Senegal - Agricultural Export Promotion Project

Document of The World Bank Report No: 17146-SE PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 5.9 MILLION (EQUIVALENT TO US$8.0 MILLION) TO THE REPUBLIC OF SENEGAL FOR AN AGRICULTURAL EXPORT PROMOTION PROJECT November 6, 1997 Agriculture m Country Department 14 Africa Region  CURRENCY EQUIVALENTS (Exchange Rate Effective October 1997) Currency Unit = CFA Franc (CFAF)l CFAF 100 = US$0.17 US$1 = CFAF 590 FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CECI NGO involved in Research and International Cooperation (Centre d'Etudes et de Cooperation Internationale) CIDA Canadian International Development Agency EU European Union GPH Senegal's Professional Horticultural Group (Groupement des Professionnels de l'Horticulture) IDA International Development Association NGO Nongovernmental Organization PCD Project Concept Document SEPAS Senegal's Agricultural Product Exporters' Organization (Senegalaise d'Exportation deProduits Agricoles et de Services) SOE Statement of Expenditures Vice President: Mr. Jean-Louis Sarbib Country Director: Mr. Mahmood Ayub Sector Manager: Mr. Jean-Paul Chausse Task Team Leader: Mr. Ousmane Sissoko 'The exchange rate of the CFAF is fixed at 100:1 to the French Franc which is a floating currency.  SENEGAL AGRICULTURAL EXPORT PROMOTION PROJECT CONTENTS -Page No A: Project Development Objective ................................................................2 1. Project development objective and key performance indicators .......................... .....................2 B: Strategic Context ................................................................2 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project .....................2 2. Main sector issues and Government strategy ............................................................... 2 3. Sector issues to be addressed by the project and strategic choices ....................... ......................3 C: Project Description Summary ................................................................3 1. Project components ....................................................3 2. Key policy and institutional reforms supported by the project ..................................................3 3. Benefits and target population ..................................................4 4. Institutional and implementation arrangements ..................................................4 D: Project Rationale ..................................................5 1. Project alternatives considered and reasons for rejection .....................................5............5 2. Major related projects financed by the Bank and/or other development agencies . 6 3. Lessons learned and reflected in the project design .7 4. Indications of borrower commitment and ownership 7 5. Value added of Bank support in this project .7 E: Summary Project Analysis .7 1. Economic .7 2. Financial .8 3. Technical .8 4. Institutional .8 5. Social .8 6. Environmental assessment .9 7. Participatory approach ...............................................................9 F: Sustainability and Risks .9 1. Sustainability: .........................9 2. Critical Risks ...................... 10 3. Possible Controversial Aspects ...................... 10  G: Main Loan Conditions ...................... 10 1. Effectiveness Conditions ....................... 10 2. Other .......................11 H. Readiness for Implementation ....................... 1 1. Compliance with Bank Policies ....................... 11  Annexes Annex 1. Project Design Summary 12 Annex 2. Detailed Project Description 14 Annex 3. Estimated Project Costs 17 Annex 4. Cost-Benefit Analysis Summary 18 Annex 5. Financial Summary 20 Annex 6. Procurement and Disbursement Arrangements 21 Table A. Project Costs by Procurement Arrangements 24 Table B. Thresholds for Procurement Methods and Prior Review 25 Table C. Allocation of Credit Proceeds 26 Annex 7. Project Processing Budget and Schedule 27 Annex 8. Documents in Project File 28 Annex 9. Statement of Loans and Credits 29 Annex 10. Country at a Glance 31 Annex I I Summary of the Environmental Analysis. 33 Map: IBRD 29056  I  Senegal Agricultural Export Promotion Project Project Appraisal Document Africa Region Country Department 14 Date: November 6, 1997 Task Team Leader: Mr. Ousmane Sissoko Country Director: Mr, Mahmood Ayub Sector Manager: Mr. Jean-Paul Chausse Project ID: SN-PE 51610 Sector: Agriculture Program Objective Category: ESD/PSD Lending Instrument: Specific Investment Loan (SIL) Program of Targeted Intervention: [] Yes [x] No Project Financing Data [] Loan [x ] Credit [ ] Guarantee [] Other [Specifyl For Loans/Credits/Others: Amount (US$m/SDRin): US$8.0m/SDR 5.9m Proposed terms: [ ] Multicurrency [] Single currency, specify Grace period (years): 10 [ Standard Variable [] Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: n/a Service charge: 0.75% Financing plan (US$m, ): Source Local Foreign Total Government 1.4 1.4 IDA 3.2 4.8 8.0 Producers/Exporters 0.4 0.6 1.0 Total 5.0 5.4 10.4 Borrower: Government of Senegal Guarantor: Responsible agency(ies): Ministry of Agriculture Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003 Annual 0.6 1.5 2.2 2.2 1.2 0.3 Cumulative 0.6 2.1 4.3 6.5 7.7 8.0 For Guarantees: [ Partial credit [ Partial risk Proposed coverage: Project sponsor: Nature of underlying financing: Terms of financing: Principal amount (US$) Final maturity Amortization profile Financing available without guarantee?: [] Yes [ No If yes, estimated cost or maturity: Estimated financing cost or maturity with guarantee: Project implementation period: 1998-2002 Expected effectiveness date: 2/1998 Expected closing date: 12/2002  -2 - A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1): The project's objectives are to diversify and develop private agricultural exports, a core objective of the Government's export-led growth strategy. This would be achieved through: (a) specific actions aimed at export market development and diversification; (b) strengthening of existing private producers/exporters' professional organizations, and encouraging the creation of farmers' associations where neededl and (c) upgrading of export facilities at the airport of Dakar. B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): CAS document number: 13909-SE of 1/26/95 Date of latest CAS discussion: 2/16/95. New CAS will be presented to the Board in early 1998. The project supports the CAS objective of sustainable economic growth with equity and poverty reduction, which explicitly also recognizes the facilitation of supply response from the private sector through diversification of production and exports of both traditional and non traditional high value crops, as a major sustainable source. Following the 1994 devaluation of the CFA Franc, which provided an important incentive for agricultural export development and diversification, a number of high value-added agricultural export products from Senegal have become competitive on overseas and regional markets. By providing an effective vehicle to support private sector investment and involvement in export crop development and diversification, and by streamlining the role of agricultural professional organizations in the agricultural export sector, the project fits well in the Bank's country strategy. 2. Main sector issues and Government strategy: Because of previous economic and institutional distortions over the past decade, farmers' reluctance to invest in new or improved technologies and the natural degradation of land, agricultural production has stagnated in Senegal since the beginning of the decade. While, prospects for Senegal's main export and import substitution crops have improved since the parity change of the CFA Franc in January 1994, there is concern that the sector has not responded as well as some other francophone countries to the favorable conditions created by the parity change. The Government's strategy recognizes that despite this generally disappointing performance, the agricultural sector has a great potential for employment and growth in the short to medium term, through export growth and forward and backward linkages, and that pockets of dynamism are emerging in the private sector, involved in high-value crops or activities either for exports or urban markets, such as horticulture, confectionery groundnuts, cattle fattening, etc. The Government's Lettre de Politique de Developpement Agricole (LPDA) issued in April 1995, and supported by the Agricultural Sector Adjustment Credit (PASA: Cr 2738-SE) defines broadly Senegal's medium- and long-term agricultural policy. It is consistent with the macroeconomic development strategy designed to respond to the new opportunities created by the change in the parity of the CFA Franc in 1994. The major objectives of the strategy as set out in the LPDA are: (i) a sustained agricultural growth of 4% per annum; (ii) improved food security; and (iii) increased rural employment and income. To achieve these objectives, the Government has undertaken to: (i) deregulate prices and trade of agricultural products and inputs; (ii) withdraw from all commercial activities to focus on public service functions, such as policy formulation, agricultural services, regulatory functions, monitoring and  -3 - evaluation; (iii) adopt a legal framework to promote land-tenure security and private investment; (iv) promote agricultural intensification and diversification; and (v) decentralize government functions and transfer their management to civil society as much as possible. 3. Sector issues to be addressed by the project and strategic choices: The Government's strategy toward increasing agricultural production aims at supporting the private sector development and involvement in agricultural production and export through specific measures indicated above. In order to develop the potential sources of sectoral growth and in view of the potential for non traditional crop production, the Government is considering, with the support of the Bank and possibly other donors, setting up an agricultural export promotion operation that could be a major vehicle in assisting individual producers/exporters and their private organizations in responding to the demand and product requirements of the regional and international markets, especially for non traditional agricultural products. This operation is expected not only to contribute to further agricultural growth and private sector development, but also to increasing the income of some of the rural poor since 80 percent of the country's poor live in rural areas where agriculture is the main income generating activity. C: Project Description Summary 1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown): Component Category Cost Incl. % of Bank- % of Continzencies Total financinz Bank- US$MM) (US$M) financing A. Export Promotion and Institution 4.6 44 3.6 45 Diversification Activities building B. Support to Producers/Exporters' Institution 2.7 26 1.8 23 Associations building C. Upgrading of Export Facilities Physical 1.4 14 1.2 15 (Project Management) Project 1.7 16 1.4 17 Management Total 10.4 100 8.0 100 2. Key policy and institutional reforms supported by the project: The project will support the Government's export-led strategy and reforms undertaken to deregulate prices and trade of agricultural products and inputs. The existing policy and institutional framework would not inhibit the project viability and sustainability; this continues to be perceived as favorable by most producers/exporters. 