Malawi - Agricultural Services Project

Doouent of The World Bank ]FOR OFmCIL USE ONLY 6j2 ?)g /&/ -A--l Report No P-5999MAI IORANDUtI AND RECOMATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPME ASSOCIATION ERCUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 33 MILION (US$45.8 MLLION EQUIVALE) TO THE REPUBLIC OF MALAI FOR AN AIRICULTURAL SERVICES PROJECT NAY 24, 1993 MICROFICHE COPY Report No. :P- 5999 MAI Type: (PM) Title: AGRICUTLTURAL SERVICES PROJECT Author: ANSON, R. Ext. :34397 Room:J11167 Dept. :AF6AG This doement has a restricted distibution d may be used by tecipleuts only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Banik authorizaton.  CURRENCY EQUIVALEN1S Currency Unit - Malawi Kwacha (MK) US$ = MIK 4.0 MKI = US$0.25 ABBREVIATIONS ADB African Development Bank ASC Agricultural Sciences Committee ASP Agricultural Services Project ASSC Agricultural Sector Steering Committee EC European Community EEC European Economic Community PA Field Assistant FHA Farm Home Assistant GDP Gross Domestic Product GOM Government of Malawi GTZ Deutsche Geiellschaft Fur Technische Zusamenarbeit GmBH IDA Iterational Development Association IFAD Intecnational Fund for Agricultura Development MOA Ministry of Agriculture NGO Non Governmental Organzation NRDP National Rural Development Program ODA Overseas Development Administration UNDP United Nations Development Program USAID United States Agency for Intenational Development FISCAL YEAR Government: April I - March 31  FOR OMCIAL USE ONLY MALAWI AGRICULTURAL SERVICES PROJECT Credit and Project Summary Borrower: Republic of Malawi Beneficiaries: 1.0 million smailholder households; Ministry of Agriculture; Bunda College of Agriculture; fertilizer importers and distributors Amount: SDR 33 million (US$45.8 million equivalent) Terms: Standard IDA terms, with 40 years maturity Ei cwj Plan: Local Foreign Total --US$ Millionn IDA 26.3 19.5 45.8 ADB 3.9 8.8 12.7 GOM 6.3 0.0 6.3 Total 36.5 28.3 64.8 Rate of Return: Not Applicable Staff Apprai Report No. 11602-MAI Map: IBRD No. 24575 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 authorizaion.  1 MEMORANDUM AND RECOMMENDATION OF THE PWEDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXCUIE DIRECTORS ON A PROPOSED CREDIT TO THIE REPUBLC OF MALAWI FOR AN AGRICULTURAL SERVICES PROJECT 1. The following memorandum and recommendation on a proposed Credit to Republic of Malawi of SDR 33 million (US$45.8 mllion equivalent) are mubmitted for your approval. The proposed Credit would be repayable over 40 years, including a grace period of ten years at standard IDA terms. It would help to finance a project which would enhance the capacity of the research, ectension and input supply systems to provide cost- effective and sustnable technologies suitable to smallholder farmers. Ibe project wold contribute directly to increasing smallholder incomes and food security. 2. Cgnta gac d: Despite a series of adjustment programs, Malawi remains one of the poorest countries in the world with a per capita GNP of US$240 (1991). It is extremely vulnerable to extemal shocks, becase of its land-locked position and narrow resource base. Although the coutry has made sonsiderable progress on the macroeconomic front over the past four years, the medium-term economic outlook is highly uncertain because of: * the exten shocks and the adverse impact of an unprecedented drought in 1992 throughout Southern Africa; and * deterioratng relations with biat donors due to unresolved issues related to governance. 3. Malawi's period of strong growvl came to a halt In the early 1980s when the country faced a combination of unforable terms of trade, high interestrates, weather-related shocks, and major domestic policy weaknesses. The first series of adjustment operations was a response to this set of shocks. However, while the Government of Malawi (GOM) was responding to these shocks, the country was hit by a worsening of the war and civil strife in neighboring Mozambique. Mhis not only led to a major increase in intenational transportation costs, but also to increased security-related expenditures and a large influx of refugees. TIis caused sharp deterioration in the macroeconomic enviroment in the mid-1980s. Despite the partial reopening of the Nacala rai route through Mozambiqe in October 1989, and recent peace overtures, the Mozambican situation has not eased and remains uncertain. Certain policy responses to this second and more drmaic set of shocks, including expanded fiscal deficits and implementation of import controls, compounded the difficulties and discouraged private sector investments and output. The situation was further exaeated by the severe drought in 1992 which reduced the maize crop by nearly 60 percent. Widespread poverty and food insecurity have emerged as important social dimensions to the economic difficulties. This has resulted in additiona foreign exchage requirements of US$236 million for maize imports in order to avoid widespread food shortages, marition and starvation. Drought- related expenditures for the inernal distribution of emergency food aid, water supply rehabilitation and health programs will fiurther worsen the Government's fiscal difficulties. 