Somalia - Livestock Health Services Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5639-so STAFF APPRAISAL PEPORT SOMALIA LIVESTOCK HEALTH SERVICES PROJECT December 13, 1985 Eastern- and Southern Africa Region Northern Agriculture Division This document has 9 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.  CURRENCY AND EQUIVALENT UNITS Somalia Shilling (So.Sh.) = 100 cents US$1.00 = So.Sh. 42.00 (November 1985) (See Annex 1, Table 12 for projected exchange rates). WEIGHTS AND MEASURES 1 Hectare (ha) = 10,000 m2 1 Square Kilometer (km2) = 100 ha 1 Metric Ton (mt) = 1,000 kg ABBREVIATIONS AHD = Animal Health Department of MLFR AU = Animal Units CBPP = Contagious Bovine Pleuropneumonia CCPP = Contagious Caprine Pleuropneumonia CRDP = Central Rangelands Development Project FAO/IC = Food & Agriculture Organization/Investment Centre FYDP = Four-Year Development Plan (1982-86) GOS = Government of Somalia GTZ = German Technical Assistance ICB International Competitive Bidding IDA = International Development Association IFAD = International Fund for Agricultural Development IRC = Inter-Regional Committee L/C = Letter of Credit LCB = Local Competitive Bidding M = Million MLFR = Ministry of Livestock, Forestry & Range MTR Mid-Term Review NRA National Range Agency NRADP = Northern Rangelands Development Project ODA Overseas Development Agency of UK PC = Project Committee PMU = Project Management Unit PPF Project Preparation Facility SOE - Statement of Expenditure USAID = United States Agency for International Development WFP World Food Program FISCAL YEAR January 1 - December 31  FOR OFFICUIL USE ONLY SOMALIA LIVESTOCK HEALTH SERVICES PROCJECT STAFF APPRAISAL REPORT Table of Contents Page No. CREDIT AND PROJECT SUMMARY ........................... . i I. AGRICULTURAL SECTOR ............. .................... 1 Background ....................................... I General Bank Group Operations in Somalia ......... 2 IDA Strategy *.................................... 2 Relationship to Other Aid Flows .................. 3 IFAD, Bank Group, Donor Role ...................- 3 II. LIVESTOCK SUBSECTOR AND DISEASE CONTROL ...o .......... 5 Production and Marketing ... ....................... 5 Government Policy and Institutions ...*............ 8 Animal Disease Control ........ .................. 10 Issues, Constraints and Project Rationale ........ 11 III. THE PROJECT AREA ..................................... 13 General .. ........................................ 13 Pastoralists, Production and Scheme ...0........... 14 Marketing ........................................ 14 Institutions ....*.***.* ......................... 15 Disease Control * ................................. 16 IV. THE PROJECT .....................17 Project Genesis ...........................*....... 17 Project Objectives ..............-........... 17 Main Features and Project Components ............ 18 Detailed Features Part A 18 Part B ................................ 22 Project Costs .............22 Financing .... ..... 24 This report is based on the findings of an appraisal mission, comprising of Messrs. F. Thomas and L. Vidaeus (IBRD), A. Duncan and M. Woodford (Consultants) and M. Slama (IFAD), that visited the project area in November-December 1984. This document has a resutricted distribution and may be used by recipients only in the performance of thek ofTwcial duties lts contents may not otherwise be disclosed without World Bank authorizatiorL  -2- Table of Contents (continued) Page No. Procurement ******************** .................. 25 Disbursements .....** ................,..... 27 Accounts and Audits ........ ...................... 28 Environmental Impact ...... ..... .. ..... ........... 29 V. ORGANIZATION AND MANAGEMENT ........................... 30 Project Organization .....*......... ............... 30 Disease Investigation and Livestock Health Services Planning .............. 31 Mid-Term Review ................*..... ............ 32 Project Allowances ....... ..se......s*.............. 33 Drug Importation and Distribution ................. 34 Administration ................ ............*... 34 Annual Work Program ....... ....* .......... 35 Monitoring, Evaluation and Reporting ............. 35 Implementation Schedule .. ........................ 36 VI. BENEFITS AND JUSTIFICATION ........................... 36 Justification .................................... 36 Benefits ...........................*............. 36 Risks ................................. 37 VII. ASSURANCES AND RECOMMENDATIONS ........................ 38 List of Text Tables Table 1. Estimated Livestock Population in Somalia ... 5 2. Exports of Live Animals from Somalia ........ 7 3. Livestock Shipments from Berbera ............ 15 4. Project Cost Summary ...... .................. 23 5. Proposed Financing Plan ..................... 24 6. Procurement Method .................... . 26 7. Proposed Allocation of IFAD Loan and IDA Credit .......................*.*.**.... 27 ANNEXES 1. Project Cost Tables .................................. 40 2. Investigative Work Program - Phase I .... ............. 56-61 3. Terms of Reference, Mid-Term Review .... .............. 62 4. Terms of Reference, Technical Assistance Team ........ 63-66 5. Estimated Schedule of Disbursements .................. 67 6. Documents Available in Project Files ............... .... 68 7. USAID Livestock Marketing and Health Project .......... 69-71 CHARTS lo MLFR Organization . ............... ...... 72 2. Project Organization ..................... *........... 73 3. Implementation Schedule ............................... 74  - 3 - Table of Contents (continued) Page No. SKETCH 1. Layout of the Central Laboratory at Hargeisa ..... 75 MAP Map of Somalia with Project Location (IBRD No. 19008)  - i - SOMALIA LIVESTOCK HEALTH SERVICES PROJECT CREDIT AND PROJECT SUMMARY Borrower: Somali Democratic Republic Beneficiary: Ministry of Livestock, Forestry and Range (MLFR) Amount: SDR 4.1 million (US$4.3 M equivalent) Terms: Standard Co-Financing: SDR 5.9 M loan (US$6.3 M equivalent) from the International Fund for Agricultural Development (IFAD). Project Description Objectives: (a) The long term goal of tnt, six-and-a-half year project would be to contribute to the reduction of economic losses in the livestock sector due to animal diseases and conditions through justifiable interventions in the area of veterinary services. The immediate objectives of the project would be to assist NLFR in (i) defining a comprehensive and economically justifiable animal disease control program for Northern Somalia (the Awdal, Galbeed and Togdheer regions) and (ii) testing such a disease control program on an operational scale in the project area. By accomplishing these objectives the project would contribute to strengthening the Animal Health Department (ARD) of MLFR as an effective institution serving the livestock sector. (b) The project would be complementary to ongoing projects aiming at animal health improvement in the area; notably the United States Agency for International Development (USAID) funded Livestock Marketing and Health Project. Its results would be expected to serve as a basis for planning further improvements in veterinary services in northern Somalia and the country as a whole. In this sense the project would serve as a pilot project. Components: Part A would include disease investigation and livestock health services planning over the entire project period concentrated on the first three and a half years (Phase I). Part B would implement a pilot program for disease control during the second half (Phase II) of the project. Components include: (a) Laboratory services at Hargeisa and Errao (b) Field Services - investigation  - ii - (c) Field Services - development (d) Project Management and (e) Training Benefits: Not quantifiable at present. Costs and benefits of animal health services would be estimated during the first investigative period (Phase I) of the project and monitored thereafter. Principal production benefits are expected to be a reduction in disease incidence leading to reduced mortality and morbidity with improved rates of reproduction and growth. Principal benefits to producers would be increased incomes and nutritional status from increased offtake and meat and milk production. Main economic benefits would derive from increased export opportunities and foreign exchange earnings. Risks: Security in border areas of regions. Inability to monitor herds moving across border and consequent possible loss of data. Availability and continuity of staff/counterparts required for implementation. Some staff incentives and facilities have been applied thus helping to attract and retain qualified staff.Uncertain market outlets and reduced offtake could jeopardize range resources and increase drought risk. GOS is exploring alternative markets for livestock and range monitoring would be a project component. The USAID marketing and quarantine project is also designed to minimize such risks. PMU would maintain close contact wiht USAID through the Project Committee established in MLFR. Project Components 1/ Local Foreign Total (USS M) Laboratory Services 0.1 1.1 1.2 Field Services: Investigation (Phase I) 0.4 2.4 2.7 Field Services: Development (Phase II) 0.2 3.2 3.4 Project Management 0.1 1.4 1.5 Training - 0.1 0.1 Subtotal 0.8 8.2 8.9 Physical Contingencies 0.0 0.2 0.2 Price Contingencies 0.2 2.3 2.5 Total Project Costs 1.0 10.6 11.6 Proposed Financing Plan IDA Credit - 4.3 4.3 IFAD Loan - 6.3 6.3 Government of Somalia 1.0 - 1.0 Total 1.0 10.6 11.6 1/ Some totals do not add due to rounding.  - iii - Estimated Disbursements of IDA Credit (US$ Million) IDA PY 1987 1988 1989 1990 1991 1992 1993 Annual .9 .7 .8 .6 .5 .4 .4 Cumulative .9 1.6 2.4 3.0 3.5 3.9 4.3 Economic Rate of Return: None calculated. ap: IBRD No. 19008  SOMALIA LIVESTOCK HEALTH SERVICES PROJECT STAFF APPRAISAL REPORT I. AGRICULTURAL SECTOR Background 1.01 Somalia is located in the northeastern corner of Africa, bordered by Ethiopia and Kenya to the west and south and the Gulf of Aden and the Indian Ocean to the north and east (Map IBRD No. 19008). The length of the coastline is about 3)300 kilometers, and the land area is about 63 M hectares. The topography is varied and includes hot and arid coastal plains, rugged mountains and plateaus, and lowlands of varying fertility and rainfall. Approximately 13% (about 8 M hectares) of the land is estimated as potentially suitable for crop production, but with water the limiting constraint, only a small part (about 0.7 M hectares) of the area is cultivated. 1.02 Somalia is amongst the poorest countries in the world and is classified by the United Nations as a least developed country. Per capita income was estimated at US$265 in 1982. Not only is it among the poorest, but the general lack of infrastructure-physical and institutional-and the hostile physical environment, poor communications, lack of modern transportation system and scattered population centers have created serious obstacles to development of che country. 1.03 The resident population was estimated at 5.3 M in 1983 and the refugee population at about 0.5 M. About 50% of the population are nomads and semi-nomads who depend on livestock for their subsistence; about 20Z are farmers cultivating land along the Juba and Shebelli rivers and in the higher rainfall Bay and north-west regions; and 20Z are urban dwellers. The economy is dominated by the livestock sector which provides a living to the large nomadic population and generates about 40% of the GDP. Up until 1982/83 exports of live animals represented about 80% of total exports. Crop production generates about 10Z of GDP and roughly the same share of exports. Rainfed crop production is based primarily upon maize and sorghum. Crop production under controlled irrigation is centered on bananas (the principal cash crop and the second largest export commodity), sugarcane, rice and maize; production under flood irrigation comprises mainly maize and sesame. Fish and fish products account for about 2% of exports as well as of GDP. 1.04 The Agricultural Sector Report of 1981 (Report No. 221ia-SO) emphasizes the need to strengthen and develop certain key areas of the sector. Important are those activities which generate increased production and exports in the short run. The sector strategy calls for development of underutilized resources (including activating sunk capital), the expansion  - 2 - of private sector incentives and opportunities and the establishment of additional export markets to increase foreign exchange earnings. General Bank Group Operations in Somalia 1.05 Bank Group gross commitments to Somalia (up to September 1985) total US$247 million, consisting of 28 IDA credits and two IFC investments. Thirteen projects are under implementation. Over 30% of total IDA lending has been for agriculture, 25% for transport and the rest about equally divided over education, water supply, ports, energy, industry and technical assistance. IFC has so far made two investments in Somalia--a US$375,000 loan for a molasses terminal for the Juba Sugar Project and SWF 1,550,000 for a polypropylene bag project. 1.06 Physical progress in implementing development projects in Somalia has been mixed, and some have not done well. Progress of the North-West Regional Agricultural Development Project, Phase I, has been excellent, and the main production targets estimated at appraisal have been met or exceeded. Projects for roads, ports, water and education have been more successful than in the agricultural sector. Many IDA-financed projects have experienced delays in execution. Staffing and management problems have impeded effective preparation and implementation of projects. Problems with projects in execution were brought to the attention of the Government authorities during the last country implementation review, which was held in Somalia in June 1984. At that time understandings were reached on the restructuring of several projects in execution. 1.07 Somalia's disbursement performance on projects assisted by the Bank Group has been satisfactory. The FY85 disbursement rate was 33.5% as compared to 21.9% for Eastern and Southern Africa and 22.02 Bank/IDA-wide. IDA Strategy 1.08 IDA proposes to continue to assist the Government to devise and implement policies and programs to improve the efficiency of both the public and private sectors, to improve the macroeconomic framework for domestic and external resource mobilization and allocation, improve pricing administration and marketing systems, and to increase production and exports. It aims to support further use of the existing capacity and to help lay the foundations for longer term growth. Economic and sector work program strives to support the macroeconomic reform process, and to provide analytical inputs for the work of the Consultative Group for Somalia. Issues in public enterprise reform are expected to become an increasingly important component of our policy dialogue. 