Senegal - Second Small Rural Operations Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7490-SE STAFF APPRAISAL REPORT SENEGAL SECOND SMALL RURAL OPERATIONS PROJECT FEBRUARY 6, 1989 Argiculture Operations Division Sahelian Department Africa Region This document has a restricted distribution and may be used by recipients ooly in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit CFA Franc (CFAF) US$1 = CFAF 300 SYSTEM OF WEIGHTS AND MEASURES Metric System GOVERNMENT FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS BCEAO Banque Centrale des Etats de l'Afrique de l'Ouest (West African Central Bank) BNDS Banque Nationale du Developpement du Senegal (National Development Bank of Senegal) CERP Centre d'Expansion Rural Polyvalent (Rural Development Center) CNCAS Caisse Nationale de Crddit Agricole du Senegal (Agricultural Credit Bank of Senegal) CONGAD Conseil des Organisations Non-Gouvernementales d'Appui au Developpement (Association of Non-Governmental Organizations) CRA Capital Replacement Account MDR Minist&re du Developpement Rural (Ministry of Rural Develupment) MDS Ministare du Developpement Social (Ministry of Social Development) NGO Non-Governmental Organizations NPA Nouvelle Politique Agricole (New Agricultural Policy) OMVG Organisation pour la Mise en Valeur du Pleuve Gambie (Organisation for the Development of the Gambia River) OMVS Organisation pour la Mise en Valeur du Fleuve Senegal (Organisation for the Development of the Senegal River) SAED Soci4t4 d'Amenagement et d'Exploitation des Terres du Delta du Fleuve Senegal et de la Faleme (Agency for the Development of the Senegal River Delta and Faleme River Valleys) SODAGRI Societe de Developpement Agricole de la Vallee de l'Anambe (Agency for the Development of the Anambe River Valley) SODEFITEX Societe de Developpement des Fibres Textiles (Cotton and Eastern Senegal Rural Development Agency) SODEVA Societe de Developpement et de la Vulgarisation Agricole (Rural Development Agency for the Groundnut Basin) SOMIVAC Socidt6 de Mise en Valeur de la Casamance (Rural Development Agency for the Casamance Region)  FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL SECOND SHALL RURAL OPERATIONS PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page SUPPORTING DOCUMENTS ............ . iii-iv CREDIT AND PROJECT SUMMARY ........................................ v-vii I. Rural Sector .............. .................................... 1 A. Project Background ....................................... 1 B. Sector Characteristics ................................... 1 C. Sector Institutions .. 2 D. Government's Agricultural Objectives and Strategy ........ 4 E. Experience w ith Past Lending ............................. 4 F. The First Small Rural Operations Project ................. 5 G. Sector Lending Strategy ................ 7 II. THE PROJECT ........ ............... o......... ...................... 8 A. Objectives and Summary Description ....................... 8 B. Detailed Features .................. .................... 10 1. Rehabilitation of 12 Rice Perimeters at Ngalenka ..... 10 2. Second Ngalenka Rice Perimeters ..................... . 11 3. Small Irrigated Perimeters at Matam .................. 12 4. Small Rice and Cereal Perimeters at Bakel ............ 12 5. Sirmang Fruit and Vegetable Perimeters ............... 13 6. Cereal and Fruit Perimeters at Fass .................. 14 7. Beekeeping ................. . 15 8. Banana Perimeters ........... . 15 9. Unidentified Activities ............................. . 16 10. Project Management .. 17 This report is based on the findings of an IDA mission that visited Senegal in April 1988. The mission consisted of J. Baah-Dwomoh (IDA). and A. Sow (World Bank Resident Mission, Dakar) and J. Argoullon (Consultant). Secretarial work was done by Mrs. C. Asare and Ms. Guillemette Rohan. Mhe report was edited by Ms. Michele Moriarty. This document has a restricted distribution and may be used by rr ipients only in the performance of their official duties. Its contents may not otherwise be discloseo without World Bank authorization.  - ii - C. Project Cost and Financing .............................. 17 1. Cost Estimates t i m a t es................ 17 2. Proposed Financing Pan l .. 19 3. Procurement ...........20 4. Allocation and Disbursement of IDA Credit. 21 D. Accounts, Audits and Peporting Requirements ............. 22 III. PROJECT IMPLEMENTATION.......... 23 A. Project Management ............. 23 1. Responsibilities of the Interministerial Committee 24 2. Responsibilities of the Project Management Unit 24 3. Training. . . . ....... ... ............. 25 4. Responsibilities of Technical Service Agencies 25 5. Responsibilities of Producer Groups. 26 6. Participation of NGOs ..... 26 B. Capital Replacemet Accounts . . .27 C. Small Rural Project Cycle for Unidentified Operations 28 D. Technologtcal and Production Specifications ... 29 1. Inputs ...29 2. Production Methods .. ... .30 3. Environmental Impact .. ...... .30 4. International Water Rights ..... .................... 30 5. Yields . .30 6. Production ...31 E. Demand, Marketing and Prices . . .31 P. Financial Implications for Beneficiaries . . . 32 G. Cost Recovery and Financial Implications for Government 33 H. Benefits and Economic Analysis .... . 34 1. Benefits n.... 34 2. Economic Analysis and Risks . .34 IV. AGREEMENTS REACHED AND RECOMMENDATION .36 ANNEXES 1-1 Situation of Capital Replacement Accounts (First Phase SRO) 2-1 Project Cost Summary by Time and by Component 2-2 Project Cost Summary by Time and Nature of Expenditure 2-3 Project Cost by Subproject and by Year 2-4 Estimated Disbursement Schedule 2-5 Terms of Reference for Accounting and Auditing Services 3-1 Yield Estimates 3-2 Production Estimates 3-3 Financial Features of the Project 3-4 Beneficiary Incomes MAP: IBRD No. 21200 - Second Rural Operations Project  - iii - REPUBLIC OF SENEGAL SECOND SMALL RURAL OPERATIONS PROJECT STAFF APPRAISAL REPORT DOCUMENTS IN THE PROJECT FILE 1. Technical 1.1 Les ProblAmes des Petits Perimbtres d'Irrigation au Senegal 1.2 Petits Perimatres Rv.raux de N'galenka 1.3 Petits Pdrim6tres Ruraux de Bakel 1.4 Petits Perimatres d'Irrigation de Medina-Gounass 1.5 Pbrimbtres Irrigues Bananiers 1.6 Rehabilitation de 12 Perimatres de N'galenka 2. Proiect Cost Summary 2.1 Summary Project Cost by Time 2.2 Summary Project Cost by Component 2.3 Detailed Project Costs 1.1 Rehabilitation Ngalenka 1.2 Seccr T Ngalenka 1.3 Peri .ctres Irrigues de Matam 1.4 P6rimbtres Irrigues-de Bakel 1.5 P6rimbtres Irriguts de Sirmang 1.6 Perimatres Irrigues de Fass (Medina-Gounass) 1.7 Programme Apiculture de Kolda 1.8 Perimatres Banar.iers de Diende 1.9 Direction du Projet 1.10 Projets Non-Identifies 3. Structures et Procedures du Service du Projet et du Comit6 de Gestion 4. Dispositions Financiares 5. Modeles d'Exploitations 5.1 REhabilitation Ngalenka 5.2 Perimatres Irrigues de Second Ngalenka 5.3 Perimetres Irrigues de Matam 5.4 PErim&tres Irrigues de Bakel 5.5 Perimatres Irrigues de Sirmang 5.6 Perimatres Irrigues de Fass (Medina-Gounass) 5.7 Programme Apiculture de Medina-Gounass 5.8 Perimatres Bananiers de Diende 6. Caisses de Renouvellement par Perimbtres  - iv - 7. Prix Economiq!ues 7.1 Au niveau de l'exploitation: riz, mals, sorgho, banane, orange, tomato 7.2 Au niveau de l'exploitation: engrais 8. Analyses Economiques 8.1 Rehabilitation Ngalenka 8.2 Perimetres Irrigues de Second Ngalenka 8.3 P4rimttres Irrigues de Hatam 8.4 Perimetres Irrigues de Bakel 8.5 Perimetres Irrigues de Sirmang 8.6 Perimetres Irrigues de Fass (Medina-Gounass) 8.7 Programme Apicole de Kolda 8.8 Perimetres Bananiers de Diende 9. Additional Supporting Documents 1. Rapport d'Execution-ler Accord de Credit 991/SE 2. Etude de Factibilite de la Phase II du Projet 3. Programme de Rehabilitation Ngalenka-Etude Previsionnels des Costs Partiels et Globaux  - v - SENEGAL SECOND SMALL RURAL OPERATIONS PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Beneficiary: Ministry of Social Development Credit Amount: SDR 12 million (US$16.1 million equivalent) Terms: Standard, with 40 years' maturity Cofinancier: International Fund for Agricultural Development (IFAD) Proiect Description: The project is the second phase of the