4. At the May 1992 Consultative Group Meeng held in Paris, bilateral donors and the EC refrained from pledging additional exernal assistce to Malawi due to political goverance issues. To close the resulting fiscal and external financing gap, the Malawian authorities Implemented an austerity package in June 1992, comprising a 22 percent devauation of the Kwacha, strict expenditure controls, and a tightening of the monetary stance. ITese measures have helped the economy to remain broadly on track. Nevertheless, timely resumption of bilatera and EC extera support (eg., balance of payment support) is ccial for the succeful continuon of the adjustment program.  2 S. Ae Agriculture continues to be the backbone of Malawi's economy. Eighty-five percent of the popuation of 8.3 million, plus about one million Mozambican refugees, reside In rural areas and rely on agriculture and natural resources for their livellhood. Agriculture accounts for nearly 33 percent of GDP and 85 percent of exports, provides two-thirds of the inputs for the manufacturing sector, and dominates the commercial and distnbution sectors. Maize is Malawi's staple food and occupies nearly 80 percent of cultivated area. Domiat exports are tobacco, tea and sugar, with tobacco comprising 45 percent of total export eatnings. Production is predominandy under rainfed conditions, relying on one rainy season per year. This makes Malawi vulnerable to drought, as in 1992. Rapid population growth (3.5 percent p.a.) and limited land have eliminated fallow in most areas, resulting in environmental degradation and reduced productivity. 6. Malawi's agricultural sector consists of smallholder and estate farm sub-seors. There are significant differences in resource allocation and farming practi:es between and within these two categories. 'he smallholder sector comprises about 1.8 million families, producing mainly for subsistence. This sector farms 75 percent of the cultivated area, but with 55 percent of households cultivating less than 1 hectare. Some 40 percent are female-headed households, of which 70 percent cultivate less than 0.5 ha. Low productivity (i.e., 800 kg maize/ha on average) and small farm sizes result in extremely low incomes and chronic food insecurity for most families. In an average rainfall year, about 75 percent of households run out of maize 3 months before the harvest. The estate sector is comprised of about 18,000 farms, which occupy about 25 percent of the cultivated land and produce mainly export crops and hybrd maze. 7. Growth of Malawi's agricultural sector since Independence has varied widely (-2 to 10 percent p.a.), due to a fiaile and narrow resource base and uncertain rainfall. The 1992 drought resulted in a negative growth rate. The main source of growth has been expansion of the area under cultvation and increased tobacco exports. The este sector has driven agricultural growth, due to privileged access to land, tobacco licenses, inputs and credit. By conrast, the smallholder sector stagnated in the 1980s, due to policy distortions, dwindling land resources, and inadequate agricultural and financial services. With alleviation of these constraints, the smallholder sector has the greater poteal for growt!' and poverty reduction. For eample, with good weather and improved policies, smaholder growth in 1991 exceeded 10 percent. 8. Sector Objetives and Constraints: The Govemmentes broad sectoral objectives are to promote agricultural growth, raise rural incomes, ensure food security at the national and household levels, and increase and diversify export earnings, while conserving natural resources. Government's main strategies involve deepening policy reforms in agricultural produce markets and cash crop production, improving public expenditure management and allocation, making the provision of agricultural services to smallholders more cost-effective, and expanding the role of the private sector. Agriculture has the potential to achieve a sustainable and broad-based growth rate of at least 4 percent p.a. Realizing this potential