1.09 IDA is giving particular attention to aid management issues, and has undertaken an assessment of technical assistance to Somalia jointly with the UNDP. An energy assessment has been completed, as has a review of population, health and nutrition issues. A collaborative review with the Government and donors of major issues in the agricultural sector is underway. We are cooperating with the Government in the preparation and review of periodically updated public investment and expenditure programs, at both the global and, increasingly, at the sector level. The Advisory  - 3 - Committee for Juba Valley Development established by the Consultative Group at its October 1983 meeting provides an important forum for review and collaboration on issues affecting the development of Somalia's major water resource. 1.10 The proposed lending program emphasizes productive investments and rehabilitation programs. An irrigation rehabilitation project is being prepared to help increase productivity and farmer income in the Shebelli Valley. A second Agricultural Inputs Program is under consideration. Most projects have been cofinanced with a number of other donors, and this is expected to continue in the future. Relationship to Other AI.d Flows 1.11 IDA disbursements represent about 8Z of total aid flows to Somalia. We expect that this relationship will continue at about the same level during the next several years. IDA obligations represent about 12% of Somalia's total outstanding and disbursed debt up to December 31, 1983. Debt service payments to IDA represent a very small proportion of Somalia's total debt service obligations. In 1984, payments to IDA were estimated at only about 1% of total debt service payments for that year. This trend is expected to continue. IFAD, Bank Group. Other Donor Role in Livestock Subsector 1.12 Since the early 1970s, a series of internationally funded projects supporting Government policy and strategy have been initiated. These projects, however, reflected an initial emphasis on the establishment of intensive public sector livestoc' production systems (including breeding, artificial insemination, feed lots, feed mills, fattening and dairy farms). Cost overruns, delays, management and technical problems, input shortages and low level of output led in the late seventies to a lack of support for these approaches. Increased attention was then focussed on the management and preservation of critical range resources, involving two large projects--the Northern Rangelands Development Project, financed by the Kuwait Fund for Arab Economic Development, and the Central Rangelands Development Project, supported by multidonor financing including IFAD, USAID, WFP, GTZ and the World Bank. The approach of these projects centered on the creation of permanent and rotational grazing and drought reserves, water supply, fodder production, and infrastructure support and veterinary services. 1.13 Earlier projects involving components for the improvement of livestock health included the following: (a) The Serum and Vaccine Institute (UNDP/FAO, 1969--ongoing) at Mogadishu; (b) the British Veterinary Team (ODA, 1969-72) for disease investigations and establishment of diagnostic laboratory facilities in Hargeisa in Northwest Somalia;  - 4 - (c) the Rinderpest Vaccination Campaign (EEC, 1970-75); the Trans-Juba Project (IDA, 1974-81); the Northern Rangelands Deve'lopment Project (Kuwait Fund, 1976-81); and the Veterinary Laboratory at Kismayo (GTZ, 1977-83 and ongoing support). 1.14 Ongoing projects partially addressing livestock health issues are: (a) the Bay Region Agricultural Development Project with a component, funded by USAID, to upgrade veterinary services in the region; (b) the Tsetse Fly Control Project (ODA supported since 1977); (c) the Central Rangelands Development Project with a veterinary component financed by the Federal Republic of Germany, and most recently (d) the Livestock Marketing and Health Project (USAID funded, 1984; Annex 7). 1.15 These efforts at development of the livestock subsector have met with mixed but generally limited success and rates of physical implementation of development plans have been disappointing. Inflation, drought and border conflicts have caused severe setbacks. Moreover, reviews of past and current projects indicate that large project size and area, complexity of project activities and inadequate baseline data are factors which frequently have contributed to implementation difficulties. Project implementation has also been hindered in some cases by dependence on large-scale construction prcgrams, poor project management and field supervision, lack of necessary project inputs (fuel, trained GOS personnel), and lack of interaction with nomadic beneficiaries. Sustainability of development activities beyond the termination of externally funded projects has been jeopardized by inadequate cost recovery and funding by GOS. 1.16 Design for future projects should, therefore, be limited in size, simple in terms of project activities, take account that funding for MLFR is meager, emphasize project management and organization with the objective of sustainability of development activities beyond project life and involve target-groups (nomadic livestock producers) in project design and program participation. Private sector entrepreneurs and livestock traders/ exporters who might be induced to import and distribute non-prescription drugs and other veterinary inputs should also be involved in final project design. Additionally, there is the need to enlist the active participation of the public sector to define its own role and of private sector activities.  -5- II. LIVESTOCK SUBSECTOR AND DISEASE CONTROL Production and Marketing 2.01 Animal Population and Production Systems. There are three basic livestock production systems in Somalia: (i) traditional nomadic pastoralism, (ii) transhumant production by settled farmers, and (iii) specialized sedentary livestock production by urban dwellers. In addition, the Government has involved itself in specialized livestock enterprises in the form of controlled grazing, ranches, dairy farms, cattle feedlots, and poultry farms as well as the delivery of veterinary services through the public sector. The total livestock population maintained by these productive systems was estimated to be about 40 M animals in 1984 of which over 70% were sheep and goats as shown in Table 1 below. Estimated average annual growth rates over the period 1975 to 1983 was almost static which is to be expected in a long-established pastoral system with little specialized production or improvement in the range feeding resources. Sheep and goats showed the largest increase but cattle and camel herds hardly grew at all. Table I Estimated Livestock Population in Somalia (M heads) Year Cattle Camels Sheep Goats TLUa/ 1975 a/ 3.8 5.4 9.1 15.6 12.1 1980 4.0 5.7 10.3 17.4 13.6 1984 4.2 5.9 10.9 19.1 14.1 Average annual growth rate 0.14 0.08 0.33 0.39 0.25 a! Tropical Livestock Unit - 250 kg. TLU conversion factors: Sheep and goats .1, camels 1.2, cattle .8. (Source: Ministry of Livestock, Forestry and Range). 2.02 Nomadic pastoralism is the predominant form of livestock production accounting for about 80% of livestock ownership and providing a livelihood for some 50Z of the human population. The system is based on multispecies holdings (camels, cattle, sheep and goats), designed for resilience under arduous and variable ecological conditions to produce milk1/ and meat for subsistence and to produce marketable surplus of live I Adult females of all species are milked with emphasis on came's and cattle .  - 6 - animals. Mobility in search of grazing and water is an essential element of the system. Movements into the Haud and other parts of the Ogaden and into northeastern Kenya are not uncommon, but there are also more limited local movements within Somalia. Migratory patterns based on national resources are only somewhat modified by investments in artificial water resources or block grazing control. 2.03 Livestock are also owned by sedentary crop farmers in defined areas, notably the river valleys and the northwest. Some stock, mainly milk cows and sheep, are kept around the homestead throughout the year, depending on the availability of feed and water, but the remainder are herded on a basis similar to those of nomadic groups. Urban producers, who supply the bulk of fresh milk to Mogadishu, Kisnayo and Hargeisa, keep stock under comparatively intensive conditions in urban and perl-urban areas. 2.04 The nomadic/transhumant systems based on sparse natural resources are characterized by high mortality especially in young stock, low fertility, advanced age at first parturition and slow rates of growth. Consequently, marketable/consumable offtake is also low. No data exist to quantify the impact of the variables of nutrition, husbandry, disease or parasite infestation on survival and productivity. Given the communality of land use with little prospect of range improvement or change to individual usage, it appears logical, therefore, to concentrate on animal diseases and conditions to enhance productivity and export of Somalia's livestock. 2.05 Offtake and Mortality Rates. Estimates of annual offtake rates are highly uncertain in light of the deficiencies in the data on essential parameters such as herd productivity and mortality rates. Nevertheless, offtake rate estimates vary between 4% in the case of camels and 13% for sheep. Offtake rates are likely to vary widely with climatic and geographical conditions but tend generally to increase during drought years and decrease in good years. The MLFR does not carry out the necessary epidemiological studies of mortality and morbidity rates. Thus, mortality rates are highly uncertain but are believed to be especially high among young stock (20-30% have been quoted). Estimates of absolute livestock losses from all causes are sketchy but averages derived from a variety of sources indicate annual losses of about 3 million young sheep and goats and 1.5 million adults; 200,000 cattle calves and 200,000 adult cattle and 230,000 camel calves and an equal number of adults. The opinion has been expressed that about one-third of these losses could be prevented by relatively unsophisticated control measures. 2.06 Production and Marketing. Based on above highly uncertain parameters the annual offtake or production in the livestock sector has been estimated to be about 3.5 M animals of which 1.9 M would be goats, 1.2 M sheep, .2 M cattle and .2 M camels. This would represent a live-weight of around 200,000 metric tons. About one-third of the total production is consumed by producers. Of the marketed offtake about half the cattle and camels and one quarter of the sheep and goats are consumed in the country. The rest is exported.  - 7 - 2.07 Available data on exports of live animals (see Table 2) suggest an increase in offtake over the last 25 years. The main driving force behind the expansion in exports has been the increasing commercialization of nomadic livestock herding, pulled by a buoyant market in Saudi Arabia for small ruminants (i.e. goats and sheep) since the late 1960s. Table 2 Exports of Live Animals from Somalia (1,000 heads) Total Small Year Cattle Camels Sheep Coats Ruminants 1950 3 - - - 121 1960 12 6 - - 576 1970 45 25 548 605 1,153 1980 85 21 829 951 1,780 1983 a/ 54 8 569 557 1,126 a/ Excludes shipments from small ports. SOURCE: Ministry of Planning and Ministry of Livestock, Forestry and Range. 2.08 During the 1970s the ports of Mogadishu and Kismayo were developed and are increasingly important in the export of cattle and camels. In 1982, these two ports were responsible for over 60% of all cattle exports and over 70% of all camel shipments. On the other hand, the northern part of Berbera, because of proximity to the Saudi market, has developed to be the main port of shipment of small ruminants. In recent years, practically all exports of small ruminants were shipped through Berbera. 2.09 Saudi Arabia has remained the principal market for Somali livestock exports. Since 1983, the export market to Saudi Arabia has been severely disrupted and Somalia's prospects are currently uncertain. Competition in the crucial Saudi market from highly organized alternative suppliers has intensified and the deficiencies of the Somali export trade have been highlighted. Somali exporters are unable to guarantee numbers, date of delivery or uniform quality; moreover, there are shifts in the pattern of demand which indicate that consumers in Saudi Arabia are now less than willing to pay substantially higher prices for the apparently preferred characteristics of Somali stock. These trends were brought into sharp relief when, during 1983, Saudi Arabia imposed a ban on the imports of cattle from Eastern Africa on the grounds of the risk of rinderpest transmission, and a ban on the imports of small ruminants because of an alleged risk of brucellosis transmission. Of all Eastern African countries, Somalia was the hardest hit and responded with intensified disease control measures. The ban on small ruminant imports was lifted in  February 1984, although the cattle ban remains in force. Exports of small stock have, however, not recovered to their former levels, and the prospects of Somalia recovering its market share of the Saudi market must be considered highly uncertain. GOS has made efforts to diversify its markets and by late 1984 had arranged for shipments of cattle to Egypt, although at lower prices and more uniform quality than had been previously enjoyed in the Saudi market. 2.10 The system for livestock marketing is well established and based on a network of exporters (Livestock Traders Committee) which employs agents to purchase stock in the interior. Official exports are subject to export licensing and to a system of letters of credit (L/C) under which GOS specifies a somewhat arbitrary L/C value per head (US$42 per small ruminant, US$280 per head of cattle and US$450 per camel in 1984) which is below the actual dollar value realized by the sale. The L/C value is repatriated at the official exchange rate while the exporter is free to repatriate the remainder at the open market rate or to purchase goods abroad for resale in Somalia. The high valuation of the currency, in conjunction with the L/C system, results in a high rate of implicit taxation on the sector, amounting, at the time of appraisal, to about 40% on gross earnings in the case of small ruminants.2/ It is expected that the impact of this taxation on export incentives and the need for a revision of Government policy regarding the L/C system as currently practiced will be reviewed under the livestock marketing studies scheduled to be carried out under a USAID-assisted project (para 2.11). 