First Small Rural Operations Project, a national program supporting the development of small rural activities. As such, it would continue the process of channelling funds and technical services co small groups of rural people, who will provide labor and some cash for the development of several types of productive activities. The project introduces various producer groups to rew technology and new activities and reinforces the local capacity for identification and preparation of small rural projects. Eight subprojects have been appraised, covering cereal, vegetable, fruit and honey production in different regions of the country. The project would finance land development works, irrigation systems and equipment, vehicles, inputs, training of farmer groups and staff, and operating costs of the subprojects and a management unit. It also includes a provision for identifying and financing new subprojects in the course of project implementation. Beneficiaries are expected te make important contributions in cash and in kind to the investments, replace all medium-term assets and bear all recurrent operating costs. Project Benefits: The project's directly productive activities are expected to benefit about 4,500 farm families who would increase their production of rice, local cereals, vegetables and fruits. It is also expected to create employment for the rural  - vi - population. It would create additional money making opportunities in rural areas currently suffering from the decline in rainfall over the past several years. The most important benefits, however, would be the continued development of self-reliant and creditworthy farmer groups and the development of an institutional capacity in the country to make sound investment decisions for small rural operations and manage investment funds. Project Risks: The main risks may involve inadequate maintenance of assets created by the project and poor initial construction of works due mainly to poor supervision. The first risk is offset by the fact that all farmers have to make cash downpayments on assets and participate in their construction. The project also emphasizes the need for adequate maintenance to ensure sustained yields. Development contracts to be signed between technical agencies and farmer groups will stress the necessity of opening both a Capital Replacement and an Operating and Maintenance Account. A clearer definition of the respective roles of the project management unit and the technical service agencies, as reflected in the contracts to be signed between them, should improve supervision of construction works.  - vii --h p X Estimated Project Costs Z of Base ----------------------- Local Foreign Total Costs -----US$ million----- Rehabilitation of Ngalenka 0.3 0.5 0.8 3.5 Second Ngalenka Rice Perimeters 0.7 1.1 1.8 8.5 Small Rice Perimeters of Matam 0.3 0.3 0.6 3.0 Small Rice Perimeters of Bakel 0.4 0.6 1.0 4.9 Sirmang Fruit & Veg. Perimeter 0.4 0.4 0.8 3.7 Fass Cereal & Fruit Perimeters 0.5 0.6 1.1 5.3 Beekeeping (Kolda) 0.2 0.1 0.3 1.6 Banana Perimeter of Diende 0.5 0.6 1.0 4.8 Project Management 3.4 2.1 5.5 25.6 Unidentified Activities 2.8 4.1 6.9 32.3 PPF 0.0 1.5 1.5 6.9 Base Costs 9.5 11.9 21.4 100.0 Physical Contingencies 0.6 0.8 1.4 6.7 Price Contingencies 1.8 1.5 3.3 15.4 Total Project Costs 11.9 14.2 26.1 122.1 (including tai.es) Taxes 0.8 -- 0.8 Total Project Costs 11.1 14.2 25.3 (net of taxes) Proposed Financing Plan Government 3.0 -- 3.0 Beneficiaries 1.0 1.0 2.0 IDA 6.0 10.1 16.1 IFAD 1.9 3.1 5.0 Total 11.9 14.2 26.1 Estimated IDA Disbursements (SDR million) ----------------------------------------- FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 Annual 1.1 0.6 1.0 1.4 1.4 2.0 2.3 2.0 0.2 Cumulative 1.1 1.7 2.7 4.1 5.5 7.5 9.8 11.8 12.0 Economic Rate of Return: 162  SENEGAL SECOND SMALL RURAL OPERATIONS PROJECT STAFF APPRAISAL REPORT I. RURAL SECTOR A. Project Background 1.01 The Government of Senegal has requested IDA's assistance in financing the second phase of a small rural operations project (Cr 991-SE). The first phase of the project was completed in December 1987. Although the basic objectives of the first phase -- encouraging small-scale productive investments in the rural sector through local initiatives and participation, introducing producer groups to new revenue-earning technology -- will remain valid for the second phase, greater emphasis will be placed this time on training farmers and farmer groups to manage their affairs. Initial project preparation was done by SONED, a parapublic consulting firm, under PPF financing, and completed in November 1987. B. Sector Characteristics 1.02 Senegal covers 200,000 km2. Its population now totals about 6.8 million, and is growing by almost 3Z per annum as of 1986. Per capita GNP for 1986 was estimated at US$ 420, placing Senegal among the lower- income countries. Since 1960, Senegal has experienced one of the lowest GDP growth rates (2-3Z per annum) of any African state not affected by war or civil strife. Over the last few years, agriculture has provided about 222 of export revenues, about 20X of GDP, and nearly 50Z of all employment. Over 93X of the total sector income is derived from rainfed agriculture, with groundnuts representing 75? of the total cash income for a typical rural family. Almost all rural sector output is produced by small-scale units, but there is much diversity in farm size, labor availability, ownership of agricultural equipment, productivity, and income. Since 70Z of the population relies on the rural economy for its livelihood, the sector will be the main source of employment and income for most Senegalese for the foreseeable future. 1.03 Average rainfall has not only declined since 1972, but has also become extremely variable. Arable land is estimated at 3.8 million hectares (about 19X of the surface area), of which about 2.5 million ha are cropped annually. Extensive agriculture still predominates and population pressure is causing a constant shortening of fallow periods. The main crops are groundnuts and millet/sorghum followed by maize, rice, cotton, cowpeas and manioc. Agriculture, including fisheries, remains crucial to Senegal's balance of payments, although export earnings have declined due to a drop in the price of groundnut oil and in the value of the dollar vis- a-vis the CFA franc.  - 2 - 1.04 Despite considerable efforts at modernization, agriculture continues to hover around the point of stagnation. Aside from the poor climatic conditions, constraints inclade: (i) the limited scope for diversification, leading to overdependence on millet/sorghum for domestic consumption and on groundnuts for export; (i-. the lack of an efficient capital market and credit system; (iii) the low productivity of large-scale public investments; (iv) the weak institutional capacity for project identification and implementation; (v) the absence of long-term policies on resource management, technology generation and transfer, and human resource development; and (vi) the weak organizational structures at the farm level. C. Sector Institutions 1.05 The Ministry of Rural Development (MDR) has overall respons- ibility for the sector, but several other Ministries, notably Social Development, Interior and Decentralization, Public Works and Water, and Forestry and Inland Fisheries, each have some responsibility for rural development. While the Ministries are responsible for policy-making, the actual implementation of those policies has over the last decade been increasingly entrusted to a number of parastatal regional development agencies (RDAs) rather than to Government Departments. Each agency is charged with implementing rural development programs in particular geographic areas. 