Dommet of The World Bank FOR OFICIAL USE ONLY Rqort No. 13817 PROJECT COMPLETION REPORT BURKINA FASO FERTILIZER PROJECT (CREDIT 1550-BUR) DECEMBER 29, 1994 Agriculture Operations Division Sahel Department Africa Regional Office 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. CURRENCY EOUIVALENTS US$1.00(1985) = CFAF378.10 US$1.00(1986) = CFAF 322.80 US$1.00(1987) = CFAF 267.00 US$1.00(1988) = CFAF303.00 US$1.00 (1989) = CFAF 289.40 US$1.00(1990) = CFAF252.50 US$1.00(1991) = CFAF259.00 US$1.00(1992) = CFAF 275.30 US$1.00(1993) = CFAF 278.00 US$1.00(1994) = CFAF 590.00 WEIGHTS AND MEASURES Metric system FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY ABBREVIATIONS BUNASOLS National Soils Laboratory CFD French Development Bank (Caisse Francaise de developpement) CIRAD French International Center for Agricultural Research and Development (Centre de cooperation internationale en recherche agronomique pour le developpement) CNCA National Bank for Agricultural Credit (Caisse Nationale du Cr6dit Agricole) CRPA Regional Center for Agricultural and Livestock Development (Centre Regional de Promotion Agro-Pastorale) DIMA Agriculture Inputs and Equipment Department (Ministry of Agriculture) FAC French Aid Agency Fund (Fonds d'aide et de cooperation) GTZ German Technical Cooperation IBF Integrated Biological Farming Company Inc. INERA National Institute of Agricultural Research (Institut National d'Etudes et de Recherches Agricoles) ORD Regional Development Authority (Organisme Regional de Developpement) PCU Fertilizer Project Coordination Unit PASA Agricultural Sector Adjustment Program (Programme d'ajustement sectoriel de l'agriculture) SAGOP Organization and Project Management Support Service (Ministry of Agriculture) SISP Monitoring Service of Externally-funded Projects (Ministry of Planning and Development) SOFITEX Mixed State Cotton Company (Societe burkinabe des fibres textiles) SOSUCO Comoe Sugar Company (Societe Sucriere de la Comoe) This document has a restricted distribution and may be used by rFpiOnts ocipin the p.fOmD*C of their official duties. Its oontents may not otherwise be disclosed without World Banlc authortzSon. I FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation December 29, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Burkina Faso Fertilizer Project (Credit 1550-BUR) Attached is the Project Completion Report on Burkina Faso-Fertilizer Project (Credit 1550-BUR) prepared by the Africa Regional Office. Part II was prepared by the Borrower. The project was cofinanced by France (CFD and FAC) and the Netherlands. Comments from the cofinanciers are not reported. The objective of the project was to improve the pattern of fertilizer use by removing subsidies and pursuing other reforms designed to orient fertilizer use towards domestic sources of supply such as rock phosphate, and promoting increased use of animal manure and other organic materials. The project financed fertilizer imports (on a declining basis in line with the phase out of subsidy), fertilizer field trials, a range of training for the agencies involved, a feasibility study of a fertilizer mixing plant (which proved to be unviable), and provided a fund for short term credit. There proved to be little demand for short term credit, and most of the funding for this component was cancelled, as was that for the fertilizer plant. The remaining elements of the project were successfully implemented. Despite the increase in price, fertilizer use has increased and the potential for using local organic materials (e.g., sugar waste) as fertilizer, and of composting, have been demonstrated. The project outcome is rated as satisfactory, institutional development as modest and sustainability as likely. The completion report provides an adequate account of project implementation. An audit is planned. Attachment 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.l FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT BURKINA FASO FERTILIZER PROJECT (Credit 1550-BUR) Table of Contents PREFACE ....................................................i EXECUTIVE SUMMARY ....................................................u PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE . .......................1 A. Project Identity ....................................................1 B. Background ....................................................1 C. Project Objectives and Description ....................................................2 D. Project Design and Organization ...................................................4 E. Project Implementation ...................................................6 F. Project Results ....................................................8 G. Economic Analysis ................................................... 13 H. Project Sustainability ................................................... 13 I. Bank Performnance .................................................... 14 J. Borrower Performance ................................................... 15 K. Lessons Learned ................................................... 16 PART H: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .. 17 A. Major Obstacles ................................................... 17 B. Review of Donor Performance ................................................... 19 PART III: STATISTICAL INFORMATION ................................................... 21 1. Related IDA Credits ................................................... 21 2. Project Timetable ................................................... 22 3. Cumulative Estimated and Actual Disbursements .............................................. 22 4. Project Costs and Financing ................................................... 23 5. Status of Credit Covenants ................................................... 25 6. Use of Bank Resources .................................................... 26 ANNEXE S Annex 1. Fertilizer Project: Disbursement of IDA Credit ................. ................ 27 Annex 2: Crop Price Movements .................................................... 28 Annex 3: Fertilizer Price Movements ................................................... 29 Annex 4: Consumption of Fertilizers ................................................... 30 Annex 5: Table of Project Costs and Financing (in CFAF millions) 32 This document has a restricted distribution and may be used by recipients only in the performan&c of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PROJECT COMPLETION REPORT BURKINA FASO FERTILIZER PROJECT (Credit 1550-BUR) PREFACE This is the Project Completion Report (PCR) for a Fertilizer Project in Burkina Faso, for which Credit 1550-BUR in the amount of SDR 13.8 million (US $13.7 million equivalent) was approved on February 26, 1985. It was signed on April 18, 1985, and became effective on November 4, 1985. The project was co-financed by Caissefranfaise de developpement (CFD) in an amount of FF 30 million approved on April 16, 1985, by Fonds d'aide et de coop&ration (FAC) in an amount of FF 16 million approved on November 19, 1985, and by the Netherlands, under arrangements to provide assistance in kind to a value of HFL 7.5 million and by the Federal Republic of Germany for $ US 2.0 million equivalent. After three extensions and four amendments, this IDA Credit Agreement was closed on June 30, 1993, 18 months later than initially anticipated. The last disbursement was made on November 4, 1993. The project cycle thus extended over an eight-year period. SDR 7.7 million was disbursed, SDR 4.5 million was cancelled in November 1986, and SDR 1.6 million remained undisbursed. The PCR (Preface, Evaluation Summary, Part I, and Part III) was prepared by the Agriculture Operations Division of the Bank's Sahelian Department, and at the Bank's request the Government of Burkina, as Borrower, prepared Part II. The PCR is based on: (i) such documents as the Credit Agreement and amendments to it, the President's Report, working documents, memoranda, supervision reports, project progress reports, and correspondence; (ii) discussions with project officials; and (iii) the findings of a project completion mission to Burkina Faso. - ii - PROJECT COMPLETION REPORT BURKINA FASO FERTILIZER PROJECT (Credit 1550-BUR) EXECUTIVE SUMMARY Background i) The project was designed to address the problem of fertilizer subsidies encountered under the rural development projects the Bank was financing in the Bougouriba, Volta Noire and Hauts Bassins departments. The cotton parastatal, SOFITEX, provided fertilizer to farmers for cotton production at subsidized prices that covered only about one-third of their real cost. SOFITEX was virtually the sole supplier of fertilizer in the country. To the extent these fertilizers were actually applied to cotton, the subsidy did not pose a problem since SOFITEX recuperated it by lowering the price it paid for seed cotton. Farmers, however, increasingly began to apply SOFITEX-supplied fertilizer to food crops and by 1982, 55 percent of all fertilizer was used for the production of cereals. SOFITEX could not recuperate the subsidy on fertilizers applied to food crops and it claimed compensation from Government. When fertilizer use for cereals was small, this did not pose a problem and Government duly compensated SOFITEX. However, fertilizer use for food crops mushroomed because of its low price and ready availability. Soon, subsidy amounts became too large for Government to pay; arrears began to accumulate and the situation became untenable. The Bank, therefore, proposed a proje.ct to eliminate the fertilizer subsidies over a period of five years and to finance some accompanying actions to improve the fertilizer subsector. Objectives ii) The principal objectives of the Project were to improve fertilizer subsector policies and the structure of fertilizer use by removing subsidies and other distortions, by identifying and providing better and cheaper fertilizers and by eliminating supply inadequacies. The project was designed to use policy reforms to orient fertilizer use for cereal increasingly toward domestic sources of supply (animal manure and other organic matter; rock phosphate). In the process, the project would help create a pattern of fertilizer use for food crops whereby farmers use the type best suited to their particular crop and soil condition, thereby lowering the cost of fertilization for the country as a whole. - iii - iii) To achieve the objectives, the project would finance fertilizer imports (the counterpart funds of which would be used for