Madagascar - Second Irrigation Rehabilitation Project

Document Of The World Bank FOR OFMICAL USIE ONLY Report No. P6250-MAG MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO SDR 15.0 MILLION TO THE REPUBLIC OF MADAGASCAR FOR A SECOND IRRIGATION REHABILITATION PROJECT JUNE 20, 1994 M .1 IUUR1H I C--: iReport No: L- 625u 1hAi Type: MoE' Agricultural Operations Division South-Central and Indian Ocean Department African Region This document has a restricted disbtribution and may be used by recpients only in the performance of their official duties. Its contentsn may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Malagasy Franc (FMG) US$1.00 = FMG 3,000 (May 994) SDR1.00 = FMG 4,230 (May 1994) WEIGHTS AND MEASURES Metric System ABBREVIATIONS CFD Caisse francaise de developpement (formerly CCCE) DGR Rural Works Directorate (Direction du G6nie Rural) DGRH Human Resource Directorate (Direction gen6rale des ressources humaines) DVA Directorate of Agricultural Extension (Direction de la vulgarisation agricole) EAO In Depth Orientation Study (Etude approfondie d'orientation) EDF European Development Fund (Fonds europeen de developpement) MEADR Ministry of Agriculture and Rural Development (Ministere d'Etat A 1'Agriculture et au D6veloppement Rural) MPI Micro Irrigation Schemes (micro perimetres irrigues) O&M Operations and Maintenance (Gestion et entretien) PPI Small Scale Irrigation (Petits perimetres irrigu6s) SOMALAC State Company of Lac Alaotra (Societe d'Etat du Lac Alaotra) WUA Water Users' Associations (Associations des Usagers d'Eau) Government Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY MADAAGA SCAR SECOND IRRIGATION REIIABIIATATION PROJEICT CRED)IT AND PROJECT SUMNINIARI' Borrower Madagascar Beneficiary Minmistry ol Agriculture and Rural Development MEADR) Credit Amount SDR 15.l million (US2 1.2 million equivalent) Terms Standard IDA terms with repayment over 40 years Financing Plan Proposed Project Financing USS million Percent IDA 21.2 82.6 Beneficiaries 1.7 6.7 Government 2.S 1(0.7 Total 25.7 100.0 Rate of Return 27 percenit Poverty Category Program of targetted interventions. The project will contribute to reducing food insecurity in rural areas, where smallholder rice producers are among poorest of rural populationi. Staff Appraisal Report Report number 12691-MAG MIap IBRD No 25595 - Second Irrigation Rehabilitation project This document has a restricted distribution and may be used by recpients only in the performance of teirc official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MIEMORANDUNM AND RECOMMENDATION OF THE PRESIDENT OF TIIE INTERNATIONAL DEVELOPMENT ASSOCIATiON TO TIHE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MADAGASCAR FOR A SECOND IRRIGATION REHABILITATION PROJECTF 1 I suhnvt for your approval the following memlioralndumii and recouimmendationi oii a proposed development credit to the Republic of Madagascar for SDR 15 million (US$212 .2 millioni), on standard IDA terms with a maturity of 40 years and a ten year grace period to finanlce a second Irrigation Rehabilitationi project. 2. Country Background. With a populationl of about 12.4 million (1993), growinig at 2.8 percent per year. and a per capita income of $230, Madagascar is among the least developed countries in the world. The agriculturally dominated economy, whichl had growni modestly in the late 1980s following a decade of decline, was disrupted by political developments since 1991. The annual rate of economic growth has been outpaced by the rate of population growth so that real per capita incomes declined by 40 percent between 1971 and 1991. Madagascar successfully completed a two- year political transition to democratic rule in 1993. A new president was elected in February 1993, parliamentary elections were held in June and a new govermnent was formed in August. The political environment in Madagascar is complex, however, and the country is going through a period of political apprenticeship. 3. Sector Background. Agriculture is the most important contributor to the national economy. The sector employs over 80 percent of the active population and accounts for over 60 percent of foreign exchange earnings. The sector supplies the primary inputs to the food and textile industries which together account for 75 percent of the value added of the industrial sector. The economic stagnation which has affected other sectors of the economy more severely than agriculture, has led to an increase in agriculture's share of GDP, from 31 percent in 1965 to 33 percent in 1993. 4. Although most tropical and temperate climate crops can be found in Madagascar, only about 2.3 million ha, or about 6 percent of the country's arable land, is cultivated. Rice production is the most important agricultural activity, accounting for 41 percent of agricultural output. Fishing is the second most important activity (20 percent of agricultural production). The traditional export crops (coffee, vanilla, cloves and pepper) together account for 7 percent of agricultural output. Root crops and maize contribute 11 percent. Vegetables and fruits contribute 10 percent. industrial crops 3 percent and livestock 5 percent. While agriculture and agro- industries are still contributing about 80 perce 'to total exports, there has been a shift in the relative importance of various products. The share of traditional exports has declined to about 40 percent in 1991, while the share of non- traditional products (such as shrimps and lobsters), currently accounting for about 15 percent of total exports, has been rapidly growing by over 20 percent per year since 1986. 