tree-planting in the UNSO financed project (para 1.20) are in the Atacora and Borgou provinces, where there are rural development projects assisted by IFAD and IDA, respectively, whose management, the CARDER's, would also be responsible for rural forestry. The project is in line with the Forestry Sector Policy of IDA which gives sawlog plantations equal importance to smaller-scale social forestry projects in overall forestry strategy, and stresses strengthening sectoral institutions. II. THE PROJECT AREA 2.01 Location: The project would involve tree planting in two separate, ecologically different areas. Project plantings would cover 4,210 ha. Of this, 4,000 ha would be at Lama about 75 km from Cotonou; the another 210 ha at Toui about 80 km from Parakou (Map, IBRD 17325). 2.02 Topography and soils: The Lama terrain lies at about 60 m above sea level and is formed from an ancient lake bed. The soils in this depression are derived from variable Eocene lake bed sediments. They contain a very high (up to 60%) clay fraction. As with all heavy clay soils, the differential swelling and contraction of successive horizons during wet and dry seasons create conditions which limit the period when mechanized operations can be carried out to about five months in the dry season. The Toui forest reserve is situated in a gently undulating plateau. The soils are variable and mainly  - 9 - ferruginous or ferralitic. Some laterite formation occurs, but in general they are suitable for good woodland production. There are no anticipated technical problems in establishing productive plantations on these soils. 2.03 Vegetation: The Lama area is the last remaining example of the semi- deciduous high forest which once covered the southern part of Benin. Exten- sive illegal farm settlement has resulted in most of the forest being con- verted into a mosaic of temporary farmlands and forest, with the exception of perhaps about 3,000 ha in the center which remains relatively untouched. The rate of destruction is estimated to be about 250 ha annually and is increasing. Under a land use plan to be agreed to this area would remain untouched for scientific and ecological purposes (para 2.07). The Toui area carries good quality Guinea savannah woodland, about 1,000-2,000 ha of which have been cleared and planted with cashew nut trees (Anarcardium). 2.04 Climate: To the south of Lama, rainfall averages 1,200 mm annually, with maxima from April to June and August to October inclusive. The month of July has a lower rainfall than these months. To the north of Lama, a similar rainfall pattern occurs, with August having the lower rainfall. Toui is situated in the zone where the rainfall averages 1,100 mm from mid-April to mid-November, with a short dry spell in August. Temperatures do not limit forest growth in either area. 2.05 Infrastructure: The Lama component is well served by the all-season road from Cotonou to Bohicon. The railway also passes through Bohicon. Tne recently constructed saw mill at Saclo near Bohicon has workshops, offices and other services which would be expanded under the project. The main road and railway line north to Parakou passes along the western boundary of the Toui forest reserve, and in part forms the boundary of the reserve. A forestry service camp already exists on this boundary where the access road crosses the railway. 2.06 Population: Considerable numbers of illegal farmers have entered the Lama forest reserve even though few of them reside inside the reserve. Al- though these farmers can be evicted legally, the proposed plantation develop- ment in this reserve would require considerable numbers of seasonal labor. Wherever possible, the farming activities should be integrated with plantation establishment, and the farmers and their families would be concentrated in villages where they could be provided with amenities and land for vegetable gardening in addition to regular seasonal employment in the plantations. There are few reported cases of illegal settlement in the Toui forest reserve. Surrounding villages have a population of about 26,000 people and Parakou to the north has a population of 66,000, providing adequate labor and markets for wood products respectively. 2.07 Land Use Plan for the Lama Forest Reserve: Although the Lama Forest Reserve was gazetted in 1942-44, and an adequate land use plan for the reserve drawn up in 1978, no effective action was taken to implement the plan. As a result, farmers with no legal or traditional rights to the land have infiltrated the zone. Subsequently, plans have been made to establish fuelwood planta- tions in the most degraded parts of the Lama reserve for which saw-log plantations would have had a higher economic value and the last vestiges of  - 10 - indigenous forest in the reserve, which have considerable scientific and ecological value are being threatened. Recognizing this situation, Government has launched a resurvey of current land use practices and soil types in the reserve to complement a completed resource inventory in the zone already planted in teak. This work is being supported with assistance from the FRG and would be used to produce new land use proposals for the reserve. However, less detailed surveys show that there is sufficient land of suitable quality available in the reserve for the establishment of the proposed plantations without conflicting with other desirable land uses. The contract between DEFC and ONAB for the execution of the proposed plantations would specify the final bounderies of the plantation site. III. THE PROJECT A. General Overview 3.01 Most of the population of Benin depends on forest products to meet its domestic energy and building material requirements. This makes assuring adequate wood supplies at reasonable cost an important national priority. Therefore, creating new sources of supply and strengthening institutions to permit optimal management of existing resources are primary Government objectives. To achieve these objectives, the project would: (a) enhance the capabilities of DEFC to manage the natural and plantation forest resources of Benin and provide resources for the collection and analysis of relevant data to develop an appropriate forestry strategy; and (b) execute a plantation program complementary to those already funded (para 1.20) to increase long term domestic wood supplies and reduce future dependence on sawn timber imports into Benin. 3..02 Over five years, project finance would be provided for: (a) establishment of a unit within DEFC responsible for planning, programming, administering and controlling the finances of the sector; (b) establishment and maintenance of 3,800 ha of species suitable for sawlog production (principally teak) in the forest reserve of Lama; (c) support of forestry research into increasing the wood production potential of the country by the establishment and maintenance of small pilot plantations on about 410 ha; (d) execution of specialized studies including a mid-term review of the project's execution; and  (e) training of selected local personnel through arrangements made by FRG. 3.03 The plantation component would be executed by DEFC through a contract with ONAB. This arrangement would be advantageous in that it would utilize management capacity and infrastructure already available within ONAB, while allowing DEFC the time to evolve institutionally simultaneously the plantation program. Pilot plantations would be executed by forestry researchers in the DRA of MESRS. 