Burundi - Muyinga Agricultural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY CA )857 - ti Report No. P-4678-BU MEMORANDUM AND RECOMMENDATION OF TRE PRESIDENT OF THE ITERNATITONL DEVOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT Of SDR 7.9 MILLION TO THE REPUBLIC OF BURUNDI FOR THE MUYINGA AC -ICULTURAL DEVELOPMENT PROJECT November 17, 1987 Thi document has a resticted dstbufio and may be used by recipients on in the pedfonnane of thei uMa dutis Its conens may no otherwise be disclosed wihou Wodd Bank  CURRENCY EQUIVALENTS Currency Unit = Burundi Franc (FBu) US $1.00 = FBu 119 FBu 1.00 = US $0.008 WEIGHTS AND MEASURES Metric BritishlUS Equivalents 1 meter (m) 3 3.28 feet (ft.) 1 cubic meter (m3) = 35.3 cubic feet 1 hectare (ha) = 100 ares - 2.47 acres 1 kilometer (km) - 0.624 mile 1 square kilometer (km2) = 0.386 square mile (sq. m.) 1 kilogram (kg) = 2.20 pounds (lb.) 1 liter (1) = 0.26 U.S. gallon (gal.) 0.22 Imperial gallon (imp. gal) 1 metric ton (m t) - 2,204 pounds (lb.) GLOSSARY OF ABBREVIATIONS C & S Coops = Credit and Savings Cooperatives CCCE = Caisse Centrale de Cooperation Economique FAOICP = Food and Agriculture Organization, Cooperative Program IDA = International Development Association ISABU = National Research Institute/Institut des Sciences Agronomiques du Burundi MOAL - Ministry of Agriculture and Livestock MRD = Ministry of Rural Development OCIBU = Industrial Crops Office of Burundi PIU = Project Implementation Unit RDC Regional Development Company GOVERNME OF BURUNDI FISCAL YEAR January 1 to December 31  FOR OFFCIAL TSE ONLY Memorandum of the Presidiwt BURUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT Credit and Proiect Summary Borrower: Republic of Burundi Beneficiaries: Farmers in the Muyinga province, Muyinga Cooperative Union (and its member cooperatives), and the Ministries of Rural Development (MRD) and Agriculture and Livestock (MOAL) Amount: SDR 7.9 million (US $10.0 million equivalent) Terms: Standard IDA, with 40 years maturity Onlendinz Terms: Not applicable Financing Plan: Government US $ 2.7 million Cooperatives and 2.9 million beneficiaries IDA 10.0 million Total US $ 15.6 million Economic Rate of Returns 38.92 (over 64Z of total project costs) Staff Appraisal Report: 6511-BU Maps: IBRD 20008 IBRD 20006 IBRD 20007 This document has a restricted distibution and may k on4 yvd pofonnm of their offici dutis Its contents may not odtewis deelrvd wWw t Wod B ak au*odr;m |  f ^& 9P61~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBT.IC OF BURUNDI FOR A MUYINGA AGRICULTURAL DEVELOPMENT PROJECT 1. The following report on a proposed development credit to Burundi for SDR 7.9 million (US $10.0 million equivalent) is submitted for approval. The proposed Credit would be on standard IDA terms with a maturity of 40 years to help finance agriculture and livestock development and soil conservation in the Muyinga province. 2. Background. Burundi has a sound record of development achievements in the post-independence period but faces deep-seated problems mostly related to the pressures of population on scarce land resources. Agriculture is the backbone of the economy contributing an average 601 of GDP, 88S of export earnings (841 of which from coffee in 1986) and employing over 842 of the population. Burundil's population of 4.8 million vakes it one of the most densely populated countries in sub- Saharan Africa with average farm sizes of about 1 ha. So far, food production has kept up with population growth estimated at 2.92 per year but at a cost: rising population densities are inexorably leading to further fragmentation of