1.06 The Regional Rural Development Agencies include: SAED for irrigation development in the Senegal and Faleme river valleys, SODEFITEX for extension work and cotton marketing in Eastern Senegal, SODEVA for extension work in the Groundnut Basin, SOMIVAC for planning and project execution in the south and SODAGRI in the south-east. These agencies are prLiarily concerned with crop-related services, but tney are increasingly providing services to other subsectors, notably cattle production. The staffs of these agencies are relatively well paid and equipped compared to Government Departments, but the financial soundness of the agencies is unduly dependent on foreign-financed projects; only SODEFITEX earns significant revenues from cotton exports. The agencies have had different degrees of financial and managerial autonomy. The proposed project would include several operations for which technical services would be provided by regional development agencies, namely SAED for three rice perimeters, SOMIVAC for two banana perimeters, and SODAGRI for the irrigated perimeter of Fass (see project description). 1.07 Government Departments and Rural Development Centers. As the responsibilities of the regional development agencies have expanded, some Government Departments have at the same time retained considerable, though no longer exclusive, responsibility for project execution. These Departments include Animal Resources, Forestry, and Water Supply. Those Departments that no longer have great responsibility for field-level execution of agricultural projects and programs still retain a nationwide network of field staff. At the local district level, staff from these departments as well as from the Ministries of Decentralization and Social Development are physically and organizationally grouped into Polyvalent Rural Development Centers (CERPs). The CERPs consist of shared office,  warehousing and transport facilities and staff housing, and have been installed in the country's 90 districts. Although based on the attractive idea of the coordinated delivery of a technical package at the district level, the CERPs have generally been ineffective and, in contrast to the regional development agencies, increasingly starved G operating funds. The CERPs currently employ a large number of junior technical staff whose abilities are under-utilized despite the heavy fixed cost. The proposed project would include one operation for which the CERPs would provide technical services, namely the Sirmang fruit and vegetable perimeter, and another-- beekeeping-- for which technical services would be provided by the Livestock Department. 1.08 Non-Governmental Organizations (NGOs). More than 100 NGOs operate in Senegal, under the supervision of the Ministry of Social Development. Slightly more than half of them have formed an alliance known as CONGAD (Conseil des Organisations Non-Gouvernementales d'Appui au Ddveloppement), a coordinating body that serves primarily as a vehicle for communication with the Senegalese authorities. Almost all of the NGOs are involved in village-level projects, though their approaches differ in terms of the extent of beneficiary participation in financing and cost recovery. The large number of NGOs and their different approaches have raised the question of what officially constitutes an NGO under Senegalese law. CONGAD members and other NGOs have started discussions with Government on the criteria for official recognition as NGOs. Meanwhile, the Ministry of Social Development has prepared a Protocol of Agreement that NGOs are expected to sign in order to begin their activities. A decree is also being prepared to better define NGO involvement in social and rural development. As in the first phase project, NGOs will be encouraged to become executing agencies for the unidentified activities, following the criteria agreed upon for such sub-projects (para 2.04). 1.09 Financial Institutions in the Sector. The sector is served by two principal financial institutions. The Banque Nationale de Developpement du Senegal (BNDS) was established in 1964 to assist development projects in agriculture, livestock, fisheries, small industries, housing and handicrafts, and to provide funds for agricultural inputs supplied in kind to cooperatives. Since it considers the guarantees too uncertain and the costs of debt collection too high, BNDS has not actively sought to grant direct loans to small rural producers, concentrating instead on loans to the agro-industrial sector and especially for groundnut marketing. The Caisse Nationale de Credit Agricole du Senegal (CNCAS) was created in 1977 following the collapse of the main institution (ONCAD) previously responsible for agricultural credit. Its equity capital amounts to CFAF 2.3 billion (US$ 8.4 million) of which CFAF 1.7 billion (US$ 6.2 million) have been paid in. Its main shareholders are the Government, BNDS, Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO), CNCA-France, and the French aid agency, Caisse Centrale de Cooperation Economique, CCCE. CNCAS's field level activities started around 1983 and since then it has distributed rural credit for agriculture, forestry, livestock, fishing and trade, and has collected rural savings. CNCAS plans to open branches in various towns to fulfill the short- and medium-term credit needs of farmers, collect savings, and then progressively replace the Rural Development Agencies as the main credit  - 4 - supplier in rural areas. Recent audits of CNCAS suggest that it is having trouble managing its credit portfolio and that it may have lost up to a third to half of its capital through irrecoverable loans. A restructuring stuly is in progress to review the situation. D. Government's Agricultural Objectives and Strategy 1.10 Government objectives, strategy and policies in the rural sector have evolved in response to chauging economic conditions and to the poor performance of the sector. During the 1960s and 1970s, Government efforts to promote agricultural production focussed almost exclusively on groundnuts. Input distribution was tied to groundnut sales, and cereals marketing policy did not encourage surpluses. For most farmers, groundnuts were thus the single most important cash crop, while cereals remained subsistence crops. 1.11 Economic adjustment became unavoidable at the end of the 1970s, when a combination of poor financial policies, overambitious investment programs, excessive internal and external borrowings, worsened terms of trade, and successive droughts plunged an already weakened economy into a severe crisis. An adjustment program was introduced in the late 1970s to redress the situation through firm management of aggregate demand. However, these policies were not sufficient to prevent deterioration of the country's finances and the growth of external debt. A new adjustment framework was thus formulated in which the agricultural sector plays a key role. This new framework concentrates on lifting supply-side constraints, creating an environment conducive to private sector activity, and improving the management of the public and parapublic sectors. 1.12 Within this framework, the Government issued in 1984 its f"New Agricultural Policy" (NPA), of which the basic aim was to promote food self-sufficiency while consolidating the gains derived from industrial crops. The NPA has four main goals: (i) organization and active participation of farmers, and of the private sector in general, in rural sector investments; (ii) reorganization and reduction of public sector intervention; (iii) improvement of input supply through the provision of adequate funding, and stimulation of private sector involvement; and (iv) reduction of pre- and post-harvest losses through intensified pest control. Thus the main thrust of the NPA was the management of both demand and supply. E. Experience with Past Lending 1.13 Bank Group lending to SeniRal's rural sector as of December 31, 1987 amounted to about US$168.7 million tor 18 projects, thirteen of which had been completed. These operations have been in various subsectors, including: five projects for engineering, technical assistance and construction of polders and large irrigated perimeters; two agricultural credit projects; two projects for rice cultivation in the south; two resettlement projects in eastern Senegal; two rural development- type projects, one in the Sine-Saloum area and the other in Eastern  - 5 - Senegal; a livestock development project in eastern Senegal; a forestry project, and an agricultural research project. In addition, the Bank Group has financed two rural development fund-type projects, the Drought Relief Fund and the First Small Rural Operations Project, for which the proposed project is a follow-up. 1.14 As