5. Madagascar possesses a considerable potential 'or agricultural growth. It has a comparative advantage in agricultural production based on low labor costs and availability of land in different ecological zones. It can produce a variety of temperate and tropical crops for the domestic and export markets. It possesses an extensive irrigation infrastructure that is laigely underutilized, representing an important asset to enable intensification and diversification. Moreover. crop yields are uniformly low and the potential to increase yields on the basis of known technologies is substantial.  2 6. Sector adjustment reforms undertaken by Madagascar in the recenit past, such as the liberalization of domestic trade, have improved prices and market demand for agricultural produce but have produced only a limited supply response so far. Sustained and spontaneous growtlh of the sector is constrained by the continuing lack of reliable transport anid communication infrastructure linking farmers wvith a market, poor conitrol and lack of maniagement of water resources, inadequate protection of watershed areas and poor agricultural support services. Public investment in the agricultural sector has concenitrated too heavily over recent years on undertaking activities which could be carried out by farmers themselves, and too little on providing basic services and creating ar. environment to enable farmers to better fend for themselves. 7. Rural development policy is based on the intensification of the small farml sector to accelerate the development of the rurai non-farm economy in the high potenitial areas of Madagascar. increase the size of the domestic market and provide sizeable farmn and off-farn employment opportunities and environmental benefits. Agricultural development strategy calls for: (a) the removal of the remaining macro-economic distortions; (b) provision of adequate rural infrastructure (transport and communications, irrigation, rural market infrastructure), and regulator) framework (business legislation, agricultural institutions, rural financial policies) in the rural areas to promote intensification of small-farm production and to facilitate inter-regional trade, (c) strengthening the public sector capacity for coordination, policy and strategy formulation, administration and monitoring of implementation: (d) provision by the public sector of cost-effective market support services; (e) decentralization of decision-r,-aking and financial responsibility to local communities and private operators; (f) more effective cost recovery on publicly funded investments; and (g) development of viable private sector organizations (producers' associations, water users' associations, professional and inter-professional organizations, etc.) that can progressively take over support services (inputs and products marketing, certain areas of applied research, extension, credit, management of irrigation schemes, etc.). Ongoing discussions of the 1994-96 public expenditure program have concentrated on ways to reduce the number of investment projects and concentrate public expenditure on activities directly linked to the stated strategy. 8. Irrigation sub-sector. The agricultural sector is characterized by the relative importance of irrigation and by the long tradition of its farmers in irrigation. After Sudan, Madagascar has the second largest irrigated agriculture sector in sub-saharan Africa. More than one million hectares or about 50 percent of the total cultivated area of the country is under irrigation or potentially irrigable. It is estimated that the irrigation sub-sector contributes almost 15 percent of Madagascar's GDP, 70 percent of agricultural production and 88 percent of total rice productioa and employs directly or indirectly 85 percent of the active population. The potential for new irrigation schemes is limited, given that about 80 percent of land potentially irrigable is already under irrigation. The government's irrigation sub-sector development strategy endorses the need for a reduction in direct involvement in the maintenance and operation of publicly-managed schemes (Grand Perimetres Irrigu6s and Petits P6rimetres Irrigues), thus releasing scarce funds to support other services, such as research, extension and rural roads. By encouraging the establishment of Water Users' Associations (WUAs) on these schemes the government aims to !ransfer operating and management functions to the farmers themselves. Local enterprises will be encouraged to develop capacity to undertake rehabilitation and maintenance work on behalf of local WUAs. To achieve this, the Government intends to (a) increase consultation between the public authorities and water users; (b) improve resource mobilization at both the central and the decentralized levels; (c) improve the prograniming and planning process at the local level, with active WUA participation; (d) decentralize and strengthen the Ministry of Agriculture, so as to enhance coordination and improve the quality of the technical support services to farmers; (e) strengthen training activities targeting both the public authorities and the beneficiaries  3 of the irrigation schemc rehabilitation programs; and (I) enact legislation governing the procedures fot transfer to the users of the responsibility for the rehabilitated irrigation schemes. 