3. Benefits and target population: The project will benefit tens of private agricultural producers/exporters and their professional organizations, and reach thousands of smaller growers of exportable crops. It will foster improved links between production and markets and result in increased exports of high-value agricultural products and contribute to reducing the country's excessive reliance on a couple of traditional products. The project is also expected to help create jobs for producers/exporters and to bring them new technology and training opportunities. It will therefore lead to important institutional and capacity building benefits (cf. para. El below).  -4- 4. Institutional and implementation arrangements: Implementation period: Four years: 1998-2002 Executing agency: Ministry of Agriculture Project coordination: Project Management Team Project oversight (policy guidance, etc.): Project Steering Committee (below). Accounting, financial reporting and auditing arrangements: The Project Management would ensure that separate project accounts are established and maintained in accordance with principles and practices satisfactory to IDA, and provide annual financial statements. The Private Sector Foundation (PSF), established under the Private Sector Capacity Building Project (Cr. 2759-SE) as a private agency, which has now gained significant experience in financial management, disbursement and procurement, would be entrusted with processing all financial services including the accounting system, financial management, disbursement and procurement under the project. The project financial management system will ensure adherence to accounting and auditing standards acceptable to the Bank, and provide timely and reliable information that can give early warning in project implementation. During appraisal, PSF's following key areas have been reviewed and found in sound agreement with Bank established procedures: Staffing was found to be adequate; the foundation is staffed with three former big auditing firms' employees. Accounting: PSF has developed a powerful accounting software, "Progeco", that segregates levels of responsibilities with regard to authority of input and control. Procurement and Disbursement procedures were found to be consistent with Bank requirements. Furthermore, the project's financial specialist will oversee payment and procurement processes together with procurement contract management information and project expenditures. All project accounts, the special account and financial statements would be audited by independent auditors acceptable to IDA. The audit report would specifically include the auditors' opinion on the Special Account and on the reliability of Statement of Expenditures (SOEs) as a basis for IDA credit disbursement. The audit report would also include an assessment as to whether goods and services have been procured from eligible sources, and an opinion on the proper utilization of goods and services under the project. The auditors' reports would further include a statement on the adequacy or otherwise of the accounting system and internal controls. The cost of audit would be paid from the IDA Credit. The audited statements, accounts, auditors' long-form reports and short-form opinion reports would be submitted to IDA not later than six months after the end of each fiscal year. The appointment of auditors satisfactory to IDA will be a condition of Credit effectiveness. Monitoring and evaluation arrangements: Project monitoring will be carried out through regular field visits and written reports by the project management. Semi-annual progress reports on project activities will also be established by the management. Project monitoring by the Government will be made through a Project Steering Committee which will include representatives from the Government and the private sector. They will be responsible for reviewing and approving the project's budgets and annual work program (AWP) including all major contracts, once a year. Producers' and exporters' professional organizations will be also involved in project execution through participation in thematic technical committees to review and follow up the project activities and advise on the selection of beneficiaries for project support. Project outcomes will be evaluated during execution and at project completion. A project mid-term review will be carried out by the Government and IDA after the second year of project implementation. Reporting. During the project's four-year implementation period (1998-2002), project accounts, special account, SOEs and financial statements will be audited every year by an independent auditor acceptable to IDA and according to international auditing standards, with the audit reports to be submitted to IDA  -5 - no later than six months after the end of each project year. The Government will also remit to IDA semi- monthly reports showing progress toward the achievement of agreed upon objectives, and an implementation completion report will be submitted to IDA within six months of IDA credit closing. D: Project Rationale 1. Project alternatives considered and reasons for rejection: Some donors are currently involved or considering to engage in selected agricultural export promotion activities. Examples include the European Union (EU) which is providing financial assistance to smaller exporters and has established a guarantee fund to cover the four main formal banks (BICIS, CBAO, CNCAS, SGBS) for extending loans to agricultural exporters. Similarly, CIDA is working with a Canadian NGO to provide technical and advisory support to individual producers and farmer organizations engaged in horticultural crop production with some export activity, in the areas of St.- Louis and Thies. However, since their activities remain relatively small, these donors are anxious to work with IDA as a catalyst to cover a broader range of activities directed at agricultural export promotion and diversification. In this context, they are also contemplating additional support to the sector for the coming years, under parallel financing arrangements with IDA. As a result, the idea of going ahead with the proposed project has been recognized as the appropriate route by such donors and the Government alike. Because of their teething problems and difficulties in grouping all interested producerslexporters, the alternative of executing the project by existing private export organizations such as the Senegalaise d'Exportation de Produits Agricoles et Services (SEPAS) and the Groupement des Professionels de l'Horticulture (GPHM, was rejected. Similarly, project execution by an arm of the Government was considered and rejected in view of high demand for efficiency that such a business oriented operation requires, in addition to the need for maintaining a higher private sector involvement in the operation throughout. The project supports the CAS objective of sustainable economic growth with equity and poverty reduction, which explicitly also recognizes the facilitation of supply response from the private sector through diversification of production and exports of both traditional and non traditional high value crops, as a major sustainable source. (cf. para. B I above).  -6- 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing andplanned): Sector issue Project Latest Supervision (Formn 590) Ratings (Bank-financed projects only) Implementation Development Progress (IP) Objective (DO) Bank-financed Business Environment Private Sector Capacity S S Building Project (Cr. 2759- SE). Ongoing. Business Environment Private Sector Development Operation. (Planned for FY 99). Agricultural Diversification Agricultural Research II (Cr. S S 2107-SE). Completed. Small Rural Operations II U U (Cr. 1992-SE). Ongoing. Agricultural Policy Agricultural Services Project S S (Cr. 2108-SE). Ongoing. Agricultural SECAL (Cr. S S 2738-SE). Completed. Agricultural Intensification and Agricultural Services and Diversification Producer Organizations Program (Planned for FY 1998). Other development agencies CECItCIDA Production and Regional Marketing Support to Vegetable Producers in St.- Louis and Thies. EU Export Guarantee and Credit to Small and Medium Size Enterprises. IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)  -7 - 3. Lessons learned and reflected in the project design: The Bank experience in supporting export promotion in Africa and other regions shows that while traditional exports need to be part of an outward-oriented strategy, the future is in non traditional exports. Foreign market development, the identification of customer and product requirements beforehand, and the presence of a catalytic mechanism that facilitates the establishment of partnerships between local agricultural producers and foreign investors -- have proven to be central factors for successful entry into the international markets. Even a modest increase in a country's share of world markets has often been an important ingredient for growth. The project design takes into account the above lessons of experience. 4. Indications of borrower commitment and ownership: The Government's commitmnent is illustrated by the fact that it has undertaken a number of initiatives including a series of workshops, action plans and trade facilitation studies, to encourage and enhance private sector involvement in agricultural and agro-industrial activities with significant export potential. It also acknowledges that the project will have to be privately managed. 