financing the residual subsidy), fertilizer field trials, a credit component, the continued production of rock phosphate and training of accountants responsible for administering fertilizer transactions. The project would also study the feasibility of a fertilizer plant and finance its construction if found feasible. Implementation Experience iv) The Credit became effective on November 4, 1985, about three months after the planned effectiveness date. The Credit Closing Date was extended, first by six months to allow for completion of analysis of fertilizer test results and the prefeasibility studies on the economics of chemical fertilizer production in Burkina Faso, then by nine months to complete the final audit and the study on the impact of the removal of fertilizer subsidies on cereals fertilizer consumption and cereals production and finally by three months for the same purpose. The Credit Agreement was amended four times (para. 20). On the disbursement side, a savings of an estimated SDR 1.6 million was made, which was cancelled at Closing Date. The savings were attributable to the cancellation of the fertilizer plant component, exchange rate differentials and unused balances from the fertilizer imports component. v) Overall project implementation proceeded satisfactorily, but project start- up was difficult due to lack of adequately trained local manpower for project coordination and for adequate supervision of the fertilizer field trials. Other problems concerned the fertilizer trial programs, which experienced a shortage of raw material inputs (inoculum and raw phosphates) during critical stages of the composting work, failure to focus composting trials on sewage and other organic materials that are more easily accessible to the farmer than the residue of the sugar plant and shortage of adequate water input for composting, especially during agricultural campaigns with poor rainfall. Project Results vi) The project's primary objective of eliminating subsidies on imported fertilizers, and thereby removing an unsustainable financial burden on the Government, was achieved one year earlier than projected. This was possible because of low international fertilizer prices, which caused the 1988 unsubsidized price to be somewhat lower than the 1987 price with 20% subsidy. As a result, it was decided not to apply the 10% subsidy scheduled for that year. vii) The fertilizer trials program financed under this project produced excellent results for the production of organic fertilizers from waste products of the country's sugar mill, using modern composting techniques which were developed in California and which today are used in many developing countries. The field trials on the application of natural phosphates indicate that the local rock phosphate is technically more effective and cheaper - iv - than triple super phosphate (TSP) in hydromorphic and acid soils and as effective as TSP in zones with precipitation levels of less than 800mm. These results have led to the development of fertilizer formulas for cultivation of millet, sorghum and maize in the different agro-ecological zones of the country. Similarly, the trials on organic fertilizer production, which entailed using inocula as activator to accelerate decomposition of animal waste and crop residues, notably rice and maize stalks and chaffs, and sawdust have produced very encouraging results. The preliminary results of these trials show that the combination of compost and domestic rock phosphate is cheaper than NPKI and reduces processing time by half These trials have been well received by the participating farmers. Many of the activities that have been financed under this project are sustainable, provided certain follow-up actions are taken to ensure sustainability. viii) On the institution-building side, this project has been a success. It has greatly contributed to: (a) strengthening the capacity of the agricultural ministry through significant improvements in the accounting and managerial skills of staff of the rural development agencies (CRPAs), by modernizing the accounting and financial management systems of these agencies and the Agricultural Ministry and by providing a core of staff with the basic technical skills to help in the formulation, execution and monitoring of the Government's future fertilizer sector policies and programs; (b) enhanced operational efficiency of the Ministry of Planning by reinforcing capacity in public investment planning, execution and monitoring; and (c) improved capacity of the Ministry of the Budget by computerizing the budgeting system and technical assistance support to transfer know-how on the associated computer skills. Future capacity-building efforts need to focus on developing a cadre of staff in the agricultural ministry with strong background in agricultural economics and knowledge of the technologies of compost production and in creating private sector capacity, including farmers' associations, especially in activities related to fertilizer importation, transportation and distribution. ix) The credit component experienced difficulties in that there was little opportunity to use the short term credit subcomponent, because CNCA (the executive agency) considered many of the autonomous regional rural development agencies not creditworthy and because it had no regional network of offices to deal directly with farmers. With regard to medium term credit for base rock phosphate dressings, there was no demand from farmers for it because of its questionable usefulness. x) Regarding the fertilizer plant, no technology was identified that could have been applied in the country. Initially, the focus was on a dry blending plant and, when this was found unjustified on a phosphate acidulation plant, the funds allocated to the possible construction of a plant were cancelled in 1986. lDesignation of chemical fertilizers containing Nitrogen, Phosphate and Potassium (Kalium). Sustainability xi) Many of the activities that have been financed under this project are sustainable, provided certain follow-up actions are taken. First, Government no longer carries the unsustainable financial burden of subsidizing fertilizers. Sustainability of this accomplishment hinges on successful dissemination and adoption of cheaper local fertilizers and on improvements in the incentive framework for agricultural supply response, through price and market liberalization policies, improvements in market and rural infrastructure, and in rural financial intermediation. Second, the encouraging agronomic results obtained from the fertilizer production component, especially from the composting trial program, represent a potential breakthrough, with Sahel-wide implications, and could significantly contribute to sustainability, if the results become more conclusive. This is being pursued under two ongoing IDA-financed agricultural extension and research projects. To obtain definitive results, additional on-farm trials need to be carried out on a much larger scale, for at least another four successive agricultural campaigns. Sustainability at the farm-level could be ensured if the existing constraints on local fertilizer production are removed, including: (a) lack of adequate and regular supply of the critical raw material inputs, such as inoculum and raw phosphates; (b) lack of focus on organic materials for composting that are easily accessible to the small farmer, such as urban/rural sewage and waste materials and semi-industrial residues relative to those from the sugar cane factory; and (c) lack of adequately trained manpower in fertilizer production. Third, the project has successfully transformed an important department of the Ministry of Agriculture (SAGOP) into a service delivery agency in the areas of accountancy and financial management training as well as in monitoring the practical application of the skills in these professions. The operating cost of this agency is very high, however. It is sustainable, provided: (a) its main clients, the rural development agencies, Government departments and project units, are required to pay the full costs of the services rendered to them, or (b) Government agrees to completely privatize the agency, in order to permit it to compete in both the local and regional markets for its services. Lessons Learned xii) There are four key lessons to be learned from this project. These are: (a) Close supervision of projects affecting large groups of people is a necessity. During the entire implementation peiod, the project was closely supervised, especially at the beginning when the fertilizer subsidy reduction was underway. The Bank was the lead institution for the project and it took care to keep other donors informed and involved. The Borrower acknowledges the value of the Bank's leadership role in its evaluation. (b) The project shows that a complex project can be brought to a successful end if Government is dedicated to it, if it is closely supervised and if the - vi - right kind of expertise is brought to bear on it. In this case, Government valued the project highly. The issues involved were at times highly technical, but the Bank supervised it closely with the required technical expertise. (c) This was a hybrid project consisting of policy reforns and investment components. The project demonstrates that such a combination can be viable. (d) With respect to the fertilizer plant, experts have been saying since the earliest stages of project preparation that such a plant could not be justified. Under pressure from Government, the Bank, nevertheless, agreed to study the feasibility of a plant and, if found justified, finance its construction. This component has been the subject of many studies, discussions and arguments and, for the results obtained, has been costly. The Bank should have been firmer in its belief in the lack of justification of the component and not have agreed to include it in the project. PROJECT COMPLETION REPORT BURKINA FASO F'ERTELIZER PROJECT (Credit 1550-BUR) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE A. PROJECT IDENTITY Project Name: Fertilizer Project Credit Number: 1550-BUR RVP Unit: Africa Regional Office Country: Burkina Faso Sector: Agriculture B. BACKGROUND 1. Agriculture is the backbone of the Burkinabe economy. It employs more than 80 percent of the labor force and provides 45 percent of GDP and 65 percent of exports. About 90 percent of cultivated land is under cereal crops. In the southwest, cotton is grown by small-holders. Sugar cane is cultivated on an irrigated factory-owned plantation and by small-holders. 