2.11 A USAID funded Livestock Marketing and Health Services Project which started its operations in late 1984 is seeking to address Somalia's immediate livestock marketing constraints (Annex 7). Specifically, it will focus on upgrading quarantine-and related export facilities to meet international trade requirements and on improving the health program for cattle exports. The project is, however, also through two marketing studies scheduled to be carried out in 1986 to assist GOS in improving the livestock marketing system and developing a cattle export marketing strategy. Government Policy and Institutions 2.11 The Government's current Four-Year Development Plan assigns the highest priority for livestock subsector development to a reduction of waste caused by disease and expected subsequent increases in the level of offtake, exports and foreign exchange earnings. Other priorities include 2/ Calculated as the So.Sh. equivalent of the L/C value, evaluated at the difference between the parallel and official market exchange rate, in percent of the export price expressed in So.Sh. evaluated at the parallel market exchange rate.  -9- range development and preservation, and production diversification with a strong emphasis on private sector involvement. Development projects aiming at achieving these and earlier objectives were reviewed in Chapter I (para 1.13). Efforts to improve animal health through enhanced disease control measures need to consider and be balanced with available animal feed resources. Hence, the Northern and Central Rangelands Development Projects aim at increasing rangeland productivity to accommodate increased livestock production through the creation of permailent and rotational grazing and drought reserves, range users cooperatives, stock water ponds and fodder production water. The longer term results of these efforts are still to be assessed. Furthermore, under the USAID funded Livestock Marketing and Health Services Project special provisions are included for expansion of private sector fodder productioa required for exports of quarantined cattle. 2.12 Although the livestock subsector comprises a substantial part of Somalia's social and economic activity, it contributes only 1-1.5% to Government revenues through direct taxes levied on exports. The tax levied on domestic slaughter of cattle in municipal slaughterhouses represents a small contribution to the revenues of local governments. On the other hand, Government expenditures affecting the subsector in 1984 represented a mere 4% of the ordinary budget. Given the important role livestock plays and could play in increasing the country's foreign exchange earnings, the Government would be justified in allocating more resources to the subsector and in relying more heavily on it as a source of revenue principally through the recovery of costs of vaccination, provision of drugs and other services of direct benefit to producers and exporters. 2.13 The Ministry of Livestock, Forestry and Range (MLFR) is the Government agency concerned with the development of the livestock subsector. As shown in Chart 1, it has four departments: Animal Health; Animal Production; Planning, Training and Research; and Administration. This Ministry also supervises the National Range Agency (NRA), a parastatal agency in the livestock subsector. The MLFR employs about 1,250 permanent and 800 temporary staff, including 55 graduates of whom 21 graduated from the Somali National University. 2.14 The Animal Health Department (AHD) which is the largest MLFR department, is headed by a Director with 18 professional staff in Mogadishu and 25 veterinarians in the field. The AHD is responsible for all aspects of animal disease control including movement control, field vaccination and treatments, meat inspection, laboratory services, the purchase and distribution of drugs and the manufacture and distribution of veterinary medicine. Most importantly, AHD has a laboratory service represented by the Serum and Vaccine Institute (SVI) in Mogadishu, the Kismayo and Hargeisa veterinary laboratories and a field service operating at regional and district levels. 2.15 The SVI provides diagnostic, investigative and research services and primarily manufactures vaccines for deparmental use. The SVI can satisfy present national demands for most vaccines and works well below full capacity due to inadequate field demand for vaccines. The Veterinary Laboratory at Kismayo was established with assistance from the Federal Republic of Germany (FRG). It is receiving continued assistance from FRG under the Central Rangeland Development Project under which the operations  - 10 - of the laboratory will be integrated with veterinary field services through a phased program for improving animal health involving disease survey, analysis and evaluation of data and implementation of veterinary intervention measures. The Veterinary Laboratory at Hargeisa, which was developed with British assistance (ODA) is now not fully operational. 2.16 The veterinary field services involve vaccinations and treatment of primarily internal and external parasites carried out by mobile units based at regional headquarters. Whereas vaccinations are given free, livestock owners are sold veterinary drugs by AHD's field staff. Figures on vaccinations and drugs suggest that the best, although inadequate, coverage is for rinderpest, with minimal ineffectual coverage for most other diseases. The project would concentrate on the whole spectrum of diseases and develop a strategy for their economic control. Animal Disease Control 2.17 The maintenance of animal health through an effective disease control strategy is critically important in the Somali context where over 60% of the population are directly dependent on livestock not only as an income-earning livelihood but to support life itself in the widespread pastoral society. Although subsector development objectives emphasize reduction in economic waste the strategies and policies to accomplish this objective are poorly defined. Planning and implementation of veterinary interventions is impeded by a lack of understanding of current levels of mortality and morbidity caused by animal diseases. It is recognized that animal diseases are important and cause economic losses to the subsector. However, the magnitude of such losses among various livestock categories and the geographic and seasonal incidence cannot yet be quantified. In such circumstances, the economic justification and cost effectiveness of veterinary interventions through veterinary services remain uncertain. There is, therefore, a need for specific epidemiological studies to establish a basis for planning animal health strategy. Efforts to remedy this situation are currently being initiated in the central rangelands area through the operations of the Kismayo Laboratory and its associated veterinary services. In the same vein, the proposed project would seek to strengthen animal health planning in the northern regions of Somalia and also serve as a basis for national planning. 2.18 Veterinary Services and Drug Distribution. In the absence of well defined disease control programs, the veterinary services of AHD lack focus and guidance, and the links between field and laboratory services are, therefore, weak. The services provided involve curative measures and vaccinations. Sick animals have to be brought by nomadic herdsmen long distances to clinical centers for treatments rather than veterinary services effectively reaching out to livestock owners. As a result treatment is directed toward individual animals rather than toward herds or flocks involved, an inherently costly approach. The above deficiencies in the basic system of veterinary services are compounded by low motivation of staff and deficient supplies, equipment and transport for veterinary staff. A major cause of low staff motivation is the Government salary structure.  - 11 - 2.19 The Government maintains a monopoly on drug importation. International drug firms are invited to submit tenders against a list of drugs chosen by AHD. Drugs are dispatched to regional offices which are responsible for distribution to district offices and village posts. Drugs are often dispensed to livestock owners on the basis of uncertain diagnosis, without adequate instructions regarding their proper use. Departmental records suggest that antibiotics are used as broad spectrum drugs whenever diagnosis is not obtained. Importation of drugs is restricted by the release by the Ministry of Finance of the necessary foreign exchange, with the result that supplies are small and limited. It is believed that this has contributed to significant illegal importations and trade in drugs through the private sector. However, steps are being initiated to eliminate the official MLFR drug importation and distribution monopoly. The Government has agreed under the IDA financed Agricultural Inputs Program to authorize approved dealers to import and distribute non-prescription drugs and veterinary supplies on the open market. This would include antihelminthics, acaricide, wound ointments, chemicals for foot rot and powder antihistics. 2.20 Issues. Constraints and Project Rationale. As indicated above, the major issue in the area of livestock health improvement is the absence of well-defined and regionally focused disease control programs which are economically justifiable, cost effective and monitored as to their effectiveness in achieving established objectives. An important aspect of this issue is the consideration of the appropriate role of public and private sectors in the delivery of veterinary services, including drugs, to livestock owners including incentives to private sector participation and recovery of public sector expenditures for animal health control to sustain such a program over time. The necessary elements of a disease control program, currently not in place, would involve the following: (i) an identified set of livestock diseases of major economic importance and their seasonal and spatial patterns; (ii) choice of appropriate and cost-effective methods, including suitable veterinary extension services and drug distribution systems to control or eradicate such diseases; (iii) design of a system for monitoring the implementation and evaluating impacts of disease control measures; and (iv) establishment of organizational and managerial structures for implementation of disease control programs including the assignment of an appropriate role to the private sector for providing veterinary services and drugs. 2.21 Strengthening of the technical and organizational base for animal health planning in support of the formulation of regional disease control programs is an immediate priority. The proposed project would address this need as it relates to northern Somalia.  - 12 - 2.22 The implementation of disease control programs is faced with logistics problems caused by the mobility of pastoralists, distances and poor communication between urban centers and location of pastoralists. The present facilities of AHD i.e., regional, district and subdistrict housing and office facilities of AHD staff, transport and equipment are viewed as constraints in overcoming such problems. However, large scale investments for strengthening of such facilities, need to be planned and justified with reference to the role and form of public sector veterinary interventions within the overall context of a disease control strategy. The proposed project would address this requirement through an appropriately phased program for strengthening veterinary field services. 2.23 As in the case of other veterinary services, animal drug distribution needs to be planned with respect to appropriate public and private sector roles. The present Government monopoly on drug importation and distribution is contributing to straining the already limited foreign exchange resources of the Government while failing to tap the resources of the private sector in meeting the drug demands of livestock owners. The Government recognizes the need for privatization of animal drug importation and distribution. A study to examine the feasibility and organizational aspects of involving the Frivate sector in drug distribution is being planned under the USAID assisted Livestock Marketing and Health Project (Annex 7). Furthermore, under the proposed IDA financed Agricultural Inputs Program, GOS agreement is being sought to the authorization of traders to import and distribute specified animal drugs (para. 2.19). The proposed Livestock Health Services Project would complement these activities as they relate to northern Somalia, by preparing and implementing proposals for involving private traders in drug distribution in the project area. 2.24 Insufficient attention has been given in the past to the implications of the limited feed resources of the range and the increases in livestock numbers that might result from an effective disease control program. Any increase in livestock numbers generated by an animal health program without a commensurate increase in offtake sustained by an assured demand for consumption of meat would be counterproductive and exacerbate the already precarious feed situation and risk of increased losses from starvation in dry or drought situations. The proposed project acknowledges the need to plan, implement and monitor a disease control program for northern Somalia within the constraint of maintaining the sustainability of the range resources and market offtake (para. 5.14). As the first Phase (three years) of the project is of an investigatory nature, no immediate additional stress would be placed on range resources or aggravate the export market situation. Additionally, given the normal biological/reproductive constraints of cattle and camels, short-term increases in numbers would not be expected; although control of parasites in all stock, particularly sheep and goats, would diminish losses and increase pressure on feed resources. Project staff would maintain close links with pastoral groups to solicit their own views on animal health interventions and on the maintenance of range resources (para. 5.06).  - 13 - II.. THE PROJECT AREA General 3.01 The project area (IBRD Map No. 19008) comprises the administrative regions of Awdal, Galbeed and Togdheer in northwest Somalia. The area is bounded on the west by the international border with Djibouti, on the north by the Gulf of Aden, on the south by the international border with Ethiopia, and on the east by Sanaag and Nugal Regions. The project area has a surface area of 86,000 km2, and a human population estimated to be 900,000, of whom 300,000 live in Hargeisa, Somalia's second largest town. The 1975 census estimated that 67Z of the population was nomadic, 23% settled farmers (some holding stock) and 10! non-agricultural. 3.02 Livestock-rearing is the most important economic activity of the area, with the arable area limited to less than 100,000 ha. The :North-West Region Agricultural Development Project (Cr. 635-SO), which recently entered a second phase, has achieved a considerable degree of success in bringing about increased production in these areas through assisting farmers in moisture conservation practices. One of the associated benefits of this project is a modest increase in the availability of feed from crop residues and improved grazing on the developed farms. 