5. Value added of Bank support in this project: In view of the Bank's prior involvement in private sector development in Senegal, the importance of agricultural diversification and export in the country strategy, and the expected catalytic role the Bank may play, the Government has requested Bank support for launching the present operation and coordinating donor activities in the field of agricultural export promotion. E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (supported by Annex 4): [x] Cost-Benefit Analysis: NPV=US$ 5.8 million; ERR= 18% []Cost Effectiveness Analysis:n/a The two approaches used--Economic Rate of Return and Net Present Value--both provide very favorable results. An evaluation of the present value of net benefits from the project shows that the project would result in net revenue of US$5.8 million after ten years and US$17.3 million after fifteen years. A second method used is a computation of the Economic Rate of Return, which yields a rate of of return of 18% at ten years and 25% at fifteen years. Compared to an opportunity cost of capital of 12%, the project looks well ahead of covering its costs by the first ten years. Sensitivity analysis indicates that the rate of return is robust. There is a 92% probability that the ERR would be above 12%. The switching values measured are all above 30% of base values. A summary of the results is presented in Annex 4. There are numerous benefits to the Senegalese economy. A more coordinated and streamlined effort towards agricultural exports would enhance Senegal's image on the world market. Export diversification and increased exports of high valued horticultural crops would reduce the risks of declines in export revenue due to dependence on a few traditional exports and increase Senegal's market share and competitiveness. It would also increase the value of Senegalese agricultural exports. Agricultural export industries would expand leading to increased taxes payable to Government. The expansion of these industries and increase in small-holder production and export of agricultural crops, would both generate employment. The resulting incomes from this increased employment would have a multiplier effect in other sectors. The infrastructure to be developed from this project would also be useful to other exports. The structure of the project is such that it would empower agricultural exporters' and producers'  -8- associations. The resulting benefits are numerous including: increased efficiency in the transfer of information on prices and emerging markets to exporters and producers through their associations; improved quality and packaging procedures; joint negotiations for freight capacity and charges; joint training, promotion and use of improved technology; innovation and advocacy towards a favorable policy environment: strong associations, in a coordinated effort would be able to address the constraints of irrigation and land tenure. These latter benefits though mostly unquantifiable, will go a long way towards strengthening the Senegalese agricultural export production and marketing sector. 2. Financial (see Annex 5): NPV=USS 4.4 million; FRR= 15% The project financial analysis was conducted relaxing the assumptions of shadow pricing and taking into account taxes, duties and contingencies. The results presented in Annex 5 confirm the financial soundness of the project. Under the project, the Government's contribution will be limited to covering taxes and duties estimated at US$1.4 million, while producers/exporters will share in the costs of services requested by them and contribute gradually to covering maintenance and operating costs. Fiscal impact: The fiscal impact is further expected to be positive in view of expected taxes payable to the Government, conservatively estimated at US$1.7 million. 3. Technical: The project technical design and cost estimates are appropriate to Senegal's needs and were confirmed by representatives of major producers'/exporters' professional organizations to be within their expectations. 4. Institutional: Project implementation will be under the general supervision and guidance of the Ministry of Agriculture (MOA) as decided upon by the Government of Senegal (GOS). Other interested ministries and private producers and exporters' associations, formally established as non-government associations, would be represented in a Project Steering Committee (PSC) responsible for supervising the implementation of the proposed project and coordination and monitoring of overall project activities. The establishment of the Project Steering Committee will be a condition of IDA Credit effectiveness. Project management will be assumed by professionals experienced in private agricultural export operations, recruited through open competition, to provide technical and market development advice to individual producers/exporters and their associations. The project management team may be assisted by international technical assistance (on short- or medium-term contracts) experienced in export development and finance, and farmer organization, and connected to an extensive network of foreign buying agencies. It is expected that project beneficiaries would gradually assume the financing of services provided by the management team and that the capacity to provide critical services will continue to be available after project completion. 5. Social: n/a 6. Environmental assessment: Environmental Category []A [x] B []C An environmental analysis was conducted for the project with a view to ensuring that it will have no significant negative impact, that the expected increases in cultivated areas will take place on cleared land, with no impact on flora and fauna, and that mitigation measures will be taken to minimize the  .9- impact of pesticides on soil, water resources and affected population. It is expected that the project will create incentives for the stabilization of agriculture by promoting environmentally sound cash crops and by increasing beneficiaries' income in rural and urban areas through the marketing of high value agricultural products. Given the scope of project activities, the project is classified under environmental category B according to the Operational Directive (OD) 4.01, Annex E. 7. Participatory approach: Project preparation involved a significant participatory approach. Beneficiaries including private producers/exporters were involved in project preparation and design through information sharing, systematic consultation and collection of feedback and written comments. Similarly, CECI-an NGO actively involved in supporting vegetable production and marketing, and donors interested in agricultural export such as CIDA and EU, were also consulted systematically and contributed primarily through sharing information on the subject. F: Sustainability and Risks 1. Sustainability: The project would enhance the capacity of the agricultural export sector to respond to the country's export promotion and diversification objectives. By strengthening farmer organizations and agricultural exporters' professional groups, the project would contribute to build a local capacity that would further ensure that actions initiated under the project are carried out and pursued upon project completion. In view of the importance of the private sector's effective involvement and participation in project activities and costs, project benefits will be also maintained after project completion, with all direct cost of services to be recovered at the end. During project execution, beneficiaries will be required to contribute between 20 and 40 percent of the direct costs for all of their requested project support, according to eligibility criteria and cost sharing mechanisms established in the Project Implementation Manual.  -.O- 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure Annex 1, cell "from Outputs to Objective" Continued Government commitment for greater role M The Government has so far agreed that of private sector in ag. exports may be short-lived. private sector play a leading role in ag. export and this will be confnired through clear delineation of the Government and private sector respective roles under the project. Uncoordinated donor action may entail risks of M Systematic coordination with other duplication. projects and structures and collaboration with ag. professional organizations will be a core activity of project management team. Producers willingness to group for product N Through providing in time market data, processing, packaging/labeling and shipping may be price information and common difficult to materialize. packaging and other services, the proposed project will play a key role in facilitating the grouping of producers/exporters to bulk and standardize their production in order to take full advantage of export opportunities. Annex 1, cell "from Components to Outputs" Non availability of local project management and N Reasonable in-country capacity exists; implementation capacity. this may be supplemented by short- term external expertise with international market network connections. In addition, assurances will be obtained that key staff will undergo an open competitive selection process and should be satisfactory at all times during project execution. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 3. Possible Controversial Aspects: n/a G: Main Loan Conditions 1. Effectiveness Conditions: A key project related conditionally will be the need to agree with the Government on the establishment of an autonomous project management structure staffed with private professionals experienced in agricultural export. Other conditions will include obtaining agreement from the  Government that it will: (a) appoint a Project Management Team with key personnel satisfactory to IDA at all times, and establish a Steering Committee with equal private and public representation; (b) appoint independent auditors satisfactory to IDA, to audit all project accounts and financial statements; (c) adopt a Project Implementation Manual acceptable to IDA. The draft Project Implementation Manual was discussed during Negotiations and found satisfactory 2. Other: n/a H. Readiness for Implementation [ ] The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [x ] Not applicable. [x ] The procurement documents for the first year's activities are complete and ready for the start of project implementation. [x ] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [ ] The following items are lacking and are discussed under loan conditions (Section G): I. Compliance with Bank Policies lx] This project complies with all applicable Bank policies. [ ] [The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.]  - 12 - Page 1 of 2. Annex 1 Senegal: Agricultural Export Promotion Project Project Design Summary Narrative Summary Key Performance Indicators' Monitoring and Supervision Critical Assumptions Sector-related CAS Goal: (from Goal to Bank Mission) Sustainable economic growth GDP and agricultural growth National statistics with equity and poverty Customs data reduction and supply response from private sector through diversification of agricultural production and ag. exports. Project Development General objectives: (from Objectives to Goal) Objectives Export diversification and Increase in private horticultural National statistics Macro and fiscal policy of the increase in agricultural exports exports by 15% a year, from Customs data Government to remain through private sector. 6,000 T to 10,000 T from 1998 favorable. to project end, significant increase in other ag. exports, and exporting new products. Specific objectives: Annual Work Program (AWP) Increase in share of project and Semi-annual Progress supported exporters in: private Reports (SPR) horticultural exports by 15% a year, from 1998 to project end, the increase in other ag. exports, and exporting new products. Project Outputs (from Outputs to Objectives) 1. Market potential for 1.1 No. of private exporters 1.1. 1. Annual Work Program Continued Govt. commitment increased and diversified reached: 50 by project end, (AWP)/Semi-annual for greater role of private sector export has been identified and over 1,000 producers Progress Reports (SPR) in ag. exports 1.2 No. of exporters/importers 1.2.1 AWPISPR relations established formally: 5 a year, at least. 1.3 Trial shipments completed 1.3.1. AWP/SPR and evaluated: 5-10 a year. 1.4 Trade shows participation w/ 1.4.1 AWP/SPR impact on ag. export development. 1.5 Research contracts on new 1.5.1 Signed and executed product development contracts effective. 1.6 No. of products 1.6.1 Project reports standardized. 2. Establish effective 2. 