Morocco - Loukkos Rural Development Project

Document of The World Bank FOR OFFICIAL lSE ONLY Report No. 9242 PROJECT COMPLETION REPORT KINGDOM OF MOROCCO LOUKKOS RURAL DEVELOPMENT PROJECT (LOAN 1848-MOR) DECEMBER 28, 1990 Agricultural Operations Division Country Department II Europe, Middle East and North Africa Regional Office This document has a restri,ted distribution and mav be used by recipients onlv in the performance of their official duties. Its contents mav not otherwise be disclosed without Worid Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Dirham (DH) Appraisal year, average US$1 - DH 3.8 Implementation, average US$1 = DH 7.6 Completion year, average US$1 = DH 8.5 WEIGHT AND MEASURES Metric System ABBREVIATIONS ASAL Agricultural Sector Adjustment Loan CT Work Center DEFCS Department of Forestry and Soil Conservation DPAE Directorate for Planning and Economic Affairs DPA Provincial Department of Agriculture FAO Food and Agriculture Organization of the United Nations FAO/CP FAO/World Bank Cooperative Program MARA Ministry of Agriculture and Agrarian Reform M&E Monitoring and Evaluation MOF Ministry of Finance MTASAP Medium Term Agricultural Sector Adjustment Loan PCR Project Completion Report SAP Special Action Program SAR Staff Appraisal Report UNDP United Nations Development Program FISCAL YEAR OF BORROWER January 1 - December 31  FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C 20433 U.S A Office ni OifedorC4wal Opoatxm Evaluatwon December 28, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Morocco Loukkos Rural Development Project (Loan 1848-MOR) Attached, for information, is a copy of a report entitled "Project Complet ion Report on Morocco - Loukkos Rural Development Project (Loan 1848-MOR)" prepared by the Europe, Middle East and North Africa Regional Office with Part II of the report contributed by the Borrower. This project has not been audited by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their officiai duties. Its contents may not otherwise be disclosed without Worid Bank authorization.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT KINGDOM OF MOROCCO LOUKKOS RURAL DEVELOPMENT PROJECT (LOAN 1848-MOR) Table of Contents Page No. Preface . ........................................................... i Evaluation Summary ................................................ iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identity .............................................. 1 B. Projet Background ............................................. 1 Place of Agriculture in the Economy during the 1970s .... ..... 1 Main issues in the Agricultural Sector in the 1970s .... ...... 1 Evolution of Government and Bank Strategy in the Agricultural Sector ....................................................... 2 Macro-Economic Fravework during Project Implementation ....... 2 C. Project Objectives and Description ............................. 3 Project Objectives .......................................... 3 Project Description ..................., 3 D. Project Design and Organization. 4 Project Processing. 4 Project Organization. 5 Problems with Project Design and Organization. 5 E. Project Implementation. 6 Implementation Schedule and Project Financing. 6 Detailed Implementation of the Components. 7 F. Project Results .il Crop Development .l Livestock Development .12 Re-evaluation of Economic Rate of Return .12 G. Project Sustainability .13 H. Bank Performance .13 I. Borrower Performance .13 J. Project Relationship .14 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. K. Consulting Services ........................................... 14 L. Project Documentation and Data .............. ................. 14 PART Il: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A. Confirmation of Factual Data Contained in Paras I and III - Comments on the Analysis Contained in Part I .15 B. Evaluation and Summary of Bank Actions .16 C. Evaluation of Moroccan Government Actions .17 D. Relations between the Bank and the Moroccan Government .17 PART III: STATISTICAL INFORMATION 1. Related Bank Loans ........................................... 19 2. Project Timetables .21 3. Loan Disbursements .22 A. Cumulative Estimated and Actual Disbursements .22 B. Planned and Actual Disbursements by Category .23 4. Project Implementation: Project Implementation Ratios . .24 A. Infrastructure and Equipment .24 B. Forestry and Erosion Control .25 C. Input Distribution .26 5. Project Costs and Financing ..27 A. Project Costs .27 B. Project Financing .27 6. Project Results ..28 A. Appraisal Estimates of ERR .28 B. Underlying Assumptions for Appraisal Estimates .......... 28 C. Comments ............... ............................... 28 7. Status of Covenants .29 8. Use of Bank Resources . . .31 A. Staff Inputs per Supervision .31 B. Mission .32  Page No. ANNEXES Annex 1 Land Use in Project Area ................................. 34 Annex 2 Projected and Actual Agricultural Production .... ........ 36 Annex 3 Crop Yields .............................................. 