9. Project Objectives. The piroject would support the coLIntry development strategy, whichi is being presented simultaneously to the Board, on four fronts: (a) promnoting growlth - it would contribute to increased agricultural output through better wvater managemenit and intensified agricultural extension on rehabilitated irrigation schemes: (b) poverty reductioni - it wouold contribute to improved rural incomes and food security by improving production and productivity on irrigation schemes in all of Madagascar's six rural provinces; (c) imaproving environmental mnanagement - it would develop techniques for enviroiinental assessment of irrigation re'habilitation and reinforce iocal capacity for environmental assessment; (d) enhancing prqject implementation caparity - it would establish operational procedures for the transfer of management and financial responsibilitv for the operations and maintenance of public irrigation schemes to water usels, thus serving to reduce the burden of public expenditure on the maintenance of such irrigation infrastructure. It would use the rehabilitation of public irrigation schemes as an incentive to involve water users in long tenm maintenance and -perations of these schemes. It would strengthen the effectiveness of decentralized public services and the control and supervision of public works at regional and local levels. It wouid thus contribute to improving the coordination of local project and program activities, which currently operate independently. It would contribute to improved productivity of the rural population by using accessible and proven technology, and would serve to promote private sector initiatives, and recourse to local consultants and engineering services. It would also establish criteria for the selection of schemes to be rehabilitated taking account of environmental implicat.ons. The lessons drawn from the project experience will provide guidelines for future efforts on other irrigation schemes which have benefitted from recent rehabilitation works, and whose sustainable upkeep and maintenance represent a major liability for public funding. 10. Project Description. The project would be implemented over a five-year period and would comprise the following components: (a) Cyclone damage repair and corrective rehabilitation works (IJS$4.1 million): Urgent repairs of damage caused by cyclones Daisy and Geralda (US$2.8 million) will be tackled in the early months of the project. During the execution of these works and of other corrective works during the first two years of the project, a genuine commitment, demonstrated by contributions in cash and in kind, will be sought from members of the WUAs, on schemes which have been rehabilitated under the first project Services from field staff will be intensified, and the details of the new responsibilities of the state and the water users will be disseminated. The potential role of associations for women producers on the rehabilitated irrigated schemes will be given special attention. (b) Environmental protection (US$1.5 million): An environmental assessment will be conducted prior to all future rehabilitation. Procedures and criteria will be based on the experience of the 30 irrigated schemes rehabilitated under the first project. The project will fund a study of the impact of environmental degradation on the operation of these schemes and will fund limited environment protection works. An environmental assessment guide for irrigation schemes will be prepared to help with the rehabilitation of future schemes. Local consultants would be trained in environment assessment mitigation by organizing seminars based on the experience gained under the project. The project will fund a disaster compensat i)n study. (c) Rehabilitation of new irrigation schemes (US$8.2 million): Rehabilitation work on additional schemes (indicatively 4,000 ha) will proceed only when firm progress has been made on the above two components. Preliminary identification of the schemes has been made in the inventory study prepared under the first project but final selection will depend upon (i) the level of firm commitment identified among the water users; (ii) the economic viability of the schemes; (iii) the environmental assessment; and (iv) their proximity to a road outlet. (d) Support to the MEADR (US$5.2 million): The project would provide support to the Directorates of Rural Works, Agriculture, Programming  4 and Finance, Lands (Domaines) and Water and Forests to enable the MEADR to provide more professional and effective technical support services for irrigation scheme operation and maintenance and transfer of agricultural technology. The project will support these services in nine regions andi in five out of six of Madagascar's existiing faritany (provinces), as part of support for a more generalized decentralization of the Ministry of Agriculture and Rural Development's services envisaged under the new constitution. (e) Training (US$0.7 million) - Training of field staff, regional technical and administrative staff and national level technical and coordination staff will continue to be a major component of the second phase project. (f) Mlonitoring and Evaluation/Audit (US$0.2 million) - The project would provide for continuous monitoring and evaluation of project impact including increases in production and yields. adoption rates of extension messages and performance by water users' associations both in collection of dues for O&M and in implementation of c*peration and maintenance of the rehabilitated schemes. (g) O&JI by Water Users Associations (US$1.3 million) - Once rehabilitated schemes have been formally transferred to WUAs, maintenance and operations will be carried out by the Associations. Funding under this component will come solely from the WUAs, Collection of contributions from members of Water Users' Associations will be a critical parameter to be monitored in project execution. ii. Estimated project costs, disbursement and procurement arrangements to be followed under the project are detailed in the attachments to this memorandum. 