2. Fertilizers were introduced for cotton cultivation. There was and is no domestic fertilizer production, apart from a small quantity of low grade rock phosphate. Supplies were imported by the Socikte burkinabe desfibres textiles (SOFITEX), the country's cotton ginning and exporting company. Fertilizer grants to the Government, mostly by Japan and the Netherlands, were also channeled through SOFITEX, which handled all fertilizer distribution. There was virtually no private fertilizer trade until the late 1980s. 3. SOFITEX, on Government orders, provided fertilizer to farmers for cotton production at subsidized prices that covered costs for only about one-third. To the extent these fertilizers were actually applied to cotton, the subsidy did not pose a problem since SOFITEX recuperated it by lowering the price it paid for seed cotton. Farmers, however, increasingly began to apply SOFITEX-supplied fertilizer to food crops and, by 1982, 55 percent of all fertilizer was used for the production of cereals. SOFITEX could not recuperate the subsidy of fertilizers applied to food crops, because it could not impose a compensating levy as in the case of cotton. It claimed, therefore, compensation from - 2 - Government. When fertilizer use for cereals was small, this did not pose a problem and Government duly compensated SOFITEX. 4. However, fertilizer use for food crops mushroomed because of its low price and ready availability. Soon, subsidy amounts became too big for Government to pay, arrears began to accumulate and the financial situation of SOFITEX (which had to finance the cereal fertilizer subsidy with bank credits) became affected. Shortages of fertilizer threatened. The fertilizer subsidies had other adverse effects. First, because of the low price of chemical fertilizers, farmers had insufficient incentive to use manure and other organic matter for fertilization. Composting was not much practiced. Secondly, farmers used fertilizers on cereals in cases where it was not economically justified, i.e. where the value of the incremental cereal production due to fertilizer use was less than the full cost of the fertilizer itself 5. In the early 1980s, the Bank was involved in several rural development projects, principally in cotton-growing regions. These projects depended on the availability of chemical fertilizers. IDA, therefore, proposed to Government a project to eliminate fertilizer subsidies and to address some other questions relating to the fertilizer subsector. Government was receptive to the idea. 6. The proposal to totally eliminate fertilizer subsidies was initially received with some reservations both within and outside the Bank. Many feared that it would be disastrous for cereals production. The project preparation team had, therefore, to convince Govermmeni, other donors and Bank staff that this would not be the case. They demonstrated that only a small part of cereals production was attributable to fertilizer use. A great deal of analytical work was done with respect to farm models, fertilizer response factors and price projections. Finally, to avoid later controversies, it was decided to get all other donors engaged in the fertilizer subsector involved in the project. C. PROJECT OBJECTIVES AND DESCRIPTION Objectives 7. The objective of the project was to improve fertilizer subsector policies and the structure of fertilizer use by removing subsidies and other distortions, identifying and providing better and cheaper fertilizers, and eliminating supply inadequacies. Project Components 8. The project consisted of eight components. Total project costs were allocated as follows over the various components: (a) Fertilizer imports US $6.4 million (28%). Financing of part of fertilizer imports for cereals cultivation on a declining linear scale starting with 40 percent in Project Year 1 (PY 1), decreasing to 0 percent in PY5. The cost to which the financing percentages was to be applied was the average cost delivered to the SOFITEX warehouse. The counterpart funds would be applied to financing the residual subsidy on cereals fertilizers; (b) Fertilizer Plant US $7.5 million (3 1%). This component would finance feasability studies for, and construction of, a fertilizer mixing plant, if found feasible. (c) Credit US $1.0 million (4%). This component would provide funds to the National Agricultural Credit Fund (CNCA) which would be on-lent as seasonal cereal fertilizer credit to regional development organisms (ORDs) or the regional development agencies (CRPAs) at 14 percent interest. (d) Fertilizer Field Trials US $2.4 million (10%). This would finance the cost of implementing a program of tests of various NPK formulations and domestic rock phosphate by the National Research Institute and other subcontractors, notably the Sugar Company (SOSUCO). This included equipment, materials and supplies, import of inoculum and residues from the sugar plant for composting and incremental operating costs. The tests were expected to identify cheaper organic fertilizer formulations for cereal cultivation, in comparison with the commonly applied cotton NPK, as well as improved rock phosphate formulations through mixing with other fertilizers. (e) Training US $2.4 million (16%). This comprised consultants' and experts' services for the training of ORD and CRPA accountants responsible for fertilizer bookkeeping, as well as incremental staff costs, vehicle operating costs, materials, office supplies and other operating expenses of SAGOP and of the Agricultural Inputs Department (DIMA). The training of these accountants was essential for the proper recording of fertilizer and money streams in the ORDs and CRPAs. This had caused problems. (f) Studies US $0.6 million (2%). Consultants' services for project-related studies to be identified. (g) Rock Phosphate Promotion US $2.0 million (8%). This component comprised the continued production and marketing of domestic rock phosphate under a German-financed project. - 4 - (h) Management US $1.6 million (7%). This component would finance the Project Management Unit. D. PROJECT DESIGN AND ORGANIZATION Project Composition 9. The initial and main purpose of the project was to eliminate the constraint posed by the fertilizer subsidies. However, in the course of preparation many add-ons were demanded by Government, cofinanciers and Bank staff. In the end, the project had seven rather diverse components. This necessitated the creation of a Project Coordination Unit (PCU) within the Ministry of Agriculture. Including the PCU, the project had eight components. 10. Government had particularly insisted on including a fertilizer dry blending unit. This plant would have imported the individual nitrogen, phosphate and potassium ingredients of NPK and mixed them in various combinations and strengths to adapt them to the requirements of various crops. Bank staff was of the opinion that such a plant would most probably not be economically feasible. Nevertheless the Bank agreed to include in the project the cost for a feasibility study as well as the cost of construction for a plant if found feasible. The Subsidy Elimination Component l. Under the Bougouriba II project, Government had already agreed to reduce fertilizer subsidies from 64 percent of ex-warehouse cost to 35 percent; at the time the Fertilizer Project took over, they stood at 49 percent. During further appraisal work for the Hauts Bassins and Volta Noire extension projects, which depended heavily on the propagation of fertilizer use for both cotton and cereal cultivation, it became apparent that total elimination of the subsidy was required if scarcities of fertilizer were to be avoided. The Bank, therefore, proposed a project to eliminate the fertilizer subsidy over a period of five years, with subsidy percentages not exceeding 40, 30, 20, 10 and 0 percent of ex- warehouse cost during project years 1 to 5. The Bank would, during the elimination period, finance the import of fertilizers to an amount equivalent to the remaining subsidy for fertilizers used on food crops and allow Government to use the counterpart funds to finance that subsidy. Government would pay its subsidy arrears to SOFITEX from its own resources. 12. It was expected that elimination of subsidies would not only restore the financial equilibrium, but also lead to a more rational fertilizer use. As subsidies were reduced, farmers would increasingly use local sources of supply (animal manure and other organic matter and rock phosphate) which were cheaper than imported chemical fertilizers - 5 - and better suited to their particular crop and land. Uneconomic fertilizer use would be eliminated. 13. The following components were added in support of the central objective of rehabilitating the fertilizer subsector, namely: (a) a program of field trials to identify more suitable and cheaper fertilizers for cereal cultivation to be conducted by INERA; (b) a feasibility study for a small fertilizer production unit that might produce fertilizer at lower cost; (c) a credit component for financing application of dressing on rock phosphate and to help farmers finance fertilizer purchases; (d) a component for the training of accountants of the regional development agencies responsible for managing the fertilizer distribution program; and (e) project unit and studies component. Responsibilities 14. The Ministry of Agriculture and Animal Resources had responsibility for implementing the project. The Ministry created a project coordination unit, with responsibilities for supervision and overall coordination of project activities. The head of this unit (Project Director) reports directly to the Director of the Agricultural Inputs Department of the above ministry (DIMA), in the latter's capacity as nominal Project Coordinator. In addition, the PCU established a monitoring and evaluation department to monitor implementation performance, with emphasis on: (a) monitoring the development of private commerce in fertilizer importation and distribution; and (b) gathering and analyzing data on fertilizer demand, quality, prices, consumption and profitability at the farm-level, as well as coordinating procurement and contract management. The PCU delegated implementation responsibility of the fertilizer trial program to the Research Institute (INERA) and the accounting training program to the Organization and Management Support Service of the Ministry of Agriculture, SAGOP. The PCUs operating costs were financed by the project's co-financiers, CCCE (CFD) from the effective date to end 1991 and