1 Members using services of 2.1.1 AWP/SPR Coordination w/other project capability of ag. professional packaging centers. and structures to avoid risks of organizations to bulk and duplication. export products Baseline and targeted values should be shown, with the latter divided into values expected at mid-term, end of project and full impact.  - 13 - Page 2 of 2 2.2 Members attending project 2.2.1. AWP/SPR training and using its svcs. 2.3 Central data/info. referral is operational. 3. Selected export facilities are 3.1 Packaging centers 3.1.1 Field visits, supervision. Producers willingness to group upgraded. operational (1-2) and their for product processing, services used. packaging and shipping. 3.2 Improved airport storage 3.2.1 Field visits, supervision. capacity (refrigerated storage, outside sheds) Project Components Inputs: (from Components to Outputs) 1. Export promotion and 1.1 Int'l market research Availability of implementation diversification activities. 1.2 Intl' events (fairs, seminars, capacity. tours) 1.3 New product development 1.4 Product quality /presentation improvement 1.5 Trial shipments 1.6 Ag. export guidelines prepared by int'l and nat'l experts. (US$4.6 million) 2. Strengthening of ag. 2.1 Product packaging and professional organizations. national labeling 2.2 Acctg., mgmt. , other training 2.3 Central referral/data info. svc. 2.4 Financial and legal advisory services 2.5 Newsletters and Export Manuals. 2.6 Nb of financial packages prepared w/ project assistance. 2.7 Packaging centers operational (1-2). (US$2.7 million) 3. Upgrading of selected export 3. 1 Refrigerated and outside facilities. storage facilities for perishables (US$1.4 million) 4. Project management 4. 1 Project management team 4.1.1. Project reports. operational at project inception, and collecting performance data. (US$1.7 million)  - 14 - Page l of3 Annex 2 Senegal: Agricultural Export Promotion Project Project Description Project Component I - US$4.6 million (total cost of component, including contingencies) Export Promotion and Diversification Activities. Under this component the project will assist Senegalese producers/exporters in: (i) market research, customer identification, meeting quality requirements, trial shipments, obtaining pre-export finance and developing maritime agricultural export crops in addition to those currently exported by air ; (ii) product development and processing, and quality control via targeted adaptive research; and (iii) establishment of business partnerships between local exporters and foreign businesses and assistance in identifying regional and overseas niches. The project will provide direct in-house assistance from its staff including a specialist in market research and product development, who is also expected to draw upon his international network corporate connections for market information, identifying and securing outlets and establishing commercial partnerships. In addition, the project will provide for contracting ad hoc services with local or international firms and institutes in those areas requiring more specialized inputs such as research for new product development including agricultural product processing, product quality certification, international ISO certifications for product processing, the establishment of national standards and norms, etc. which will be financed fully by the project. With respect to market research and development, the project activities will not only be geared at overseas markets but also at developing regional niches. Both traditional and non traditional horticultural products, for which potential for increasing Senegal's share is promising, will be encouraged and benefit from project support for which there is a clamor from producers/exporters engaged in crops such as green beans for which the country could maintain a leader role over the coming years in addition to melon, grapefruit, confectionery groundnuts, and others such as cashew nut, cherry tomato, avocado, mango, asparagus, aubergine, okra, pepper, tropical plants, etc. The project will finance the full cost of those research activities which will benefit the entire agricultural export community. The project will also encourage and contribute to business canvassing activities for all promising products as well as exporters' participation in selected specialized international fairs. Trial shipments including product preparation and forwarding of new export crops will be also conducted under the project to further support export diversification; these will be complemented with the follow-up of export transactions, product acceptance and final sale results. Project Component 2 - US$2.7 million (total cost of component, including contingencies) Support to Producers/Exporters' Associations. Under this component, the project will deal primarily with: (i) strengthening existing private professional organizations: producer groups, export associations, cooperatives, interprofessional groups of professional associations, which could become a major vehicle for non traditional export market development and for lobbying activities, etc.; (ii) encouraging the creation of farmer associations by developing a proper strategy with the help of the project's farmer organization specialist; and (iii) setting up a central referral/data information service as well as providing management and legal advice required for the formal establishment of nascent associations and for developing their work programs together with training in simplified cost accounting and management principles. In this respect,  - 15 - Page 2 of 3 project support will benefit existing and future producers'/exporters' associations and their individual members. Because product quality and presentation constitute key requirements for tapping external markets, the project would facilitate product grouping for packaging and quality controls in selected packaging centers that may be established under the project. Major existing associations, including the Senegalaise d 'Exportation de Produits Agricoles et Services (SEPAS) and the Groupement des Professionels de l 'Horticulture (GPH), whose activities account for the bulk of horticultural exports of the country, have already indicated their interest in participating in project activities and willingness to contributing to cost sharing for the expected project support. Direct assistance and short-term consultancies will be provided under this component to provide training in simplified accounting systems, management and legal advice in preparing statutes and operating principles and procedures. A central referral/data information service will be established to provide just-in-time infornation to producers/exporters on going market prices, cargo plans, quantity and quality requirements, etc. A provision will be also included in the project primarily to help smaller members of exporters/producers' associations prepare sound financial packages including relevant technical infornation and thereby, help make their businesses more attractive to local banks and further improve their access to formal financial services. In addition to representing the interests of their members, producers/exporters' associations are expected to be play a major role in lobbying activities for the trade in dealing with common issues affecting their members on which they will have an increased bargaining power. In doing so, it is expected that such problems including but not limited to the inadequate availability of irrigation water in the neighborhood of Dakar, land tenure issues, etc. Strengthening of professional organizations will also bring other benefits such as furthering local institutional capacity for project oversight and execution, and ensuring the sustainability of project action once it is completed. Project Component 3 - US$1.4 million (total cost of component, including contingencies) Upgrading of Export Facilities through upgrading/rehabilitating infrastructure (cold storage, storage capacity, outside sheds, etc.) at the airport for preserving perishable products in transit. Such rehabilitation will concern the airport of Dakar. Studies and the actual execution of work will be carried out under this component. All infrastructure upgraded under the project will be privately managed with appropriate cost recovery for maintenance. Project Management and Implementation The project will be implemented over a four-year period from 1998 through 2002, under the generai supervision and guidancq of the Ministry of Agriculture. The project will provide support for project management which will be assumed by qualified private professionals experienced in agricultural export or related activities and farmer organization. The support for project management will cover investment costs and operating costs on a decreasing basis, for a total of US$1.7 million including contingencies. So far, all stakeholders including the GOS, would-be beneficiaries and donors, concurred that the project management team will have full autonomy in decision-making and carrying out day-to-day project activities, and be responsible for achieving the agreed upon monitorable results under the project. As it was recognized that project management will be entrusted to experienced and able private professionals with a mastery of the trade, all key project staff will be selected on the basis on an open competitive process and with fixed term renewable contracts.  -16- Page 3 of 3 The project management unit will be a light autonomous structure, which will be managed in a private fashion, with fixed term contractual staff and no Government interference in day-to-day management. At project inception, a National Project Manager (NPM) will be recruited on a fixed term contract of two years, renewable on the basis of demonstrated performance. He will be assisted by technical staff including two senior local professionals experienced in agricultural export or related activities, a local financial and accounting specialist and support staff. The NPM will have management, coordination and monitoring responsibilities including but not limited to: (a) implementing the project, coordinating and monitoring project execution; (b) contracting and supervising the execution of contracts between the project and specialized institutions and the technical assistants for market research and product development, dissemination of export standards and requirements, adaptive research, technical agricuwtural advice, etc.; (c) preparing the project's annual work programs (AWPs), annual budgets, acccunts and financial statements, progress reports, disbursement applications and procurement plans and execution; (d) liaising with the Government, institutes and professional organizations involved in agricultural export crops promotion, etc.; and (e) coordinating project activities with those of donors. Major responsibilities of the senior local professionals will involve: (a) disseminating information on product quality standards and requirements; (b) advising and following up on the efficient use of technical packages for specific export crop production; (c) coordinating export promotion activities including fairs, business tours and market tests; (d) following up the activities of