12. Project Sustainability. Longer term sustainability of the investment and institutional reforms initiated by the project depends upon the establishment of a commitment by local water users' associations to take over responsibility for the O&M costs of the rehabilitated irrigation schemes. The project will introduce participative techniques to encourage farmers' involvement in local decision-making. Through more professional and regular farm extension services, the project will also contribute to a reestablishment of confidence between .he public and private sectors, whicl should consequently ensure the longer term terhnical sustainability. 13. Lessons Learned from Previous IDA Involvement. Lending to the irrigation sector in Madagascar began in 1970 with a project to improve the irrigation and drainage of some 12,000 ha in the Lac Alaotra area. Subsequent credits in support of large scale irrigation schemes in the Morondava, Samangoky and Lac Alaotra followed during the 1970s and 1980s. They all shared similar problems of poor post-project maintenance, ineffectiveness of the extensio .ervices and poor management by parastatal companies. Over-sophistication in the technical and ma..agerial design of the projects also explained poor performance. Ex-post impact evaluations recommended, among other things, the need for private sector involvement and close collaboration with water users and water user associations. Government now recognizes it has neither the financial nor managerial capacity to operate these large scale schemes, as originally envisaged. 14. With the implementation of the first Irrigation Rehabilitation project (Cr. 1589-MAG) in 1985, a more successful formula for irrigation development and rehabilitation was developed. The project demonstrated the importance of a detailed assessment of beneficiary commitment throughout the design and implementation process. The importance of an assessment of the conditions of the catchment areas above individual schemes became clear. Draft legislation was prepared (and has since been adopted), defining the roles and responsibilities of the State and of water users, once operations and maintenance have been transferred. Improved agricultural production was achieved on the rehabilitated schemes more from improved water management than from adoption of improved technology. Flexibility was a key principle in project implementation, leading to successful implementation after a slow start-up.  5 15. The design of this second phase project has taken account of these lessons and builds on past experience. Considerable involvement of water users is envisaged at an early stage and throughout the rehabilitation process. There are no parastatal agencies involved and thie water users themselves will be made responsible at an early stage for ensuring fcr reliable water supp'y {o their schemes. Improved cost-effectiveness will be achieved by applying preselection criteria to comzpaniies bidding to carry out civil works. Agricultural extension efforts will be intensified and hetter maniaged. 16. Rationale for IDA Involvement. IDA's main objectives in Madagascar are to help the government promote private sector- and export-led growth, attack poverty, improve natural resource management, build local capacity and improve project implementation. A key underlying theme is redefinition of the role of the state, improving the quality of public services, and expanding the role of the private sector in investment and the provision of services. The proposed project is consistent with the country assistance strategy, which is being presented to the Board simriultaneously with this investment proposal, and contributes to meeting all of the above objectives. The project will stimulate growth through the rehabilitation of key irrigation infrastructure, which is needed to increase agricultural production and productivity. It will attack poverty by increasing rural iicomes and food security in Madagascar's six rural provinces. It will develop techniques for environmental assessment of irrigation rehabilitation and reinforce local capacity for environmental assessment. The project will enhance project implementation capacity by transferring the management and financial responsibility for the operation and maintenance of public irrigation schemes to water users, thus reducing the role of the state and the burden on public expenditure. Finally, it will encourage participatory approaches in project execution and provide resources for training. 17. Actions Agreed. Assurances obtained during negotiations include: (i) agreement to submit a project execution program, budget and financial plan annually before October 31, for the following year's activities; (ii) project accounts would be audited annually by independent auditors acceptable to IDA; (iii) audits of financial accounts will be submitted to IDA not more than six months after the close of each financial year; (iv) reports on project implementation progress would be submitted to IDA and other donors semi-annually at the end of March and at the end of September each year; (v) the MEADR would fix a common policy on field allowances for all projects before the end of 1994 and (vi) the MEADR would maintain the irrigation sector coordination committee, whose secretariat would be assured by the national irrigation program coordinator; (vii) Government would carry out in consultation with donors, a mid-term evaluation of the project; (viii) Government would carry out, in consultation with donors, an annual review of the public expenditure program for the agricultural sector. Effectiveness of the credit would be subject to the deposit of an initial amount of US$100,000 as Government's contribution to the project account. 