Is essential to trigger growth in other sectors and to reduce iV-espread poverty. Agricultural growth will need to be derived mainly from increases in smallholder productivity and in returns per unit of land under cultivation. The recent development of high-yielding flint maize varieties is a promising prospect for such growth and for enhancing food security. While some progress has been made in increasing productivity, the majority of smallholders, especially the resource-poor, continue to face major constaints. These include limited land resources; declining soil fertility and deforestation; severely limited access to cash crop production; lack of access to inputs (especially improved seeds and fertilizer) and financial services; limited availability of labor during peak-season (especially for female-headed households) and deficient research and extension services. Steps are being taken to address some of these constraints, with assistance from IDA and other donor agencies (including ADB, IFAD, EEC, UNDP, USAID, ODA and GTZ). Notwithstauding these programs, recen studies have highighted the need for additional action in order to: (i) generate and introduce improved technologies suitable for different household types and agroecological zones, through increasing the focus of agricultural research and extension; (ii) increase the avaiability and use of improved seeds and fertilizer; (iii) remove restrictions on smallholder production of cash crops; (iv) expand access to rural financial services;  3 and (v) provide more effective targeted Income-generating intervendons for the resource-poor, most of whom are women. The ASP would be a catlyst for such actions. 9. ETect hbJecives: Ie Projects key objectives are: (i) to help formulate and Implement institutional and management reforms In the national research, extension, and Input supply systems, with the aim of prosiding cost-effective and sustainable technologies suitable for a range of smallholders; and (ii) to enhance farm incomes and food security by increasing and diversifying smallholder production, especially among female and resource- poor farmers. A secondary objective is to provide a policy and operational framework for channeling and coordinating assistance to the development of agricultural services from other donors. 10. .. DescipAtion: The Project would be implemented over a six year period and would be comprised of four major components: research, extension, input supply and institutional strengthening. (a) Agrigultural Research (US$18.1 million or 28 percent of total project costs): This component would support: () formulating and implementing research action pluas which are consistent with the national research master plan and rei1istic budget ceilings; (ii) strengthening research-extension-farmer linkages to ensure research responds to smallholders' needs; (iii) diversifying participation in publicly fiunded research through expanding contract research by qualified bodies, and facilitating progress towards the commercialization of some research activities; (iv) improving the setting and updating of national research priorities and allocation of public funding (ncluding donors) by activating the Agricultmal Sciences Committee (of the National Research Council of Malawi, in the Office of the President); and (iv) improving research system management, and enhancing researcher career structures, motivation and accountability. (b) Agricultural Extension (US$24.2 million or 37 pereent of total project costs): The extension component would cover five technical areas: crops/agro-forestry; livestock; land resources and conservation; small-scale irrigation; and food and nutrition. In all these areas, the Project would support activities which would: (i) increase the efficiency of extension delivery through streamlining organizational arrangements, operations, staffing levels, functions and capacities; (ii) expand the coverage of smallholders to reach more female and resource poor farmers, through separating credit administration from extension, promoting low-cost and proven technologies/practices, strengthening research-extension-farmer linkages, integrting technical messages that are more responsive to smaUholder constrains, collaborating with NGOs, using farmer groups other ta those which are credit based, increasing the mnmber of female field assistants (FAs), and training all FAs in gender-related issues, particularly nutrition; and (ill) increase the effectiveness of extension through improving staff traing, using more interactive teaching methods, and encouraging better quality and consistency of field