agriculturl producers'/exporters' associations and helping the formal of establishment thereof, if any; (e) coordinating training activities and field demonstrations; (f) helping prepare these organizations' business plans, budgets and financing options; and (g) assisting in data management, dissemination including memberships, price, market and production indicators. The project management team will be assisted by a team of international technical assistance - an export development and sales specialist with financiallexport finance experience, data management and export logistics expertise - who will be paired with the above local expertise. Such technical assistance will further provide services for: (a) setting up appropriate accounting and financial management systems for the agricultuml professional associations; (b) designing the data base management; (c) providing guidance and advice to local professional staff with the objective of helping develop a local expertise that could overtime become the foundation of a specialized private service for export market development and export logistics management; (d) promoting the establishment of professional organizations, where warranted; (e) preparing the training programs and organizing training sessions; and (f) provide the required training to transfer their knowledge, know-how and responsibilities to the local professional staff. In this connection, the technical assistance will be accountable and its performance will be evaluated on, among other things, the extent to which such transfer actually takes place. Ad hoc technical assistant assignments in export logistics and air freight advisory will be also secured. The above technical assistance contract will be financed for a period of two years which may possibly be extended for a duration not to exceed twelve months upon satisfactory performance. Appointment of project management team with key personnel to be satisfactory to IDA at all times during project implementation would be a condition of Credit effectiveness. To ensure that the provisions of the Project Implementation Manual are observed by the project management, the draft document was discussed at negotiations and found satisfactory. The adoption by the Government of a Project Implementation Manual acceptable to IDA will be a condition of Credit effectiveness.  - 17 - Annex 3 Senegal: Agricultural Export Promotion Project Estimated Project Costs' Proiect Component Local Foreign Total - --------------------US $ million-------------------- Export Promotion and Diversification Activities 1.2 2.9 4.2 Support to Producers'/Exporters' Associations 1.5 0.9 2.4 Upgrading of Export Facilities 0.6 0.7 1.3 Project Management 1.3 0.3 1.5 Total 4.6 4.9 9.4 Total Baseline Cost Physical Contingencies 0.1 0.1 0.2 Price Contingencies 0.3 0.5 0.8 Total Proiect Cost 5.0 5.4 10.4 Numbers may not add up due rounding  - 18 - Page I of 2 Annex 4 Senegal: Agricultural Export Promotion Project Cost Benefit Analysis Summary (in US$ million) Present Value of Flows Fiscal Impact Economic Financial Analysis Analysis' Taxes Subsidies Benefits 12.1 11.7 1.7 Costs 6.3 7.3 1.4 Net Benefits 5.8 4.4 IRR (10 year) 18% 15% IRR (15 year) 25% 23% Summary of Benefits and Costs: The economic analyses were conducted in constant 1997 prices. Economic costs were computed as current financial costs minus taxes, duties and price contingencies. The total economic cost used for the analyses is US$ 8.5 million, while the financial cost is US$ 9.6 million; the corresponding present values are US$6.3 million and US$7.3 million, respectively. The present value of economic benefits are US$12.1 million and that of the financial benefits is estimated at US$11.7 million. Main Assumptions: The underlying assumptions for the project economic analyses are as follows: That demand for high valued agricultural products (fruits, nuts and vegetables, etc.) remains strong especially in targeted markets and for the identified products; * That the targeted markets (or market niche) remain opened for export; * That international freight rates and handling charges do not increase excessively to make exports unprofitable; * That producer prices change in relation to international prices to reflect the true market incentives; * That the agricultural production and trade policy environment remains favorable and the overall macroeconomic environment remains stable; * That producers and exporters associations play their role in assisting members; * That constraints such as irrigation, land tenure, export financing will be alleviated or at least not worsen. 'If the difference between the present value of financial and economic flows is large and cannot be explained by taxes and subsidies, a brief explanation of the difference is warranted, e.g., "The value of financial benefits is less than that of economic benefits because of controls on electricity tariffs."  - 19 - Page 2 of 2 Sensitivity analysis / Switching values of critical items: Various factors that are likely to change were analyzed and are discussed in this section. Increased cost of air freight would increase transfer costs, reduce margins and make some commodities unprofitable to export. Increased use of sea freight for some crops such as mango, aubergine and melon which is a possibility, would reduce their transfer costs, increase the margin and make them more profitable to export. Increased costs of production or low domestic supply, would lead to increased producer price followed by lower margins, making export unprofitable. Reductions in international prices and increase in handling charges could make exports unprofitable. An analysis of the variables used in the economic analyses and effect of their changes on the rates of return led to the identification of the critical values shown in table below. Switching (Critical) Values (in CFAF) Variable Switching Base Percentage Value Value Change Producer Prices/kg Green Beans 400 250 60 Cherry Tomato 800 100 700 Exchange Rate (FCFAIUS$) 850 590 44 Air Freight 702 520 35 International Prices/ kg Green Beans 1020 1500 -32 Cherry Tomato 1500 2250 -33 A simulation was conducted using the Crystal Ball software, around the critical values by building in probabilities and possible distributions. A simulation of 20% change in producer prices, 10% change in air freight, international prices and exchange rate, led to a favorable result in terms of project viability. There was a 92% chance that the ERR would at least equal the opportunity cost of capital, i.e. above 12%. It is therefore concluded that the overall performance of the project is robust.  - 20 - Annex 5 Senegal: Agricultural Export Promotion Project Financial Summary (in US$ million) Years Ending Implementation Period Operational Period 1998 1999 2000 2001 2002 2033 2004 2005 Project Costs Investment Costs 1.9 2.9 2.4 2.0 Recurrent Costs 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Total 2.2 3.2 2.7 2.3 0.3 0.3 0.3 0.3 Financing Sources (% of total proiect costs) IDA 78 78 77 75 Government 13 16 15 12 Beneficiaries 9 7 10 13 100 100 100 100 Total 100 100 100 100 I Detailed project financial analyses were conducted and are summarized in para E2 above. They confirm the financial soundness of the project and its fiscal sustainability. Under the project, the Government's contribution will be limited to covering taxes and duties estimated at US$1.4 million, while producers/exporters will share in the costs of services requested by them and contribute gradually to covering maintenance and operating costs. The fiscal impact is further expected to be positive in view of expected taxes payable to the Government, conservatively estimated at US$1.7 million.  - 21 - Page I of 6 Annex 6 Senegal: Agricultural Export Promotion Project Procurement and Disbursement Arrangements Procurement 1. All goods, works and services financed under the IDA Credit would be procured in accordance with IDA guidelines of goods, works and services [(Guidelines: Procurement under IBRD Loans and IDA Credits, January 1995 as revised in January and August 1996 (Goods and Works Guidelines),and Guidelines: Selection and Employment of Consultants by World Bank Borrowers, January 1997 (Consultants Guidelines)]. Contracts to supply goods and equipment, vehicles and consulting services would be processed under a contractual arrangement with the Private Sector Foundation (PSF), which has adequate experience and control procedures in place for procurement and is presently supported under the Private Sector Capacity Building Project (Credit 2759-SE), and awarded by the project management. Contract for civil works would be processed under a contractual arrangement with the Agency for the Management and Execution of Public Works (AGETIP), which has extensive experience in civil works contracts using Bank procedures. Contracts for works 2. There is only one major civil works contract--for upgrading the cargo warehouse capacity at the Dakar airport--to be carried out under the project, which is estimated to cost US$720,000 of which IDA financing is expected to be about US$540,000. This contract would be procured by International Competitive Bidding (ICB), acceptable for the Bank. For all other contracts, involving minor works, each is expected to cost less than US$50,000, with an aggregate amount of US$100,000. These contracts would be awarded on the basis of at least three quotations from eligible contractors. Contracts for vehicles. goods and equipment 3. Contracts for vehicles, goods and equipment would be grouped by lots. Contracts for lots expected to exceed US$200,000 would be procured by International Competitive Bidding (ICB) procedures, acceptable to the Bank. Use of ICB is only expected for the refrigeration equipment to be used in the extension of the storage facilities at the Dakar airport, at an estimated cost of US$540,000. There would be no other procurement by International Competitive Bidding (ICB) procedures as the lots for all other vehicles and equipment are not expected to exceed US$200,000 per contract and are therefore not likely to attract international bidders. National Competitive Bidding (NCB), procedures acceptable to IDA, would be used for contracts equivalent to or more than US$50,000 and less than US$200,000. The total value of goods to be procured under NCB should not exceed US$1,300,000 for the life of the project. Contracts under US$50,000 for the procurement of items that cannot be grouped into bulk procurement and for readily available off-the-shelf goods would be procured by comparing price quotations obtained from at least three local suppliers. Procurement by this method should not exceed the total sum of US$350,000 for the life of the project. The implementation unit would be required to prepare a computer-based system to monitor that the aggregate amounts agreed upon would not be exceeded during project implementation. IDA's prior review procedures for civil works and goods would apply to all purchases for which the contract value is equivalent or  - 22 - Page 2 of 6 in excess of US$50,000. Contracts for Technical Assistance and Traininsz 4.1 Oualitv- and Cost-Based Selection (OCBS) Except as otherwise stated in paragraph 4.2 below all consultants' contracts would be procured using QCBS. Consultants' services, as listed in paragraph 3.13 to 3.18 of the Guidelines will also be procured using QCBS. 4.2 Other Procedures for the Selection of Consultants a) Selection Based on Consultants' Qualifications: Services for contracts for assignments for which the need for preparing and evaluating competitive proposals is not justified and estimated to cost less than US$20,000 equivalent per contract for individual contracts and US$50,000 equivalent per contract for consulting firms, may be procured under contracts awarded on the basis of appropriate qualifications and references in accordance with paragraphs 3.1 and 3.7 of the Consultants Guidelines. Services that may fall in this category would be related to research, product quality and development, product dissemination, financial advice, establishment of national norms, and proper operational procedures. b) Single Source Selection. Services estimated to cost less than US$20,000 equivalent per contract for individual consultants and US$50,000 equivalent per contract for consulting firms, may, with IDA's prior agreement, be procured in accordance with the provisions of paragraphs 3.8 through 3.1 1 of the Consultants Guidelines. c) Individual Consultants. Services for consultants and other contractual staff employed by project management would be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultants Guidelines. 