18. Environmental Aspects. Irrigation has a major positive impact in increasing yields and national productivity, as well as improving local living standards and diets. In Madagascar, irrigation also has a positive impact by alleviating agricultural pressure on the marginal hillside lands. Adverse direct environmental impacts of rehab.litation could result from problems due to technical design flaws and the damage caused by construction during physical rehabilitation. With proper supervision, such impacts can be reduced to negligible proportions. The direct impacts most often associated with intensive irrigation (soil degradation, surface water contamination by fertilizers and pesticides and the increased risk of water borne diseases) are not significant at this time on the rehabilitated irrigation schemes in Madagascar and should pose no major threat with sound farming and maintenance practices. 19. Adverse indirect .npacts of rehabilitation usually include the degradation of watersheds upstream of the rehabilitated schemes, with a moderate to high adverse impact on certain schemes  6 during and after rehabilitation. Cyclones have also had on occasioni a moderate to very hlighi impact on the environment, both during the rehabilitation phase and during subsequenlt scheme operations. Byf conducting an environmental analysis prior to any new rehabilitation, the project will make a major effort to avoid adverse rehabilitation effects experienced io date. For the rehabilitated schemiies under the first project, scheme-specific evaluiaiions will he carried out as part of a moie global retrospective evaluation. Thlis evaluation will provide recommendatiolns wllich will serve as a reference in the development of futurc imitigation plans. 20. Program Objective Categories (POCs). The proJect supports thlree POCs: food security, poverty alleviation aad capacity building (government sLrvices and farmer groups). 34 percent of the popuLtion in Madagascar are estimiiated to be afficted by lood insecurity. The project will contribute to reducing food insecurit) ii- rural areas an(d will increase rural incomiies among smallholder rice producers, whlo wvith average, holding. of half a hectare, are among the poor.st of the rural population. The project monitoring indicators developed and agreed with government cover these categories and will be reviewed regularly in the framework of annual supervision. 21. Project Benefits. The project will make a major contribution to the reinforcement of the technical services of the Ministry of Agriculture, both at the central level and more especially a! provincial and local levels. This institutional strengthening will benefit agricultural development in Madagascar in general, and the irrigatior. sub-sector in particular. Through the improvement of water management on existing irrigation schemes, the project will have a direct impact on increasing the income of approximately 40,000 small scale farm families. B) introducing the possibility of cropping in the off-season, the area cultivated may be increased by up to 50 percent. The introduction of better organized agricultural extension services and the application of improved techniques for rice and other crops will lead to increased yields and hence output. With the transfer of the responsibility for operations and maintenance of the medium-sized irrigation schemes, the recurrent costs of maintenance of these schemes from public funding sources will be reduced. Once rehabilitation has been completed and the schemes have been taken over by the water users, it is estimated that there will be a saving of the equivalent of US$500,000 per year to the public exchequer. 22. Risks. The success of the project depends, among other things, on the successful transfer of the management and the maintenance of the rehabilitated schemes to local WUAs. The project has incorporated the principle of progressive rehabilitation, with an assessment of physical and monetary contributions at each stage of the rehabilitation. In addition, z, more intensive process of local feed-back and participation in project execution by beneficiaries will permit project staff to assess the levels of local commitment of the WUAs at different stages. Given the progress registered under the first project, there is a high probability that management and maintenance responsibility will be successfully transferred. 23. The lack of intensified agricultural extension support provided by the Directorate for Agriculture following rehabilitation was one reason for the only modest improvements in agricultural productivity and production during the first project. The risk of a lack of collaboration by the Department of Agriculture is reduced in the light of the (a) the renewed political commitment by the Ministry of Agriculture on improving the effectiveness and professional quality of its national agricultural extension service; and (b) the resources which will be mobilized specifically for the Department of Agriculture to improve the quality of extension support on and around the rehabilitated schemes, unlike the previous project, when such resources were not specifically identified. 24. In order to ensure longer term sustainability of the rehabilitation program, virtually no recourse is anticipated to long term technical assistance. In its place, short term assignments by  7 consultants, both national and expatriate, are envisaged. There is a risk that this might result in a higher incidence of technical errors in rehabilitation design. 