supervision, supported by improved operational fumding, close monitoring and rewarding good performance. (c) Input Supply (US$10.0 million or 16 percent of total project costs): To increase the availability and use of improved seeds and fertilizers by smallholders, this component would: (i) help formulate and implement seed and fertlizer policy reforms to further liberalize importation (fertilizers), production (ybrid seeds), pricing and domestic distribution; and (ii) help finance incremental fertilizer imports, as well as mobilize additional donor assistance for fertlizer imports within a consistent policy framework. (d) Institutional Strengthening (US$12.5 million or 19 percent of total project costs): This component would strengthen the capacity of MOA to deliver agricultural services in an efficient, effective and sustainable manner, and thus ensure the realization of benefits to smallholders from reforms in the extension, research, and input supply systems. Actions would be supported to Improve: planning and financial management in MOA; transport management; procurement (including a cross-Ministerial study and action plan); agricutural policy analysis training (-county); pilot schemes in small scale irrigation, with an emphasis on building capacity of farmer groups; sectoral and project monitoring and evaluation.  4 11. Poject Cost and Financing: Estmated total project costs would be US$64.8 million. IDA would finance US$45.8 M (70 percent); ADB US$12.7 M (20 percent) and Government the balance of US$6.3 M (10 percent). Schedule A provides a break-down of estimated project costs and a project finacing plan; Schedule B provides details of procurement methods, a break-down of disbursements and an estimated schedule of disbursement; Schedule C provides a timetable of key processing events; and the status of Bank operations in Malawi and the statement of LFC investments are provided in Schedule D. 12. Project LmpteMenA&n: MOA would be responsible for overall Project coordination and implementation. All of the Project activities build on existing programs and would be implemented through established institutional arrangements, The activities and arrangements, however, would be refocused to generate more tangible and sustainable results. MOA D)epartment and Unit heads would be responsible for specific components. An Agricultura Sector Steering Committee (ASSC), would be activated to ensure effective coordinadon among, and monitoring by participating departments, units and agencies for this Project, as well as the other major projects being implemented by MOA. The ASSC would be supported by MOA's Monitoring and Evaluation Unit, and backed-up by a senior Monitoring and Evaluation (M&E) officer who would be assigned to monitoring overall project progress. Project implementation in Malawi has, in the past, suffered from weak institutional capacity. IDA has carried out workshops in Malawi and provided assistance to various government agencies to alleviate disbursement problems. In addition, the activities under the ASP have been carefully phased to take into account weak implemeion capacity and the project provides in-service training and technical assistance to build capacity. MOA, together with IDA and GTZ, has prepared a detailed implementation manual for project components to help guide implementation. Project implementation and impact will be closely monitored through biennial reviews and the use of performance indicators and targets which were developed and agreed with the implementing agencies. 13. Proect Sustainabit: The active participation of Government and especially the key implementing departments in the design and preparation of the project should enhance the sustainability of project activities. Various mechanisms, including two workshops and continuous and open dialogue promoted through the Resident Mission staff, were used during project processing to ensure active participation and ownership of the project action plans on the part of the relevant officials at both Headquarters and field levels. In addition, the Project would strengthen the capacity of MOA to plan and provide more effective, efficient and sustainable agricultural research and extension services. Measues to promote sustainability iniclude: keeping project scope consistent with existing levels of funding (in real terms) and implementation arrangements and capacities; streamlining research and extension staff; using improved method (i.e., "yardsticks" and improved budgetary processes) to estimate and allocate required operating funds; improving the policy environment to expand the role of the private sector in providing key agricultural inputs; improving the motivation and accountability of research and extension staff; and ensuring that Govenment gradually absorbs the modest incremental recurrent costs. 