3.03 The climate is semi-arid, subject to the monsoon which brings the rainfall in two seasons, the gu (April/June) and the der (September/October and intermittently up to December). Annual average precipitation ranges from less than 100 mm at the coast to 500 mm inland except for limited areas where it may reach 900 mm. Variability is very high; Hargeisa, for instance, with a long-term average of some 400 mm has recorded variations from 209 mm to 810 mm per year. The major topographical features are (i) the low-lying coastal plains (the Guban) running some 70 km inland with a very iot summer climate, (ii) a high escarpment running east-west parallel to the coent and rising to 1,550 m at Sheikh; (iii) a plateau to the south of the mountains (the Ogod) extending to Ethiopia, with an average altitude of 1,200 m arid rainfall in the range 100 - 300 mm; and (iv) beyond this the Haud, a red s.mdy plain, stretching southwards into Ethiopia, its altitude falling to some 500 m. 3.04 The project area is connected to Mogadishu by means of a bituminized road which extends from Burao through Berbera to Hargeisa and Gebiley and is currently being extended to Borama near the Ethiopian border. Burao and Hargeisa are also connected by a poor quality dirt road. Other lesser dirt roads and trails provide poor connections between towns and villages. Large parts of the range are inaccessible even to four-wheel drive vehicles, especially during the rains. Telephone communications are limited to an unreliable service between main towns. This is disadvantageous for livestock exporters who are unable to speak directly with importers in other countries. Poor communications make it particularly difficult for pastorali ts to visit veterinary centers (even without their animals) or for veterinary services to reach pastoralists. Outbreaks of disease can thus go unreported and untreated, and diagnosis and treatment tend to be of an ad-hoc nature. Thus, although the maintenance of animal health is of great importance to a primarily  - 14 - livestock-oriented society, and especially so to protect or enhance the development of its exports, no adequate diagnostic or preventive base exists mainly because of the lack of communications. Pastoralists, Production and Scheme 3.05 Available data show that the project area includes an estimated 25% of the national camel herd, 47% of all small ruminants and 5% of all cattle. In absolute numbers, this would imply a livestock population in the area of about 0.7 M camels; 2.9 M sheep; 2.5 M goats and 0.1 M cattle. By comparison with the national average, the livestock economy of the north is based predominantly on camels and small ruminants, and it is with these classes of stock that livestock health services would be primarily concerned. The major movements of livestock and people occur between the Guban, Ogod and Haud, with a multitude of minor movements within each zone. These represent a regular large scale migration of several hundred thousand people who have evolved a range management system of intricate cooperation over large areas. 3.06 The ultimate beneficiaries of the proposed project would be the pastoralists of northwest Somalia. Of particular importance are the nomadic social organizations and de facto herdsmen associations. These groups are formed out of small subsegments of primary lineage groups, under the necessity of forging alliances strong enough to exercise effective pressure upon other primary lineage groups, when it comes to sharing of resources or settling social conflicts. Outside of these groups, no collective action is normally achieved within the nomadic lineage society. In northern Somalia, there are about 350 such groups of which there are some 110 in Togdheer involving a population of about 360,000, each group controlling on average, though with wide variations, 33,000 small ruminants, 4,800 camels, and 3,000 cattle. No comparable data are available for Galbeed and Awdal regions. 3.07 The average herd size in the project area is believed to be somewhat larger than in the Central Rangelands area where a nomadic household survey in 1983 estimated it to be around 100. The same survey found an average household income of So.Sh. 28,850 in the Central Rangelands and estimated that about 40% of the households failed to generate sufficient income to rise above the food poverty line, and that about 60% failed to meet the basic needs poverty line. Taking into account the larger herd sizes in the proposed project area, the incidence of poverty should be lower, but also here a large percentage of the nomadic hous..holds would have incomes below the poverty line. Marketing 3.08 The marketing system has been long established in the project area, Berbera being the main port of export. Stock purchased at the inland markets or directly from the producer are assembled by the traders or their agents, vaccinated and then held for two to three weeks at holding grounds. Once shipping has been arranged, stock are moved to Berbera  - 15 - (small stock and most cattle by road transport, camels walked) and loaded on ships as rapidly as possible as feed resources at Berbera are extremely limited. Feed for the 2-3 day voyage to Jeddah is purchased by the exporter at a cost in late 1984 of some So.Sh. 18,000 per load (one load being adequate for 1,000 small stock to complete the journey). Deficiencies in the marketing system are primarily related to infrastructure and supplies of fodder. Inland, the holding grounds in the Burao-Hargeisa-Berbera triangle Qolcaday have generally fallen into disrepair and do not allow effective separation of livestock, and the facilities at Berbera port are substandard. These facilities are to be improved under the Livestock Marketing and Health Project. Feed supplies, the prices of which have risen steeply, have to be trucked from long distances. This constraint is also to be addressed under the USAID assisted project through provision of credit for fodder production and transport. 3.09 The present problems of access to the crucial Saudi export market (para 2.09) are reflected in northern Somalia in depressed real prices and in greatly reduced livestock shipments from Berbera (see Table 3). In December, 1984 exporters had still not been paid for deliveries of small stock made to Saudi Arabia in July/August, and no stock were passing through Berbera; small stock for 1984 were down 45% and 65% compared to 1983 and 1982. However, increased smuggling of livestock to the Gulf States through uncontrolled ports was reported. The project would not seek to address marketing constraints which are being studied country-wide by USAID and GOS. Table 3 Livestock Shipments from Port of Berbera (1,000 Head) Small Year Cattle Camels Ruminants Total A.U. a/ 1980 77.1 8.0 14,080.0 1,951.5 1981 51.9 4.7 1,281.1 1,639.2 1982 60.2 3.9 1,312.2 1,713.0 1983 29.8 3.4 1,052.4 1,265.8 1984 b/ 6.0 1.6 619.7 670.4 a/ Animal Units (A.U.) 1 camel - 10 sheep/goat - 6 cattle. b/ Up to November, 1984. SOURCE: Animal Health Department, Berbera. Institutions 3.10 Administration. The project area is administered by the Regional Governors of Awdal, Galbeed and Togdheer with bases in Borama, Hargeisa and Burao assisted by District Commissioners. Civil order is controlled by a Police Commissioner and his force; while regional and border security is in the hands of the Somali Army.  - 16 - 3.11 Government Services. A wide range of services is nominally provided to the agricultural/livestock sector. These services include rainfed and irrigated farm development and extension, forestry range, animal health, water supply development credit and marketing. All of the institutions involved, including MLFR suffer from budgetary constraints, lack of trained staff, transport, housing and low salaries. Staff turnover is high due to relatively harsh local conditions and isolation from the mainstream of social and political life and chances of promotion. In the absence of a solid institutional presence in the area, it was necessary to form a Project Management Unit to implement the North-West Region Agricultural Project. A similar arrangement is proposed for the Livestock Health Services Project. This, however, would not be a substitute for a soundly staffed and an adequately financed national institution. This will need to be addressed during the mid-term review (prior to starting the development phase) of the project. Disease Control 3.12 At present, the animal disease control activities of AHD in the northern regions of Somalia are subject to constraints similar to those discussed in Chapter II (para. 2.17-2.19). Briefly, they comprise the absence of an adequate information base upon which to found an appropriate health control policy, serious deficiencies in staffing, staff motivation and supervision, and a shortage of basic facilities and equipment. In consequence, the veterinary field services of AHD are not capable of carrying out the necessary phased program of planning, investigation and evaluation, which should precede an integrated animal disease control strategy. The logistic and managerial problems inherent in the provision of veterinary services for nomadic herdsmen are particularly relevant in the project area. 3.13 The present knowledge of the spectrum of diseases responsible for mortality and morbidity in livestock in the northern regions arises from the accumulated observations of the Somali field staff, supported by the findings of the British Veterinary Team stationed in Hargeisa 1969-1972. Some limited work has also been sponsored by the diagnostic section of SVI. The main diseases mentioned are: in cattle, rinderpest and contagious bovine pleuropnuemonia (CBPP); in camels, trypanosomiasis and rabies; and in sheep and goats, Nairobi sheep disease, helminthiasis and contagious caprine pleuropneumonia (CCPP). However, since the diagnostic laboratory at Hargeisa is now barely operational and transport facilities for the veterinary field service strictly limited, little reliance can be placed on recent accounts uf animal disease in the project area. The roles that starvation and malnutrition undoubtedly play its causing livestock debility and mortality also need to be investigated.  - 17 - IV. THE PROJECT Project Genesis 4.01 IFAD has since late 1982 been considering possible financial assistance to GOS in the animal health sector. With the cooperation of the FAO/Investment Centre (FAO/IC), a Livestock Health Services Project was identified and prepared. The FAO/IC mission, which submitted its report in October 1984, proposed a five-year project, costing about US$17 M (excluding price contingencies), for the simultaneous strengthening of animal health planning and veterinary field services. The bulk of project expenditure, US$12 M or 70X, would be directed towards strengthening and expanding AHD's veterinary field services. This would involve provision of buildings, transport, equipment and drug supplies. About US$5 M, or 30% of total project expenditures, would go towards strengthening of animal health planning, i.e., disease investigation, diagnosis, surveillance and evaluation involving a substantial technical assistance component. Financing of project costs was expected to be shared between IFAD (veterinary field services component), ODA (animal health planning component) and local financing generated by project sales of drugs. 4.02 The [DA appraisal mission agreed with the findings of the Preparation Report that strengthening of animal health planning is a critical element for a livestock health services project. However, for reasons already indicated (para. 3.12), it had strong reservations about the conclusions of the Report that substantial and immediate investments in treatment oriented veterinary field services in the project area are, at this stage,justified and that such investments should proceed simultaneously with efforts to improve animal health planning. Consequently, the mission recommended a project reduced in scale and modified with respect to objectives compared to earlier proposals. Further, after prolonged discussions, GOS requected that ODA grant financing for the animal health planning component be replaced by IDA credit financing. The source of financing does not alter the project concept. Project Objectives 4.03 The proposed project recognizes the need for a phased approach to development of animal health in the project area. This would involve the logical sequence of first determining what constitutes an economically justifiable and cost effective disease control program and second, comaittinf appropriately scaled and directed resources to the implementation of such a program. 4.04 The long-term goals of the project would be to contribute to the reduction of economic losses in the livestock sector which result from animal diseases and to strengthen the institutional capability of AHD to serve the needs of the livestock sector. In pursuit of these goals, the project would assist AHD in: (i) defining a comprehensive and economically justifiable animal disease control program for the project area; and  - 18 - (ii) testing such a program on an operational scale. 4.05 The project would be complementary to ongoing projects aiming at animal health improvement in the area, notably the USAID assisted Livestock Marketing and Health Project (Annex 7). It would complement and be consistent with the phased approach to animal disease control that has already been adopted under the Central Rangelands Project (IDA Credit 906-SO). Its results would be expected to serve as a basis for planning and implementing further improvements in veterinary services in Northern Somalia and the country as a whole. In this sense, it would serve as a pilot project. Main Features and Project Components 4.06 The project, to be implemented over a period of six and a half years, would involve the following two main sets of activities: (i) disease investigation and livestock health services planning (Part A); and (ii) implementation on a pilot scale of a disease control program in the project area (Part B). 4.07 Part A. Disease investigation and livestock health services planning would extend over the entire project period but be concentrated to the first three and a half years (Phase I) and aim at the formulation of a comprehensive disease control program for the project area. To support Part A activities, the project would finance the following components: Ci) strengthening of AHD's veterinary laboratory services in Hargeisa and Burao; (ii) strengthening of A!D's investigative veterinary field services; and (iii) technical assistance services to help AHD in carrying out the program. 