holdings, overgrazing by livestock, declining soil fertility and erosion, severe deforestation to satisfy energy needs, and the opening up of Increasingly marginal lands for cultivation. Experience gained under two ongoing IDA financed integrated rural development projects (Kirimiro, Credit 1165 BU and Ngozi III, Credit 1192 BU), both esec,.ed by autonomous regional development companies (RDCs), have led to the following broad sectoral strategies: (a) to focus the Ministry of Agriculture and Livestock's (MOAL) intervention in the agricultural sector on service and promotion type activities (research and extension) at a cost sustainable under the national budget; (b) to the extent possible, promote private sector involvement in the processing and marketing of agricultural produce and in the production and retail marketing of agricultural inputs; (c) to increase the returns from Burundi9s major export crop, cot -e; and (d) to promote activities to protect the natural resource base. The project aims at pursuing some of these goals In the Muyinga province. 3. Prolect Objectives. The proposed project would Increase agricultural production, develop crop and input marketing through cooperatives and the private sector and promote environmental protection in the Muyinga province. 4. Project Description. The proposed project would be implemented over a six year period and comprise: (a) the strengthening in the Muyinga province of MOAL's services for agricultural research and extension, forestry and agro-forestry, animal health, swamp development and protection, and rural road improvement with a view to increase food crop, coffee and livestock production and Improve soil conservation  through the creation of protection forests, on-farm erosion control and agro-forestry; (b) the strengthening of the Muyinga Cooperatives Union (and member cooperatives) to promote the sale of farm inputs and produce through cooperatives and private traders; (c) the strengthening of cooperative accounting and management in the Muyinga province through support to the Cooperatives Department of the Ministry of Rural Development (MRD); and (d) support to the Credit and Savings Cooperatives for their establishment in the Muyinga province. It is estimated that about 35,000 farmers in the province (58S of total) would directly benefit from the project. Total project cost is estimated at US $1W.6 million with a foreign exchange component of US $ 9.0 million or 571. Proposed IDA financing amounts to US $10.0 million (641 of project costs). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement are shown in Schedule B. Disbursement amounts and schedule are presented in Schedule C. A timetable of key project processing events and the status of Bank Grouip operations An Burundi are given in Schedules D and E, respectively. Maps are also attached. The Staff Appraisal Report No. 6511-BU dated August 20, 1987, is being circulated separately. S. Rationale for IDA Involvement, In support of the Government's strategy to maintain eadequate food production at sustainable costs, the project would strengthen agricultural research, extension and animal health services, and at the same time, ensure the careful management and protection of the natural resource base. The project would promote greater efficiency in the marketing of agricultural inputs and produce through an Increased involvement of the private sector (traders and cooperatives). 