subsequently from the IDA credit. The project implementation experience shows that DIMA did not have adequately trained and experienced staff to perform satisfactorily all of the tasks assigned to the PCU. This design oversight problem was redressed during the first one-year extension of the Closing Date through training and short-term technical assistance support to the personnel of DIMA and the PCU. 15. SOFITEX would import fertilizers and distribute them through the ORDs and CRPAs. The credit component would be administered by CNCA. The German Government (GTZ) would continue their pilot scheme for producing domestic rock phosphate. The responsibility for the studies component would be assigned at the time the studies were identified. -6 - Project Documentation and Data 16. No Staff Appraisal Report (SAR) was prepared. The project was executed on the basis of a President's Report supported by nine detailed working documents on the costs and technical execution of the project. These documents became gradually outdated due to the extensive restructuring that was done during implementation. Cofinancing 17. There were three other donors interested in the fertilizer subsector. These were the French Government, which had been assisting Government on an ad-hoc basis in paying the cereal fertilizer subsidy, the German Government, which financed a small pilot unit for crushing phosphate rock to be used as fertilizer and the Dutch Government, which had occasionally provided fertilizer in kind on a grant basis. They all participated in the project as follows: CFD - US $3.2 million; the Netherlands - US $2.1 million; FAC - US $1.7 million; and Germany - US $2.0 million. Government contributed US $1.4 million. All financing was on a parallel basis. Germany later withdrew from the project. France, represented by the CFD and FAC was very active during the first four years of implementation, especially in providing technical assistance to the Ministry of Agriculture and financing the importation of fertilizers, but later relaxed their involvement. E. PROJECT IMPLEMENTATION General 18. The Credit became effective on November 4, 1985, eight months after Board approval and about three months after the planned effectiveness date. The delay was due to the fact that effectiveness of the IDA credit was contingent on the signing of funding agreements with the other donors and to delays in compliance with other IDA effectiveness conditions, in particular the establishment of the Project Coordination Unit (PCU). 19. The Closing Date, originally set for December 31, 1991, was extended, first by six months to allow for completion of the analysis of fertilizer test results and the prefeasibility studies on the economics of chemical fertilizer production in Burkina Faso, then by nine months for the same purpose and finally by three months to complete the final audit and the study on the impact of the removal of fertilizer subsidies on cereals fertilizer consumption and cereals production. 20. The Credit Agreement was amended four times. The first amendment was made on February 27, 1986, enabling the financing of a unit responsible for monitoring externally-funded projects in the Presidency. The second amendment occurred on November 14, 1986 cancelling the Fertilizer plant component on the grounds that it was - 7 - not economically justified. The third amendment was on October 14, 1987. This amendment allowed the Borrower to add a new component to finance office equipment and consultant services for strengthening the Ministry of the Budget. The fourth amendment was in June 1993, which enabled the Borrower to finance: (a) credits by CNCA to cotton growers2; and (b) vehicles and office equipment for a National Fertilizer Secretariat to be set up within DIMA. 21. SDR 1.6 million was cancelled at the Closing Date, in addition to the SDR 4.5 million for the fertilizer plant cancelled on November 14, 1986. The extra savings were attributable to exchange rate differentials and savings on the fertilizer import component. Consulting Services 22. The Project has financed both external and local consultant services mainly for conducting studies, but also as short-term technical assistance to the accountancy training program and to help with computerization of the budget process of the Ministry of the Budget. The procurement of consulting services did not always go as smoothly. This was due in part to the PCU's unfamiliarity with the Bank's procurement requirements and partly to problems posed by the Government's highly centralized procurement system. Specifically, there was disagreement between Government and the Bank on the recruitment procedures for a consultant to study the feasibility of phosphate acidulation in Burkina. The Borrower was intent on awarding the contract to a firm, which was associated with one of the processes to be studied. The Bank maintained that it would not finance the study if done by the firm in question because of lack of impartiality of the consultant and that, should the study be financed from another source, it would not finance the construction of a plant if found feasible. 23. Many of the initial implementation problems have been resolved in the course of the last three years of the implementation period, through the combination of program restructuring, intensive supervision and improvements in coordination and procurement management by the PCU. In order to consolidate the positive agronomic results obtained under this component and to ensure the sustainability of the fertilizer production program, further action is needed to remove certain outstanding constraints, including: (a) lack of adequate technical expertise in both chemical and organic fertilizer production and in financial and economic analysis of test/research findings; (b) absence of a properly designed mechanism for dissemination and adoption of proven fertilizer products and method; (c) uncertainty about adequate supply and accessibility of raw materials for composting; and (d) limited private sector involvement in subsector activities, especially in domestic fertilizer marketing and transportation as well as in importation. 2The original credit component envisaged only credits to non-cotton growing ORDs. - 8 - 24. Project management performance, however, improved from moderately satisfactory during the first five years after the Effective Date to satisfactory during the remaining three years. On-the-job training and recruitment of a Project Director with several years of experience in managing Bank-financed projects in the agricultural sector, partly accounted for this progress by helping to enhance work programming and project coordination capabilities. The disbursement rate also increased sharply from a low of 29 percent in 1989 to 61 percent by the end of the first extension of the Closing Date in 1992, also due to on-the-job training and procurement assistance from the Resident Mission. Training support from the Accountancy Training Program was helpful in bringing about modest improvements in project accounting and financial management and, hence, in enhancing the PCU's capabilities for clearing the back-log of unrecorded project transactions and in preparing timely financial statements for the annual audits of project accounts. The other factor that contributed to improvements in implementation performance was the training and technical assistance support provided by the IFDC through project financing. This support was designed to equip the personnel of DIMA and the PCU with the necessary technical skills in fertilizer policy analysis and formulation as well as in monitoring the fertilizer supply and distribution system. With the successful integration of the PCU within DIMA before the Project Completion Date, the Ministry of Agriculture now has a specialized unit, with the potential to play the lead role in designing and implementing the Government's strategy for the future development of this subsector. The need for such support was identified during project supervision, as the original project design did not include any provision to train PCU personnel in carrying out the functions assigned to it at appraisal. This design oversight may be explained by insufficient attention to the institutional aspects of the project during project preparation in comparison with the thrust on fertilizer subsidy removal. F. PROJECT RESULTS General 25. Despite its complexity, project implementation went well, albeit with some delays in a few components. The credit financed a few items not related to the fertilizer subsector, in particular, offices in the Presidency and the Ministry of Finance (see para. 20). Project Coordination Unit 26. The task of the PCU was to prepare annual work programs and issue progress reports, which contained useful statistical data on fertilizer consumption and prices. In addition, the PCU prepared performance reports and the supporting documentation for each full supervision mission. It also coordinated procurement, prepared disbursement requests and maintained the accounts. -9 - 27. Most of the personnel of the PCU lacked the basic technical and management skills required to manage an operation as complex as this project. The PCU was well equipped with sophisticated computer technology, which, for the most part, was underutilized and poorly maintained for lack of the necessary know-how. This problem of inadequately trained manpower affected the unit's implementation capabilities, especially in accounting and financial management, procurement and contract management, preparing and monitoring project studies and coordinating the financial and administrative aspects of implementing the components which it had delegated to other Government services. Changes of Project Director, which occurred three times during critical periods of the implementation process, caused delays in adopting the corrective measures recommended by various supervision missions. Subsidy Elimination 28. The project's primary objective of eliminating subsidies on imported fertilizers was achieved one year earlier than projected. This was due to low world market fertilizer prices, which caused the 1988 unsubsidized consumer price to be somewhat lower than the 1987 consumer price with 20% subsidy. As a result, it was decided not to apply the 10% subsidy scheduled for 1988 but to eliminate the subsidy entirely one year ahead of schedule. 