4.08 Part B. The implementation of a pilot program for disease control in the project area would be initiated during the second half of the project period (Phase II). The scope, detailed design and justification of such a program, to be proposed during Phase I, would be subject to a Mid-Term Review (para 4.19). To facilitate the iwplementation of such a program the project would provide for the strengthening of delivery systems for veterinary services, including drugs. Detailed Features (a) Port A: Disease Investigation and Livestock Health Services Planning 4.09 Objective and Scope (details are in Annex 2). The objective would be to formulate a comprehensive animal disease control program for the livestock sector in the project area, covering the necessary elements of such a program as reviewed earlier (para. 2.20). The program would be expected to result in the following:  - 19 - (1) identification of animal diseases causing major economic losses to the sector, i.e. negative impacts on livestock production, incomes to livestock owners and export earnings to the country; (ii) recommendations for cost effective delivery systems for veterinary services including drugs for controlling economically important diseases and for monitoring and evaluating the implementation of such systems; (iii) proposals for an appropriate allocation of responsibilities between the public and private sector, including the livestock owners themselves, for implementing proposed delivery systems; (iv) preparation of a public investment program, including detailed cost estimates, to support AHD and private sector agents in the form of facilities, equipment, supplies, drugs, training, technical assistance and financial resources to enable them to implement the disease control strategy, identified under (ii), in the project area during Phase II; (v) recommendations for an appropriate system of cost recovery, given the public sector expenditure program proposed in (iv) above; (vi) recommendations for an appropriate organizational structure and staffing of AHD's veterinary services in the project area; and (vii) an economic and financial analysis of the investment program proposed under (iv) above. 4.10 Investigations would cover the fields of epidemiology, range ecology, sociology of pastoral communities, veterinary economics and organizational and administrative aspects of veterinary delivery systems. Collection, analysis and evaluation of information in the respective fields would be planned, programmed and conducted in an integrated manner with the clear operational aim of formulating an animal disease control strategy for the project area. The investigations would take the preliminary findings of the ODA Veterinary Investigations as a starting point (para. 3.13). They would involve assessments of the spatial and seasonal incidence of identified diseases relative to (i) livestock migration and feed availa- bility; (ii) husbandry practices and herd/flock size and composition; and (iii) the presence of disease conditions. The relative economic importance of identified diseases would be estimated. The main objectives of the range and pastoral systems investigations would be to establish and apply a methodology for correlating disease control strategies with trends in range conditions and the behavior of pastoralists with respect to animal husbandry practices and livestock offtake.  - 20 - 4.11 The development of effective delivery systems would he an essential part of the activities scheduled for Phase I and a prerequisite for the implementation of Part B of the project. As initial results of the disease investigation programs become available, the Project Management Unit (para. 4.17) would design, test, and evaluate alternative systems for delivery of veterinary services, including the distribution of veterinary drugs to livestock owners. Attention would be paid to alternative allocations of functions between the private and public sector, recognizing the need for greatest possible use of the skills and resources of the livestock owners and traders. Actual and potential groupings of livestock owners and traders that could provide a focus for extension, training and input supplies would be identified. Furthermore, an analysis would be made of the scope and feasibility for channelling drugs through the private sector (para 5.17). 4.12 Laboratory Services (US$1.2 M, Annex 1, Table 4). The space and facilities of the existing laboratory at Hargeisa are inadequate to support the proposed broad disease investigation program. Expansion of the facility is not feasible. The project would provide for (i) the construction of a new central veterinary laboratory at Hargeisa, and the rehabilitation of the existing laboratory at Burao to improve the diagnostic capabilities of AHD in the project area; (ii) the services of an internationally recruited senior laboratory technician; and (iii) financing of incremental local staff and operating costs for laboratory services. During negotiations it was agreed that the site for the new laboratory would bc selected by December 15, 1985. The transfer of the site to the project would be a condition of Credit Effectiveness. 4.13 The new Hargeisa laboratory would be the main source of sample analysis for disease investigations. It would consist of sections for parasitology, bacteriology and pathology and be provided with a full range of equipment to carry out disease diagnosis (Annex 1, Table 5). The Burao laboratory would serve as an outstation for the disease investigations in the Toghdeer region. The laboratory buildings would consist of prefabricated structures with floor space of about 625 m2 (Hargeisa) and 250 m2 (Burao). The Hargeisa laboratory would include space for the three laboratory sections, a washing/preparation room, stores, archives, staff offices for expatriate and local laboratory staff and an animal house (see Sketch).3/ In anticipation of the completion of the proposed new veterinary laboratory facilities project laboratory staff would utilize the existing facilities in Hargeisa and Burao. 4.14 Field Services and Investigation (US$2.7 M, Annex 1, Table 6). To strengthen AHD's planning capability and resources for carrying out veterinary disease investigations in the fields, the project would provide for technical assistance services, transport, equipment, supplies (including drugs) and financing of incremental staff costs. The disease investigation program would rely on sample specimens and information collected in the field by two Veterinary Investigation Teams. Each team would be equipped with a 4-wheel drive vehicle and supported by a 5-ton 4-wheel truck which would carry equipment, fuel, water, food and other 3/ Estimated costs refer to base costs for project components.  - 21 - supplies to allow the team to stay in the field for periods of about 2 weeks at a time (Annex 1, Table 7). Two additional mobile teams for range and pastoralist systems investigations would be established, and equipped to operate parallel to the veterinary investigation teams. 4.15 The project would also provide for the rehabilitation of a small number of AHD veterinary district offices in the project area. This rehabilitation would involve repairs or extension to existing buildings and refurbishing essential equipment required to support the implementation of the field investigation program. Incremental local staff salaries and other operating costs for the investigative field services would amount to about US$.6 M over the project period, including about US$.2 M for veterinary drugs required to support disease investigations. 4.16 Training (US$.1 M, Annex 1, Table 11). Overseas training would be provided for a total of 9 staff of AHD through scholarships and and short-term professional courses. The training would focus on the areas of veterinary econcmics, epidemiology and animal health planning. In-service training of Somali veterinary and other staff would be provided regularly throughout the project period through the services of the internationally recruited advisors. 4.17 Project Management Unit (US$ 1.5 M, Annex 1, Table 9). The project would provide quarters for six internationally recruited advisors (prefabricated structures, 100 m2 each), two four-wheel drive vehicles, office accommodation (included in the new Hargeisa laboratory building), office furniture and equipment. An internationally recruited technical advisor to the Project Director would be employed. In addition, 20 man-months of short-term consultancies (para. 5.11), would be financed. Incremental local staff salaries and other operating costs for the project management unit would be about US$.2 N over the project period. 4.18 Technical Assistance Team. The implementation of Part A of the project would rely heavily on the services of internationally recruited advisors4/ (para 5.07). In total, the project would provide for about 30 man-years of internationally recruited consultant services to assist ARD in designing and implementing the investigation program, translating results into recommendations for disease control strategies and programs and for supervising and monitoring the implementation of a disease control program (Part B) during Phase II. The indicated complement of advisory services is considered the minimum necessary to effectively carry out the identified tasks. Terms of reference for the six internationally recruited experts as shown in Annex 4 were agreed during negotiations. Early GOS action to recruit these experts would be critical for the initiation of the investigation program. The qualifications and experience of the internationally recruited experts and short-term consultants would be acceptable to IDA and IFAD. It would oe a condition of Credit Effectiveness that GOS has completed the contractual arrangements for the Technical Assistance Team. 4/ The costs of these services are included in the cost estimates shown above for the respective project components.  - 22 - (b) Part B: Implementation of a Disease Control Program 4.19 Mid-Term Review. A review would be carried out at the beginning of the fourth project year to evaluate the findings of the disease investigation program and livestock health services planning activities carried out durIng Phase I. The scope and organizational aspects of the review are discussed below (para 5.12). The Mid-Term Review (MTR) would make recommendations regarding the release and the use of a Development Fund provided under the project, which would be used to assist AHD in implementing a disease control prog-am through the strengthening of veterinary field services under Phase II of the project. Release of the Fund would be contingent on specific criteria being met as set out below (para. 5.13) An important consideration for the release of the Development Fund would be satisfactory assurances that livestock increases expected to result from improved livestock health services will be offset by increased offtake for export marketing and that the latter would not be constrained by export market outlets. 4.20 Strengthening of Veterinary Field Services Under Phase Il (US$3.4 M, Annex 1, Table 8). The program for strengthening veterinary field services, the details of which would be determined through MTR, would be implemented over a three-year period (Phase II). It is envisaged that the Development Fund would be used for support to AHD's veterinary field service organization in the form of vehicles, equipment, and rehabilitation of district office buildings. Furthermore, it is expected that it would provide technical and financial support for the establishment of private sector veterinary services and drug distribution services consistent with recommendations regarding the role of private sector in delivery systems for veterinary services to be reviewed by MTR (para. 4.09, section [iii]). 4.21 The time and proposed funding for the implementation of delivery systems for veterinary field services may prove insufficient to meet the longer term requirements for such services in the project area. However, it is expected that results from the project would serve as a basis for further planning of livestock health services and that funding for continued support to the subsector would be forthcoming. E. Project Costs 4.22 The estimated total project cost, including physical and price contingencies, is US$11.6 M of which 91% would be foreign exchange. Investments under the project are free of duties and taxes. Details of cost estimates, summarized in Table 4, are in Annex 1. The cost estimates are based on November 1984 figures updated to October 1985 baseline price levels. Physical contingencies for civil works and equipment and vehicles are estimated at 10%. No physical contingencies have been provided for staff salaries (expatriate and local) and training. Price contingencies have been separately calculated for the foreign exchange and local currency components, and have been estimated from the expected annual inflation rates detailed in Annex 1, Table 12. Base costs shown in Table 4 are estimated using the exchange rate US$1 - So.Sh. 42.00. Total project costs  - 23 - including price contingencies reflect further expected devaluation of the local currency as shown in Annex 1, Table 12. Table 4 SOALIA' LiEsToneflTH SEmIs PROJECT PROJECT COS SUMMAY (S.SH. million) (IJSS Million) Z Total Z Total Z Foreign Base Z Foreign Base Local Foreign Total Exchande Costs Local Foreign Total Exhmarde Costs a== __= ==- - -- Z= === =_ = _======- A. LAOTORY MRVICES 3.9 45.2 49.0 92 13 O.l 1.1 1.2 92 13 B. FIELD SERVICES: INVESTIGATION (PHASE I) 14.9 100.5 115.5 87 31 0.4 2.4 2.7 87 31 C. FIELD SERVICES: DEVELOPMENT (PHASE $I) 9.3 133.9 143.2 94 39 0.2 3.2 3.4 94 38 D. PROJECT MANAGEMENT 4.8 60.4 65.2 93 17 0.1 1.4 1.6 93 17 E. TRAINING - 3.0 3.0 100 1 - 0.1 01 100 1 Total BASELINE COSTS 32.8 343.1 375.9 91 100 0.8 8.2 8.9 91 100 Phusical Contingencies 0.7 6.6 7.4 90 2 0.0 0.2 0.2 90 2 Price Contingencies 36.2 363.9 400.0 91 106 0.2 2.3 2.5 .91 28 Total PROJECT COSTS 69.9 713.5 783.3 91 208 1.0 10.6 11.6 91 130 Novmber '9, 1995 10:58 4.23 Detailed estimates of project costs for the strengthening of veterinary field services (Part B of the project) during Phase II would be prepared for the MTR (para 4.09). It is expected, however, that these costs would be contained within a total cost of US$4.8 M, including physical and price contingencies. The amount has beer determined at a level which at this stage is considered appropriate to permit an initial testing of a disease control program in the project area and which would be consistent with an IFAD contribution of US$4.5 M for financing of estimated foreign exchange costs. 4.24 An advance under IDA's Project Preparation Facility (PPF) of US$200,000 M net of duties and taxes has been requested by GOS and is in the process of being approved. The PPF would cover the costs of (a) technical assistance to prepare design and tender documents for civil works, vehicles and equipment; (b) procurement of first batch of vehicles and office supplies and equipment to support early activation of the Project Management Unit; and (c) training of key project staff and recruitment of the Technical Assistance Team. The advance would be refinanced under the project.  - 24 - F. Financing 4.25 The financing of project costs would be arranged as follows: Table 5 Proposed Financing Plan (US$ M) Foreign Local Exchange Currency Z of Total Cost Cost Total Project Cost Part A 1/ IDA 4.3 4.3 63 IFAD 1.8 - 1.8 25 GOS - .7 .7 12 Sub-total 6.1 .7 6.8 100 Part B I/ IFAD Loan 4.5 4-5 94 GOS _ .3 .3 6 Sub-total 4.5 .3 4.8 100 Total Project IDA 4.3 4.3 37 IFAD 6.3 - 6.3 54 GOS - 1.0 1.0 9 Total 10.6 1.0 11.6 100 1/ Part A of the project would include all project components except the development of veterinary field services under Phase II of the Project which is included as Part B.  - 25 - 4.26 The proposed IDA credit (US$4.3 M) would meet the costs under Part A of salaries, travel and subsistence of internationally recruited experts, overseas training and refinancing of the Project Preparation Advance. The proposed IFAD loan of US$6.3 M, to be made available to GOS on highly concessional terms,5/ would (i) finance the foreign exchange costs of civil works, vehicles, equipment, supplies, and incremental operating expenses under Part A of the project (US$1.8 M); and (ii) finance the estimated foreign exchange costs of strengthening of the veterinary field services in the project area as Part B of the project during Phase II (US$4.5 M). 4.27 The GOS's contribution would be about US$1.0 H, equivalent to 9% of project cost.6/ It would finance the equivalent of about US$.7 M in local expenditures under Part A for minor civil works and incremental operating costs through the necessary budgetary allccations to AHD. The balance, or the equivalent of US$.3M, would finance local expenditures under Part B.7/ The project is not expected during Phase I to result in incremental Gavernment receipts from sale of veterinary drugs or services. Any such receipts forthcoming during the Phase II as a result of development and implementation of improved delivery systems for veterinary field services would be retained by AHD in the Northern Region to meet incremental local expenditures and/or importation of veterinary drugs. Procurement 8/ 4.28 Procurement arrangements are summarized in Table 6 below with IFAD procedures outlined in para 4.29. Procurement for project elements to be financed by IDA would be made in accordance with IDA guidelines. 51 Service charge of 1% annually, and maturity period 50 years, including a 10-year grace period. 6/ The GOS contribution to meet local expenditures as expressed in US$ would fall below US$1.0 in the event that devaluation of the domestic currency proceeds at a quicker pace than what has been assumed for project cost estimation purposes (Annex 1, Table 12). 7/ Based on token estimates of local and foreign cost elements of investment and recurrent costs for Part B activities during Phase II (Annex 1, Table 8). 8/ Unless otherwise indicated, the values quoted are inclusive of physical and price contingencies.  - 26 - Table 6 Procurement Method a/ Procurement Method a/ Total Project Element ICB LCB Other N.A. Cost (USS M)- Part A: 1. Vehicles and Equipment .26 - .46b/ .11 e/ .82 (.11) (.11) 2. Civil Works including .75 .10 - - .85 pre-fabricated Dldgs. 3. Operating Expenses & .25 b/ .74 .99 Veterinary Drugs 4. Technical Assistance 4.10 C/ .09 e/ 4.19 Services and Staff Training (4.10) (.09) (4.19) Sub-total 1.01 .10 4.81 .93 6.85 (4.10) (.20) (4.30) Part B: 5. Expenses Under Vet. Field 4.78d, 4.78 Services Dev. (Ph. II) Total 1.01 .10 9.59 .93 11.63 (4.10) (.20) (4.30) a/ Figures in parentheses are amounts financed by IDA. b/ International shopping for equipment and drugs. c/ Items for IDA financing (expatriate advisory services and overseas training) will be procured in accordance with Bank Guidelines. d/ Procurement methods to be determined as part of Mid-term Review. e/ Refinancing of PPF. 4.29 Contracts for vehicles and p-efabricated buildings totalling approximately USS1.1 M would be grouped where possible in contracts valued at US$100,000 or more and procured by ICB in accordance with the Bank'sGuidelines. Laboratory and field equipment totalling about US$400,000 and grouped as much as possible would, because of the small number of items under individual equipment categories, be purchased through international shopping after obtaining at least three quotations. Minor civil works contracts for building construction and rehabilitation with an estimated total of US$100,000 would be let under LCB. All bidding packages for goods and works estimated to cost over US$50,000 would be subject to prior Bank review of procurement documentation. Other contracts would be subject to selective post-award review.  - 27 - 4.30 The siX internationally recruited experts forming the Technical Assistance Team, as well as short-term consultants, would be engaged by GOS following IDA guidelines (para. 4.18). The services of the individual experts of the Technical Assistance Team would preferably be engaged under a single contract to be awarded to a suitable and qualified institution or firm. The agreement by GOS to the above procedures for procurement under the proposed project was obtained during negotiations. Disbursements 4.31 The IDA Credit and IFAD Loan would be administered by IDA under a frame agreement. Disbursements would be made according to the schedule shown below. Table 7 Prt3ned ArocatHm of IFAD loan ard ID, Credit Mmmrt z q,wAdituze Allncated Faord (US$) ns credit 1. itltait Services (Part A) 3,920,000 10CM of foreign eqpendituze 2. Oversm TraiznLg (Part A) 80,000 3. Pefund of Project Prwarntiwn Awm 200,000 10CZ of awmxt due 4. uaalocaw 100,Lo00 Sub-Total 4,3000O IFAD Loom 1. iquupent, vehc3es ann and luprted oonsructkm 1,380,000 lOCZ of foreign exmaditwxs lmteristltmc. pa te ildingo (Part A) and 90Z of local ePnditus for iampted ites prooored localy 2. Incremental rerret casts, i.e., veteria 420,000 dng, and MEM coss for uidlzq and vels (Part A) 3. Irwlopot Fund for stretlAdrgof 4,200,000 veterInary field s (Part B)a/ 4. Azbwrizd Afocation to Special Accxxmt 200,000 5. Unallocated 100,000 Sibtotal 6,300,000 Total 10,600,o0 a/ Catgory to be bnein dcamin cn its foflwlog outY of MM.  - 28 - The disbursement profile for all IDA Eastern Africa Region Credits is nine years, with about 83Z being disbursed over the first six years. The shorter overall disbursement period of seven years assumed for the project is justified because funds for vehicles, civil works, expatriate services and training would be committed very early in the life of Part A of the project; in addition the use of the Development Fund allocation under Part B, would be identified and funds committed during year four of project implementation. Projected semi-annual disbursements are shown in Annex 5. 4.32 Disbursements against all items financed by the IDA Credit and IFAD Loan would be based on full documentation, except in the case of the following items: (i) goods costing less than US$10,000 equivalent, (ii) incremental operating costs, (iii) overseas training, and (iv) contracts involving individual consultants. In these cases, only Statement of Expenditures (SOEs) would be required. Supporting documentation for SOEs would be retained by PMU for inspection by IDA supervision missions. Incremental recurrent costs reimbursable under the IFAD Loan would consist of the foreign exchange cost elements of operation and maintenance of vehicles, buildings and equipment procured under the project and the cost of imported drugs. 4*23 Disbursements of funds under the Development Fund would be intingent on a joint IDA and IFAD decision to release the Fund which, in turn, would be dependent upon the fulfillment of the conditions specified below (para.5.13). Necessary amendments to the disbursement procedures for expenditures relating to Part B activities would be agreed upon following the recommendations by [TR. 4.34 To ensure that project activities are not held back by a lack of funds, PMU should have prompt access to the required funds. It would therefore be a condition of Credit Effectiveness that GOS has deposited in the Project's account with a bank acceptable to IDA an advance based on an estimated average of about three months expenditures, involving local currency payments, in the amount of So.Sh. 2.5 M and that Government would replenish the project account quarterly to that level or such level as may be agreed upon until project completion. Furthermore, GOS would open two special accounts, one for IDA and one for IFAD funds, in foreign exchange in the project's name with the Central Bank to enable the PMU to disburse without any delay. IDA and IFAD would at effectiveness make initial deposits of US$50,000 and US$200,000 equivalent into the respective special accounts. These arrangements were agreed during negotiations. Accounts and Audits 4.35 The project entity would establish and maintain accounts in accordance with sound and generally recognized accounting principles and practices satisfactory to the Bank. Based on these accounts, the project entity would provide interim and annual financial statements to reflect the financial operations and status of the project.  - 29 - 4.36 An auditor's opinion and report satisfactory to the Bank on the project statements and the special account would be provided within six months after the closing of each fiscal year. The auditor's report would include a statement on the adequacy of the accounting systems and internal controls and on the reliability of SOEs as a basis for disbursements. The foregoing accounting, financial reporting and audit arrangements would provide adequate and timely information to IDA for supervision of disbursements and the project generally. The above arrangements together with the appointment of acceptable independent auditors were agreed at negotiations. Environmental Impact 4.37 The project takes into consideration the often expressed concerns that the rangelands of northern Somalia have deteriorated over time and are still actively deteriorating. Casual observations are, however, not supported by long-term data to substantiate and quantify such concerns. Although monitoring of range conditions has been instituted under projects controlled by NRA, these are of recent origin and are not directly linked to a program of disease control, but rather to systems of range improvement through controlled access by pastoralists. Additional pressure on range and feed resources could be adverse; hence, the critical need to increase offtake for domeetic consumption and export should the disease control program improve livestock productivity and survival. 4.38 The formulation and implementation of a disease control program for northern Somalia (i.e., Project Part A) would be linked to the objective of maintaining sustainability of range resources. The project would establish and operate a Range Monitoring Team as part of the Project -nagement Unit and enlist the cooperation of NRA in the monitoring of range conditions in the project area as a normal part of GOS animal health and range control programs and as a mechanism for permanent feedback into planning of disease control interventions. GOS trade officials and the USAID Livestock Marketing and Health Project are specifically addressing the issues of export marketing to increase offtake should an animal health project succeed in reducing losses and increasing productivity. These developments would be closely followed by the PMU and PC. 4.39 No toxic elements would be applied to the land. All veterinary vaccines and drugs, to be clearly marked, would be for animal treatment only and their use would have no adverse effect on humans. If successful, the disease control program would have beneficial effects on human nutrition and health and would improve the financial lot of livestock producers.  - 30 - V. ORGANIZATION AND MANAGEMENT Project Organization 5.01 The proposed project activities aim at strengthening the technical and organizational capabilities of AHD's regional veterinary staff in Northern Somalia in the fields of disease investigation and livestock health services planning and the subsequent implementation of cost effective delivery systems for veterinary services within a well defined disease control program. To this end, proiect organization and management would be structured to involve primarily existing staff resources of AHD in the project area, increase the efficiency and motivation of staff and ensure that when the project terminates activities initiated under the project are continued as part of a regular AHD program. 5.02 The proposed project organization is shown in Chart 2. The responsibility for project implementation would be assigned to a Project Management Unit (PMU) which would be located in Hargeisa and which would report directly to the Director of AHD in Mogadishu and a Project Committee to be established within MLFR. The PMU would include the Technical Assistance Team, be supported by an Inter-Regional Committee and seek the actve involvement by livestock owners and traders in project planning and implementatiou. 5.03 Project Management Unit. The PMU would be headed by a Project Director whose qualifications and experience would be acceptable to IDA and IFAD. The Project Director would be assisted by a Technical Director, an internationally recruited animal health economist, who would be the leader of the Technical Assistance Team. The PHU would comprise three sections during Phase I of the project: Field Investigation, Laboratory Services and Administration. Veterinary and laboratory staff currently employed in AHD's Regional Veterinary offices in Hargeisa and Burao would be assigned to PMU. These assignments would, in the majority of cases, not create any need for add'tional staff recruitment by ADE since the purpose of the project would be to organize more efficient use of existing staff resources. During Phase II an additional section of PMU would be created for the implementation of the disease control program to be identified during Phase I. The organization and operation of this section would be determined as part of the Mid-Term Review. The establishment of PHU and the appointment of a Project Director would be conditions of Credit Effectiveness. However, it was agreed at negotiations that the Project Director would be appointed, PHU established, and the key staff of PMU recruited by December 31, 1985. Also, the assurances were obtained from GOS at negotiations that special efforts would be made to retain qualified local staff within PMU throughout the project implementation period. To this end, staff incentives (para 5.16) would be kept continuously under review, and staff transfers avoided. 