Madagascar - Agricultural Extension Pilot Project

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Document of The World Bank FOR OFFICIAL USE ONLY Reort No- P-5234-MAG MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 2.8 MILLION TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR AN AGRICULTURAL EXTENSION PILOT PROJECT April 30, 1990 Thi document has a restricted distribution and may be used by roipients only In the performns of thdir offical dudes Its contenbs may not otherwise be dhisosed without Wodd Bank authoriation.  CURRENCY E!UIVALENTS Currency Unit - Malagasy Francs (FlG) US$ 1.00 P FHG 1620 1mG 1,000 - USS 0.62 WEIGS AND MLASURES 1 are (a) - 0.0247 acres 1 hectare (ha) * 2.47 acres 1 kilometer (km) - 0.62 miles 1 square kilometer (km2) - 0.39 square mile 1 kilogram (kg) - 2.20 pounds 1 liter (1) a 0.26 US gallon 0.22 Imperial gallon 1 tonne (t) - 2,204 pounds ABBREVIATIONS DVA - Directorate for Agricultural Extension (Direction de la Vulgarisation Agricole) IFAD - International Fund for Agricultural Development MIN&GRI - Ministry of Agriculture (Minist;re de la Production Agricole et du Patrimoine Foncier) PPF m Project Preparation Facility Fiscal Year Government of Madagascar January 1 - December 31  FOR OMCIAL USE ONLY REPUBLIC OF MADAGASCAR PLGICLTRA I SIN ILOTM Credit gad ProleLt Summarv Borrower Republic of Madagascar Beneficiaries s Ministry of Agriculture and Land Use and Malagasy farmers. Amount s SDR 2.8 million (US $ 3.68 million) Terms t Standard, with 40 years maturity Onlendina Term. s Not applicable Financint Plan s Government S 0.92 million IDA $ 3.68 million Total $ 4.60 million Taxes $ 0.81 million Grand Total $ 5.41 million Economic Rate of Return s 17Z Staff Appraisal Report s Report No. 8334-MAG a Madagascar Agricultural Extension Pilot Project, IBRD No. 21993 I Thb document ha a restrited dibution d may be ud by cipients only in the Performance 1 of their official duties. Its contents may not otherwise be disclosed 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 DEMOCRATIC REPUBLIC OF MADAGASCAR FOR AN AGRICULTURAL EXTENSION PILOT PROJECT * 1. The following memorandum and recouendation on a proposed development credit to the Democratic Republic of Madagascar for SDR 2.8 million (US$ 3.68 million equivalent) is submitted for approval. The * proposed credit would be on standard IDA terms with 40 years maturity and would constitute a three-year pilot phase of a long-term development effort to increase the efficiency of the agricultural extension services in Madagascar. It is part of a broader long-term strategy aiming at sustainable agricultural development through modernization of agricultural practices, environmental measures and population policies. The project would put particular emphasis on replicability and financial sustainability. 2. Backgrounds Agriculture is Madagas_r's main contributor to the national economy. It employs some 85% of the population and accounts for 801 of export earnings. Agriculture has generally performed poorly in the 1975-87 period, w^ith growth rates well below population growth. This is reflected in a continuous decline in per capita income and in environmental degradation. The main reason for this poor performance has been the Government's interventionist policies in pricing and marketing, as well as high export taxes, while at the same tlme allowing its services to the sector (research, extension, and roads and Irrigation maintenance) to decline in quality and coverage. As a result, performance of agricultural support services have become gradually paralysed due to weak management, poor inter-agency coordination, severe financial constraints on the operating budget, overstaffing, and lack (of sequate training and incentives. The Government is now considering making the institutions responsible for basic agricultural services more effective as well as reducing reliance on autonomous operations. The National Agricultural Research Project, approved by the Executive Directors in mid-June 1989, and the proposed Agricultural Extension Pilot Project concentrate on ways to improve research and extension and their links with other services. The proposed project has also been designed to support activities under the Environment Program, approved by the Executive Directors on April 17, 1990. 3. Initial Pilot Activities: Pilot extension activities were initiated in 1988 in three extension districts to prepare a national extension project. Activities, however, did not take off in earnest until April 1989, because of procurement delays, lack of timely funds, and late staff assignments. As sufficient evidence was not available, further testing was required of the adaptability, replicability and sustainability of the proposed extension strategy in the Malagasy context, where several donors finance projects with separate extension structures (including IDA Cr. 1337-MAG). The Government therefore decided that the project would serve as a pilot operation to provide the necessary experience, assess various extension approaches, and build up the DVA.  4. Despite the short testing