consistently noted in completion reports and audits, project performance in general has been patchy, management performance unsatisfactory, and ar..icipated benefits increasingly unrealized. Contributing factors cited include: (i) external phenomena ranging from poor rainfall to inadequate national policies regarding agricultural credit and input pricing; (ii) poor choice of technologies; (iii) the weak institutional environment and the poor management performance of national development agencies; and (iv) the poor quality of engineering design and supervision of construction works and other infrastructure development. F. The First Small Rural Operations Project 1.15 The first phase project, which became effective in September 1980, channeled funds to small groups of rural producers who contributed labor and cash for a variety of productive activities. Six small rural operations were identified and appraised at the outset. They were: (i) the development of 30 irrigated rice perimeters of 20 ha each in the Ngalenka Valley; (ii) development of 18 irrigated vegetable perimeters of 2 ha each; (iii) development of 15 irrigated banana perimeters of 4 ha each; (iv) a beel- eping operation in the Casamance region; (v) provision of small fishing boats and motors for a fishing subproject; and (vi) construction of 50 new wells and deepening of 5C others in the Sine Saloum region. The project also included funds for activities to be identified and prepared in the course of project implementation, and provided for a management structure. 1.16 Project implementation was satisfactory and most of the subprojects surpassed the initial physical targets. The component dealing with subprojects "to be identified during implementation' generated much interest and the project management unit received nearly 300 requests for financing, many from individuals seeking financing for productive activities, but who did not meet the selection criteria defined at appraisal. Nearly all the financing requests that were approved were similar to activities already being implemented. 1.17 Actual results in terms of the number of activities undertaken have exceeded appraisal estimates. Some revisions were made in the initial stages of supervision in order to take farmer demand and other constraints into consideration. For example, the size of each rice perimeter was increased from 20 to 30 ha, tubewells were used for irrigation in the vegetable perimeters instead of ordinary wells, and the banana perimeters were redesigned to account for the fact that surface water was no longer available for irrigation. The average size of the vegetable perimeters was increased from about 2 ha to about 6 ha, and the average size of a banana perimeter increased from 4 ha at appraisal to about 13.5 ha. Since project management did not set up any meaningful  - 6 - monitoring and evaluation system, actual yield and production figures have not been systematically monitored. In most cases, frequent personnel changes in subprojects as well as farmers' reluctance to declare production levels also meant that only fragmentary production data was available. It is known, however, that production on the rice, vegetable and banana perimeters has reached, and in some seasons surpassed, appraisal targets. The various subprojects are still operating satisfactorily, with the exception of the fishing subproject, which had to be closed down by project management due to problems in getting the fishing group to respect its commitments. 1.18 In addition to the increases in the size of the subprojects, several new subprojects were approved and started under the category "projects to be identified in the course of implementation". Four of these were for banana perimeters of 15.5 ha each, involving four producer groups, one was for fishing, and the rest for small vegetable perimeters of 2 - 8 ha and involving nine producer groups. About 1,700 families benefitted from the already appraised operations, and about 1,200 families benefitted from the subprojects identified in the course of project implementation, for a total of about 2,900 families. 1.19 Capital Replacement Accounts. One of the innovative features of the first project was the Capital Replacement Account (CRA). Results were mixed in terms of farmer acceptance and establishment of the CRAs, which were supposed to provide farmer groups with sufficient funds for future replacement of medium-term assets. With the possible exception of the banana perimeters, the idea of the CRA was not fully accepted from the beginning, the main difficulty being farmers' mistrust and incompre- hension of its true function. Also, some farmers have always harbored the notion that Government can be counted on to come to their aid and replace worn-out equipment if they cannot do so themselves. Another problem was the tendency of Rural Development Agencies, and especially SAED, to emphasize debt reimbursement for inputs that they had provided on credit, sometimes neglecting to mention also the need for contributions to the CRA. This gave farmers the impression that the CRAs were less important. One factor however, which affected regular contribution to CRAs was the difficulties encountered by farmers in ensuring continuous cultivation each season following land development, either for technical or agronomic reasons. Thus even in cases where farmers were willing to contribute to their CRAs, seasonal variations in cultivation and production results sometimes made payments of the ammounts due difficult. Some farmer groups, however, have used funds from their CRAs to replace their motorpumps and have thus come to appreciate their utility. Farmers now seem convinced that it is in their own interest to establish these CRAs, first as a means of obtaining initial free capital, and second to reduce their dependency on the Government. CRA contributions from the last season are therefore encouraging, and groups are expected henceforth to give priority to the creation of the CRAs. The situation of the CRAs are summarized by subproject and by producer group in Annex 1-1. 1.20 The main problems encountered under the first phase project were: (i) the poor quality of construction, especially on the small rice perimeters; (ii) lack of clarity on the respective responsibilities of the  - 7 - Project Management Unit and some executing agencies; (iii) farmers' initial misunderstanding on the usefulness of CRAs; and (iv) inadequate provisions for the maintenance of developed perimeters. Though most acute in the Ngalenka rice subpioject, these problems existed to varying degrees elsewhere, and made it difficult for farmers, especially in the rice perimeters, to achieve reasonable yields and hence to honor their financial obligations. Most of the executing agencies considered the project to be peripheral to their main activities and thus did not pay close attention to it. Staff initially chosen to head subprojects were not up to the task and this, coupled with the absence of central units within the executing agencies supporting the subproject teams, led to poor supervision during construction, inadequate extension advice and farmer training, and a failure to insist on the respect of financial obligations. There were thus several changes in subproject leadership during the first three years. 