5.04 Inter-Regional Committee. To secure cooperation of other Government and non-Government regional institutions, an Inter-Regional Committee (IRC) would be headed by one of the Governors in the Project area and have the Project Director as its Secretary. The IRC would convene quarterly and as other members have, the regional representatives of  - 31 - NRA, a representative from the Animal Production Department of MLFR, AHD's Regional Veterinary Officers in the project area, the Technical Director of PMU and representatives of livestock owners and traders. When questions of security, logistics and communications are discussed, the local army commander would also be invited to participate. It was agreed during negotiations that IRC would be constituted by September 30, 1986. 5.05 The Project Committee. Project implementation would be supervised and monitored by a Project Committee (PC), to be established within MLFR. The PC would be chaired by either the Minister, Vice-Minister or the Permanent Secretary of MLFR and include as members the Director of AHD and representatives from the Planning, Research and Training Department, NRA and other appropriate agencies. The PC would quarterly review PMU's progress reports and initiate or direct PMU to take action to overcome any bottlenecks that might impede timely or effective project implementation. It would also serve as a coordinating unit for all development projects in the livestock subsector. The PC would issue clear instructions to PMU conce ning format, contents and frequency of progress reports on project implel.entation. The establishment of PC would be a condition of Credit Effectiveness. 5.06 Involvement of Livestock Owners and Traders. The project's deep involvement with the animal health practices of the nomads would require a broad forum to discuss the nomads' overall views on existing and proposed delivery systems for veterinary services. This would serve to provide necessary feedback to PMU relative to activities throughout the project period. To this end, the PMU would organize by region or area, periodic assemblies of nomadic and sedentary livestock owners. Similarly, PMU would seek the active involvement by livestock traders in the project area in its Phase I planning, testing and evaluation of alternative veterinary delivery systems, ini particular concerning drug importation and distribution (para 5.17). The PMU would prepare a plan for the organization and interaction with assemblies/groups of livestock owners and traders which would recognize the particular problems in administering livestock health services caused by the mobility of the target group. The agreement was obtained from GOS during negotiations that such a plan would be submitted to IDA/IFAD for review by November 30, 1986. Disease Investigation and Livestock Health Services Planning (Project Part A) 5.07 The Project Director (a Somali national), assisted by a Technl-al Director (internationally recruited) would have the overall responsibility for planning, administering and implementing the disease investigation and livestock health services planning program of the project. In particular, he would be responsible for: (i) preparing and supervising the progress of annual work programs; (ii) reporting progress to PC and financing agencies; and (iii) preparing proposals for the implementation of a disease control program covering aspects outlined above (para 4.09) to be submitted for the Mid-Term Review (para 5.12). The implementation of the disease investigation program and the associated planning for a disease control program would be done through the Field Investigation and Laboratory  - 32 - Services Sections of PMU with the support of long- and short-term technical assistance services. Local project staffing for these sections is shown in Annex 1, Table 10. 5.08 Field investigations, including the testing and evaluation of alternative delivery systems for veterinary services, covering areas discussed earlier (para 4.10-11) would be carried out by the two Veterinary Investigation Teams, the Pastoral Systems Analysis Team and the Range Ecology Team. Each of the teams would be led by internationally recruited experts, i.e., two Senior Veterinary Investigation Officers, a Pastoralist Systems Specialist and a Range Ecologist working with AMHD veterinary officers. The Range Ecology Team, although a part of PMU, would plan and execute its work program in close association with NRA and the Range Management Institute at Burao as it relates to establishing methodology of range monitoring and data collection. 5.09 The investigative field teams would be staffed with technical and support personnel from AHD and as appropriate other MLFR departments and would operate out of the central laboratory in Hargeisa using the Burao laboratory as an outstation and work closely together as dictated by the overall work program. Investigations would be carried out along fixed time schedules and geographical coverage would consider ecological rather than regional and district boundaries. Other considerations affecting work plan design would be seasonal livestock densities and movements, geographic features and disease intelligence. The principal activities of the disease investigation teams would be to: (i) regularly visit groups of livestock. owners to obtain intelligence on animal disease spectrum, its epidemiology and information on disease conditions; and (ii) collect serum samples, screening of faeces samples for parasites, and as required, perform 'blood smears and autopsies. 5.10 The Laboratory Services Section would be headed by an AHD Veterinary Investigation Officer assisted by an internationally recruited Senior Laboratory Technician. The bacteriology, pathology and parasitology departments would each be led by an AHD veterinarian. Vi-ological investigations would, to the extent required, be carried out by the Serum and Vaccine Institute in Mogadishu or by suitable institutes outside Somalia. 5.11 The PMU would also be assisted by 20 man-months of short-term technical assistance services in specific areas of investigation and planning. These areas would include veterinary economics, animal husbandry, and organization and management of veterinary services. To ensure continuity and effectiveness of such services, assistance would be sought from specialist institutions such as the International Livestock Centre for Africa. Mid-Term Review 5.12 At the beginning of the fourth project year, a Mid-term Review (MTR) would be carried out through a mission including representatives from GOS, IFAD and IDA. The purpose of MTR would be to: (i) review the results of PMU disease investigation and livestock health services planning  - 33 - activities carried out under Phase I; (ii) appraise proposals for a disease control program in the project area; and (iii) formulate a detailed plan, including objectives, activities, costs and institutional arrangements, for the implementation of such a program during Phase II. The tasks for MTR and important issues to be addressed during the review are discussed further in Annex 3. 5.13 The MTR would base its work on PHU's Phase I report (para. 5.25). This report would cover the areas outlined earlier (para. 4.09). Recommendations by MTR for the use of the Development Fund to support project activities under Part B during Phase II would be reviewed by IFAD which would apply the following criteria in deciding, in consultation with IDA, on the release of the Fund: (a) The main features of a cost effective and economically justifiable disease control program have been identified. (b; Outstanding organizational and management deficiencies within AHD can be adequately addressed and remedied during Phase II of the project. Cc) The implementation of a proposed disease control program would not be rendered ineffective by outstanding sector constraints, including those related to export market outlets and available range resources. 5.14 The MTR would carefully examine the relationship between export marketing prospects for Somali livestock, projected availability of feed resources on ranges and increases in livestock numbers expected from improved health services for purposes of determining whether proposals for a disease control program are compatible with the objective of sustaining the range resources as a source of livestock feed. To facilitate such an assessment, the PC through PNU would ensure that the necessary liaison be established with the USAID Livestock Marketing and Health Project and any other development or research projects in the livestock sector the activities of which have a bearing on the objectives of the proposed project. Specifically, it would ensure that the results of the marketing studies of the USAID project (para. 2.11), and tte results of the veterinary investigations under the Central Rangelands Development Project be incorporated by PHU in its Phase I report and the subsequent MTR. Agreement by GOS to the completion of MTR, as structured above, by December 31, 1989 was obtained at negotiations. Project Allowances 5.15 The morale and efficiency of ARD staff in the project area have been suffering from low salaries, allowances and per diems. This problem, comon throughout the entire civil service system, is recognized by the GOS as a constraint to the implementation of development projects through public sector agencies. The Government is currently reviewing proposals to increase the civil service salary levels. However, the rate and schedule for such increases are yet to be determined and implemented.  - 34 - 5.16 In the light of the above and as project activities would be conducted in remote locations and under harsh conditions, it is proposed to increase the motivation and cooperation of local veterinary staff by offering to PHU staff: (i) an inducement allowance which would be over and above the current basic salaries paid by the MLFR; and (ii) an increased per diem allowance while on field trips. These allowances would be reviewed annually in light of the civil service structures for salaries and field allowances. During negotiations, GOS agreed to submit for IDA review and approval a proposed salary structure for PMU staff which would contain an appropriate incentive element and provide for adequate per diem and allowances. The proposed salary structure would be reflected in and submitted as part of the annual work program and budget (para 5.22). Sustainability of these financial i;uducements would depend on the agreement of MLFR to charge pastoralists for all services rendered for their exclusive benefit by veterinary staff and that part of these proceeds would be retained by staff. These arrangements would be finalized at the MTR.9/ Drug Importation and Distribution 5.17 During Phase I of the project, a limited amount of therapeutic drugs would be required to support the implementation of the disease investigation program and the testing of alternative and standard disease treatment strategies. Drugs would be imported directly by PMU through Djibouti and be stored at project headquarters in Hargeisa. These drugs would be distributed by project field staff to livestock owners free of charge in return for cooperation received in the investigation and treatment testing programs. 5.18 Procedures for drug importation and distribution required during Phase II to support the implementation of a disease control program would be recommended as part of PMUs proposals regarding appropriate delivery system for veterinary services riara 4.09(iii)] for review by MTR. It is expected, however, that drug im;'ortation and sale under Part B of the project would involve the private sector to a considerable extent. The proposals for private sector drug distribution would address: (i) organizational arrangements for importation and financing of drug purchases by private import agents (particularly livestock traders); and (ii) the onward distribution of drugs to livestock owners within the context of the proposed systems for delivery of veterinary field services. Investigations to formulate such proposals would be undertaken in conjunction with the USAID assisted Livestock Marketing and Health Project which is due to commission a detailed study on this subject during 1985. Administration 5.19 The administrative aspects of project implementation would involve procurement, financial control, budgeting, personnel management and logistics (stores, transportation, etc.). The responsibility for these 9/ GOS is already in the process (1985) of modifying its recruitment/ salary structure, including an increase of 80X in salaries in 1985. GOS hopes to so increase salaries as to eliminate the need for special project incentives.  - 35 - functions would be delegated by the Project Director to the Deputy Project Director. Because of the remoteness of the project area and poor communications with Mogadishu, effective and timely project implementation would require autonomy of PMU in handling project administration matters, including ready access by PMU to project funds including the project account (para 4.33). This would become especially important during Phase II, which would be expected to raise the requirements for procurement and handling of project funds for operational purposes. 5.20 To assist PMU in its budgeting and financial control of Phase I project activities, the services of the Financial Controller attached to the ongoing IFAD and IDA supported North-West Agricultural Development Project would be obtained on a time-sharing basis. Necessary administrative arrangements would be finalized between MLFR and the Ministry of Agriculture by January 1, 1986. Assurances to this effect were obtained during negotiations. The MTR, in drawing up the implementation plan for Part B of the project would address the need for further strengthening of financial control assistance to PMU during Phase II and make appropriate recommendations accordingly. Annual Work Program 5.21 Annual work programs covering all project activities would be the basic management system for the project. They would set targets within the context of overall project objectives and identify methods to be employed and resources required to achieve them, and include: (a) a detailed description of work to be performed, including the objectives for the ensuing fiscal year, a schedule of activities, equipment requirements, proposed staffing arrrangements, and training plans, and distribution of responsibilities for each work task; (b) a budget for the period, including proposed capital and recurrent expenditures, a comparison of proposed budget and actual expenditures for the previous year; and (c) a financing plan with cash flow projections, including GOS contributions to the project account. 5.22 The annual work program would enable PC to review progress, examine proposed activities and make the necessary arrangements for budgetary and other support. It would be submitted to PC by October 1 and to IFAD and IDA by November 1 each year for acceptance to cover the following 'iscal year. The initial work program covering the period July to December 1986 would be prepared and submitted to IDA by August 15, 1986. Agreements to this effect were obtained at negotiations. Monitoring, Evaluation and Reporting 5.23 Overall monitoring of project progress would be the responsibility of PC. During Phase II of the project, a plan would be implemented for monitoring and evaluation of the disease control program.  - 36 - Such a plan would be prepared by PHU and be submitted as part of PMU's Phase I Report (para. 5.25). It would specify the organizational arrangements, manpower and other resources required for establishing a program for regular monitoring of the impacts of public as well as private sector interventions to control livestock diseases and for evaluating the effectiveness of such interventions relative to objectives and targets established for disease control. 5.24 The PMU would establish a computerized data base covering epidemiological, economic and other information pertinent to disease investigations and livestock health services planning. The data base would be maintained and updated throughout the project period and serve as a framework for monitoring and evaluation of disease control Leasures. 5.25 The PMU would prepare and submit quarterly progress reports through PC to IFAD and IDA according to an agreed format. A report covering the findings of Phase I activities and detailed proposals for Phase II activities would be submitted by PMU to the same agencies by September 30, 1989. The subject matters covered and areas of proposals contained in the report would be as indicated above (para 4.09). The agreement by GOS to the timing and areas to be covered by PHU's Phase I report was obtained during negotiations. The PMU would also prepare a project completion report no later than siX months after the completion of the project. Implementation Schedule 5.26 The project would be completed over six and a half years, i.e., by December 31, 1992, assuming project start-up by July 1986. An implemcntation schedule is shown in Chart 3. VI. BENEFITS AND JUSTIFICATION Justification 6.01 While nearly all ongoing projects in the livestock subsector do have some animal health component, there is presently no systematic approach to upgrading the national animal health services. The Somali animal health services are presently not capable of carrying out a phased program of planning, programming, implementation and evaluation required for successful and cost effective control of animal disease. Hence, the justification for the proposed project. Benefits 6.02 The project would aim at strengthening AHD's technical and organizational capabilities in planning for animal health improvement in northern Somalia. Such strengthening, leading to the formulation and implementation of an economically justifiable and cost effective disease control strategy, would in the longer term result in benefits to the livestock subsector in the project area. These benefits would occur in the  - 37 - form of reductions in the economic losses of livestock and livestock products due to animal disease. They would translate into incremental earnings of livestock owners, pastoralist households and livestock traders, as well as increased foreign exchange earnings to the country. The latter benefits are predicated upon the assumption that incremental commercial offtake made possible through reduced livestock mortality rates would be primarily exported. 6.03 Incremental project benefits would start accruing under Phase II of the project with the implementation of a disease control program (Part B of the project). They are at this stage not quantifiable since (i) there is an absence of reliable baseline data on livestock mortality and morbidity rates in the project area (to be remedied under Part A of the project); and (ii) they would be dependent on the nature and scope of the disease control program and its associated investment and implementation costs which would be determined as part of project activities during Phase I. Thus, the project as proposed does not lend itself to an economic rate of return analysis at this stage. However, such analysis would form part of the Mid-Term Review (para. 5.12). Risks 6.04 Basic risks inherent in the project are: (a) Border Security. Abeyance of this risk is the function of local government and police/armed forces and includes prudent reporting of staff movements in sensitive areas and maintaining a low profile. (b) Herd Movement. Loss of data/contacts with predesignated herds selected for monitoring and control. Remedies would include branding/tagging of selected herds and appointment of para-veterinary personnel to live with migrant owners. (c) Staffing. Because of the remoteness of the area, harsh working conditions and distance from the main seat of power and promotion, it is difficult to attract and retain qualified local staff over the long term for project implementation. The proposed salary incentives and the provision of facilities and transport 3hould help to ameliorate this problem (para. 5.16). (d) Market Outlets. A successful animal health disease control program resulting in reduced mortality and morbidity could jeopardize range resources and increase drought risk if not accompanied by an increased offtake for internal consumption or export. The GOS and USAID are exploring increased, diversified market cutlets to minimize the risk of overstocking and range degradation. The project would have little or no impact on the size of animal herd during the investigatory stage (Phase I). Furthermore, even if a veterinary services stage (Phase II) were to prove highly successful in controlling disease, it is unlikely that there would be any rapid build-up of numbers in the face of the normal over-riding factor of low nutrition and poor general  - 38 - husbandry. However, following the MTR, release of funds for a disease control program under Phase II would be contingent, inter alia, on GOS demonstrated ability to raise livestock exports to levels offsetting livestock increases resulting from improved animal health services (para. 4.19) and on parallel USAID study findings (Annex 7, para. 4 lb]). VII. ASSURANCES AND RECOMMENDATIONS 7.01 The following agreements and assurances were obtained from GOS during negotiations:: (a) The site for the new central laboratory and housing for the Technical Assistance Team at Hargeisa w3uld be selected by December 15, 1985 and the transfer of this site to project use be expedited (para. 4.12). (b) GOS would take immediate action to recruit the six experts of the Technical Assistance Team based on TORs as agreed; the experts would have qualifications and experience acceptable to IDA and IFAD (para. 4.18). Cc) The prorurement procedures were agreed upon (para. 4.30). Cd) The project would maintain its accounting system in accordance with sound and generally recognized accounting principles and practices and have Ruch accounts audited by independent auditors, acceptable to IDA and IFAD, and furnish them to IDA/IFAD within six months of the close of each fiscal year (para. 4.35). (e) Special efforts would be made to retain key professional staff, assigned to PMU and/or trained under the project, with the project through'ut the implementation period (para. 5.03). (f) An Inter-Regional Committee, chaired by one of the Governors in the Project area: would be constituted by September 30, 1986 (para. 5.04). (g) PMU would prepare and submit to IDA and IFAD for their review a plan for the organization of, and interaction with, assemblies/groups of livestock owners and traders in the project area by November 30, 1986 (para. 5.06). (h) A Mid-Term Review would be completed L, December 31, 1989. IFAD, upon its review of the proposed Phase II implementation plans to be undertaken following agreed criteria would, in consultation with IDA, decide on the release of the Development Fund to support Phase II project activities (para. 5.12). (i) The Mid-Term Review would be based on the findings and recommendations of PMH's Phase I report which would be submitted to IDA/IFAD by September 30, 1989. The subject matters covered  - 39 - and areas of proposals contained in the Report were agreed upon (para 5.25). (j) PNU would annually, together with the Annual Work Program and the Budget, submit to IDA for its review and approval a salary structure for PMU staff containing an appropriate inducement allowance over and above the basic salaries paid by MLFR and an adequate per diem allowance while on field trips (para 5.16); (k) The services of the Financial Controller attached to the North-West Agricultural Development Project would be obtained by the project on a time-sharing basis with administrative arrangements to be finalized between MLFR and the Ministry of Agriculture by January 1, 1986 (para. 5.20). (1) PHU would prepare annual work programs and submit them to IDA and IFAD; the first such program covering GOS FY86 would be submitted by August 15, 1986 with subsequent programs to be submitted by November 1 each year for acceptance to cover the following fiscal year (para. 5.22). 7.02 Conditions of Credit Effectiveness would be that: (a) The site of the central laboratory and housing for the Technical Assisttnce Team had been transferred to the Project (para. 4.12). _/ (b) GOS had completed the contractual arrangements for the Technical Assistance Team to be engaged by MLFR to assist in project implementation (para. 4.18). (c) GOS had opened up a Project Account in a Bank acceptable to IDA/IFAD and made an initial payment of So.Sh. 2.5 H into the account (para. 4.34). (d) A Project Management Unit would be established and a Project Director, with qualifications and experience acceptable to IDA/IFAD had been appointed (para. 5.03).1 U/ (e) A Project Committee, chaired by the Minister, Vice-Minister or the Permanent Secretary for MLFR had been established (para. 5.05). 7.03 With the above assurances and conditions, the proposed project is suitable for an IDA Credit on standard terms of US$4.3 million. The borrower would be the Government of Somalia. 10/ Action expected to be completed by December 31, 1985.  - 40 - ANNEX 1 SOMALIA LIVESTOCK HEALTH SERVICES PROJECT Project Cost Tables Table No. 1 - Project Components by Year - Base Costs 2 - Project Components by Year Including Contingencies 3 - Summary Accounts by Project Components 4 - Laboratory Services 5 - Laboratory Equipment 6 - Field Services: Investigation (Phase I) 7 - Equipment for Mobile Investigation Units 8 - Field Services: Development (Phase II) 9 - Project Management 10 - Project Staffing and Costs 11 - Training 12 - Inflation and Foreign Exchange Rates Used For Project Cost Estimates 13 - 'Fnancing Plan by Summary Accounts  SWIA^LIA LIVESTOCK HEALTH SERVICES PROJECT Project Caanmts by Year (BSSH. '000) east Costs Total 86/87 87/88 86/89 89/90 0/91 91/92 92/93 SO91. (USs '00) At LABORATORY SERVICES 28938980 5M002,5 5M0025 5M002.5 2,902.5 19516.5 1.139,4 49Z53.8 1.165.6 B. FIELD SERVICES: INVESTIGATION (PMISE I) 2998.G7 22,565.0 20,535.4 16,1758 12.3538 9M203.9 5840.9 11543.5 2749.6 C. FIELD SERVICES: DEYELOPlINT (PHASE 11) - - - 42,956.4 57o276.8 29640.0 14M320.0 143152 3M409.4 D. PROJECT NANAGEHENT 29,1065 9v240*7 79140.7 7,140.7 5,040.7 5,040.7 2,520.4 65v232#4 1,553.2 E. TRAINING 1.5120 16512,0 - - - - - 3024.0 72.0 Total BASELINE COSTS 87,917.2 39U320.2 32,67896 71,277.4 77.573,9 44401,0 23,820.6 375.P9,9 8949.7 Pthsical Ccntinomies 5M562.6 485.3 292.4 282,4 292,4 2624 196.1 7,393.5 176.0 Price Continufcils 29M376.4 23,48746 29,906.0 84,715.6 1112981,3 74.738,4 46,581*4 399,966.7 2.503,0 Total PROJECT COSTS 122,776.2 62,293.1 62,767.0 156,275.4 189P137.6 119.421d7 70,599.1 793,269.0 11,626.9 -m- swm- a- _11I Zan--= s _I_ _szam 20-- Foreign Exchange 113458743 55779.4 56,944.9 143,842,1 173,054.9 106,702.4 U9602.5 713.51345 10,602.3 .--------- - ------- - --------- - -- - _ - - - -_ -  SOIALIA LIYESTOCt HEALTH SERYICES FROJECT Project Coeonmnts bv Year Totals Including Contingencies Totals Includinr Contirsewicies (S,SH. '000) (USt '000) 86/87 87/88 88/89 89/90 90/91 91/92 92/93 Total 66/87 97/8a 98/19 89/90 90/91 91/92 92/93 Total ::::::::: :::::::: 888388888ass:s 2::er::e 8.388888 838888888s 3888883 13328 88888 888.88 888 e:88888 e8:: 8sas 8::ee 8 A. LABORATORY SERVICES 40,450.6 8,1l1.5 9,610,6 119021.6 7,153.9 4,171.5 5,421.6 93,936,3 774.9 136.2 146,3 157.5 9J,2 5407 42.7 19410.4 N D. FIELD SERVICES; INVESTIGATION (PHASE 1) 39,61342 36t845,4 s9,457,8 35,731.1 30,461.7 25,093.4 17,596.3 224,7908. 758,9 619,3 600,6 510.4 417,9 329,s 219,4 3,455.7 C, FIELD SERVICES: DEYELOPMENT (PHASE 11) - - - 93,913,4 139,143,3 76,543.8 429093.9 351594,4 - - - 1I340.2 19908,7 1,004,5 '524.9 40778,3 D. PROJECT MANAGEMENT 40,!24,'i 14,91899 13,69896 15,709,3 12,373,9 13,61s.0 7.486,3 1189524.5 780.2 250.7 208.5 224,4 169o7 178.6 93.3 IS05,6 E. TRAINING 1,987.8 2.427.3 - - - - 4.415.0 38.1 409 - - - - - 73.9 Total PROJECT COSTS 122.776,2 62,293,1 b2v767,0 156,275,4 1899137e6 119421.7 70,598,l 783269.0 2,352.0 1,046,9 9554 2,232,5 29594,5 1,5602 80.3 11,629.8 22==::::: zasassassassaS Z =:::7:59 X--.----:axxx aass238 aZ Z =S:S-X2X MUX-: 9 = a lW2sXa - -2 :: Saa ss JA ~ - -'-AS ................................................... . .............................. - -------- - -----~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~I  43 Annex I Table 3 SONALIA LIYESTOCK HEALTH SERVICES PROJECT SuaurY Account by Projec' Caanhmft (S.SH. '000) FIELD Physical FIELD SERVICES: SERVICES: Cantiusencies LAWRATORY INVE5TI6ATION DUELOPEWN PROJECT - - SERVICES (PHASE I) (PHASE II) MANAGENENT TRAINING Tatal 2 Amount I. INVESTMEIT COSTS A. CIVIL SOAS 14,934.1 344.4 - 12,738.7 - 30,617.2 10.0 3,061.7 P. VEHICLES 2,014.1 6,435.7 - 333.0 - B,782.8 10.0 878.3 C. LABORATORY AND FIELD EGUIPIENT 64518.2 3,132.2 - - - 9v650.4 10.0 965.0 D. FIELD SERVICES DEVELOPMENT (PHASE II) - - 42v95'J.3 - - 42P955.3 0,0 0.0 E. PROJECT PREPARATION FACILITY - 840.5 - 6,899.3 - 7,739.8 5.1 396.5 Total INVESTMENT COSTS 23i366.5 13,452.8 42r955.3 I',971.1 - 99,745.7 5.3 5,301.6 II. RECDWRENT COSTS A. EXPATRIATE ADISOR SALARIES 20,329.0 77,784.0 - 37,800N0 - 135,912.0 0.0 0.0 D. INCREMENTAL STAFF COSTS 2,334.2 11,682,7 - 2,031.6 - 16,048.4 0.0 0.0 C. VEHICES AND NULDIN6S 0 t H 1,404.8 2,886.4 - 29920.7 - 7,211.9 10.0 721.2 D. VETERINARY DRUGS - 7,350.0 - - - 7,350.0 10.0 735.0 E. SUPPLIES AND EQUIPMENT 1,520.4 2,327.6 - 2M509.0 - 6,357.0 10.0 635.7 F. TRAINING - - - 3,024.0 3,024.0 0.0 o.0 G. FIELD SERVIES DEVELONPENT (PHASE II) - 100i239.9 - - 100l239.9 0.0 0.0 Total RECURRENT COSTS 25r'J87.4 102,030.7 10O239.9 45r,261.3 3,024.0 276,143.2 0.8 29091.9 Total BASELINE COSTS 48,953.8 115p483.5 1439195.2 65,232.4 3P024.0 375,888.9 2.0 7ih93.5 Physical Continsencin 2r629.2 2,601.7 - 2rb62,6 - 74393.5 0.0 0.0 Price Continsuiczes 32r353.3 106.713.6 208i399.2 51r129.5 1X391.0 399i986.7 1.0 3,895.5 Total PROJECT COSTS 83,936.3 224,798.8 351i594.4 118,524.5 4r415.0 783M269.0 1.4 11,288.9 Foreign Exchmnse 766538.4 194,S82.1 328r74