1. Lessons Learnt from Previous IDA Agricultral 3ItJ: Relevant projects in Malawi include: the Smallholder Fertilizer Project (Cr. 1352); several projects under the National Rural Development Program in the 1970s and 1980s; the National Agricultural Research Project (Cr. 1549); the Agricultural Extension and Planning Support Project (Cr. 1626); and the Agricultural Sector Adjustment Credit (Cr. 2121). Lessons from these and similar projects in sub-Saharan Africa include: (i) project scope must be kept simple and adjusted to budgetary constraints consistent with macroeconomic conditions and implementation capacity; (ii) institutional reforms take time and require a long-term commitment, phasing, detailed action plans and a broad-based consensus of both decision-makers and implementors; CMii) effective coordinating arrangements are necessary; (iv) overse degree courses should be funded sparingly, especially when incentives are weak in the public sector; and (v) strong capacity in Government/MOA budgeting, financial management, procurement and policy formulation Is essential. The Project takes these lessons into account by: focussing on the most critical agricultural services; developing a broad-based consensus during preparation and appraisal; supportng a phased program of institutional and policy  5 . reforms, backed by agreed action plans; expanding the role of the private sector; emphasizing In-service and in- country training; and employing simple Implementation and coordination arrangements. 15. Rationale for IDA Involvement: In the 1980s, IDA played a key role in supporting Malawi's stuct and agricutural adjustment and investment programs. Currendy, lIDA, In close collaboration with GOM and donors, is preparing an Agricultural Sector Memorandum (ASM) to update sector strategies and provide the analyical underpinnings for Project investment. Ihis Project has integrated the initia findings of the ASM into its design. The ASP is also well-timed in terms of building on past riulti-donor investmets (especially in infastructure and training), policy and institutional reforms, and the MDA-supported pilot extension initve and agriculturl research project (coming to closure in 1993). The later, together with the Rockefeller Foundation, assisted in the development of two promising hybrid variedes of maize which are now ready for dissemination to smallholders. The Project would support the implementation of specific measures to secure a supply response (especially for the new maize hybrids) from a larger proportion of smallholders as an engine for growth and poverty alleviation. The Project also provides an investment framework for coordinat and mobilizing additional donor assistance, including co-financing by the African Development Bank and a proposed parallel project financed by the International Fund for Agricultural Development (IFAD). In addition, the proposed IDA- supported Rural Financial Services Project would expand smallholder access to finance, and thus enable a wider adoption of the improvedi technologies being promoted by the ASP. The Project is therefore consistent with IDA's strategy with respect to Malawi's agricultural sector in that ASP would contribute directly to increasing smalhoider productivity and incomes and to alleviadng poverty in a sustainable hamer. 16. Main Assurances Obtained: There is broad agreement with Government on the Project's objectives and the need for policy and operational improvements during implementation. In order to ensure Government conmitment to the essential policy and institutional changes, and their timely implementation, the Project design has emphasized -At n ations. the fllowing aurc y : (a) the ASP Plan of Action (containing action plans for each component and subcomponent) satisfacwry to IDA would be implemented; (ii) improved seed and fertilizer policy reforms would be implemented in 1993/4; (dii) the proposals concering the functions, coamposition and operation of the Agricultur Sciences Committee (ASC) are satisfactory to IDA; and (iv) budgetary alloaions for non-salary operang expenditures would be accordance with realistic requirements, based on improved methods of calculation. Before Board Presentation, the Government fulfilled the following actions satisfactory to IDA: finalized the sectoral leuer of agricultural policies; approved and announced the seed and fertilizer policy reforms; finalized and approved