6. Actions Agreed. In line with the aims of the project to strengthen and sustain services and to develop private sector involvement, a number of project-specific agreements were obtained during negotiations, the most important of which are: (a) in order for the Credit to finance part of the project's production of coffee tree plants (for onward dibtribution to farmers free of charge) the Government would provide IDA with its action and financial program to replace and expand its coffee plantings, thus allowing IDA to review and comment on the Government's policies and practices in thir! regardt (b) leasing agreements between the Government and the cooperatives for project funded equipment and buildings would have to be acceptable to IDA; (c) assistance to the forestry department (for forestry and fruit tree production) and ISABU (for reseach) would be the object of annual agreements between these agencies and the project unit; (d) Government financing of existing sa'zries and operating costs in Muyinga province would continue to be funded through the recurrent budget rather than through the development budget; (e) agricultural inputs for resale would be sold at retail through private traders and cooperatives rather than through Government services; and (f) a Project Implementation Unit (PrU) would be created for the duration of the investment period only for the purpose of coordinating and monitoring project activities in the course of implementation.  - 3 - 7. Justificrtion. The project Is justified by the institutional development benefits arising from the strengthening of MOAL services in the Muyinga province and from increased private sector participation; by the environmental benefits stemiang from the creation of protection forests, soil couservation, agro-forestry and swamp protectiong and by the Incremental food crop, coffee and livestock production valued at US $3.5 million per annum by the end of the project period. The economic rate of return has been estimated at 392. 8. Risks. The project vwuld institute a number of innovations as regards the role of cooperatives and the private sector. Although the scale of these innovations has been kept to mwdest levels, th-.. capability of cooperatives and the attitude of the Government are still untested. The Government has expressed its commitment to these innovations. Strengthening of monitoring and evaluation has been built into project design to generate the information necessary for close supervision of the Implementation of these innovations by the Government and IDA. 9. Recoumendation. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed Credit. Barber Conable, Presilent Attachments Wsshington, D. C. November 17, 1987  \\b qbw ft)
"'k, k*-"'*  -4- Schedule A BURUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT Proiect Costs and Financing Local Foreign Total Estimated Proiect Costs ---- (US $ million ---- Research and extension 2.1 1.6 3.7 Livestock 0.2 0.4 0.6 Forestry 0.8 0.7 1.5 Infrastructure and erosion control 0.4 0.4 0.8 Cooperatives 1.0 3.4 4.4 Project Implementation Unit 0.5 1.2 1.7 Base cost 5.0 7.7 12.7 Physical contingencies 0.4 0.7 1.1 Price contingencies 1.2 0.6 1.8 Total project costs 6.6 9.0 15.6 of which: Taxes and Duties 0.9 0.0 0.9 Financing Plan Government 2.5 0.2 2.7 Coops and beneficiaries 0.7 2.2 2.9 IDA 2.1 7.9 10.0 Total 5.3 10.3 15.6  -5- Schedule B Page 1 8URUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT Procurement Procedures T. A. Disbursement Category ICB LCB Otherla NA b Guidelines Total ------------------ US $ million - Construction - 0.99 - -- 0.99 (0.94) (0.94) Infrastructure - 1.56 - - - 1.56 (*1.45) (1.45) Furniture - - 0.26 - - 0.26 (0.23) (0.23) Vehicles and equipment 0.75 - - - - 0.75 (0.60) (0.60) Agricultural inputs 3.86 - - 2.33 - 6.19 (1.32) (2.19) (3.51) Technical assistance - - - - 2.10 2.10 (2.10) (2.10) Training - - - 0.34 - 0.34 (0.32) (0.32) Operating costs - - - 3.43 - 3.43 (0.81) (0.81) Total 4.61 2.55 0.26 6.10 2.10 15.62 (Total IDA) (1.92)(2.39) (0.23) (3.32) (2.10) (9.96) La Local or International procurement procedures, subject to local availability. Lb Direct contracta for labor, training, or for the production of coffee, forestry and fruit tree plants. Le Includes all training (investment or recurrent costs).  -6- Schedule B Page 2 BURUNDI MUYINGA ACRICULTRUAL DEVELOPMENT PROJECT Proceeds of the IOA Credit Credit Amount N of Expenditures Category US S /a to be Financed 1. CIVIL WORKS (a) Buildings, stores, houses S 800,000 100% of foreign expenditure and 9S% of local expenditures (b) Infrastructure for erosio:t 1,300,000 100% of foreign control expenditure and 95% of local expenditures 2. VEHICLES AND EqUIPMENT (a) Vehicles 413,000 100X of foreign expenditure and g0% of local expenditures (b) Furniture and equipment 162,000 100X of foreign expenditure and 90X of loi.s1 expenditures 3. INPUTS (a) Agricultural, forestry, 2,000,000 100X of foreign fruit tree and expenditure and veterinary inputs 90X of local expenditures (b) Coffee plants (Phase I) 600,000 100% of foreign expenditure and 90X of local expenditures (c) Coffee plants (Phase II) 600,000 100% of foreign expenditure and 90X of local expenditures 4. RESEARCH AND DEVELOPMENT, 340,000 100X of foreign TRAINING AND STUDIES expenditure and 95X of local expenditures 5. OPERATING COSTS 676,000 Lb S. TECHNICAL ASSISTANCE 1,950,000 100% 7. REFUNDING OF PROJECT 500,000 PREPARATIGN ADVANCE 8. UNALLOCATED L 970.000 Total 8 10.000,000 la Cost estimates for categories 1 to 4 do not Include physical contingencies. /b IDA will cover 90% of expenditures In year 1, 85X in year 2, 80% In year S, 70X in year 4, SOX In year 5, and 20X in yar S. Le Represents estimated total physical contingencies for categories 1 to 4.  -7- Schedule B Page 3 Schedule of Disbursements IDA Fiscal Year 88 89 90 91 92 93 94 --------- (US $ million) --------- Annual 1.9 2.6 2.1 1.4 0.9 0.8 0.3 Cumulative 1.9 4.5 6.6 8.0 8.9 9.7 10.0  Schedule C BURUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT Timetable of Key Proiect Processing Events Time taken to prepare: 21 months Prepared by: Government with consulting firm and PAO/CP assistance and IDA input Appraisal mission departures May 1986 Post-appraisal mission departures: September 1986 June 1987 Negotiations: September 28, 1987 Planned date of effectiveness: January 31, 1988 List of relevant PPARs: 1531, 4576 and 5683  Schedule D BURUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT Status of Bank Group Operattons In Burundi A. Statement of Sank Loans and IDA Credits (As of September 80, 1987) Amount (US S Million) /I Loan or QNet of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed One Loan L2 and 19 Credits fully disbursed 4.8 139.8 1049 BU 1980 Burundi Urban Development - 1.6.0 0.60 I18S SU / 1981 Burundi Kirimiro Rural Development - 19.30 2.11 1192 BU 1982 Burundl Integrated Rural Dev./Ngozi III - 16.00 8.82 1368 BU 1983 Burundi Third Education - 15.80 0.58 1419 W 1983 Burundi Ruxziz II Regional - 1.600 4.86 1468 W 1984 Burundi Third Technical Assistance - 5.16 8.15 is88 SU 1985 Burundi Fourth Highway - 18.10 16.78 1693 BU 1986 Burundi Power Trans. and Distribution - 12.30 10.17 1620 SU 198S Burundi Second Forestry - 12.80 9.78 1625 SU 1985 Burundi Rural Water Supply - 9.56 7.44 1795 BU 1987 Burundi Technical Assistance - 7.56 7.60 186 BU 1987 BurunZ# Telecommunications - 4.80 4.80 Total 4.8 291.48 78.03 