period, definite improvements are visible in both work organixation and management. maps and programs of visits are curreitly used by most agents. The organization of farmers In groups has become the dominant vehile, of extension as opposed to the earlier method of visits to individual farmers. Training program have been established on the basis of ability tests taken by all field staff in the three pilot extension districts in February 1989. Bi-monthly traliing essions of extension agents have been instituted and are adhered to, whereas monthly workshops for Subject Matter Speciallsts (Techniclins Formateurs or TF) are becoming more regular. During the main season, area specific messages were extended for rice, malze, groundnuts and In some areas cassava. During the 1989 winter season, technical messages were being extended for wheat, potatoes and vegetables, leading to marked Improvements In yields, where recowaendations had been properly implemented. In ord-r to continue progress, the extension districts stressed the need for closer links with research, especially In the area of testing and plant protection. 5. Rationale for IDA involvements Madagascar's overall economic growth will continue to depend on Increasing productivity in the agricultural sector. IDA has been assisting Government in this sector through the Agricultural Institutions Technical Assistance Project (Cr. 1249-MAG) and its follow-up, the Second Agricultural Institutions Development Project (Cr. 1709-NAG) under which funding was provided for the preparation of the proposed project. Continued support by IDA, both technically and finanially, would be essential to achieving success in Improving the extension services and thus Increasing agricultural productivity as part of IDA's overall strategy to contribute to sustainable agricultural growth and environmental protection. Furthermore, the project would support IDA's strategy to help Government refocus its area of intervention away from production to the efficient provision of services. The project complements the IDA-financed National Agricultural Research Project (Cr. 2041-MAG) and the Enviroament Program (Cr. 2125-MAG). 6. Proiect Obiectivess The project would serve as a pilot to test an extension strategy In 5 extension districts with particular emphasis on adaptation to the Malagasy context (dealing with groups rather than individual farmers, gradually suppressing the supervisor level, and capitalizing on the comparatively high literacy rate in rural areas), sustainability in light of public finance constraints, and possible future replicability nationwide. The project would therefore initiate and test the viability of a long-term action plan for agricultural extension. The project would strengthen Government extension services, promote general principles of sound field management to ensure efficient and cost effective extension, and harmonize various approaches adopted by other donors and non-governmental organizations. Strengthening Government extension services would mainly entail improving staff competence through regular training, gradually decreasing the overall number of personnel whenever warranted, keeping lean teams of competent staff at the MINAGRI, and involving provincial levels. Harmonizing the various approaches to extension would, however, not be synonymous with standardization. Rather, it would provide the opportunity to select the most cost effective approaches as results become available, on the basis of an in-depth evaluation to be carried out at the end of year 2.  -3- 7. Project Descriptions In order to achieve the above objectives, the project woulds (i) reorganize end strengthen extension servicen in 5 of the country's 23 extension districts, including Ambatondrazaka, Antananarivo, Amparafaravolo, Miarinarivo and Moramanga; (ii) provide systematic in-service training for project staff at all levela; (iII) focus adaptive research on validation and diftusion of economically and environmentally sound technology; (iv) strengthen the monitoring and evaluation capability at both the central and regional levels; (v) strengthen financial management; (vi) improve organizational and managerial capacity of the DVA; and (vii) make funds available for studies, an in- depth review of the project and alternative approaches to extension at the end of year 2, and the preparation of a follow-up project that would draw on the results of the project review. The study program is intended to look expressly for ways to reduce the cost of extension to the Government throught (i) involving the private sector and NGOs more forcefully; (ii) seeking for ways to reduce costs at the DVA, e.g. by reducing excess personnel; and (iii) reviewing the possibility of cost recovery mechanisms. Also, both MINAGRI and IDA would carefully monltor the project's actual costs. During project lplementation, emphasis will be put on natural resources management, including watershed management and anti-erosion measures. 