1.21 The selection and appraisal process of the proposed project has incorporated these lessons learned under the first phase. Executing agencies for identified operations have been closely involved in the preparation and appraisal of subprojects assigned to them. Contracts linking the Project Management Unit and the agencies would spell out: (a) supervision responsibilities during both construction and project execution; (b) inputs expected from the agencies in preparing procurement documents and the selection of contractors; and (c) the departments within the executing agencies to be responsible for backing up the subproject head and his team. 1.22 The second phase project emphasizes farmers' commitment by asking for a greater initial contribution to the CRA: lOZ of medium-term assets compared to 5Z under the first phase. It introduces the concept of maintenance accounts to repair and maintain shared facilities, and will intensify farmer training to make groups more aware of their responsibilities. In addition, the encouraging financial results obtained by some farmet groups during the latter part of the first project has shown others that it is in their interest to make the project work accord'ng to agreed upon criteria. G. Sector Lending Strategy 1.23 Until a few years ago, Bank assistance was mostly project- oriented. The acute financial crisis of the past several years and the magnitude of the economy's structural distortions have led to a major shift in strategy. The Bank Group's operations now have the following main objectives: first, to assist the Government with structural adjustment lending operations, accompanied where appropriate by technical assistance to improve production incentives and the efficiency of economic management, and to put medium-term development efforts back on sound financial footing; second, to promote long-term economic growth and development by supporting structural adjustment through well-prepared investments, rehabilitation efforts and sectoral adjustment operations within a framework of appropriate sectoral policies; third, to improve the Bank's knowledge of Senegal's economic, social, institutional and administrative frameworks in order to tailor policy reforms to the country's needs and absorptive  - 8 - capacity; and finally, to help improve aid effectiveness in Senegal by acting as the focal point for coordination between donors and the Government, at the same time helping the latter to strengthen its own planning and aid coordination ability. 1.24 Rationale for IDA Involvement. The proposed project is designed to be implemented in accordance with the New Agricultural Policy (para 1.12). Through its continued involvement in this project, IDA seeks to support Government's quest for less costly Government interventions, greater private initiative, and a better mix of privateipublic sector institutions. The project also provides an opportunity for farmer groups to supplement their cash incomes with new productive activities. It is hoped that, in time, the project will also create new institutions and farmer groups capable of supporting themselves either through their own resources or through direct borrowing from the banking system. Through its involvement, IDA will seek to harmonize the implementation procedures of the many small rural operations undertaken through NGOs that ate under the supervision of the same Ministry as the Project Management Unit. II. THE PROJECT A. Objectives and Summary Description 2.01 Objectives. The proposed project would continue to channel funds and technical services to small groups of rural people who would undertake to provide labor, and some funds, for the development of several types of directly productive activities. As was the case under the first Small Rural Operations Project, for which the proposed project is a follow- up, the broad objectives are to encourage local initiative and thereby broaden popular participation in decision-making on rural investments, and to undertake only those small rural projects that are manifestly in the interest of the beneficiaries. Within this framework, the project would: encourage small groups of producers to constitute themselves into legally recognized units such as Economic Interest Groups (GIEs) and render these creditworthy in the judgment of the local banking system; create employment in the rural areas to help decrease rural-urban migration; and st-engthen the existing Senegalese capacity for identification and preparatiol, of small rural projects. The specific subprojects to be financed would increase crop, fruit and vegetable production, enhance security of production and raise rural living standards. 2.02 Summary Description. The project, to be implemented over five years by the Project Management Unit in the Ministry of Social Development, would finance the following specific components: (a) consolidation and rehabilitation of 12 of the 28 irrigated Ngalenka rice and vegetable perimeters developed under the first Small Rural Operations project in the Saint Louis region;  (b) construction, equipment and technical services for 10 rice and vegetable perimeters of 30 ha each in the zone lying between the Ngalenka and Senegal rivers in the Saint Louis region; (c) construction, equipment and technical services for four rice and vegetable perimeters of 20 - 30 ha each in the Matam area for four women's and youth groups; (d) construction, equipment and technical services for six perimeters (rice, maize, sorghum and vegetables) of 30 ha each in the Bakel area of Tambacounda region; (e) construction, equipment and technical services for a 15 ha vegetable perimeter and a 45 ha fruit tree operation for 100 families at Sirmang (Lower Saloum region); (f) construction, equipment and technical services for two perimeters of 60 ha each for rice, maize, banana and citrus fruit per perimeter, at Fass near Medina-Gounass (Kolda region); (g) individual and collective equipment and technical services for 150 traditional beekeepers in three villages in the region of Kolda; (h) construction, equipment and technical services for 2 banana perimaters of 15 ha each in Diende (near Sedhiou); (i) unidentified activities; and (j) improvement of the project management structure with the required technical and administrative staff and logistLcal support, including improvement of project accounting, monitoring and evaluation and links between the Project Directorate and the sub- projects. 2.03 Three of the eight appraised operations -- the Ngalenka rehabilitation, the second Ngalenka subproject and the banana perimeters -- are in areas where similar actions were undertaken under the first project. Though the remaining five appraised sub-projects are on new sites, their activities are similar to those financed under the first phase. "he eight directly productive appraised operations, namely (a) through (h) above, would benefit about 2,500 families or some 28,500 people, nearly all in the category of the rural poor. Assuming a similar cost per beneficiary for the unidentified projects, most of which would likely be similar to those already appraised, the total number of beneficiaries would be about 4,500 families, or some 51,000 people. 2.04 Subproject Selection Criteria. The criteria used for selection of the appraised operations were that they be: (a) directly productive and environmentally sound rural development activities; (b) financially and economically profitable, with a net income per labor- day at full development of at least CFAF 650, being 25Z more than the nationwide average rural income, and an internal economic rate of return of at least 1OZ. (c) requested by, and manifestly in the interest of, a group  - 10 - or groups of producers; (d) capable of being maintained by the beneficiaries; and (e) environmentally sound. These criteria would be retained for the preparation and appraisal of currently unidentified activities. Most of the appraised operations originated from requests from producer groups channeled either directly through the regional development agencies or through the district and department development committees. As a result of information disseminated during the first-phase project by the Project Management Unit (PMU) concerning project selection criteria and procedures, most groups seeking financing are now aware of the availability of resources through the Small Rural Operations project. The PMU would continue to disseminate information on project selection criteria and procedures (para 3.13). It is expected that the allocation for unidentified operations would be used for small rural projects in which the producers had taken the key initiatives. In addition to such projects being directly productive and environmentally sound, the same tests of manifest interest on the part of the beneficiaries would apply, namely: (a) a commitment to provide all unskilled labor during construction with no remuneration, either in cash or in kind; (b) lump sum cash payments of at least 1OZ of the value of medium-term assets into special Capital Replacement Accounts (para 3.11) prior to the initial installation of medium-term assets; and (c) a commitment to provide for replacement of such assets and for operation and maintenance, by making annual payments, calculated at replacement and maintenance costs, into each group's Capital Replacement and Operating Accounts. An assurance was obtained at negotiations that the above three criteria and the tests of manifest interest would be applied in the selection of additional small rural projects to be financed from the allocation for unidentified activities, including the portion earmarked for sub-projects submitted by women (para 2.23). B. Detailed Features 1. Rehabilitation of 12 Rice Perimeters at Ngalenka 2.05 During the first phase project, financing was provided to develop 28 perimeters totalling 824.4 ha. Perimeters were developed for full water control, allowing on each perimeter 20 ha of rice during the rainy season and 10 ha of vegetables during the off-season, with the possibility of more intensive cultivation after the completion of the Diama and Manantali dams. Some of the perimeters have encountered technical and organizational problems. The technical problems have to do with the poor quality of some of the developments (lack of levelling, excessive length of canals, etc.) and insufficient maintenance of the irrigation network, poor civil engineering and the lack of control over agronomic practices. Producer groups have often failed to organize themselves to do preventive maintenance. They often do not respect correct irrigation practices and have not always followed agronomic recommendations. All these problems have led to poor water control, considerable waste of water and a further degradation of the irrigation network and civil works. 2.06 The project would provide for the consolidation and rehabilitation of the irrigation and civil engineering networks on 12 of  - 11 - the 28 perimeters developed under the first phase. These 12 perimeters were for the most part developed early in the first phase project and need repairs most urgently. The main works to be financed would consist of: (a) earthworks (levelling, primary and secondary canals, and embankments), either to consolidate existing areas or extend the perimeters; (b) the construction of new civil engineering structures and the replacement of some existing ones; and (c) the reinforcement of some existing works. The project will finance operating expenses for technical services provided by SAED for the first four years, including training of farmer groups on correct agronomic, irrigation and maintenance practices. The project will be responsible only for the physical rehabilitation and technical services described above. For some of the perimeters, the overhaul or replacement of motorpumps may be necessary, and the produc groups will be responsible for this. The groups will also be responsible Lor acquiring their own inputs and for earthworks necessary for cultivation. In order for the rehabilitation works on any of the twelve perimeters included to be financed, the producer group must have paid into their Capital Replacement Account a minimum of 60X of the eligible amount as of December 31, 1988, including any amounts the Group may have used to replace any medium-term asset. Each Group would also be required to pay into a special maintenance account 52 of the contract value of the rehabilitation and civil works to be done. Such payment would be verified by the Project Management Unit. Assurances to this effect were obtained during negotiations. 2. Second Ngalenka Rice Perimeters 2.07 Between the Ngalenka, a tributary of the Senegal River, and the Senegal River itself, 10 groups of producers would be helped to construct and operate irrigated perimeters of 30 ha each with full water control. The operation would be similar to that done along the Ngalenka during the first phase. Some of the perimeters would, however, pump water directly from the Senegal River. For this subproject as well as those that would pump water from international waterways, Government has obtained agreements and/or informed riperians on the use of water under the project (para 3.20). 2.08 The project would provide: (a) soil and topographical surveys; (b) construction of the water distribution network; (c) installation of a 500 m3/hr motorpump on a floating base; (d) construction of one access road and one store per perimeter; and (e) first year inputs for 20 ha of rainy season paddy and 10 ha of dry season crops, mainly vegetables. The small base for SAED operations constructed during the first phase at Thille Boubacar would be respor.sible for supervising the project under the overall technical responsibility of SAED's Podor Delegation based at Nianga. SAED would be responsible for doing surveys and drawing up plans (funds are provided for this under two additional PPF advances of US$1.29 million), for supervising the construction, and for providing technical assistance during initial farming oDerations. SAED would assign the required staff -- an agricultural engineer, a surveyor and three agricultural advisors -- to supervise the project. In the framework of SAED's decentralization, the team would be given sufficient operational autonomy with technical backstopping from the Podor Delegation. Producer groups would be responsible for providing all  - 12 - unskilled labor for perimeter construction, performing all farming operations, paying for operation and maintenance of their pump and providing, in cash and in kind, for maintenance of the water distribution system. In accordance with Senegal's land teaure laws, each group would be responsible for acquiring the land to be developed from the Rural Community. Land allocation within the perimeters would be decided by the producer group. Following the experience of the first phase Ngalenka project, each group would have about 40 to 50 members who would each receive about 0.75 ha. Further detailed features are in Working Paper 1 and costs are detailed at Working Paper 2, Table 2. 3. Small Irrigated Perimeters of Matam 2.09 Along the Senegal River and one of its tributaries near Matam, the Dioulol, four female and youth producer groups would be helped to construct and operate small irrigated rice and vegetable perimeters with full water control. Similar activities have existed in the Matam area since 1975 and several such perimeters have already been developed. 2.10 The project would provide for: (a) the necessary studies; (b) construction of the water distribution network; (c) installation of a 300 m3/hr to 500 m3/hr motorpump on a floating base; (d) construction of one store per perimeter; and (e) first year inputs and tools for 20 ha of rainy season paddy and 6 - 10 ha of dry season vegetables. The SAED Delegation at Matam would be responsible for undertaking studies, supervising construction and providing technical assistance on farming operations. SAED would assign a rural engineer and an agricultural advisor to the subproject and train pump operators in routine maintenance. As in all other subprojects, the producer groups would be responsible for providing all unskilled labor for perimeter construction, performing all farming operations, paying for operation and maintenance of their pump, and providing, in cash and in kind, for maintenance of the water distribution system. Each group would be responsible for formally acquiring the land to be developed from the Rural Community. Land allocation within the perimeters would be determined by the producer group and it is expected that each group would have about 60 to 80 members who would each receive 0.25 - 0.33 ha. Further detailed features are in Working Paper 1 and costs detailed at Working Paper 2, Table 3. 4. Small Rice and Cereal Perimeters at Bakel 2.11 The subproject would assist six producer groups along the Senegal and Faleme Rivers in constructing, equipping and operating small irrigated perimeters of 30 ha each for rice, cereal and vegetable production. In almost all cases, the producer groups involved are currently operating small irrigated perimeters developed with the assistance of SAED starting in about 1984. For most groups, the area per member of the group averages from a low of 0,10 ha to a high of about 0,3 ha. The groups are thus seeking extensions or new perimeters to increase the holdings per member. 