29. One of the project's main objectives was to avoid scarcities. In this respect the project was most successful. While before 1985, fertilizer consumption had hovered around 20,000 m.t. per year, consumption rose sharply as soon as Government had been relieved of the subsidy burden. Consumption in 1985 amounted to 21,400 m.t. and in 1991 to 50,600 m.t. 30. The financial impact on the budget was significant: these subsidies stood at about FCFA 1.5 billion at project preparation in 1982. They were reduced to zero by 1988/89. In addition to the substantial savings realized from the removal of subsidies, the Government has been gaining fiscal revenues from the subsector through the tax levied on imported chemical fertilizers; the tax rate was about 6 percent during the 1993/94 agricultural campaign. 31. The eliminatiofi of fertilizer subsidies was expected to eliminate a major constraint on the development of the agricultural sector, and ultimately to lead to enhanced producer-incomes through increased fertilizer consumption and cereals production. On the basis of the evidence from an impact evaluation study that was conducted at the end of the project, however, the revenue impact cannot be ascertained for the following reasons. To begin with, the time-series data analyzed covers only the period of the subsidy-removal date, 1988/1989 and 1991/1992, which is the latest period for which there is reliable data. The analysis should be based on a larger time series (at - 10 - least 10 years), in order to properly evaluate the revenue impact. Secondly, the cereals production effect is directly linked to the impact on cotton, as these two crops are grown in rotation. Therefore, the quantity of fertilizer devoted to cereals depend, to a great extent, on the quantity available for cotton. Thus, any decline in fertilizer consumption for cotton, due to high fertilizer prices, will induce a concomitant decline in fertilizer consumption for cereals. Moreover, only about 5 percent of farmers outside the cotton zone actually use imported fertilizers in cereals. The impact evaluation showed cotton production to have increased between 1988/89 and 1990/91. However, this increase is attributable more to the expansion in the number of new cotton farmers than to the reduction of the subsidies. This number grew by an annual average of about 30 percent from 1987/88 to 1990/91, consisting mainly of immigrants. Thirdly, productivity gains may depend on other factors, such as animal traction, application of insecticides and other phytosanitary products, organic fertilizers and improved cultural practices. On the basis of the above, it should be noted that the removal of subsidies on imported fertilizers could in the future actually have a negative impact on farmers' incomes if fertilizer prices tend upward, while the cotton producer price remains constant or tends downward. The positive revenue effects on cereals producers could be significantly enhanced with measures to ensure cereals producers' access to credit and improved markets as well as to low-cost fertilizers. Fertilizer Field Trials 32. This component consisted of the following fertilizer trial programs: (a) fertilizer formulations for cereals conducted through an Agreement between the PCU and the National Research Institute (INERA), (b) application of natural phosphates on hydromorphous plains, implemented first by GTZ technical assistance under their rock phosphates project and subsequently by INERA, and (c) organic fertilizer production from residues of the country's sugar factory. The implementation of this component encountered problems consisting of flawed procedures for contract management, lack of coordination between trial programs, difficulties in selections of trial sites, shortage of local know-how on the basic technology of compost production and unavailability of adequate supply of the raw material inputs for the composting work, such as inoculum, raw phosphates and semi-industrial waste from the sugar plant. There were other factors unrelated to design oversight that also hampered satisfactory implementation perforrnance, such as shortage of water for composting due to droughts, delays in obtaining equipment and assigning competent staff and slow performance of some agencies - especially the PCU, BUNASOLS and the Agro-Meteorological Service. 33. Nevertheless, the fertilizer trials program produced excellent results for the production of organic fertilizers from waste products of the sugar mill, using modern composting techniques which were developed in California and which today are used there and in many developing countries. The field trials conducted in the sugar production zone of Banfora showed the effectiveness of organic fertilizers, with and without the addition of - 11 - local rock phosphates. Preliminary results of the tests on the application of natural phosphates indicate that the local rock phosphate is technically more efficient and cheaper than TSP in hydromorphic and acid soils and as effective as TSP in zones with precipitation levels of less than 800mm. These results have led to the development of fertilizer formulas for cultivation of millet, sorghum and maize in the different agro- ecological zones of the country. Similarly, the trials on organic fertilizer production, which entailed using inocula as activator to accelerate decomposition of animal waste and crop residues, notably rice and maize stalks and chaffs, and sawdust have produced very encouraging results. The preliminary results of these trials show that the combination of compost and domestic rock phosphate is cheaper than NPK and reduces processing time by half The trial results have been well received by the participating farmers. 34. There is every indication that once the field trials have been completed, these organic/rock phosphate mixtures will fulfill one of the purposes of the project, namely to give farmers access to cheap and effective locally produced fertilizers. In order to obtain conclusive results from the fertilizer trials, however, further tests need to be conducted on a larger scale for at least another three to four successive agricultural campaigns. In this regard, it is important to note that the key raw materials required for these trials, namely, raw phosphates and inoculum, should be available on time and in sufficient quantities in order to ensure sustainability of the fertilizer production effort. The lack of these critical inputs during important stages of composting have in the past caused long delays in implementing the fertilizer tests program. More effort is also needed to identify local raw materials that are easily accessible to the small farmer, such as sewage and other waste materials, for organic fertilizer production. Furthermore, the encouraging agro-economic results which have been achieved need to be subject to more rigorous economic analysis in order to determine on-farm profitability for investing in these local substitutes for imported fertilizers. Fertilizer Plant 35. The project's objective of helping Burkina to locally produce chemical fertilizers by constructing a fertilizer plant was not achieved, however. Burkina Faso, in common with most other countries with their own low grade, local phosphates, has found it impossible to compete with lower cost, more reactive and higher grade phosphates available in the world market. It was assumed during implementation that because of the interest in the development of a mining operation which would utilize the ore near Perkoa to produce a zinc concentrate for sale in the international market, the associated pyrites would be available as a byproduct at a low cost and could be used to produce sulfuric acid. Consequently, the project financed an IFDC-CIRAD preliminary feasibility study of full acidulation, using the sulfuric acid from Perkoa. In a report issued in March 1992, IFDC-CIRAD concluded that for Burkina to be competitive in sulfuric acid production, it would have to construct a production unit of 16,600 m.t. per year of acid and that the unit would need to operate at near 100 percent of capacity utilization. At the present rate of - 12 - annual fertilizer consumption), about 6,500 m.t. of sulfuric acid could be used; in order to support a plant producing 16,000 m.t. per year of acid, annual fertilizer consumption would be required to rise to 120,000 tons. If an estimate of 6 percent annual rate of growth in consumption were used, a level of 120,000 m.t. per year would not be reached until 2008. 36. As recommended in the above study, local production of sulfuric acid needs to be studied again after the mining operation at Perkoa begins or upon the discovery of another source of sulfur or pyrites. More important, the IFDC-CIRAD calculations show that all of the crops grown in Burkina Faso, and particularly cotton over a long period, would have benefited had there been a local source of the recommended fertilizers available. Continuing Government commitment to the objectives of the fertilizer trial programs is central to consolidation of the accomplishments and successful completion of the ongoing tests that are being carried out through the Agricultural Research Project. The private sector should also be encouraged to invest in Bank-financed subsector activities, in order to enhance efficiency in fertilizer production and distribution. Training of Accountants 37. The accountancy training program was implemented by the Organization and Management Support Services Department (SAGOP) of the Ministry of Agriculture. The overall implementation performance of this component was consistently satisfactory. Unlike the other components, SAGOP was equipped with well-trained staff, complemented by private consultants who were recruited occasionally, to provide services to their clients. The program succeeded in: (a) training the accounting staff of the regional development agencies and the PCU, (b) installing computerized accounting systems for these beneficiaries, and (c) establishing a system for monitoring application of the software and accounting procedures, in general. The project has also contributed to strengthening the administrative capacity of MAAH by providing a core of staff with the basic technical skills to help in the formulation, execution and monitoring of the Government's future fertilizer sector policies and programs. 