25. Insufficient funding of the Government's contribution to the project could have a negative impact on execution. However, the project budget approval and financing arrangements are such as to minimize the impact of delinquency by any cofinancier. IDA funds will be made available on a lender of last resort basis, and annual work programs and budgets will be designed accordingly. An intensified dialogue between the Bank and the Government on macroeconomic questions will focus attention on the public expenditure program, through which priority counterpart funding obligations would be flagged. The risks of poor Government funding performance seriously affecting successful project implementation are low. 26. The risk of environmental damage to water catchment areas feeding newly rehabilitated schemes, as encountered under the first project, would be minimized by the environmental assessments proposed in the selection of additional schemes for rehabilitation. On the basis of historical evidence, there is nonetheless an five to ten percent possibilitv that rehabilitated schemes will suffer from cyclone damage or other natural disaster within ten years of rehabilitation. 27. Recommnendation. I am satisfied that the proposed credit would comply with the Articles of Agreemenit of the Association and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington D.C. July 12, 1994  8 Schedule A Page 1 of 1 PROJECT COSTS AND FINANCING PLAN Estimated Project Costs a\ (US$ million) Local Foreign Total A. Transfer of O&M to water users on rehabilitated schemes and post-cyclone rehabilitation 1.4 2.7 4.1 B. Environmental assessment studies and protection works 0.6 0.9 1.5 C. Rehabilitation of additional schemes 2.8 5.4 8.2 D. Support for services of Ministry of Agriculture 2.5 2.7 5.2 E. Human resource development 0.4 0.3 0.7 F. Monitoring and Evaluation 0.1 0.1 0.2 G. Operations and maintenance by WUAs 1.3 0.0 1.3 Base Cost 9.1 12.1 21.2 Physical contingencies 0.9 1.2 2.1 Price contingencies 1.4 1.0 2.4 Total Project Costs 11.4 14.3 25.7 a/ Includes US$2.7 million of taxes and duties Proposed Project Financing US$ million Percent IDA 21.2 82.6 Beneficiaries 1.7 6.7 Government 2.8 10.7 Total 25.7 100.0  9 Schedule B Page 1 of 2 Procurement Methods and Disbursement ProcurMnt Method intemational Local (US$S00) Competitive Competve Consulting Bding Bidding Other Serv'ces N.B,F. Total A. Works 13,193 1,202 - - 14,395 (11,737) (1,060) (12,797) B. Goods 976 459 293 - * 1,727 (662) (333) (205) (1,200) C. Consuta Capacity buldn h- - 1,028 - 1,028 (1,000) (1,000) Implementation suppot & wpesin /a - * - 1,466 - 1,466 (1,363) (1,363) Sudies /a I I83 894 (11) (824) (835) 0. Tranin and Workshop - 1,007 38 1,045 (1,007) (38) (1,045) E. Allowance and recurrwn cods Incremental recurred costs - 155 1,434 - 1.588 (131) (1,120) (1,251) Incremtl alowances - 998 - 998 (998) (998) F. Othr -b - 1,712 1,712 G. PPF - - 839 - 839 (739) (739) Total 14,169 1,816 4,582 3,415 1,712 25,693 (1Z399) (1,524) (4,079) (3,224) (21,227) Note. Figues in pwarth are te respetve amounts finace by lntertiol Development Associton ba Serices should be procud in accordance wIth World Bank 'Guidelines: Use of ConsultnXt by Wodd Bank Borrowers (Washington DC A lb Contlrbuos from WUAs twards O&M - Not Bank-financed  10 Schedule B Page 2 of 2 Estimated IDA Disbursements (US$ millions) FY95 FY96 FY97 FY98 FY99 FY00 FY01 6 ms 6 ms Annual 0.7 1.5 2.0 4.0 4.8 5.2 3.0 Cumulative 0.7 2.2 4.2 8.2 13.0 18.2 21.2 Percentage (%) 3.0 10.0 20.0 39.0 61.0 86.0 100.0 Agriculture Sector Disbursement Profile (%) 0.0 10.0 22.0 38.0 58.0 82.0 94.0 Disbursement of IDA Credit Amount Percentage Category (US$ '000) Financed by IDA 1. Civil Works 11,905 100 2. . Consultants' Services 2,183 100 3. Vehicles and Equipment 1,064 100 of foreign and 85 of local costs 4. Studies 400 100 5. Travel Costs and Training 907 100 6. Operating Costs 2,088 100 7. PPF advance 750 100 8. Unallocated 1,930 Total 21,227  11 Schedule C Page I of 1 TIMNETABLE OF TIHE PROJECT'S KEI PROCESSING EVENTS Time taken to prepare 6 months Prepared by Governumient/FAO Cooperative programr Initial EPS April 199() Revised EPS April 1992 Preappraisal Review February 16, 1993 Final EPS February 26. 1993 Appraisal mission departure March 22. 1993 Yellow Cover January 13, 1994 Negotiations March 21, 1994 Board presentation July 12, 1994 Planned date of effectiveness December 1994 Mid Term review June 1997 List of relevant PCRs Madagascar Irrigation Rehabilitation (Cr. 1958-MAG) - under preparation This report is based on the findings of the World Bank appraisal mission undertaken in March 1993 by a team consisting of Messrs. C. Trapman (Agricultural Economist, Mission leader), Adel Bichara (Irrigation Engineer), John Buursink (Environment Planner, consultant), Enda J. Byrne (local participation/NGO specialist. consultant), Solange Elfassy (agricultural extension and community development specialist, consultant), Bruno Ribon (Financial Analyst, consultant) and Jean-Claude Rocaboy (Institutional Specialist, consultant).  12 Schedule D Pagel of 5 STATUS OF BANK GROUP OPERATIONS IN MADAGASCAR A. Statement of Bank Loans and IDA Credits Run Time: 05/19/94 at 14.37.36 AFRICA - COXUNTRY DEPARTMENT III Status Of Bank Group Operations In MADAGASCAR PFDBR25 - Sumnary Statement Of L,.ns and IDA Credits (LOA data as of 4/30/94 - MIS data as of 05/19/94) By Country Country: MADAGASCAR Admnunt in USS mittion (Less cancettations) Loan or Fiscat Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date .. ... ....... ...... ---- .. .. . ... ----- --- ---- ....... Credits 51 Credits(s) closed 732.63 C15890-MAG 1985 MADAGASCAR IRRIGATION REHAB. 