2.12 The project provides for: (a) studies and surveys; (b) construction of the water distribution network; (c) installation of a  - 13 - 500 m3/hr motorpump or, a floating base; (d) construction of stores for each perimeter; and (e) first year inputs for 25 ha of rairy season paddy and cereals and 10 to 15 ha of dry season cereals and vegetables. The SIED Delegation at Bakel, which has been implementing similar small irrigated perimeters in the zone, would be responsible for undertaking the studies, supervising construction and providing technical assistance on farming operations. The key personnel to be assigned by SAED to the iubproject are an agricultural engineer, two agricultural advisors and a rural engineer. SAED's mechanics would intervene on a paid basis to repair motorpumps for the groups. 2.13 In the Bakel area, SAED normally asks farmer groups to make a downpayment of CFAF 145,000 in a Capital Replacement Account (CRA) before it delivers motorpumps for their perimeters. It is not clear how this amount was set, but it presumably represented about 5Z of the cost of the motorpumps about six years ago. This contrasts with SAED's policy in other areas, such as Matam, where the initial payment into the CRA is currently fixed at 10 of the motorpump price before delivery and installation. In the Bakel area, once the initial payment into the CRA has been made, SAED has also not insisted on the creation of the replacement account. Thus, most producer groups in the area are without operational CRAs even though some of them already have three or more motorpumps. The replacement of such equipment is therefore not guaranteed. In order to ensure consistency and respect the spirit of the New Agricultural Policy (NPA), it will be necessary for SAED to re-examine its policy on equipment replacement in Bakel. Before any investments are made by the proposed project in the Bakel area, SAED will therefore have to apply the same policy of capital replacement and maintenance as it does in other areas and according to the criteria agreed on under the propose project (para 2.04). As in all the other subprojects, producer groups would be responsible for providing all unskilled labor for perimeter construction, performing all farming operations, and providing in cash and in kind for maintenance of the perimeter. Sites have already been identified for the perimeters. However, each group would be responsible for formally acquiring the land to be developed from the Rural Community. Land allocation within the perimeters would be decided by the producer group. 5. Sirmang Fruit and Vegetable Perimeter 2.14 In the Lower Saloum area, near the Gambia border, the project would help a group of producers to construct and operate an irrigated perimeter for vegetables (15 ha) and fruit trees (45 ha) with water to be supplied by pumps erected on open wells. There are already vegetable and fruit production activities in the zone, where some vegetable gardens are irrigated from traditional shallow hand-dug wells. A vegetable production project was also started in the area in 1977, with irrigation from electric pumps on open wells between 8 and 15 m deep. Poor training of farmers and poor planning in terms of providing for operating costs and equipment repair and maintenance has caused difficulties when project financing ceased. This project, however, has demonstrated the potential for vegetable production in the zone as well as the possibility of irrigation from open wells.  - 14 - 2.15 The project would provide modest additional operating means for the Rural Development Center (CERP) of Toubacouta that would provide technical services for the perimeter. On the perimeter itself, the project provides for: (a) the necessary surveys and studies; (b) the construction of five open wells about 20 m deep, each equipped with an electric pump; (c) one large and 200 small water storage tanks in reinforced concrete, built to existing design standards and connected by plastic piping; and (d) a store, tools, fencing and windbreaks. Water would normally be carried by hand from the storage tanks to the crops. First year inputs would be supplied by the project, and reimbursements from these inputs would be used to constitute a revolving fund for future input purchases to be done by the producer group itself. Similarly, output wou'.d be sold to the well- established network of private buyers. The CERP would assign a horticulturalist as well as a cooperative agent to the perimeter. The project will finance the training of a mechanic and allowances for the mechanic for the first two years, after which the producer group would be responsible for financing his services. The project also provides for the training of farmer groups in adequate maintenance and organization. The group would be responsible for providing all unskilled labor for construction, performing all farming operations and paying for maintenance of their pump and water distribution facilities. An area has already been selected for the perimter. However, formal land acquisition from the Rural Community would be the responsibility of the producer group. Land allocation within the perimeter would be decided by the producer group, and it is expected that the group would have about 100 members (to be divided into 5 sub-groups) who would each receive 0.15 ha for vegetable cultivation and 0.45 ha for fruit trees. Perimeter development and equipment costs would be about CFAF 3.0 million (US$10.900) per ha. Costs are detailed in Working Paper 2, Table 5. 6. Cereal and Fruit Perimeters of Fass (Medina Gounass) 2.16 The Project would help two producer groups along the Gambia river, some 20 km from Medina Gounass, to construct and operate two irrigation perimeters with full water control for the production of rice, maize, banana, and fruit trees. Crops in the zone are essentially rainfed, although some groups are now installing irrigated perimeters along the Gambia river following the decline in annual rainfall over the past few years. This decline has also prompted the producer group of Fass and one of the regional development agencies operating in the area, SODAGRI, to request the perimeters. 2.17 The project would provide at each of the perimeters; (a) soil and topographical surveys, (b) destumping and construction of the water distribution network, with earth canals and all structures in reinforced concrete; (c) installation of a 36 hp Group Motor Pump (GMP) delivering 400 m3/hr on a floating base; (d) construction of an access road and a storage shed; and (e) tools and first year inputs for 20 ha each of rainy and dry season paddy and maize, 15 ha of banana and 5 ha of fruit crops. SODAGRI would be responsible for undertaking the surveys and drawing up plans, supervising construction and providing technical assistance during initial farming operations. SODAGRI is performing similar functions satisfactorily along the Gambia and Anambe rivers and  - 15 - would assign an agricultural engineer and two extension workers to the subproject. Producer groups would be responsible for providing all unskilled labor for perimeter and access road construction, performing all farming operations, paying for operation and maintenance of their pump, and providing in cash and kind for maintenance of the water distribution system. A site has already been identified for the perimeter. However, the groups would be responsible for the formal acquisition of the land from the Rural Community. Land allocation within the perimeters would bt decided by the producer group, but it is expected that each perimeter would have about 50 farmers who would each receive 1.2 ha. Perimeter development and equipment costs are estimated at CFAF 1.6 million (US$5,700) per ha. The cost is higher than on most such small perimeters owing to the high cost of the access road to be constructed between Medina Gounass and the perimeter. Further detailed features are in Working Paper 1 and costs are detailed in Working Paper 2, Table 6. 