4.3 Review by the Bank of the Selection of Consultants: a) Scheduling the Selection Process. The selection process for the recruitment of consultants, including the cost estimate, the contract packaging, applicable procedures, the short list, selection criteria, the proposed implementation program and the disbursement schedule shall be furnished to IDA for its review and prior approval, in accordance with paragraph 1 of Appendix I of the Consultants Guidelines.  - 23 - Page 3 of 6 b) Prior Review. (i) All contracts for the employment of consulting firms estimated to cost the equivalent of US$100,000 or more, the procedures set forth in paragraphs 1 and 2 [other than the 3rd subparagraph of para 2 (a)] and 5 of Appendix I of the Consultants Guidelines shall apply. (ii) All contracts for the employment of consulting firms estimated to cost the equivalent of US$50,000 or more per contract, but less than US$100,000, the procedures set forth in paragraphs 1, 2 [other than the 2nd subparagraph of para. 2 (a)] and 5 of Appendix I of the Consultants Guidelines shall apply. (iii) All contracts for the employment of individual consultants estimated to cost the equivalent of US$20,000 or more, the qualifications, experience and terms of reference (TORs) of the consultants shall be furnished to the Bank for its prior review and approval. 4.4 Post Review. All contracts not governed by the paragraph 4.3 (b) above, the procedures set forth in paragraph 4 of Appendix 1 of the Consultants Guidelines shall apply. Disbursements Use of statements of expenses (SOEs): 1. Disbursements will be fully documented except for expenditures for operating costs, training and contracts for goods and consulting firms costing less than US$100,000 equivalent. Statements of Expenditures (SOEs) will also be used for contracts for individual consultants costing less than US$50,000 equivalent. The training program will be included in the Annual Work Program and approved annually. All expenditures above 20 percent of the initial deposit to the Special Account would be eligible for direct payment by IDA. All supporting documents will be retained by the Project Management and made readily available for review by periodic IDA supervision missions and external auditors. Special account: 2. To ensure that funds for project implementation are available as and when needed, a Special Account in local currency would be established at a commercial bank acceptable to IDA, with an initial deposit equivalent to US$600,000, to cover about three months of expenditures, to be withdrawn from the Credit Account after Credit effectiveness. The Special Account would be replenished monthly or more often when the total disbursed amounts to one third of the initial deposit, whichever is sooner. 3. The Credit funds are expected to be disbursed faster than the standard disbursement profile for agricultural projects in Senegal, in view of the shorter implementation period for this operation which, in essence, is a private sector support operation including institution building and time-bound technical assistance. Disbursements are expected to be completed by December 31, 2002.  - 24 - Page4 of6 Annex 6, Table A: Project Costs by Procurement Arrangements (in US$'000 equivalent) Expenditure Category Procurement Method Total Cost (including contingencies) ICB NCB Other NBF 1. Works 720 99 819 (540) (74) (614) 2. Goods 487 1,265 350 2,103 (365) (917) (300) (1,582) 3. Services 6,563 1/ 6,521 (4,976) (4,900) 4. Miscellaneous 942 2/ 942 (868) (868) Total 1,207 1,265 7,955 0 10,385 (905) (917) (6,219) (0) (7,964) Note: N.B.F. Not Bank-financed (includes elements procured under parallel cofinancing procedures, consultancies under trust funds, any reserved procurement, and any other miscellaneous items). Figures in parenthesis are the amounts to be financed by the IDA credit. 1: All consulting services would be obtained in accordance with the Bank's procurement guidelines (see also paras. 4.1-4.4 of this annex). Most consultant services would be obtained using short lists from databases already compiled by other IDA funded projects in the country. 2: Miscellaneous expenditures are those related to the project's incremental operations costs. They include rent, utilities, office supplies, vehicle and equipment operating and maintenance costs, and travel allowances of project staff. They would be mostly obtained through local shopping procedures, given the small amounts of the individual purchases and the difficulty in combining them in sufficiently large lots.  - 25 - Page 5 of 6 Annex 6, Table B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review I. Works Equal or more than ICB Equa! or more than US$50,000 US$50,000 Less than US$50,000 Comparison of at least three quotations 2. Goods Equal or more than ICB Equal or more than US$200,000 US$50,000 Equal or more than NCB US$50,000 Less than US$50,000 National Shopping 3. Services Equal or more than US$20,000 for individuals and equal or more than UtS$50iooo for firms. 4. Miscellaneous Total value of contracts subject to prior review: $7.8m, or 75% of total costs  -26 -Page 6 of 6 Annex 6, Table C: Allocation of IDA Credit Proceeds Amount Expenditure Category in US$million Financing Percentage 1. Works 0.6 100% of foreign and 80% of local expenditures 2. Vehicles, Equipment and Materials 1.1 100% of foreign and 80% of local expenditures 3. Consultaht Services and Training 3.0 100% 4. Ag. Export Promotion Services 1.2 100% 5. Operating Costs 0.9 80% 'till 6/30/2001; 40% thereafter 6. PPF 0.4 7. Unallocated 0.8 Total 8.0  - 27 - Annex 7 Senegal: Agricultural Export Promotion Project Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage) 150 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 6 5 First Bank mission (identification) 06/03/1997 06/03/1997 Appraisal mission departure 09/29/1997 9/29./1997 Negotiations 11/15/1997 10/15/1997 Planned Date of Effectiveness 02/01/1998 Prepared by: Ministry of Agriculture Preparation assistance: [PPF, trust funds, cofinanciers, etc.] Bank staff who worked on the project included: Mr. Mahmood Ayub (Country Director, CD 14) Mr. Jean-Paul Chausse (Technical Manager, AFTA3) Mr. Ousmane Sissoko (Sr. Financial Analyst, Task Team Leader) Mr. Leopold Sarr (Ag. Services Specialist) Mr. Abdoulaye Seck (Economist) Ms. Lynn Engstrand (Private Sector Development Specialist) Mr. Dirk Prevoo (Operations Analyst) Ms. Andrea Vasquez (Task Assistant) Ms. Asha Ayoung (Procurement Specialist) Mr. Wolfgang Chadab (Disbursement Officer) Mr. Kishor Uprety (Lawyer)  - 28 - Annex 8 Senegal: Agricultural Export Promotion Project Documents in the Project File* A. Project Implementation Plan B. Bank Staff Assessments Detailed Cost Tables Estimated Disbursement Schedule Detailed Economic Analysis *Including electronic files.  Generated: 11/07/97 Annex 9 Status of Bank Group Operations in Senegal IBRD Loans and IDA Credits in the Operations Portfolio (As of September 30, 1997 Difference Between expected Original Amount in US$ Millions and actual Loan or Fiscal disbursements a/ Project ID Credit Year Borrower Purpose No. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd Number of Closed Loans/credits: 90 Active Loans SM-PE-2369 IDA29850 1998 REPUBLIC OF SENEGAL INTEGR.HEALTH S.DEV. 0.00 50.00 0.00 49.13 0.00 0.00 SN-PE-41567 IDA29510 1997 REPUBLIC OF SENEGAL ENDEMIC DISEASES 0.00 14.90 0.00 14.78 14.92 0.00 SN-PE-44383 IDAN0240 1997 REPUBLIC OF SENEGAL URBAN TRANS REP TA 0.00 6.60 0.00 6.71 0.00 0.00 SN-PE-46648 IDA29720 1997 REPUBLIC OF SENEGAL REGIONAL POWER 0.00 10.50 0.00 10.54 0.00 0.00 SN-PE-46768 IDA29630 1997 REPUBLIC OF SENEGAL SUST.PART.ENGY.MGMT. 0.00 5.20 0.00 5.20 0.00 0.00 SN-PE-2373 IDA28720 1996 REPUBLIC OF SENEGAL HIGHER EDUC I 0.00 26.50 0.00 22.94 24.15 0.00 SN-PE-35621 IDA28730 1996 REPUBLIC OF SENEGAL PILOT FEMALE LITERAC 0.00 12.60 0.00 9.94 10.58 0.00 SN-PE-2346 lDA27580 1995 REPUBLIC OF SENEGAL WATER SECTOR 0.00 100.00 0.00 84.69 97.90 97.89 SN-PE-2376 IDA27590 1995 REPUBLIC OF SENEGAL PRIV.SCTR.CAP.BLDG 0.00 12.50 0.00 8.02 9.44 9.44 SN-PE-35615 IDA27230 1995 REPUBLIC OF SENEGAL COMM NUTRITION 0.00 18.20 0.00 13.08 15.17 15.20 SN-PE-2357 IDA24730 1993 REPUBLIC OF SENEGAL HUMAN RES DEV'T II 0.00 40.00 0.00 16.12 14.69 0.00 SN-PE-2342 IDA22660 1991 REPUBLIC OF SENEGAL TRANSPORT SEC. SECAL 0.00 65.00 0.00 15.02 9.30 9.10 SN-PE-2331 IDA21080 1990 REPUBLIC OF SENEGAL AG. SERVICES 0.00 17.10 0.00 1.82 .63 .62 SN-PE-2327 IDA19920 1989 REPUBLIC OF SENEGAL SMALL RURAL OPS. II 0.00 16.10 0.00 5.79 5.64 0.00 SN-PE-2339 IDA18680 1988 REPUBLIC OF SENEGAL INDUSTRY SECTOR 0.00 33.00 0.00 5.66 4.04 3.94 Total 0.00 428.20 0.00 269.64 206.46 136.19 Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 149.40 1,187.68 1,337.08 of which has been repaid: 0.00 168.10 168.10 Total now held by IBRD and IDA: 428.20 976.78 1,404.98 Amount sold : 0.00 5.46 5.46 Of which repaid : 0.00 5.46 5.46 Total Undisbursed : 269.64 6.37 276.01 a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system will be used (HS . highly Satisfactory, S - satisfactory, U = unsatisfactory, HU . highly unsatisfactory): see proposed Improvements in Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994. Note: Disbursement data is updated at the end of the first week of the month. OQ 0 Generated by the Operations Information System (QIS)  - 30 - Page 2 of 2 Senegal STATEMENT OF IFC's Committed and Disbursed Portfolio As of 30-Sep-97 (In US Dollar Millions) Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1980 BHS 0.00 .46 0.00 0.00 0.00 .46 0.00 0.00 1981/88 ICS 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 1994/96 SOGECA 0.00 .33 0.00 0.00 0.00 .28 0.00 0.00 1996/97 AEF SERT .63 .43 0.00 0.00 .63 .39 0.00 0.00 1997 SEF NBA SA 1.86 0.00 0.00 0.00 .93 0.00 0.00 0.00 Total Portfolio: 5.49 1.22 0.00 0.00 4.56 1.13 0.00 0.00 Approvals Pending Commitment Loan Eauity Ouasi Partic 1997 GTI DAKAR 13.09 1.50 1.51 0.00 Total Pending Commitnent: 13.09 1.50 1.51 0.00 Generated by the Oprations Information System (OIS) on 1 1/07/97  -31 - Annex 10 Page 1 of 2 Senegal: Agricultural Export Promotion Projec Senegal at a glance- ... ~~~~~Sub-' POVERTY and SOCIAL ha8l Lw lSenegall- Afdsa' Menai.mmGaat~ Population mid-1996 (milons) . .7 60 3.22 GNP per capita 1096 (USS) 56L40b0 GNP199604150asum ~ ~ ~ ~4.9 294 1.601 Average annual growth. 