38. The project has also enhanced the operational efficiency of two ministries not involved in the fertilizer subsector. These interventions were made possible through amendments of the DCA (see para. 20). The project was used for this because the credit contained sufficient funds. This concerned the Ministry of Planning by reinforcing capacity in public investment planning, execution and monitoring and the Ministry of the Budget by computerizing the budgeting system and technical assistance support to transfer know-how on the associated computer skills. Future capacity-building efforts need to focus on developing a cadre of staff in the agricultural ministry with technical skills and knowledge of the technologies of compost production and in creating private sector capacity, including farmers' associations, especially in activities related to fertilizer importation, transportation and distribution. - 13 - Credit 39. The implementation of the agricultural credit component was delegated to the Agricultural Credit Bank (CNCA). The short-term credit to the CRPAs to assist individual farmers and village cooperatives to purchase fertilizers for cereals production was virtually untouched by the fourth year after the Effective Date, because: (a) the CNCA felt it did not have the necessary infrastructure and regional representation to on- lend to the intended beneficiaries and (b) small farmers, who had very limited capacity for indebtedness, were reluctant to borrow due to their misapprehensions about the profitability of fertilizer use outside the cotton zone. The medium-term credit to finance application of base dressing on rock phosphate was not used, simply because there was no demand for it. This implementation experience points to inadequacies in the original design. Project Cost and Financing 40. The Project cost at appraisal was estimated to be US $24.1 million, or CFAF 1 I billion (at the appraisal exchange rate of US$1 = CFAF 460). Actual project cost was lower. Total project expenditure at the Closing Date amounted to CFAF 5.41 billion, or about half the appraisal estimate. The difference is explained by: (a) the lower US$/CFAF exchange rates in 1985 and 1986 of US$1 = CFAF 450 and 350 respectively for the importation of fertilizers, which generated savings (the exchange rate used at the time of writing the first draft of this report in 1993 was US$1 = CFAF 278); and (b) cancellation of Credit proceeds originally allocated for construction of a fertilizer production unit and the balance from the fertilizer importation fund, equivalent to SDR 4.5 million. The balance at Closing Date was SDR 1.6 million (equivalent CFAF 656 million). G. ECONOMIC ANALYSIS 41. Because of the many imponderables in the project, no economic rate of return was calculated at appraisal and none has been calculated for this PCR. H. PROJECT SUSTAINABILITY 42. Many of the activities that have been financed under this project are sustainable, provided certain follow-up actions are taken to ensure sustainability. First the Government no longer carries the unsustainable financial burden of subsidizing fertilizers, thanks to support from this project. Sustainability of this accomplishment hinges on: (a) continued social peace and political stability in the rural areas, (b) successful dissemination and adoption of cheaper local fertilizers and (c) improvements in the incentive framework for agricultural supply response, through price and market liberalization policies, - 14 - improvements in market and rural infrastructure and in rural financial intermediation. Second, the encouraging agronomic results obtained from the fertilizer production component, especially from the composting trial program, represent a potential breakthrough, with Sahel-wide implications, and could significantly contribute to sustainability, if the results become more conclusive. In order to obtain definitive results, additional on-farm trials need to be carried out on a much larger scale, for at least another four successive agricultural campaigns. Sustainability at the farm-level could be ensured if the existing constraints on local fertilizer production are removed, including: (a) lack of adequate and regular supply of the critical raw material inputs, such as inoculum and raw phosphates; (b) lack of focus on organic material inputs for composting that are easily accessible to the small farmer, such as sewage, waste materials and semi-industrial residues relative to those from the sugar cane factory; and (c) lack of adequately trained manpower in fertilizer production. Third, the project has successfully transformed one of the Government departments (SAGOP) into a service delivery agency in the areas of accountancy and financial management training as well as in monitoring the practical application of the skills in these professions. The operating cost of this agency is very high, however. It is sustainable, provided: (a) its main clients, the rural development agencies, Government departments and project units, are required to pay the full costs of the services rendered to them, or (b) Government agrees to completely privatize the agency, in order to permit it to compete in both the local and regional markets for the services in which it can demonstrate to have a comparative cost advantage. 43. The key implementation problem identified may be traced to the issue of sustainablity of the training services provided by SAGOP, for the following reasons. First because of the increasing demand for accountants, trained personnel of the regional agencies tend frequently to transfer to the private sector, where the incentives appear to be more attractive. This hampers the transfer of know-how and capacity-building at the local level as most of the private accounting firms operate mainly in the urban areas, notably, Ouagadougou. Second, there is no arrangement for cost-recovery for the services provided by SAGOP to the CRPAs. Without cost-recovery to finance the high operating costs of SAGOP or the eventual privatization of the above function of SAGOP, this component is not likely to be sustainable. Third, there is very limited capacity within SAGOP and the public sector in general in maintenance of the installed hardware. This has led to frequent breakdown and deterioration of expensive computer technologies during project implementation. The local suppliers appear to have limited capacity to meet the rising demand for such services. Sustainability cannot be assured without corrective measures to deal with this outstanding implementation problem. I. BANK PERFORMANCE 44. Relationships between Government and donors on project matters were good. Following the successful elimination of fertilizer subsidies in 1987, the other donors - 15 - began to focus more on their bilateral projects, subsequently phasing out their involvement in project implementation during the last three years of the implementation period. 45. Supervision included twelve missions between November 1985 and May 1993, or an average of one mission every eight months. In addition, there were three missions by local researchers to Burkina and California to gather information on composting, two external training missions by personnel of DIMA and routine field supervision by the Resident mission to check on implementation performance between full supervision missions. The thrust of the supervision missions during the first three years of implementation was on monitoring progress on fertilizer subsidy elimination. Once this objective was accomplished, Bank supervision missions began to pay much closer attention to design features of the other components, leading to a mix of restructuring and redesign initiatives intended to steer the project towards achieving its development and performance objectives. The flexibility which allowed the Task Manager to do so paid a high dividend as it permitted proper identification of important design flaws and corrective measures to be taken. For instance, the fertilizer trial program was restructured to expand the composting trials and to entrust implementation to the National Research Institute (INERA) rather than with three separate entities: GTZ, FABCON/IBF and INERA, agreement was reached with Government to expand the subsidy-removal agreement to include other agricultural inputs; the credit component was redesigned in response to its non-performance and additional components were added to reinforce the capacity of other Government Ministries and to finance preparation of new operations in the sector. Quality control of the execution of the fertilizer trial program may have suffered due to the unavailability of Bank agronomists or fertilizer industry specialists to participate on all full supervision missions. J. BORROWER PERFORMANCE 46. Despite the political upheavals during the early phase of project implementation, the Government kept its commitments and was active at all times in moving the project forward. From the outset, contacts with donors were handled by high- level authorities and public officials. The initiative for holding the project negotiations in Paris came from the Government. The wrap-up sessions held at the end of supervision missions were attended by the Secretary-General of the Ministry of Agriculture and Livestock and usually concluded with a working visit to the Minister. The Government influenced many of the restructuring initiatives taken during implementation and was very persistent in pressing for the prefeasibility study for construction of a local plant for chemical fertilizer production, following the Bank's decision to cancel the fertilizer plant component and to finance sector-related studies. While the Government recognized the importance of training, it tended to perceive capacity building and enhancement largely in terms of more equipment (vehicles and computer hardware) and more staff. Government ownership was consistently demonstrated throughout the project cycle. In this regard, it should be noted that every living government official who had been involved with this - 16 - operation, since the preparation phase, actually participated in the final project supervision mission. 