3.04 The project is suitable for IDA and IDA Special Fund financing because of the emphasis given to institutional strengthening. The project is consistent with IDA's concerns for forestry development. Lastly, the project does not replace or retard processing of other agricultural loans or credits. Further identification and preparation of agriculture projects is scheduled to take place in the second half of FY84. B. Detailed Features (a) Strengthening DEFC 3.05 DEFC would be significantly reorganized and strengthened as part of the project. This would be the initial steps in the transformation that would allow DEFC to eventually assume full operational responsibility for forestry regeneration, in addition to fulfilling its traditional roles more effectively (para 1.21). Staff now employed and charged with monitoring forestry exploi- tation and legislation, research, supervision of reforestation, liason with CARDERs, and administration and finance would be regrouped into a new Advisory/Policy Unit. This unit would be the focus of DEFC's work in collecting data, programming analyses, organizing future forestry programs and coordinating projects to execute forestry regeneration. This grouping would reduce the number of individuals reporting directly to the Director from eight to five which would improve the direction given to DEFC (Annex 3). The Unit would be strengthened with the provision of appropriate light vehicles, office equipment and funds to cover vehicle and office running costs. An interna- tionally recruited forestry administration specialist, with terms of reference, experience and qualifications acceptable to IDA (para 8.01(a)) would be employed for about 60 months to head the Unit. Such terms and qualifications were discussed and agreed at negotiations. He would assume his duties about 6 months before the start of the project, supported by a PPF which has been awarded, in order to assist in the reorganization. This type of specialty is not currently available in Benin. The Unit would also contain financial and administrative services to develop a close working relationship between financing and budget concerns and programming functions. As qualified and experienced accountants are extremely difficult to recruit within Benin, an internationally recruited accountant would be employed for about 36 months as financial controller. He would direct the organization of DEFC's cash inflows, originating from donors and Government, and from forestry fees and royalties in anticipation of the future when exploitation of existing and project supported plantations begins. His duties would begin about 3 months  - 12 - before the anticipated start of the project, financed under the PPF. The Unit would also have funds available to recruit up to 24 months of specialist sesrvices from consultants, with experience, qualifications, and term of reference acceptable to IDA (para 8.01(a)), leading to the elaboration of a forestry strategy, and preparation of a possible follow-up project. 3,06 Related to the transition of DEFC but not supported by the project, a studies and planning office within ONAB, supported by FRG, is being re-located so as to be in close physical proximity of DEFC. It would provide the Advisory/Policy Unit in DEFC with data on plantation yields, natural forest areas, and volumes of saw logs. This would also assist DEFC to formulate strategy for state plantations, and plan cost recovery. Likewise, the Director of DEFC, as the responsible official for the ADB and UNSO financed plantation projects (para 1.20) would evaluate progress under these projects as a basis for strategic planning. 3.07 With experience gained during the execution of the project, DEFC would evolve into an organization capable of formulating and executing most of Government's forestry policy objectives. An organigram of an organizational structure which has been found effective in managing and regenerating forestry resources elsewhere in Western Africa is annexed. Concrete plans for further reorganization of DEFC would be made only after a mid-term review of progress iDn project execution, as part of the preparation of possible follow-up projects. However, one scenario would be that: (i) the Advisory/Policy Unit would become concerned primarily with forestry monitoring and evaluation, planning and programming of regeneration and exploitation, and forestry legislation; (ii) areas of forestry administration, financial control, inventory, taxes and royalties assessment and collection would become the responsibility of an Administration and Finance Unit; (iii) state plantations activities now executed through various project units would become the respon- sibility of a State Plantation Unit; and (iv) social and agro forestry now undertaken through special arrangements, would become a Rural and Community Forestry Unit. The issues related to such a reorganization would be discussed during the execution of the project as part of IDA's dialogue with Government concerning the forestry sector strategy. (b) Lama Plantation 3.08 The project would support a 3,800 ha plantation program in the ];ama forest reserve which would augment the teak plantation already successfully established there. The principal species would be teak (Tectona grandis) but other sawlog producing species would be established in trials. Works to be financed would include forest clearing, the construction of about 15 km of access roads and 38 km of plantation tracks as required, and plantation establishment and maintenance. After the felling and removal of the indigenous wood produce for sawlogs, poles and fuelwood (or charcoal), the renaining residues would be burned. Appropriate mechanical means would be utilized in the heavy clearing and land preparation operations. These would include the windrowing of the residues before burning permitting draining operations and subsequent mechanical weeding, operations which cannot effi- ciently be carried out manually in this area of heavy soils. Over the five- year project period, the clearing, planting and maintenance program would be:  - 13 - ClearirLg, Planting and Maintenances Program (in ha) 84/85 85/86 86/87 87/88 88/89 Total PYI PY2 PY3 PY4 PY5 Clearing and preparation 200 600 1,000 1,000 1,000 3,800 Planting 200 600 1,000 1,000 1,000 3,800 Maintenance 200 800 1,800 2,800 3,800 - 3.09 The main species selected for planting would be teak, already successfully established on 6,350 ha in the region over the past 30 years. Inventories of these plantations which in the past have not been correctly managed, show that mean annual increments (m.a.i.) o