measures to Improve researchers' career structure and incentives; completed the research action plans in accordance with agreed creria; and completed the implementation reports on the small-scale irrigation and food and nutrition subcomponents. Conditions of credit effectiveness include the appointment of the head of the ASC technical secretariat; issuance of a circular formalizing the role of the Agriculhtu Sector Steering Committee and the appointment of tbree key technical assistance staff, all satisfactory to IDA. Cnitio of disbursement for the inputs component will be the implementation of fertilizer policy reforms and action plan satsfactory to IDA. 17. Environmental Aspects: ASP's environmental assessment category is "B." The project is ewected to have a beneficial environmental impact through dissemiating extension messages on: increased, but more efficient, fertilizer applications (fertiizer use is at low levels in a country with rapidly declining soil fertlity); soil and water management and conservation; agro-forestry and nitrogen-fixing plants. These efforts would promote land conservation and environmental protection, as well as sustainable cultivation. The final design and execution of the small scale irrigation schemes would need to meet pre-defned environment criteria and would be monitored closely for adverse effects, if any. The Government is currently preparing a national environmental action plan which will identify measures and establish the policy and institutional framework to stregthen Malawi's capacity to monitor and address the environmental effects of investment projects such as ASP.  6 18. Areas gf Special Emphasis The Project emphasizes household food security and poverty reduction among resoureor farmers, many of whom are female, ahough increased prodklivity and diversification. The Project promotes an epanded role for the private sector ir, agriculhua services through contracting out research, using NMOs and established local farmers' groups in extension and small scale irrigation, and further promoting the liberalization of seed and fertilizer markets. 19. Troect Beneft: lhe Project would provide two types of benefits: proluctiontincome and institutional. Production benefits would include: increased adoption of improved seeds, especially the promising hybrid maize seed; more efficient and profitable application of fertilizer; use of fertilizer by a larger number of smallholders; and more widespread adoption of agro-forestry, nitrogen-fixing rotations and water and soil conservation; and the development and replication of viable technologies for small scale irrigation. Institutional benefits would include: improved institutional mechanisms and capacity to sustain more efficient research and extension systems, which are responsive to the needs of smaillholders, especily women and the resource poor; impoved financial, transport and monitoring systems to support agricultural services, and a beter motivated and :abned research and extension staff. The net value of smallholder output is expected to increase by 35 percen in red tems by 2002/3. The ASP benefits would also be enhanced by several proposed parallel projects (including support from IFAD) which would provide additional assistance through the ASP fhamework. 20. Prie Ris L: imited Govarment/MOA capacity to formulate and impiement the required policy and institional changes would adversely affect project Implementation. This outcome would be minimized by ensuring realistic project scope, developing phased implementation action plans prior to project start-up, and providing in-service training and carefully designed technical assistance to build local capacity. Deterioration in economic performance and budgetary funding could undermne the required non-salary recurrent funding of key services. IThese risks are countered by developing an lnpioved method for estimating and alloctng recurrent funding, financing incremental operating costs on a declining basis to ensure phased absorption by MOA, and close monitoring on an anua basis. The proposed improvements in research and extension may not generate workable solutions to constraints of resource poor smallholders, but priority will be placed on ensuring a rapid flow of remunerative and affordable technologies, strengthening research-extension-fanr linkages, and closely monitoring farmer adoption rates. Other donor projects involving agdcultural services may diffuse budgetary and management resources, but ASP provides an improved framework and mechanisms for more effctive donor funding support and collaboration. 