10.57 1.81 12/31/93(R) C16610-MAG 1986 MADAGASCAR ACCT./MGMT. TRAINING 9.22 6.86 06/30/94(R) C17520-MAG 1987 MADAGASCAR PORT REHABILITATION 16.00 5.55 12/31/94(R) C17870-MAG 1987 MADAGASCAR ENERGY I 25.00 5.62 12/31/94(R) C18040-MAG 1987 MADAGASCAR AGRI.CR.JI(8TM) 10.00 1.33 06/30/94 C18780-MAG 1988 MADAGASCAR FOREST MGT 7.00 2.94 01/31/96 C19050-MAG 1988 MADAGASCAR HIGHWAYS VII 40.00 9.76 06/30/95(R) C19670-MAG 1989 MADAGASCAR MACRO EMSAP/TA 22.00 11.67 06/30/94 C20420-MAG 1989 MADAGASCAR AGRIC RESEARCH 11.69 9.86 12/31/96 C20940-MAG 1990 MADAGASCAR EDUC SECT REINF 39.00 30.63 06/30/96 C21040-MAG 1990 MADAGASCAR FIN SECTOR/APEX 48.00 43.28 06/30/97 C21170-MAG 1990 MADAGASCAR TANA PLAIN DEV 30.50 29.54 06/30/97 C21250-MAG 1990 MADAGASCAR ENVIRONMENT 26.00 22.48 06/30/96 C21500-MAG 1990 MADAGASCAR PILOT EXTENSION 3.68 1.71 06/30/94 C22430-MAG 1991 MADAGASCAR LIVESTOCK 19.80 16.30 06/30/99 C22510-MAG 1991 MADAGASCAR NAT HEALTH SECTOR 31.00 28.88 06/30/97 C23820-MAG 1992 MADAGASCAR VOC. EDUCATION 22.80 21.10 06/30/98 C24590-MAG 1993 MADAGASCAR RURAL FIN 3.70 3.82 12/31/97 C24740-MAG 1993 MADAGASCAR FOOD SECURITY & NIJTR 21.30 19.20 07/31/98 * C24970-MAG 1993 MADAGASCAR FINANCIAL INSTITUTIO 6.30 6.50 09/30/98 * C25380-MAG 1994 MADAGASCAR PET SEC REFORM 51.90 51.86 12/31/98 * C25910-MAG 1994 MADAGASCAR URBAN WORKS PILOT 18.30 18.80 12/31/98 TOTAL number Credits = 22 473.76 349.52 Loans 5 Loans(s) closed 32.57 Att closed for MADAGASCAR TOTAL nuTber Loans a 0  13 Schedule D Page 2 of 5 Run Time: 05/19/94 at 14.37.36 Status Of Bank Group Operations In MADAGASCAR PFDBR25 - Summary Statement Of Loans and IDA Credits (LOA data as of 4/30/94 - MIS data as of 05/19/94) By Country Country: MADAGASCAR Amount in USS million (less cancellations) Loan or Fiscal Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date -- - - - - ... ... - - - - .. .... . .... - - ...... .-.-.-.. TOTAL*** 32.57 1,206.39 of which repaid 21.61 34.20 -- --- .. ... .... TOTAL held by Bank & IDA 10.96 1,172.18 mnount sold of which repaid TOTAL undisbursed 349.52 Notes: , ........... .......... i Not yet effective * Not yet signed i Total Approved, Repayments, and Outstanding baLance represent both active and inactive Loans and Credits. (R) indicates formally revised Closing Date. (S) indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are historical value, alt others are market value. The Signing, Effective, and Closing dates are based upon the Loan Department offical data and are not taken from the Task Budget file.  14 Scheduile D Page 3 of 5 INTERNATIONAL FINANCE CORPORATION INrEGRATED CORPORATE ACCOUN'TING SY'STEMI STATENIENT OF IFC INVESTMIENTS As of April 30, 1994 Country: MADAGASCAR GROSS COMINNTTMWENTS US$ MILLION OBLIGOR TYPE OF BUSINESS FISCAL Y'EAR LOAN EOUITY TOTAIL AEF-Fiaro Venture Capital Companics I 990 (X) 28 28 1991 00 .12 12 1992 .00 06 .06 Aqualma Canning Preserv & Process 1992 1.90 .61 2.51 1993 1.90 00 1 90 BATA Malgache MFG of Footwear 1980 1.25 .00 1 .25 BNI Commercial Banks 1992 .00 2.61 2.61 COTONA Spinning. Weaving & 1985 .00 .18 .18 Finishing 1986 9.29 .00 9.29 1990 1 59 .00 1.59 NOISSI-BE Canning Preser & Process 1983 .00 .10 .10 1984 2.57 .00 2,57 1989 .00 .15 .15 1990 4.37 .00 4. 7 SOTEMA Spinning, Weaving & 1977 11.00 .30 11.30 Finishing 1987 3.72 .01 3.73 Total Gross Committments 37 .9 4.43 42.01 Less Cancellations, Terminations, Exchange Adjustments, Repayments, Writeoffs and Sales 22.56 .20 22.76 Toal Committments Now Held by IFC 15.02 4.23 19.25 Total Undisbursed IFC .80 .00 .80 Total Outstanding IFC 14.22 4.23 18.45  15 Schedule D Page 4 of 5 REPUIBLIC OF MNADAGASCAR SECOND IRRIGATION REHABILITATION PROJECT Note on projects with significant disbursement lag I. Most projects with IDA linancing in Madagascar have suffered froma slow disbursements due partiN to generic problems. including: (a) lack of counterpart funds, (b) difficulties for project managers to access IDA funds deposited in special accounts opened by the Central Bank and operated by signatories in the Treasury; and (c) cumbersome public procurement procedures due to repeated reviews by central agencies. lhe situation worsened in July 1991 witlh the onset of political turmoil. Large scale demonstrations and strikes paralvzed public adminiistration and severely disrupted economic activity. The country has now completed a process of political tranc ion (new government in place since late August 1993). Project implementation has continued to be slow during the two-year transition. The generic problems noted above have affected all projects, in addition to othIer project-specific factors causing delays. The fol!owing projects have the most significant disbursement lags: Accounting and Mianagement Training Project (Cr. 1661-MAG). Even though the project has attained most of its goals, disbursements are low, with larger than anticipated co-financing through grants from Canada and France. Agreement has been reached on possible uses for some of the remaining funds, and a little more than USSI million has been cancelled. Forest Management (Cr. 1878-MAG). Implementation of this project has been delayed by a wide variety of problems (organizational, personnel, counterpart funds, and marketing). A mid- term review in March 1992 made recommendations to redirect and streamline the project and agreed on an action plan, which the Forestry Department (DEF) has so far implemented with minor delays. Consideration is being given to transferring the activities under this component to the Environment project (Cr 2125-MAG), which has similar objectives The Fanamalanga