19909 Population (%M. 2.7 1.7, Labor fbrce()27 . . GPGi * ~~~~~~~~~~per -- Mosm recent estlnate btssyearavblaatc 1980) ampleaIlIU Poverty. headoount ktdc Uox ppt5n Urban population (U of totalpopula#an 42 31. 20., LUfeexweCtm at bdehyw)5 52- 63 Infant morWtalt (per' 1.6000AeWfs2 9 69 Chid msJnutriton (% ofwwts5 20 A==es to safe water (U ofppfao).. 4 53 Illiteracy (Ucp~so. g 5. 7 43 '34 Gross primary enrollment( ooAeap fao 60 72 10 Male 67 7 li2 Lwhomum Female .8365 09 _ _ _ _ __ _ _ _ _ __ _ _ _ _ _ KEY ECONOMIC RATIOS, ad LONG-TERKTRENDS, 1976' 1985 1905 190 GOP (billons US$) .9 26 4.9 5.1 Gross domesfti ivesamlmVGDP 17. 10. . 15. 16.3 OseU D Exports of goods and swvbcesGDP. 368 :2. 31.6 30.6- Gross domestic savin)gs/GOP 12"5 :-0.7, 104 .11.4 Gross national savinasrGOP. 60 -5. 9. 10.0 Current account baiance,JGO 4.4: :.:16.6 -6.1 -6.8 Interet payments/GP I. 2.0. 1.2 . Saviti Tota debt/GOP IS 90.4.- 79.0 Tota debt service/exports 5. 20.7 17.6 Present value of debt1GDP . . 51.6 Present Valu odeeprs. .. 148.9 nsmm :197545 190646. -1906 190116 199746 (average annual gowth) GDP 2.0 1.9 46 5.6 .9 - GNP per capita -1.2 .-03': -.S.6 1 Exports of goods and servIces: 2.2 2.9: 8.1 4 4.1 STRUCTURE of the ECONOMY ______________ (% of GDP) 17 9 95 19 Agticultume 26.9 16. 21.0 2`1.3 32- Industry 20.3 15.6 19.5 19.7 Manufacturng 16.4 11.3 12.9 12.9 . services 52.8 67.9 59.6 69.0.4 Private consumption 72.2 83.9 78.4 76.2 .*I General government consumptio 15.2 16.8 11.2 10.4 Imports of goods and services 41.6 40.9 3.8. 351.5 ,197545 1916-96 195 1996 (average on-el growth) Gi'wS l5b5fto5pIW lePUw4%) Agricuftur -1.4 1.5 0.9 7.5 a0- Industry 2.1 3.0 9.7 7.0 Manufacturing 2.5 2.4 9.6 5. i services 3.1 1.7 4.7 4.5 Private consumption 3.0 0.9 10.1 6.2 e General govemnment consumption 5.3 -2.9 1.6 1.3 I Gross domestic ienvstmnt 4.48 5.0 29.2 114.5. -.e Imports of goods end servicess 3.3 -0.4 6.6 5.6 Gros nationa product 1.6 2.2 4.6 5.6 I" n Note: 1996 data ame prellmlnauy esttrmates. *The diamonds show four key Indficator in the counbY (in bold) compwted with its income-group average. I data we mfiessig. ledummnil W be iuncoplete.  -32 - Page 2 of 2 Senegal PRICES and GOVERNMENT FINANCE 1975 1985 1996 1996 Domestic prces nfla on) (% changJ) 40 Consumer prces 31.7 13.0 8.1 2.8 Impliit GOP deflator 11.5 9.1 7.6 2.8 20 Government finance f (% of GDP) 91 s2 93 s9 es so Current revenue 18.9 18.2 16.9 15.6 -20 Current budget balance 2.6 -0.5 3.8 3.8 - GDP w Crt OveraN surplus/defkit -0.3 -3.5 -1.4 -1.4 TRADE 1975 19685 1995 1995 (milons USS) Export and Import lvls (miil US$) Total exports (fob) 503 515 969 98 e 500 Groundnut products 209 53 102 80 Phosphates .. 58 33 38 Manufactures 13 8 40 33 o000 Total imports (cit) 612 904 1.383 1,440 Food 190 197 394 398 10 v rI I Fueland enrgy 46 173 138 176 Capital goods '129 83 180 '188 6____________ Export price index (1987=100) .. 74 90 91 so 91 s2 93 94 9 9s Importprice index (1987=100) 82 125 131 o EDimpons Terms of trade (1987=100) .. 91 72 69 BALANCE of PAYMENTS 1975 1985 1995 1995 (rnimons USS) Current account balance to GDP ratio (% | Exports of goods and services 688 851 1.544 1.588 0 1 Imports of goods and services 782 1,165 1,797 1,852 901 9S 92 193 94 5 9 | Resource balance -94 -314 -253 -264 Net income -76 -127 -155 -130 5 4 Netcurrenttransfers -10 8 110 58 Current account balance, LJLJ before official capital transfers -179 -434 -298 -337 1 T Financing items (net) 175 420 380 390 L| Changes in net reserves 5 14 -82 -64 |-1S Meno,: Reserves induding gold (mill.L USS) 31 15 283 -291 Conversion rate (1oca11USS) 214.3 449.3 499.2 511.6 EXTERNAL DEBT and RESOURCE FLOWS 1975 19U5 1995 1996 (migions USs) Composition of total debt, 1995 (milL US$) Total debt outstanding and disbursed 349 2,563 3,845 A A IBRD 10 89 35 23 G 231 IDA 43 232 1,126 1,194 128 B Total debt service 42 190 296 | 1128 IBRD 1 10 16 12 IDA 0 4 14 15 Composition of net resource flws E Ofical grants 44 96 371 1246 Official creditors 39 130 48 Private creditors 19 -5 -25 \/ C Foreign direct investment 23 -16 1 347 Portfolio equity 0 0 0 | 7 700 WVorld Bank program Commitments 31 25 216 42 A-IBRD E-Bilateral Disbursements 19 33 107 110 B- IDA D- Othr mullatl F - PrFivate Prindpal repayments 0 6 18 17 C-IMF G-Short-term Net fows. 19 27 89 93 __1 Interest payments 1 8 12 11 Nettransfers 18 19 77 82 Development Economics 8U28U97  - 33 - Annex 11 Page I of 9 Senegal: Agricultural Export Promotion Project Summary of the Environmental Analysis L. EXECUTIVE SUMMARY 1.1 Preamble Senegal has a semi-arid climate -with a significant temperature variations throughout the country. Lying in the transition zone between the Sudano-Guinean region and the Sahel, the country's climate is characterized by wide rainfall va?l2rion with limited amount of surface water and biomass resources but considerable amount of ground water. With its fragile narural resource base, an increasing population and poor farming practices, resource degradation is accelerating. The population is relatively dense, and with a demographic growth rate of 2.7 percent per annum and 61% of rural population, the demand for land and renewable natural resource is takling a great toll on the country's narural resource base resulting in the potential degradation of the physical environment. The country's agricultural production has grown at a rate of not more than 2.7 percent per annum with an extension of areas under cultivation rather than through intensification of productivity. This prevailing situation has subjected Senegal to a potential ecological and socio-economic crisis in the past rvo decades which has led to a severe land degradation and massive migration of its rural population to the cities and uroan centers, and even to -uhe neighboring humid West African countries. To reverse this situation and help arrest the degradation of this fragile natural resource base, the Governrnent of Senegal with its donors partners, pa-ticularly the World Bank-, have initiated the country's first environmental strategic framework, trie National Environmental Action Plan (NEAP), in order to define the strategies and provide the necessary legislative framework and regulatory mechanism required to protect, control, enforce and monitor the use of the country's poor natural resources. Senegal is an agricultural country where the natural resource degradation is being accelerated by the pressure from the rain-fed and irrigated farming in the dry and semi-humid areas, combined with itinerant pastoral practices from the degraded region in the northern part of the country, and by the incessant migration. The agricultural activities have led to considerable problems, such as: soil degradation; ground water pollution: over-exploitation of the unconfined, water table aquifers; flora-fauna reduction; and the degradation of the populations' health conditions. These damages are likely to be more important around lakes and dams where diseases such as malaria and schistomiasis are prevalent. The Pilot Agricultural Export Promotion Project (PAEPP) will engender an intensive agricultural activity which will have some repercussions on the fragile ecosystem of the country. The implementation of the project may lead to a surface water withdrawals, particularly from the lakes of the Diama dam. Also, the ground water may be impacted, notably, through boreholes in shallow aquifers, as well as, the destruction of the vegetation cover in the Senegal river valley, the digging of irrigation drainage canals, the use of agrochemicals such as fertilizers, pesticides, and herbicides, and the concentration of population which could put damageable pressures on the natural resource base, including the flora and fauna. The Project will also increase the work-time on the overall work line, such as from farming to packaging, transportation and storage. Even if the agricultural activity is advantageous economically, it cannot be done without negative impact on the physical environment and the social fabric.  Page 2 of 9 - 34 - The immediate consequences of the project's impact on the environment are two folds: (i) at the physical level, there will be a significant "change" due to the loss of vegetation cover already in an advanced degradation stage in the Niayes region and the loss of forage in the Senegal river valley zone. Also, the population pressure will accelerate the degradation of the soil and water contamination, and cause an uncontrolled felling of trees for use as fuelwood; and (ii) the disruption of the traditional agricultural practices of autochtones and the destruction of fauna's habitat. The damages of the use of pesticides particularly on farmers and riparian population can also be added. The natural resource base of Niayes zone and, particularly Dakar's region and its vicinity, is already suffering due to the intensive exploitation of soil, water aiid vegetation cover through over-population. The capacity to contain this over-ecploitation of the natural resources of the region has been considerably reduced and the risk of salinization and water depletion, as well as, soil erosion remain extremely high. The zones around Diama are presently attracting a rapid movement of people which would impact the vegetation cover as well as the fauna and their habitats. Conversely, the Casamance zone and the south in general remain intact compared to the above regions. The production potential of this region is one of the highest in the country. The ecosystem is renewed very quickly due to its relatively good soils, the sufficient rains and undisturbed vegetation. To increase the sustainability of the PAEPP and avoid the degradation of the physical and social environment, in particular the soils, water resources and vegetation of this fragile ecological system, it is envisaged to set up on a regional basis at the early stages of the site preparation, preventive and mitigative measures accordingly. As a result, an environmental assessment (EA) has been conducted as part of the PAEPP. The EA complies directly with the World Bank 's directives, in particular OD 4.01 and its Annex C: Environmental Mitigation Plan. 1.2 Project Description The main objectives of the project are to: assist the private farmers involved in both traditional and non- traditional crop production and export; support and motivate new and innovative producers in the development of high value-added crops which can be produced in Senegal; and strengthen farmers organizations by providing technical advice and training to farmers in crop production, export and management. Also, the project will contribute to improve storage of perishables by upgrading facilities at the airports of Dakar and St. Louis and encourage bulk shipment The project comprises four main components: 1.2.1 Promotion and Diversification Activities These activities will consist of: (i) market research, customer identification, meeting quality requirements, trial shipments and obtaining pre-export finance; (ii) product development and processing, and quality control via targeted adaptive research; and (iii) establishment of business  Page 3 of 9 - 35 - partnerships between local exporters and foreign businesses and assistance in identifying regional and overseas niches. The project will provide direct in-house assistance from its staff including a specialist in market research and product development, who is also expected to draw upon his international network corporate connections for market information identifying and securing outlets and establishing commercial partnerships. In addition, the project will provide for contracting ad hoc services with local or international firrns and institutes in those areas requiring more specialized inputs such as research for new product development including agricultural product processing, product quality certification, international ISO certifications for product processing, the establishment of national standards and norms, etc. Both traditional and non-traditional horticultural products, for which the potential for increasing Senegal's economic share are promising, will be encouraged and benefit from project support for which there is a clamor from producers and exporters. The project will also encourage and contribute to business canvassing activities for all promising products as well as exporters' participation in selected specialized international fairs. 