38 Annex 4 Livestock Population and Yields .......................... 39  PROJECT COMPLETION REPORT KINGDON OF MOROCCO LOURKKOS RURAL DEVELOPMENT PROJFCT (LOAN 1848-MOR) PREFACE This is the Project Completion Report (PCR) for the Loukkos Rural Development Project in Morocco, for which Loan 1848-MOR in the amount of US$34.0 million was approved on May 20, 1980. The loan was closed on December 31, 1988, eighteen months behind schedule. US$10.0 million was cancelled from the loan in November 1984, and another US$6.0 million was cancelled in 1986. The last disbursement was on July 27, 1989, total disbursements amount to US$14.4 million or 80% of the revised loan amount, and US$3.6 million was cancelled at project's completion. The PCR was jointly prepared by the Agriculture Operations Division of the Europe, MidCie East and North Africa Regional Office (Preface, Evaluation Suiumary, Parts I a.id III), and the Borrover (Part II), with some input from the FAO/CP (see below). Part II consists mostly of the Borrower's comments on Parts I and II. Preparation of this PCR was started during the Bank's final supervision mission of the project in November 1988, and is based, inter alia, on the Staff Appraisal Report; the Loan Agreement; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. In addition an independent FAO/CP mission constituted by one economist was sent in April 1989 to Morocco to assist with the economic reevaluation of the project.  - iii - PROJECT COMPLETION REPORT KINGDOM OF MOROCCO LOUKKOS RURAL DEVELOPMENT PROJECT (LOAN 1848-MOR) EVALUATION SUMMARY Introduction and Background 1. The Loukkos Rural Development Project was the second of a series of four rural development projects appraised during the late 1970s and early 1980s, at a turning point in terms of both Government strategy and Bank involvement in the Moroccan agricultural sector. In the late 1960s and throughout the 1970s Goverrnment agricultural policy was strongly biased in favor of the large scale irrigated sector. As a result Moroccan agriculture had a dual structure with the intensive irrigated sector producing high value commodities and export crops on 10% of the land, while the rainfed sector accounted for the bulk of basic food supply and supported the majority of the rural population, but showed no long run productivity increases. Income distribution became increasingly unequal as agricultural income in irrigated areas rose while poverty increased in rainfed areas, predominantly in mountain, forest and arid areas. Bank investment in Moroccan agriculture was also concentrated in large scale irrigation and credit until the mid 1970s. In the early 1980s Government recognized the need for a more balanced development of the agricultural sector. At the same time, the Bank shifted emphasis to rainfed development and poverty alleviation with the series of four rural development projects which were developed to test options and to stimulate growth in various environmcnts representative of Morocco's rainfed area. The Loukkos project was specifically designed to address the development issues of the densely populated but poorly endowed and h'ghly eroded mountain regions of the north of Morocco'4. During project implementation the Bank became more and more involved in policy issues and helped Government devise a medium term adjustment program to tackle the structural and policy-related problems of Morroccan agriculture. This program started to be implemented in the framework of two subsequent agricultural sector adjustment loans (ASAL I FY85 and ASAL II FY88). 1 The three other rural development projects were the Fes-Karia-Tissa Agriculture Project approved in FY78 and closed 06/30/90, the Middle Atlas Agricultural Development Project approved in FY82 and closing 12/30/90 and the Oulmes Rommani Agricultural Development Project approved in FY83 and closing 07/01/91.  - iv - 2. The project was implemented during a period of severe crisis followed by austerity and far-reaching macroeconomic adjustment. After the 1983 budget crisis Morocco embarked on a stabilization and adjustment program dith drastic reductions in public investment which hindered the implementation of investment projects because of continuous underfunding. ObJectives 3. The overall objective of the project was to transform the ecologically destructive agricultural system prevailing in the Loukkos watershed into a sustainable system by reducing soil erosion thereby increasing agricultural productivity and incomes of poor farmers. The secondary objective was to gain experience and serve as a model for wider replication elsewhere in the Rif region. 4. The project actions were concentrated in three sub-areas of the watershed representative of the various types of conditions and development potential found in the Rif Mountains: the Middle Loukkos, 31,000 ha, with moderate agricultural potential, the Upper Loukkos, 15,000 ha, with steeper slopes and serious erosion problems and suitable for forage and tree crap with limited annual crop potential, and the Izar