8. The project to be carried out over three years would provide funding for civil works, technical assistance, consultancies, studies, vehicles and equipment, and training. Total project cost is estimated at US$5.41 million equivalent, with a foreign exchange component of US$1.1 million (211). A breakdown of estimated 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 Madagascar are given in Schedule C and D, respectively. A map is also attached. The Staff Appraisal Report, No. 8334-MAG, is being distributed separately. 9. ARreements reached: At negotiations, the following agreements were reached: (i) adherence to accounting and auditing arrangements; (ii) scope and implementation of the in-depth project review at the end of implementation year 2; (iii) establishment of Government funded accounts for the DVA and the five extension districts; (iv) adequate field allowances would be paid to DVA staff needed for project execution and the corresponding budget allocations would be made; (v) terms of reference, cost estimates and arrangements for executing the studies would be prepared by DVA and submitted to IDA for arproval; (vi) DVA would submit to IDA for approval its budget and work program, no later than September 30 of the preceding year; and (vii) MINAGRI would take the necessary measures to ensure that funds are available from which the salaries of contractual workers would be paid during the first quarter of each year. 10. Benefits: The proposed project is expected to benefit about 125,000 farm families directly and an unknown number through spillover effects. In the short-term the main benefits would include improved efficiency and higher effectiveness of the DVA extension service. Criteria for measuring such achievements would be (a) increased collaboration  - 4 - between DVA and the research agency, (b) a greater knowledge of farmers' demands and concerns by extension agents, and (c) the elaboration sad implementation of measures to streamline the organization. In the long- te.m, the project would improve farmers' productivity, increase incomes for the rural population, increase food security, and would be a main tool in stemming environmental degradation. 11. Risks: The risks Include those usually assoclated with extension projectst (a) Inadequate and/or untimely provision of budgetary resources by Government (even though the relevant incremental cost per farm family appears high at US$7.68, it compares favorably with several self standing projects in Madagascar); (b) staff of low competence; (c) the possible inability of extension and research services to produce messages which farmers value in the short run; (d) slower than expected adoption rates by farmers of the recommended technical advice; and (e) poor inter- agency coordination. To minimize these risks emphasis will be put on strengthening financial and management capabil'.ties at both the central and the extension district levels; reinforcing links between extension and research; preparation of annual work programs and related budgets; and an in-depth review of the project with emphasis on impact, sustainability and replicability at the end of year two. The adequate provision of counterpart funds will be reviewed annua; I in the framework of the Public Expenditure Program. In addition, a Bank staff member has been assigned to the Resident Mission to specifically advise on project implementation. 12. 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. Con' ie President Attachments Washington, DC April 30, 1990  -5- SCHEULE A Page 1 of 2 HADh&ASCAR AGRICULTURAL EXTENSION PILOT PROJECT ESTINATED COSTS AND FINANCING PLAU 1/ (US8 ' 3 Total - - ------I Foreign Bas" Local For.l9 Total Exchange Coo" I. INVESTMENT COSTS A. CIVIL WORKS 695 174 66 203 lox 8. EqIPMENIT AUDIO VISUAL 14 i8 2t 47? 1X FUNITURE s - 69 a 23 TRANSPORTATO 804 822 68n 47X 15X AGRICULTURAL E4JIP 46 as 75 46X 23 Sub-Total EWIPUENT 611 W65 67 42X 19X C. TECHNICAL ASSISTANCE/STUDIES TECHNICAL ASSISTANCE 876 - 870 ex ex STUDIES AND TEST SW - 00 ex 11x Sub-Total TECHICAL EqUIPMENT/SUDIES 676 - 670 19X 0. TRAININ AD DOCUMENTAnON TRININ 160 160 SW C 3X DOCUMAnTION 1v 21 89 Sax 1 Sub-ToWl TAINN ND DOCUMENTATON 282 2 814 S03 7X E. UNSPECfIED INESTMENTS (APAA. AND A TON.) AWAAAAVOLA 171 114 286 40X 6S AITONDRAZAK 243 162 465 403 ON Sub-Total UNSPECIFIE DINVESTMES 414 276 O9v 403 163 Total INVESTMN COSTS 2,664 965 8,650 27X 793 It. RECURRENT COs A. SARIES 469 - 409 eX 9X S. OFFICE SUPPLIES 98 - 98 x 2% C. AGRICULTURAL SUPPLIES 78 18 66 1SX 2X 0. TREATMENT PRODUCTS a 1 4 8s1 eX E. OPERATIONS AM MAINTENANCE 80 - m0 0a eX Total RECURRENT COSTS 987 14 951 1% 213 Total BASELIN COSTS 8,602 999 4,01 22S 100X Physical Contingencies 164 26 180 20 8X Price Contlngeonci 6so 92 676 14X 15X Total PROJECT COSTS 4,292 1,116 5,409 21S 11X 1J Inclusive of US$812,100 for taxes and duties.  SCWULE A Page 2 of 2 FINANCING PLAN US$ Mllion Goveroment 0.92 20 IDA 3.68 21 80 Total 4.60 100 Taxes 0.81 Grand Total 5.41 2/ Including advances totalling US$1,000,000 from the Project Preparation Facility.  -7- SCHEDULE B Page i of 2 MAGASCAR AGRICULUURAL EXTENSION PILOT PROJECT PROCUREMENT METHOD MPD DISBURSEMENTS Us LOS Ls other Total Civil Vo 1.a 1.8 V.lcie.. t4eayclos