pine forest plantation has almost completed reorganizing and equipping itself to meet its tasks, and is continuing its efforts to find foreigni operators who are interested in its products and by-products. Seventh Highway Project (Cr. 1905-MAG). This project was mostly affected by the generic problems of cumbersome procurement procedures and lack of counterpart funds. Many contracts have now been signed and disbursements have increased significantly (USS8 million in FY93 and US$13.8 million already in FY94 by the end of April 1994). Economic Management and Social Action Project (Cr. 1967-MAG). Implementation of IDA- financed components was slow, partly due to complexity of project design. Components financed by grants from Switzerland and UNDP were disbursing more rapidly. Following the establishment of a new coordination unit (private sector), the disbursement rate picked up and the project was re-designed in October 1992 to streamline its activities. National Agricultural Research Project (Cr. 2042-MAG). The project experienced an eight- month start-up delay in meeting credit effectiveness conditions. Project execution was disrupted in 1991 due to the political turmoil in the country and continued to be affected by institutional disputes. Several missions in 1993 and 1994 have focussed on restructuring the project, and a proposal to downsize the project and cancel part of the credit has been implemented.  16 Schedule D Page 5 of 5 Education Sector Reinforcement Project (Cr. 2094-AIAG). Only about 30)'X of this credit has been disbursed, even though the project has been effective for three years. Project objectives and design are being simplified in order to speed up project implementation Financial Sector and Private Enterprise Development (APEX) Project (Cr. 2104-NMAG). The APEX credit, despite a good commitment record, is not disbursing rapidly. A mid-term review in October 1993 gave particular attention to identifying and addressing the problems which have being holding up disbursements. Actions to remedy a number of problems (e.g. authorization for Central Bank to request disbursement directly, simplified methodology for ERR calculation, clarification of eligibility criteria, procurement guidelines, more regular monitoring) were agreed upon with the Borrower and for the most part have been implemented. Antananarivo Plain Development Project (Cr. 2117-AIAG). This project experienced start-up delays, due both to cumbersome procurement procedures as well as complicated resettlement issues, but most of these problems have been resolved and disbursements are expected to pick up considerably. Environment Project (Cr. 2125-MAG). Madagascar's period of political and social instability coincided with, and affected, the start-up of this project. The institutional set-up of the project has, however, been put in place and has helped develop a satisfactory implementation capacity. The project now needs to concentrate on priority areas and establish realistic objectives and performance criteria. A mid-term review mission and meeting with the cofinanciers in December 1993 addressed these issues. National Health Project (Cr. 2251-MAG). Start-up of this project was delayed due to slow establishment of a project management structure. Progress is still slow and a mid-term review is planned for Fall 1994 to define steps to improve project performance and its contribution to sector objectives. 2. Some recent breakthroughs have been made which should go some way towards addressing the generic problems of the portfolio. A CPPR was carried out in April 1994 during which a calendar was agreed upon to address remaining issues and to complete the restructuring of the portfolio, particularly in the case where projects are incompatible with execution or financial capacity, or do not respond any longer to today's development priorities; clearer responsibilities will be given to project managers; innovative mean of project implementation and management will be introduced following the positive experience of the Antananarivo Urban Works Project; systematic monitoring of performance will be implemented. These breakthroughs followed the Country Implementation Review (CIR) in Antananarivo in December 1990 and a follow-up CIR in March 1992, which resulted in: (a) new regulations for procurement and use standard bidding documents which comply with Bank guidelines; and (b) a decree allowing project managers to have direct access to special accounts to be opened in commercial banks. In FY93, disbursements for investment operations reached US$41 million, i.e. almost 80% more than the total amount disbursed in FY92. In FY94, US$38 million had been disbursed as of April 1994. A Bank implementation specialist will be assigned to the Resident Mission in early FY 95. The specialist will train local staff and help project managers to develop and use appropriate tools for accelerating project implementation.  44 46 48 50 MADAGASCAR SECOND IRRIGATION REHABILITATION PROJECT DEUXIEME PROJET DE REHABILITATION DES PERIMETRES IRRIGUES 12' ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~12 1808E n0 w . ' EN IRRIGATION SCHEMES BY FINANCIER AntRilonono (Areo in Iteotonool IDA ~ '_ , r 0 CFD , 0212 81bono2 1100-- FED A-OOE7t- iFI 1___ PNUD/FAO/PAM, |~j] ADB Amb hbn PAVED ROADS ROUTES GOUDRONNEES ALL-WEATHER ROADS ROUTES ACCESSIBLES EN TOUITE SAISON AnT R N - RAILROADS ANTSIRANANA 14CHEMIN DEFER :4 RIVERS RMERES -_ - sembow --- FARITANY BOUNDARIES LIMtTES DES FARITANY BoolononoN A.69.dy, 52 0 ___ 4& ts >, .80 ~ ~ ~ ~ ~ ~ ~ ~ ~ - MEXCOdOLO, 115 / \~~~~~~~~~~~>reBnondtin M.B. 4mb8,2 400-' O *MALRBE nodonono.l 1- - -o,' ojonBorc 16