Togo - Agricultural Extension Project

Doument of The World Bank FOR OFFICIAL USE ONLY Ck fo7 k - 7 Report No. P-4441-TO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 7.6 MILLION TO THE REPUBLIC OF TOGO FOR AN AGRICULTURAL EXTENSION PROJECT April 27, 1987 This document has a restricted distribution and may be used by recipients only in the performance or their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) a/ US$1.00 - CFAF 314 (West Africa Regional Rate for January 1987) WEIGHTS AND MEASUREMENTS Metric System ABBREVIATIONS AND ACRONYMS DCV - Direction de la Cooperation et de la Vulgarisation DGDR - Direction Generale du Developpement Rural DRDR - Direction Regionale du Developpement Rural MDR - Ministere du Developpement Rural GOVERNMENT'S FISCAL YEAR January 1 - December 31 a! The exchange rate of the CFA Franc is fixed at 50:1 with the French Franc, which is a floating currency.  FOR OFmFCIAL USE ONLY TOGO AGRICULTURE EXTENSION PROJECT Credit and Project Sunnary Borrower: Togo Beneficiary: Ministry of Rural Development Amount: SDR 7.6 million (US$9.7 million equivalent) Terms: Standard Onlending Terms Not applicable Financing Plan: Government $ 2.9 million IDA $ 9.7 million TOTAL $12.6 million Economic Rate of Return: Not applicable Staff Appraisal Report: No. 6601-TO This document has a restricted distribution and may be used by recipients only in the performance of their official duties. [Its contents maY not otherwise be disclsed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF TOGO FOR AN AGRICULTURAL EXTENSION PROJECT 1. The following report on a proposed development credit to Togo for SDR 7.6 million (US$9.7 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms and help finance an agricultural extension project. 2. Background. Agriculture in Togo accounted for 302 of GDP and about 30% of exports in 1985, and employed 8OX of the labor force. Although there are few natural constraints on agriculture, real sectoral growth in the past decade (2.7Z p.a) has been principally due to expansion in area under cultivation, and has just kept up with population growth. The productivity of the smallholder subsector remained stable and markedly below its potential due to: (a) poor price incentives, particularly for export crops; (b) limited allocation of funds by Government to support necessary services for the sector; (c) ill-defined strategy for agriculture which has permitted numerous uncoordinated agricultural projects but which has not improved extension and research services in aggregate and (d) lack of adequate technical advice of immediate use to farmers. Agriculture has been allocated only 5Z of Government's annual budget, mostly for salaries, leaving little for operations. As a consequence, a sustainable delivery system for services has not been developed. During two structural adjustment programs, Government began to redress the basic problems of the sector, producing a New Agricultural Strategy for Rural Development in 1985 which the Bank has actively supported. Government has also increased budgetary allocation to the sector, raised producer prices of export crops, liberalised foodcrop export marketing, and begun reform of export crops marketing institutions. These essential reforms need now to be complemented with actions to improve agricultural services with extension as a main priority, followed by support for research, seed production, credit and input supply. IDA would assist Government in this respect with the present project that would organize and upgrade extension services, and a further project now in the preparation stage that would deal with complementary support services. 3. Project Objectives. The proposed project would strengthen existing extension services in areas of four of the country's five regional directorates (DRDRs) where external financing is not presently involved. It would build on experience acquired in one year of pilot testing of the principles of the Training and Visit System (T & V) in the Togolese context. The project would improve extension staff organization, ensure adequate training of personnel and improve the current weak links between extension and research. The project would also develop an institutional framework within the Ministry of Rural Development (MDR) to better define extension priorities and programs, guide the work of regional extension staff and ensure consistency in the approaches adopted by existing projects. It would support an institutional development process to: (i) improve the ability of the General Directorate for Rural Development within the Ministry of Rural Development (DGDR(HDR) to organize and provide technical assistance to its own field staff and (ii) strengthen the extension system through more effective mechanisms for setting priorities, allocating resources and managing finances.  - 2 - 4. Project Description. The proposed project would introduce the main elements of the T & V system including: (a) systematic visits to groups of farmers; (b) regular training of extension staff; (c) improved linkages between extension and research; td) proper monitoring and evaluation; and (e) efficient financial management systems at both national and regional levels. The project would also provide technical assistance to MDR to help in establishing the management systems, and procedures for continuously upgrading technical messages. IDA financing would be made available for investments in equipment, transport, civil works, internationally recruited personnel, training, and part of incremental operating costs. Government would cover local salaries and an increasing portion of operating costs. The project is estimated to cost US$12.6 million equivalent, with a foreign exchange component of US$7.6 million (60Z). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Togo are given in Schedules C & D respectively. A map is also attached. The Staff Appraisal Report, No.6601-TO dated April 27, 1987, is being distributed separately. 