47. The Government fully complied with obligations to make counterpart contributions to project cost. The financing arrangements are summarized in Part III, Table 4B. 48. About one year prior to the final supervision mission, the Borrower undertook a full evaluation of the activities financed under the technical component. The report of this study was useful for the work of the above mission. The project also financed a detailed review of the performance of the accountancy training component. The results of this review are contained in a report available in the project files here at the Bank and in the Ministry of Agriculture. K. LESSONS LEARNED 49. There are four key lessons to be learned from this project. These are: (a) Close supervision of projects affecting large groups of people is a necessity. During the entire implementation peiod, the project was closely supervised, especially at the beginning when the fertilizer subsidy reduction was underway. The Bank was the lead institution for the project and it took care to keep other donors informed and involved. The Borrower acknowledges the value of the Bank's leadership role in its evaluation. (b) The project shows that a complex project can be brought to a successful end if Government is dedicated to it, if it is closely supervised and if the right kind of expertise is brought to bear on it. In this case, Government valued the project highly. The issues involved were at times highly technical, but the Bank supervised it closely with the required technical expertise. (c) This was a hybrid project consisting of policy reforms and investment components. The project demonstrates that such a combination can be viable. (d) With respect to the fertilizer plant, experts have been saying since the earliest stages of project preparation that such a plant could not be justified. Under pressure from Government, the Bank, nevertheless, agreed to study the feasibility of a plant and, if found justified, finance its construction. This component has been the subject of many studies, discussions and arguments and, for the results obtained, has been costly. - 17 - The Bank should have been firmer in its belief in the lack of justification of the component and not have agreed to include it in the project. PART E[: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 50. This review will: (a) examine the major obstacles encountered during the course of the project; (b) evaluate the results of the project and the roles played by donors; and (c) outline the actions needed to consolidate project gains. A. MAJOR OBSTACLES 51. The major obstacles adding to the difficulties of project implementation fell into three categories. Four of these obstacles were attributable to the design of the project. In the first place, the project was regarded in Burkina as an agricultural development project, although it was really a structural adjustment operation focused chiefly on the elimination of government subsidies on fertilizers, its other components simply being supporting measures. Secondly, certain ambiguities arose out of the fact that the fertilizers the project was supposed to concern itself with were defined as "foodcrop fertilizers;" because Burkina's cotton-growing zones are also its biggest producers of cereals and that they account for close to 90 percent of fertilizer consumption, it seemed injudicious to confine project activities to non-cotton-growing zones alone, particularly where the distribution of credit facilities was concerned. Thirdly, although institutional arrangements for official supervision of the various project components were fairly well defined, there was some confusion over the links between the Project Coordination Unit and the groups responsible for implementing those components. Finally, despite the complementary nature of the Fertilizer Project and the Phosphate Project, the fact that Germany was not formally associated as a donor with the former precluded the kind of synergy between the two ventures that would have given their results greater value. 52. Organizational and institutional obstacles arose in three areas. (1) The Project Coordination Unit exercised two functions (attending to the administrative and financial aspects of the project on the one hand and to its studies component on the other), but under less-than-ideal conditions. For one thing, the autonomy the project enjoyed precluded its integration with the government technical departments responsible for formulating sectoral agricultural development policies (e.g. on fertilizers); it would have been wiser to place the project in the hands of the Agricultural Inputs Service, which in fact had been the original intention (so that the Service could be developed institutionally). For another, the manpower resources (both Burkina nationals and foreign technical assistants) available to the project were limited. (2) The project suffered the effects of institutional changes that occurred during its execution period: (a) elirnination of the ORDs and their (tardy) replacement by the CRPAs; and (b) staff turnover in the Project - 18 - Coordination Unit and related government departments and agencies. (3) Administrative and financial procedures used were ill-adapted to project requirements: (a) competitive bidding was lengthy and slow-paced, which led to significant delays in the procurement of project goods and services; (b) certain matters were not dealt with as speedily as necessary; and (c) there were delays in recruiting contract personnel for the Coordination Unit and some project components. 53. On the financial side, the Special Account, amounting to CFAF 82,627,790, proved insufficient to finance certain project component activities, even though it was clear they were important. 54. Review of Project Results: The following observations apply to the components of the project and to agricultural policy. 55. In terms of its original objectives, the project produced five major achievements. (1) Government fertilizer subsidies were totally eliminated by the 1987/88 crop season. (2) The field trials conducted at locations throughout the country generated very valuable formulations for affordable cereal fertilizers suited to different ecological zones; the same was also true of the tests on organic fertilizer/domestic rock phosphate combinations. However, knowledge of these results has still not been disseminated among farmers (non-availability of new cereal fertilizers, failure to acquaint farmers with new composting procedures, and non-availability of composting inoculum). (3) Modern improved accounting.procedures and systems have been adopted by the CRPAs and other departments and agencies of the Ministry of Agriculture, and the necessary related training has been provided for their staff. However, it still remains to get the SAGOP Training Center (built with project support) into operation and to write its Operating Rules (giving it administrative and financial autonomy). (4) Since the results of the experimental component of the project have indicated that potential exists for developing and enhancing the value of the country's rock phosphates, an important national resource, a feasibility study on a fertilizer formulation unit is absolutely necessary. (5) Thanks to the body of data collected and analyzed by the Project Coordination Unit, the prerequisites exist for drafting of a national fertilizer policy. Local project staff and DvIMA staff have received training to equip them for administration and management of the fertilizer subsector, while the fact that DIMA has been strengthened will enable it to continue discussions with the various parties participating in the subsector and to act on the specific recommendations of the Agricultural Inputs Seminar held in December 1992. 56. In the case of Burkina's agricultural policy, the Fertilizer Project has provided an impressive example of structural adjustment incorporated without difficulty. It has also made a significant contribution to drafting of the country's Agriculture Sector Structural Adjustment Program, by funding preparations for the Cereal Plan-which, as part of efforts there to ensure improved use of the means of production (and particularly fertilizers), will comprise measures advocated by the Fertilizer Project. - 19 - B. REVIEW OF DONOR PERFORMANCE 57. The Fertilizer Project was funded jointly by the World Bank, CFD, FAC, the Netherlands, and the Government of Burkina Faso, which all contributed to varying degrees. 58. The World Bank attended fully to its responsibilities as principal project donor through its regular periodic monitoring of both the physical and financial aspects of the undertaking. Its recommendations regarding management and technical implementation of the various components improved general project performance. In the main, the World Bank contributed significantly to the project. However, it may be pointed out that: (a) Washington took too long over the approval of certain technical questions, thereby often compromising the process of project implementation; and (b) the lack of consensus between Burkina and the Bank on the choice of the acidulation process to be used with rock phosphates mined at Kodjari, and also on the recruitment of consultants to study the feasibility of the proposed fertilizer production unit, was a considerable obstacle in the search for more affordable fertilizer formulations than "cotton" fertilizer, especially examples incorporating natural phosphates. 59. CFD/FAC: This major financial contribution funded the operations of the Project Coordination Unit, implementation of the experimental component, and the support provided by expatriate personnel. The speed with which reimbursement applications were attended to by CFD/FAC facilitated project implementation. However, not all the support (supervise, advise) project officials were entitled to expect from CFD/FAC was forthcoming. 60. Netherlands: This contribution, also a major one, in the form of grants of fertilizer, facilitated implementation of the project. However, this donor did not take part in the periodic monitoring and supervision of the project. 61. Government of Burkina Faso: The Borrower made the services of the necessary civil service personnel available for project purposes and met its financial commitment to the experimental component. However, here again the complexity of administrative procedures (especially those related to procurement) did nothing to facilitate the achievement of certain investment goals. 