7. Beekeeping 2.18 In the Dabo district of Kolda Region, three groups of beekeepers would be helped to install and operate 1,500 improved traditional beehives and 300 modern hives, and three honey and wax collectionlextraction centers. Kolda region is the largest honey producer in Senegal, with the beekeeping center at Kolda alone extracting between 15 and 20 tons of honey per year. Collection of wild honey and wax is a traditional occupation in the project area. The main demand in these areas is for more modern equipment and for honey and wax extractian centers. 2.19 The subproject would provide for: (a) installation of collective honey an, wax extraction equipment at three cienters for three groups of 50 beekeepers each; (b) installation of two modern hives, 10 improved traditional hives as well as 20 additional ordinary traditional hives per beekeeper and provision of mesh frames, fumigators and protective clothing; and (c) collective equipment for the raising of queen bees. The honey and wax produced by the three groups will normally be bought and marketed by SERAS ("Societe d'Exploitation des Ressources Animales du Senegal"). However, several new firms have shown an interest in honey marketing and the producers would be free to sell their wax and honey to any interested dealer. The Livestock Department in Kolaa Region would be responsible for providing tochnical assistance for both production and marketing. The Beekeeping Service at the Central Livestock Directorate in Dakar would provide technical expertise. Producer groups would be responsible for providing all unskilled labor for the construction of the extraction centers and for performing all beekeeping and processing operations, as well as paying for maintenance of their equipment and extraction facilities. 8. Banana Perimeters 2.20 The project would assist two groups of producers to construct and operate irrigated banana perimeters, with water supplied by electrical pumps erected on boreholes. Following the experience of the first Small Rural Operations Project, water would be obtained from boreholes of about 300 to 350 m and with yields of about 150 m3/hr, and  - 16 - capable of irrigating medium-size perimeters of about 15 ha, such as farmer groups are now demanding. 2.21 The project would provide at each of the two perimeters: (a) topographical and pedological surveys; (b) a 50 hp pump delivering about 100 m3/hr; (c) water distribution system and drainage canals, mostly in concrete; (d) an equipment store, a banana sorting and treatment center; (e) materials and supplies for the initial plantation; and (e) inputs for the upkeep of the plantation and Cor preparing and packaging the first production for sale. SOMIVAC would, as it was under the first phase, be responsible for doing the studies, supervising construction and initial plantation, and providing technical assistance for the operations. SOMIVAC would provide one agronomist and one extension agent per perimeter. The producer groups would be responsible for providing all unskilled labor for perimeter construction, performing farming operations, paying for operation and maintenance of their pump and providing in cash and in kind for the maintenance of the water distribution system. Perimeter sites have already been selected by the groups. However, formal acquisition of the land from the Rural Community will be the responsibility of the producer groups. Land allocation within the perimeter would be decided by the producer' group. Basd on the experience of the first phase, it is expected that each group would have about 150 members who would each receive 0.1 ha. The perimeter development cost per ha would be CFAF 5.4 million (US$19,400), of which 38Z is the cost of the borehole alone. Costs are detailed in Working Paper 2, Table 8. 9. Unidentified Activities 2.22 Towards the completion of the first phase project and in the course of project preparation, many promising project ideas came up and several producer groups requested financing for small rural projects. Thus, in addition to the new project ideas and the strong demand for financing of more small rural operations, the Project Management Unit has a large file of proposals that are not yet appraisable for various reasons. The proposed credit would therefore include an allocation (33Z of total projects costs) for financing, during implementation, of additional directly-productive small rural operations that have yet to be identified, prepared and appraised, in accordance with the procedures specified in the small rural project cycle (paras 3.13-3.15). 2.23 In the small rural projects being financed, women normally do most of the work. Because of the social structure, however, these women are not official members of the producer groups benefitting from the project funds. They often constitute their own groups, outside of the main male-dominated producer groups, to farm traditional vegetable gardens using traditional wells for irrigation. In order to support productive female- initiated activities, assurances were obtained at negotiations that about 30? of the IDA credit allocated to unidentified activities would be reserved for groups made up entirely of females. This percentage would be reviewed in the course of project execution. The reservation of a given percentage of the funds allocated for "unidentified activities' for female groups does not prevent women from joining the other groups, and project  - 17 - management will continue to encourage them to join the existing, often male-dominated groups. 10, Project Management 2.24 The Project would c ntinue to finance the Project Management Unit set up under the first phase. In addition to the project manager, the unit will consist of seven technical specialists (three agro-economists, one livestock economist, two rural engineers and a trainer), a chief accountant, and a deputy, bookkeepers and support staff, all of whom will be on fixed-term contracts for the duratiot of the project. A monitoring and evaluation unit of two additional agricultural economists would be set up within the project management unit to monitor the impact of the project as well as follow up on the operation of all CRAs and operating accounts includinp those under the first phase project. In order to ensure continuous follow-up and supervision of activities under the first phase and of those to be started in the proposed project, the project would provide for the construction of two bases for the project unit - one in the Senegal river valley region, possibly at Bakel and the other in the south at Diattacounda. These bases will serve as headquarters of subprojects in these areas and a supervision point for project management. The project would finance office accommodation, vehicles, equipment and furniture, and travel costs of staff, and would also include accounting support and audit services, consultants and materials for training as well as office operating expenses. C. Project Cost and Financing 1. Cost Estimates 2.25 Total project costs over the five year implementation period are estimated at CFAF 7.8 billion (or US$ 26.1 million), of which CFAF 4.3 billion (US$14.2 million), or 54Z of total costs, is in foreign exchange. Estimated taxes and duties amount to about CFAF 255 million. Unit costs are based on May 1988 prices adjusted for inflation to November 1988, the date of negotiations. Project costs are siummarized below.  - 18 - Project Cost Summary (CFAE Million) (US $ Million) J Total t X Foreign Base Local Foreign Total Local Foreign Total Exchange Costs Rehabilitation of Ngalenka 76 148 224 0.3 0.5 0.8 66 3.5 Second Ngalenka Rice Perimeters 221 325 546 0.7 1.1 1.8 60 8.5 Small Rice Perimeters of Matam 81 113 194 0.3 0.3 0.6 58 3.0 Small Rice Perimeters of Bakel 130 181 311 0.4 0.6 1.0 58 4.9 Sirmang Fruit & Veg. Perimeter 125 110 235 0.4 0.4 0.8 47 3.7 Fass Cereal & Fruit Perimeters 160 181 341 0.5 0.6 1.1 53 5.3 Beekeeping (Kolda) 58 42 100 0.2 0.1 0.3 42 1.6 Banana Perimeter of Diende 136 175 311 0.5 0.6 1.1 56 4.8 Project Management 1015 627 1642 3.4 2.1 5.5 38 25.6 Unidentified Activities 836 1239 2075 2.8 4.1 6.9 60 32.3 PPF 0 441 441 0.0 1.5 1.5 100 6.9 Total Base Costs 2838 3582 6420 9.5 11.9 21.4 56 100.0 Physical Contingencies 173 256 429 0.6 0.8 1.4 60 Price Contingencies 565 427 992 1.8 1.5 3.3 43 Total Project Costs 3576 4265 7841 11.9 14.2 26.1 54 (Including Taxes) ====-= ===== ====== ==== ===