5. Rationale for IDA Involvement. The project forms an integral part of Government's agricultural sector development strategy and is closely related to the extension efforts of the ongoing Second Rural Development Project in Cotton Areas (Cr. 1302-TO) and CocoalCoffee Project (Cr. 945-TO). IDA has assisted in the formulation of this strategy and continues to support it. It is also related to two structural adjustment programs which specifically call for a reorganization and rehabilitation of key agricultural services. Implementation of Government's policy for seeking agricultural growth will depend on simple well tested research recommendations reaching Togolese farmers. This can only be done by improving the current linkages between research and extension as well as the efficiency of the outreach effort itself. Through its example, the proposed project would also contribute to Government's objectives of restructuring the various extension services currently financed in other projects, with the goal of eventually elimina- ting the current dispersion of efforts. IDA has significant experience in the agricultural extension field which can be applied effectively in Togo. IDA's continuous involvement both financially and through the provision of technical advice is therefore important for the success of Togo's agricultural strategy. 6. Agreed Actions. Assurances were obtained at negotiations that the Direction de la Cooperation et de la Vulgarisation (DCV) DGDR would review the efficiency of the new organization of the DRDRS two years after effectiveness and that any needed improvements would be made; that the annual adaptive research program would be implemented on the basis of contracts; that local procurement methods for equipment and supplies would be subject to some modifications required to make them acceptable to the Association; that counterpart funds would be made available in a timely manner; and that an agreed program will be implemented, based on a study to be completed by December 31, 1988, to improve the integration of women in extension activities and promote their participation in development. Conditions of effectiveness include finalizing audits of DRDR accounts, introducing an improved financial management system and having internationally recruited staff in post as well as the head of DCV. 7. Justification. Benefits under the project would derive from MDR's improved ability to plan and manage its outreach activities which would make existing personnel more effective in the field. These benefits have already been shown in pilot actions in terms of significant increases in agricultural production  - 3 - and productivity. As the technology to be transfered would focus on simple, low risk changes in agricultural methods, the project would have direct benefits for the poorer segments of the population as well as for the better off. Given the difficulty in attributing a precise level of benefits to an extension project, due to the large number of other influential factor# involved in crop production, an ERR has not been calculated. MDR's annual operating costs would increase by 15Z in constant prices in the post-project period over pre-project expenditure. This is the minimum deemed necessary to got the extension services to an acceptable level of efficiency, and repr4sents a cost/ha of cultivated land which is similar to other extension projects currently being implemented in West Africa. Host of the post-project expenditure is for non-personnel costs thus fitting in with Government's structural adjustment program which calls for increasing the proportion of non-personnel costs in the budget. 8. Risks. Possible project risks are the ones usually associated with extension projects: inadequate budgetary support. ineffective management, low adoption rates and slow build-up of applicable technology through research. The project has been designed to focus on these risks: to complement actions Government has already taken to increase budget allocations to the sector, the Special Account to be set up would improve the project's cash flow, and the new organization, training, M & E and financial management would improve overall project management. Pilot projects have demonstrated that suitable technologies exist and have been adopted by farmers. In addition, a sizeable body of existing research results is undergoing pre-extension testing and should continue to supply the project with new extension messages during the project period. 9. Recommendation. 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 B. Conable President Attachments Washington D.C. April 27. 1987  -4- Sclledule A Estimated Project Costs Local Foreign Total Z of Base Cost - ---- US$ million Extension Services 1.5 2.8 4.3 39 Training 1.1 0.3 1.4 13 Research 0.9 1.1 2.0 18 Monitoring and Evaluation 0.4 0.6 1.0 9 Financial Management 0.3 2.0 2.3 21 Total Base Costs 4.2 6.8 11.0 100 Physical Contingencies 0.3 0.4 0.7 6 Price Contingencies 0.5 0.4 0.9 8 Total Project Costs a; 5.0 7.6 12.6 114 (Including Taxes) --- Taxes 0.6 ... 0.6 Total Project Costs (Net of Taxes) 4.4 7.6 12.0 =mm M-M~mmm a/ Including a US$0.2 million PPF for project preparation and US$0.6 million for a second PPF for start-up activities. Financing Plan Government 2.9 -- 2.9 IDA 2.1 7.6 9.7 Total 5.0 7.6 12.6 ___= ___m=  -5- Schoduld B Procurement Arrangements (US$ million) Procurement Method -c-- otal Procurement Element ICa LCB Other M/& Coat. Duilding p1.0 0.2 *1 1.2 (0.8) (0.2) (1.0) Vehicles 1.2 1.2 (L.2) (1.2) Equipment 0.4 0.2 0.6 (0.4) (0.2) (0.6) Technical Assistance 2.0 b| 2.0 (2 0) (2.0) Consultanrs 1.2 b/ 1.2 (1.2) (1.2) Training Sesslons 1.3 cJ 1.3 (1.3) (143) Operating Costs 3.2 dI 3.2 (2.4) (2.4) Salaries 1.9 a/ 1.9 1.2 1.4 3.6 6.4 12.6 (1.2) (L.2) (3.6) (3.7) (9.7) a/ Constructed by farmrs i P Frocurement according to Bank guLdelines -J Local and International transportatilon and subsistence 1 Vehicle maintenancm and office expensae e/ FFnanced by Goverment Disbursements Amount of Loan Z of Etimated Allocated Cost to be 'US$ million) Financed Categorie SDR U"S$ 1. Building. 0.70 0.9 1002 2. Vehicles and Equipmeat 1.25 1.6 1001 3. Technical Assistance 0.94 1.2 1002 4. Consultants 0.55 0.7 109l 5. Training 0.86 L.1 1100 6. Operating Costs a! 1.65 2.1 lOO for 1988 901 for 1989 601 for 1990 441 for 1991 7. ?PF 0.63 0.8 1001 B. Unallocated 1.02 1.3 7.60 9.7 a! Other that salaries and wages Estimated D