62. Action Required to Consolidate Project Gains: It is consistent with the above review of the history of the project that the Burkina authorities should propose the following steps to consolidate its achievements: (1) Execution of the feasibility study for a unit to produce fertilizer formulations based on use of the country's rock phosphates. (2) Continuation of experimental activities with a view to (a) identifying composting - 20 - processes and methods geared to existing farming conditions, and (b) supporting pre- extension trials of the most affordable cereal fertilizers with the necessary auxiliary measures. (3) Strengthening DIMA by providing the logistical resources, equipment and funding that will enable it to take part in the development of a national fertilizer policy and to make the fertilizer subsector attractive to private business promoters. - 21 - PART m: STATISTICAL INFORMATION 1. Related IDA Credits Credit Number Year of Project Title Purpose of Project Approval Status Credit 1097-BUR Continuation of integrated rural 6/30/81 Completed Bougouriba II development in the Bougouriba Agricultural Development region Project Credit 1284-BUR Improvement of cereal production, 6/28/82 Completed Volta Noire Agricultural cotton exports and rural standard Development Project of living Credit 1285-BUR Strengthening integrated rural 7/27/82 Completed Hauts Bassins development in the Hauts Bassins Agricultural Development region Project Credit 1293-BLUR Identification of system to prevent 9/21/82 Completed Koudougou Agricultural or curb soil erosion Pilot Project Credit 1482-BUR Assistance for Burkina with the 5/24/84 Completed Mining Exploration and technical and economic appraisal Technical Assistance - of the Perkoa zinc niines, and Project promotion of their development by the private sector Credit 1896-BUR Strengthening agricultural research 4/19/88 In progress Agricultural Research and its links with extension Project Credit 1979-BUR Strengthening of rural support 1/17/89 In progress Agricultural Services services Project Credit 2229-BUR Improvement of natural resource 4/25/91 In progress Environmental management by village Management Project communities and throughout the country Credit 2381-BUR Reforms in the agricultural sector 6/9/92 In progress Agricultural Sector to eliminate distortions Adjustment Credit undermining its effectiveness and sound operation Credit 2414-BUR j Strengthen food security 7/9/92 In progress Food Securitv |institutions and ana1Svtical ability - 22 - 2. Project Timetable Item Planned Date Revised Date Actual Date Identification 10/82 10/29/82 Preparation 3/82 3/82-2/83 Appraisal Mission 6/83 6/83-10/83 Negotiations End 84 11/27-30/84 Board Approval 1-3/85 2/26/85 Credit Signature Prior to end FY85 4/18/85 Credit Effectiveness 8/16/85 11/15/85 11/4/85 Credit Completion 6/30/91 12/31/91 12/31/92 9/30/92 12/31/92 Credit Closing 12/31/91 6/30/92 6/30/93 3/31/93 ..___ _ __ _ __ _ __ _ __ _ __ _ __ _ 6/30/93 . 3. Cumulative Estimated and Actual Disbursements (US$ million) IDA FY Appraisal Actual Actual as % Estimated cumulative of estimate .________ (cumulative) at 9/30/93 1986 1.9 1.6 89 1987 4.3 1.8 42 1988 8.1 2.6 32 1989 11.1 3.2 29 1990 12.9 4.8 38 1991 13.7 5.9 43 1992 8.2 61 1993 10.2 76 - 23 - 4. Project Costs and Financing A. Proiect Costs (US$ millions) Component Appraisal Actual Estimate Fertilizer imports 6.4 5.6 Credit 1.0 2.5 Promotion of rock phosphates 2.0 0.0 Experimental program on multi-site field 2.4 2.3 trials Industrial 7.5 1.0 Accounting training 2.4 1.9 Management 1.6 2.5 Studies 0.6 0.7 PCU Support La 0.0 0.5 TOTAL 23.9 17.0 a/ See para. 23 B. Project Financin2 Appraisal Actual Estimate IDA 13.7 10.2 CFD 3.2 3.0 FAC 1.7 0.6 Netherlands 2.1 2.1 Fed. Rep. of Germany 2.0 0.0 Burkina 1.4 0.9 TOTAL 24.1 16.8 - 24 - C. Cost Covered by World Bank (US$ thousands) Category Appraisal Revised Figures Actual Estimate Figures 1/86 11/86 10/87 6/93 1. Vehicles & equipment for 361 399 435 472 507 1,132 field trials . . _ 2. Fertilizer (a) 84-86 seasons 1,606 1,776 1,936 2,096 2,256 1,638 (b) following seasons 301 301 363 393 423 222 3. Credit 903 1,000 1,089 1,180 1,269 1,515 4. Operating costs of field 1,606 1,776 1,936 2,100 2,256 1,900 trials & training 5. Consultants on 703 800 847 917 987 1,800 accounting training & SISP 6. Studies 502 555 605 655 705 427 7. Fertilizer production unit (a) civil engineering 1,305 1,443 - - - - (b) vehicles & equipment 1,908 2,109 - - - - (c) consultants 402 444 1,452 1,572 1,692 885 (d) working capital 2,108 - - - - - 8. PPF reirnbursement 502 555 605 655 705 120 9. Special account 201 222 242 262 282 0 10. Unallocated 1,446 1,443 1,573 655 705 0 11. Goods & services for - 156 170 184 200 436 SISP 12. Goods & services for 1,050 1,128 230 Ministry of Budget TOTAL 13,854 12,979 11,253 12,191 13,115 Note: SDR Equivalents are: January 1986 SDR 1 = US$1.11 November 1986 SDR I = US$1.26 October 1987 SDR I = US$1.31 June 1993 SDR 1 = US$1.41 - 25 - 5. Status of Credit Covenants (Development Credit Agreement between IDA and the Borrower) SECTION COVENANT STATUS OF REMARKS COMEPLIANCE 3.01 Borrower to establish Project Coordination Unit Complied with 3.02 Borrower to employ consultants & experts in Complied with accordance with Bank guidelines 3.03(b) Borrower to use all goods & services financed Complied with out of Credit proceeds exclusivelv for Project 3.04(a) Borrower to provide plans, reports & all other Complied with documentation as Bank shall request 3.04(bXi) Borrower to maintain records Complied with 3.04(bXii) Borrower to allow visits to Project facilities and Complied with construction sites, and inspection of Project goods . 3.04(bXiii) Borrower to provide IDA with information on Complied with Project costs and benefits as requested 3.04(c) IDA may publish descriptions of contracts Complied with awarded by Borrower 3.04(d) Borrower to provide report on completion of In progress Project 3.05 Borrower to provide credit, acting for purpose Complied with Contrary to original through CNCA Agreemnent, most credit was made available in cotton- growing zones 3.06(a) Borrower to apply uniform rates of subsidy Complied with 3.06(b) Borrower td reduce subsidies on fertilizers Complied with 3.07 CRPAs to cover costs through fertilizer sale Complied with prices 3.08(i) Borrower to provide evaluation of results of each crop season, plus work program for following season 3.08(ii) Borrower to provide annual report on Project Complied with activities 3.09(a) Borrower & IDA to review Project results, agree Complied with on fertilizer prices and discuss work program every November/December 3.09(b) Borrower & IDA to consult each year on Complied with These consultations quantities of fertilizers to be imported continued until 1987/88, when all subsidies were abolished 3.10 Borrower to cause SOFITEX to buy, stock and Complied with distribute domestic rock phosphate 3.11 Borrower to present feasibility study and plan of Not complied Prefeasibility study action for fertilizer production unit with concluded by CIRAD/IFRAC, but Project closing date prevented completion of full- scale feasibility study - 26 - 6. Use of Bank Resources A. Staff Inputs Stage of Project Cycle Man/week Remarks Preparation 72.5 Appraisal 46.0 Appraisal proceeded in several stages. Negotiations to presentation to 32.1 Negotiations took place in Paris, with all Board cofinancing present. Effectiveness 2.0 Supervision 76.2 Completion 8.0 End-of-project mission took place with full participation of all Burkina officials concerned. TOTAL 236.8 B. Supervision Missions Date No. of Staff Days Specialization I Persons in Field 11/82 1 1 i Agric. scientist 5/82 1 11 Agric. scientist 11/86 1 9 Agric. scientist 5/87 2 10 Agric. scientist, mission leader 2/88 2 10 Economist, mission leader 2/89 1 8 Economist 11/89 1 3 Economist 5/90 2 8 Economist, mission leader 11/90 2 7 Economist, mission leader 7/91 2 2 Economist, mission leader 5/92 2 4 Economist, mission leader 5/93 4 15 Economist, mission leader, task manager, agric. research expert - 27 - Annex 1: Fertilizer Project: Disbursement of IDA Credit (US $ millions) Disbursements FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Estimate 0.1 1.90 4.30 8.10 11.10 12.90 13.70 Revised 1.61 2.31 2.91 14.31 5.51 7.03 8.53 9.23 esimate = 1.60 176 2 3.92 Actual 1.60 1.76 2.61 3.26 4.87 5.92 8.82 10.2 ________________ ~~~~~~~~~~~~0 - 28 - Annex 2: Crop Price Movements (FCFA/kg) 80/SI 81/82 82183 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 Cotton 55 62 62 70 90 100 100 95 95 95 95 95 Sorghum 45 50 58 64 80 80 40 50 45 50 65 65 M&ilet 45 50 60 66 80 80 40 50 45 50 65 65 iaize 45 50 55 60 85 80 40 50 45 50 65 65 - 29 - Annex 3: Fertilizer Price Movements (CFAF/kg) 80/8 81/8 82/8 83/8 84/8 85/8 86/8 87/8 88/8 89/9 90/9 91/9 92/93 1 2 3 4 5 6 7 8 9 0 1 2 NPK 40 40 43.6 62 78 90 114 91 96 105 98 109 Urea 45 45 60 62 66_ 78 _ 85 66 77 94 88 96.5 - 30 - Annex 4: Consumption of Fertilizers 85/86 86/87 87/88 88/89 89/90 90/91 91/92 Table 1: All crops Total Fertilizer Consumed (in metric tons) NPK 17,771 24,002 24,460 27,657 30,504 31,364 41,063 UREA 3,617 6,204 7,662 8,914 8,452 10,431 9,558 Burkinaphosphate 626 545 311 670 1,219 0 640 Table 2: All crops Fertilizer Consumed (in kg/ha) NPK 8.7 7.9 10.3 14.0 12.3 UREA 2.7 2.5 2.9 4.7 2.9 Table 3: Cotton Fertilizer Consuned (in kglha) NPK 109.9 108.9 117 111.6 86.5 UREA 26.5 30.0 25 33.4 18.3 Table 4: Cereals Fertilizer Consumed (in kg/ha) NPK 2.2 2.5 2.9 4.7 2.9 UREA 0.7 0.8 1.0 1.8 1.5 Table 5: Cotton Fertilizer Consumed (in kg/ha) in Main Cotton- Growing Zones NPK 116.9 117.4 125.0 115.9 94.6 UREA 25.4 32.9 26.5 34.9 19.7 Table 6: Cereals Fertilizer Consumed (in kg/ha) in Main Cereal- Growing Zones NPK 5.2 10.9 13.7 11.9 25.2 UREA 1.7 3.3 3.0 4.0 5.4 Table 7: Relationships between NPK Consumption and Cotton Production Total consumption NPK for cotton (t) 17,566 17,966 21,115 Total cotton (t) 152,211 180,994 185,560 216,000 242,200 Table 8: Relationships between NPK Consumption and Cereal Production Total consumption NPK for cereals (t) Total cereals (t) . 1,470,00 2,074,88 1,951,90 1,517,900 2,454,900 Maize (t) 0 8 0 257,900 315,200 Sorghum (t) 750,500 1,238,300 Millet (t) 449,000 848,500 Table 9: Relationships between NPK Consumption and Cereal Production in Maior Growing Zones - 31 - NPK (t) 5,523 4,740 6,983 9,615 8,160 18,392 Ccreals (t) 535,100 805,900 Maize (t) 169,000 217,600 Sorghum (t) 212,000 352,000 Milet (t) 107,000 203,000 I - 32 - Annex 5: Table of Project Costs and Financing (CFAF millions) Components IDA CFD FAC Netherlands Burkina Total % of Project Total Costs Project .____ Costs A. Fertilizer imports 665 481 - 571 1,717 32 B. Field trips & training 892 23 67 982 18 C. Promotion of rock 0 phosphates _ D. Study fertilizer 295 500 795 15 production unit E. Credit component 333 319 652 12 F. Agricultural Inputs 122 122 2 Service G. Accounting training 535 535 10 H. Project monitoring 177 71 383 631 11 information & Coordination Unit Total Project Costs 3,019 1,323 138 571 383 5,312 100 % of Total Project Costs 56.8 24.9 2.6 10.7 7.2 100
Группа Всемирного банка · Project Completion Report
Burkina Faso - Fertilizer Project
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Буркина-Фасо
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