of which rpraid 1.83 6.84 Total now outatanding 2.97 29S5-9 Less amount sold 2.97 5.27 of which repaid 2.97 5.27 Total 0.66 0.60 Total held by Bank and IDA 0.0 285.82 Total undisbursed 78.06 1 Prior to exchange adjustents. Extended In 1967 to the Belgium Trust Territory of Ruanda-Urundi for the Improvement of the BuJumbura-Muramvya road and the expansion of the lake port of OuJumbura. The Loan, which was guaranteed by the Kingdom of Belgium, has been fully repaid. /3 Including a NORAD grant participation of US $5.8 million. Credit 1165 BU and higher are denominated In SDRs and are shown In USS oquivalent based on the exchange rates in effect at time of negotiations.  - 10 - Schodul- D BURUI IIYINOA AGRICULTURAL DEVELOPMT PROJECT S. Statment of IFC Investment, in Burundi Expressod In US I (As of September 30, 1987) Amount US S Million Yoar Obliastor Type of Business Loan Equit Total 1981 Verreries du Burundi Closs Containor 4.8 0.9 5.6 Total gross comitments loss canoetlations, terminations, repayments and sales 9.1 0.1 0.2 Total commitments now hold by IFC O.1 O.1 0.2  29- 30* BURUNDI MUYINGA AGRICULTURAL DEVELOPMENT PROJECT PROJECT AREA J RWANDA ! MUYINGA PROJECT AREA NOOZI 11 AND KIRIMIRO "IN PROIECT AREAS 0 ARRONDISSEMENT CAPITALS \\ry PROVINCE CAPITAtS o ( ,' 69 NATIONAL CAPITAL ! xC Kirundo 8usoni ARRONDISSEMENT BOUNDARIES t A , ndo PROVINCE BOUNDARIES * Ntego KIRUNDO / ( N ~ - --COMMUNE BOUNDARIES TANZANIA j ~-~ INTERNATIONAL BOUNDARIES TANZANIA Mobayi \ / \ Bukuba (Rugafflb BITOKE Bukinanyona 05Y B ugaTOKE'A B~~~~~~~~~~~~  ZAIRE A i (K. /MuiimbuzBke"molmb ZAR ] ><doa <Bzi 0fJ <\ BUJ M UURA MVYAo mbuz iMu M ke' bEe 0~~~~~r i YO amm ;<> t,\j;notzo IE Mui anuto J RUTANA a j .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 _ gz ; C Rem on3BURI / . I = Nanzo MaBAns o K UGyANDA 9 Mr bondo / ~ / , 7 _ _ _ | Nynnz~~o tan B) KILOMETERSRAND \ R.foy i-R-*U-'-TA2 'TANZANA _ 410 BURURi wo .... ; . ... _ I . 4 - 13 O _ ___ ___ __  300 B U R U N D I MUYINGA AGRICULTURAL DEVELOPMENT PROJECT NATURAL REGIONS J RWANDA ! MUYINGA PROJECT AREA NATURAL REGION BOUNDARIES i/) o ARRONDISSEMENT CAPITALS Buqabi, O PROVINCE CAPITALS (- * NATIONAL CAPITAL Buson ARRONDISSEMENT BOUNDARIES PES/ PROVINCE BOUNDARIES KIRUNDO COMMUNE BOUNDARIES TANZANIA N > ^*x A ~-~ INTERNATIONAL BOUNDARIES Gt 7 ',~~~ ~ ~ M USE / # / iua a '<,>, -~~~K Iu-/B IT KE (. * * ~.* \KAY NZA B.jqun~~~~~~~~~~~u Mnrut I~ ~ ~~~~~~~~~k  BUBAZ L~iKjoo KARUZI mWcCro ZAIRE CANKUZO JURAMfyi~A* j0 8 UM8URA~ >, - N_. 0i, - | \ - 5, j R i'GITEGA . I~~~~~~~~~~~~~~~AN ii ii -' N r 0 S iA < i-S J' j st~~~~~~~~~~KtOM TERS| 0 10 20 _ rT :- |-- M | ZAIA R 4-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 01 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ 0 -11 ZAIRI~~~~ TANNANA I~ ~~A  2~~0 ~BURUNDI k MUYINGA AGRICULTURAL DEVELOPMENT PROJECT NATURAL REGIONS J RWANDA ! MUYINGA PROJECT AREA NATURAL REGION BOUNDARIES -N | ARRONDISSEMENT CAPITALS o PROVINCE CAPtTALS (.YN * NATIONAL CAPITAL ARRONDISSEMENT BOUNDARIES Mb r'3 PROVINCE BOUNDARIES RUND ( fi7 V<l * COMMUNE BOUNDARIES TANZANIA N -- - INTERNATIONAL BOUNDARIES C. ~~~~~~~M umbo 'U IToKE / a-h 4 B ~~a.~da KAYANZA NGZ i4^.rJnbra9 I X t-ffi * . _< 0Ses7r>. v-za 9 ;;! j I ' r*<N,/>. _ ;  )4 BUB T _KARUZI Mvko ZAIRE * '/KUZ |tt V \ V. / 'i X > ' 'RUYIGI N \ / / | Z IKE S | KENYA I ) dC$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~KLOMIE ERS 1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 2 MAKKA LUiGT-11TAANN 4A 4* Rt.' ~~e B RURI - - - -1 ~ Sot e.to.,*fl ) fRWAnt- MAKAMBA ~~~~~~~~~~~~~UGANDAD7 I ~~~~~~~~~~~~~~~~~~~~~~~~~~~TANZANIA 3p'~~~~~~~~~~~~~~~~~~~~~~~~~t