21. ROrunedwo: I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington D.C. May 24, 1993  7 Schedule A MALAWI AGRICULTURAL SERVICES PROJECT Estmated Project Cost and Flnandng Plan Estematd Projed Costs LoaMl Forpgn Total -US$ MlUioa- Research 9.6 6.0 15.6 Extension 16.2 3.9 20.1 input Supply 0.0 9.0 9.0 1nstiional Strengtening 4.6 5.3 9.9 roject Preparation 0.2 1.0 1.2 Physical Contingencies 1.4 0.4 1.8 Price Contingencies 4.5 2.7 7.2 Total 36.5 28.3 64.8 Project Financng Plan Local Poreign Total -US MUiion- IDA 26.3 19.5 45.8 ADB 3.9 8.8 12.7 Government 6.3 0.0 6.3 Total 36.S 28.3 64.8  8 Schedule B Page 1 of 3 MALAWI AGRICULTURAL SERviCES PROjECT Procurent Methods and Disbursement Procurement Method (USS Million) Project Element ICB LCB Others NA Total Civil Works - 5.9 - - 5.9 - (4.0) - - (4.0) Technical Assistance - - 5.9 - 5.9 (5.4) - (5.4) Training - - 13.2 - 13.2 (11.1) - (11.1) Vehicles and Equipment 5.3 - 1.0 - 6.3 (2.9) - (0.9) - (3.8) Incremental Operating - - 22.3 - 22.3 Costs - (16.3) - (16.3) Fertilzers 10.0 - - - 10.0 (4.0) - - - (4.0) Refinancing Project 1.0 0.2 - - 1.2 Preparation Facility (1.0) (0.2) - - (1.2) Total 16.3 6.1 42.4 - 64.8 (7.9) (4.2) (33.7) - (45.8) Note: Figures in parenthesis are the respective amounts financed by the IDA Credit.  9 Schedule B Page 2 of 3 MALAWI AGRICULTURAL SERVICES PROJECTr Disbursement Amount and Percentage for IMA Credit Category Amount of Credit Percentage lnanced by IDA Allocated ((US$ Milon) 1. Civil Works 4.0 90 percent 2. Consultants' Svices ad 16.5 100 percent Training 3. Vehicles, Equipment and 3.8 100 percent of foreign Supplies expenditures and 80 percent of local expendiures 4. Fertlizers 4.0 100 percent S. Incremental Operating Costs 16.3 100 percent through December 31, 1996 and 60 percent thereafter 6. Refunding of Project 1.2 100 percent Preparaion Advance  10 Schedule B Page 3 of 3 MALAWI AGRICULTURAL SERVICES PROJECT Etsmated IDA Schedule of Disburisutent Projed Year FY94 FY95 FY96 FY97 FY98 FY99 FY2000 TOTAL Annual Disburs 5.4 11.4 9.8 6.6 7.3 3.5 1.8 45.8 (US$ Million) Cumulative Disbursements 5.4 16.8 26.6 33.2 40.5 44.0 45.8 45.8 (US$ Million)  ii Schedule C MALAWI AGRICULTURAL SERVICES PROJECT Timetable of Key ProceI ig Evenb 1. Ilm8 taken to prepare 9 Months 2. Prepared by : Government with techical assistance and IDA collaboradon 3. First IDA Mission October 1991 4. Approval Departure : June 1992 5. Negotiations February 1993 6. Planned date of effectiveness July 1993 7. List of relevant PCRs PCR No. 7759 NRDP H (Wood Energy); PCR No. 8534 Smaliholder Fertlizer Project; PCR No.8638 Third NRDP. 'he Project is based on the findings of an appraisal and post-appraisal mission which vished Malawi in July and November of 1992, and comprised Messrs/Mmes R. Anson (Mison lader, Sr. Agriculural Economist); E. Gadzama (Women in Agriculture); R. Gopalkrishnan (Sr. Procurement Specialist); S. Hiwa (Ag. Program Officer, Resident Mission); Z. Matmor (Sr. Extension Specialist); P. Mbuka (Sr. Ag. Services Speciist, Resident Mission); V. Scarborough (November mission Ag. Economist); L. Schwat (July mission Ag. Economist); V. Venkatesan (Sr. Extension Advisor); A. Yates (Sr. Research Specialist). In addition, several GIZ consultants and C. Dickerson (WAD) participated in the mission. Messr/Mmes A. Spurling (Principal Research Specaist) was the Lead Advisor; A. Rioust-de-Largentaye and K. Saito were peer reviewers. C. Helman is managing Division Chief and S. Donning Department Director for the operation.  Page I of 3 Status Of ar3* GrGi Csrti.s In 9A I PFDUZ - SUary 8utat I1 Of Laws IOA CtDriito CU edate s of 330/93 - NiS data as of 042M93) ............ .......................... _...... By Csattry C.ntry: NALMS *mt in MS witi {n (Las cmacllatiss) Loen or Fisa tisi CLosinig credit No. Year Borow PupBse IDA brsed Date ....... . . ... ... ...... ....... Credits 42 Creits(s) etosed 63m.57 C152s0-sAL 1985 AL URBAN I 15.00 5.53 06/30/93(1) C15490-lUL 1985 ALAMI AGRI RES. 23.80 2.91 10/31/93(2) C16260.L 1986 kALAIt EXT. PULAIGO 11.10 2.18 06/30/93(0) C17420-AL 1987 SALAMI LILOGIdE WATER CM 20.00 .36 06/30/93 C167?0-IAL 1967 PALAWI F. SECIt OMIT I 27.00 2.45 12/15/93 C17680-IAL 1987 SAAI 2ID FAIJLT IEALTE 11.00 .19 06/30/ C185104AL 1986 SALAWI ACRIWU CREDIT 5.90 1.02 0630/95 C18790NAL 1966 mAAm TRASIT 1 13.40 3.62 06/0/% C19660-AL 1989 SALAMI AGRI JARKETINQ & S? 18.30 5.84 06/C096 C199004IL 1989 PALAWI ENERGY 1 46.70 2S.88 12n31/94 C20360AL 1989 NALAMI ISTUM.DEV. 11.30 3.75 12431/94 C206904WA 1990 PALAWI INFRASTS)CIUE I 8.80 13.71 12/31/95 C0830-AL 1990 SALAMI E9UC.SEC.11 36.90 27.44 06/30/96 O0-AL 1991 SALAMI Po SECMOR CIT 5.5J0 49.08 0MA30/9 C2u2e-MAL 1991 UWi FINANCIAtL & MtU 32.00 23.52 06/09? C2250-SAL 1991 NAtUl FIIIERS On. 8.80 6.05 06/30/9 C23790-SAL 1992 SALAMI LOCAL GM. 24.00 22.79 12/31/99 C Z860-VAL 1992 SALAI PWER V 55.00 54.61 06/09 C3960-SAL(S) 1992 SALAMI NUnWm DEV a 0 120.00 54.21 06/30/S C23961-SAL(S) 1993 NALAMI E1IIE1_ NEV & 5 5.9f 5.95 12/31/9 TOTAL ntb.r Credits 2 570.45 312.91 La"s 10 Lons(s) cled 1".52 All cloed for NALAMI TOTAL rfr Loa 0 T*TAL* 106.52 1,209.02 Of didch epaId 45.04 2332 TOTAL heLd b 3* IMA 54 1.15.70 Anogt sold At uhtch repsd TOTAL uisbursed 313.01 Notes: ..... ......... _.. * Not w effective N Sot ywt signed Total Approved, R _epsust, NW C*staWieg bn an reprsat both ative ad uistive Los aN Credits. (3) fndicfates ft Lty revise ClosiW Dat. (S) Indicates SWSECAL Loam s Credit. The Net Apoved wd 6Bn RpA)int ae historical waLtu, att ers ae mrkot waltu. The Signing, gffetive W Closlng dats ar based mn th Loan Dermat offfcal ditt ad we rot tams from the Task Sud.t fito.  13 Page 2 of 3 MALAWI AGRICULTURAL SERVICES PROJECT Statement of IFC Investments as of December 31, 1992 Investment Lean Equity Total Number FY Obligor Business -1US$ Miion- 326-MAI 1976 618-MAI 1982 D. Whitehead & Sons Textiles 10.8 - 10.8 362-MAI 77/81/95 Dwanga Sugar Corp. Sugr 11.3 - 11.3 434-MAI 1979 INDEBANK Devt. Finan - 0.6 0.6 502-MAI 1980/84 Malawi Hotels Ltd. Tourism 2.1 - 2.1 543-MAM 1981 614-MIM 1982 Ethanol Co. Ltd. Chem/Petrochem 2.3 0.2 2.5 832-MMA 1986 ILasing & Finance Co. Money/Cap. MkkL 0.7 0.2 0.9 741-MMA 1987 872-MAI 1987 Viphya Plywood Plywood 3.9 O.S 4.4 Total Grows Commitmenas 31.1 1.5 32.6 Lesm: Cncellations, terinations, exchange adjustments, repayments, write- 24.9 0.5 25.4 offs, and sales Total Comminients held by IFC 6.2 1.0 7.2 Total Uncommitted Investments - - -  14 Page 3 of 3 MALAWI AGUCULTURAL SERVICES PROJECT Disbursement Delays 'he Bankrs portfolio in Malawi is fairly large and includes 19 ongoing operations. The Governent's limitet capacity to implemen the project remains a concern. One of the chaeistcs of project implemeation in Malawi has been slow disbursement - ie., slower than planned in the original project Staff Appraisal Reports. As illustrated on page 1 of Schedule D, total disbursements as of March 31, 1993 were about 55% of total approved credits. A large part of the undisbursed amount is due to delays in the commencement of Power V Project and in the release of the second tranche under the Entre eurip Development and Drought Recovery Project It is also relevant to note however, that 11 out of 19 operations are about 3 years old or less Cie., they became efecve in 1989 or later). The major causes of delayed disbursements in Malawi are: (i) a shortage of trained/experienced staff resuting in inadequate knowledge of the Bank's disbursement procedures; (ii) a frequent turnover of disbument staff (iii) lack of adequate counterpart funds; and (iv) lack of staff incentives. On the Bank"s side, disbursements are slowed down by: (i) overly complex project components; Cii) occasional staff delays in procurement approval; and (iii) a failure to resolve project budget issues at negotiations. To remedy these problems, a number of disbursement workshops have been undertaken in Malawi and these will cotinue to be held annually, wih disbursement officers working in the Goverment and in parastatads paricipating. In addition, in FY93 a Bank disbursement officer visited Malawi twice to assist various NMiistries/agencies in resolving pendin disbursement issues and in clearing the bacldog. Finally, based on the Country Implementtion Review of May 1993, the Government and IDA joindy formulated an action program aimed at improving various aspects of project implementation in Malawi, including disbursements.  IBRD 24575 02 To Oat Es Son MALAWI ADMINISTRATIVE ela'f7 a DIVISIONS .0, This map has been prepored REIN zWhWoXdd~~~ - ksr91 0 % < a l~~b REGIONS edswy far the aowonvenw4e AND OfOdpTho d is for DISTRICTS ad ff boudre shown an tis map do not imn an tm Rheow _ part aF TheWarddSn Grasp, am lu= cR athilr;4er W1 lon \ tumPPRINCIPAL ROADS ndtesnat orebcCetoflCe6< such boundaries. RIVERS 7, RTt E F>l t~~~'-'X RIVERS // ndeaiC Lake 0 TOWNS S00x2F j qlttU | ~ NQ (D DISTRICT CAPITALS > NATIONAL CAPITAL fM}* -zimb 5 Jf / /DISTRICT BOUNDARIES 1t' [ ); Itt awbumuhns 3 - REGION BOUNDARIES 30 ZAMBIA Li t U k o < - INTERNATIONAL BOllNDARIES Mlowi KILOMETERS 0 20 40 6.0 8l0 100 MILES 0 20 40 60 [ S4 ~~~~~~~~Nkbelokolo \ NTX isf ) \ MOZAMBIQUE TobLusakaC tohi.ire T. N LIL NWEcX JJanua 1993 > FQ r/MACHINGA MOZAMBIQUE h. T* TolJe G O 5 AM t.ZA MUne- i hkoo\ 5 H 4 NJI 1 AN O9 To S ei.iom lanuory 1993