1.2.2 Support to Producers/Exporters Associations Under this component, the project will support producers/exporters by: (i) strengthening existing private professional organizations: producer groups, export associations, cooperatives and inter- professional groups, which could become a major vehicle for non-traditional export market development and for lobbying activities, etc.; (ii) encouraging the creation of farmer associations; and (iii) setting up a central referral/data information service, as well as, providing management and legal advice required for the formal establishment of nascent associations and for developing their work programs together with training in simplified cost accounting and management principles. In this respect, project support will benefit existing and future producers/exporters' associations and their individual members. Because product quality and presentation constitute key requirements for tapping external markets, the project would facilitate product grouping for packaging and quality controls in selected packaging centers that may be established. 1.2.3 Upgrading of Export Facilities To improve product quality the project will upgrade and /or rehabilitate existing infrastructure such as cold storage, storage capacity, outside sheds, etc. at the airport for preserving perishabte.products in transit. Such rehabilitation will involve small but important work at the airport of Dakar, and possibly that of St. Louis if volumes so warrant. Preliminary studies and the actual execution of work will be carried out under this component. It is expected that the component will be co-financed under parallel financing by other donors involved in agricultural export promotion activities in the country. 1.2.4 Project Management and Implementation The project will be implemented over a four-year period from 1998 through 2001, under the general supervision and guidance of the Ministry of Agriculture. The project will provide support for project management which will be assumed by qualified private professionals experienced in agricultural export or related activities and farmer organization. The support for project management will cover investment costs and operating costs on a decreasing basis.  Page 4 of 9 - 36 - The project management team will have full autonomy in decision-making and carrying out day-to-day project activities, and be responsible for achieving the agreed upon monitorable results. All key project staff will be selected on the basis of an open competitive process and with fixed term renewable contracts. 1.3 Initial Conditions Senegal has a total land area of 196,720 km2. It is located in West Africa, bordering the Atlantic Ocean between Guinea -Bissau and Mauritania. The Atlantic Ocean stretches for over 500 kilometers along the western portion of the country. Senegal is bounded by four countries, Guinea-Bissau and Guinea in the South, Mauritania in the North, and Mali in the East. The Gambia is almost an enclave of Senegal, in the Center. The terrain is generally low, rolling plains rising to foothills in southeast. Three rivers flow across the country in an east-west direction: Senegal river (170km) in the north; the Gambia river (750km) and the Casamance river in the south. Senegal has a dry tropical climate, hot and humi'd. It has a rainy season (June to October) with strong southeast winds;nc, a dry season (November to May) dominated by the hot, dry harmattan winds. The environment is characterized by occurrences of soil erosion, desertification, overgrazing, overfishing and a wildlife population threatened by poaching. The country has three types of vegetation; forest in the south, Savannah in the central part and steppe-like in the north. In 1994, Senegal had a population of about 8.5 million, giving an average density of 36 people persquare kilometer. The annual population growth rate is currently 2.7 percent. The religion is predominantly Muslim (94 percent), with small populations of Christians (5%) and traditional religions (1%). In general, women and children in Senegal suffer from inadequate access to education and other social services. For instance, in 1988 thepercentage of total population age 15 and over literate 28.6%; male literacy 38.8% and female literacy 19.4%. This is evidenced by key social indicators such as infant mortality and mortality of children under 5 years. The average life expectancy in the country is 50 years. 1.4 Statutorv Framework. The Pilot Agricultural Export Promotion Project is a direcf fit into the overall frameWorlof the agricultural policy and the natural resources management policies which the Government of Senegal and the donors partners have defined and embodied in the three major undertakings: (a) The Agriculture Development Policy Letter; (b) The National Environmental Action Plan (to be adopted in September 1997); and (c) The Land Tenure Action Plan. t Although Senegal does not have a legal requirement at this time for formal enviromnental assessment, the land 0 tenure law has been revised in 1996. The revised version of the land tenure law is still in conflict with I customary law with respect to the stated fact that all land belong to the State. Although it includes provisions 0 to decentralize land tenure rights to village communities, it is unclear whether the State can overrule the village decisions. Increasingly, land adjudication is being decided on a more decentralized basis by the heads of the I  Page 5 of 9 - 37 - family. Thus, there is a gradual emergence of the sense of private ownership. Hence, family groups have actively attempted to establish their rights over portions of community land, often extending their overall domain and encroaching on virgin, unexploited areas. The lack of land tenure security is a source of negative impact to the natural resource base, as well as, potential cultural conflict on the social resettlement fabric of communities in the country. 1.5 Probable Impacts of the Project. In general, the proposed Pilot Agricultural Export Promotion Project (PAEPP) would engender changes on the ecological systems to be developed and these changes are bound to affect the fragile vegetation cover, soil fertility, the ground water as well as the surface water, and to a large extent, the social fabric of the riparian population. 1.5.1 The Possible Positive Impacts of the Project It is however clear from the assessment that the project's impact on the natural resource base as well as the social and economic fabric is globally positive. It will contribute to the maintenance of the social equilibrium of the regions population by globally maintaining the ecosystems equilibrium through the amelioration of the quality of life of the people. The creation of employment for the economically active would reduce the rural -xodus, improve the quality of life of both males and females, which would reinforce the production capacity of he exploiters, improve their dietary intakes and reduce malnutrition, in particular, infant malnutrition. This ,vould eventually have significant positive impact at the national level, as well as, lead to potential financial jenefits and appreciation in the improvements of the living standards in the country. The gain from the exports vill reinforce the economy and the positive impacts will benefit nationally the producers/exporters. 1.5.2 The Possible Negative Impacts of the Project. i addition to the project negative impacts on the vegetation cover, the soil and the affected population, enerally water related diseases do exist due to the presence of lakes and drainage canals in the project are. otential negative impact from pollution exists in areas where water is withdrawn in large quantities from the ireatic aquifers that may result in droughts. Water related diseases are important in areas where surface ater are to be used, mainly in the Saint-Louis region. The incidence of malaria and bilharzia contamination of aters by fertilizers and pesticides, and soil erosion can post major threats especially where there is poor water anagement, over-use of fertilizers and pesticides and poor drainage idertaking the crop production and related activities without a sound natural resources renewal measures :ll undoubtedly lead to an irreversible, disruptive ecosystem. The affected population could be exposed to veral risks, such as health and social crisis, and even in the short terrm to a decrease of life standards, if no egrated measures of protection and improvement are taken to prevent the immediate effects on the physical vironment and the social fabric. ,otential cultural conflict that could arise between autochtones and allotchtones farmers may contribute to negative impacts if the land tenure problems for which the autochtones are still sensitive are not totally ved. degradation of the land and the vegetation cover could lead to the reduction of productivity, increase the .flict between farmers and stock breeders, and accelerate the intensive over-use of fertilizers.  - 38 - Page 6 of 9 At the export level, the search for quality products will lead, on one hand, to the increase in the quantitative use of agrochemicals for treatment during cropping, packaging, and storage, and on the other hand, to an increase of road and air traffic. As a result, negative impacts will occur mostly in road traffic accidents, noise effects due to increase load of vehicles and airplanes transportation, gas emission effluents, and from contamination as a result of pesticide misuse and over-use. Other possible negative impacts are soil degradation, salinization and water pollution, and transportation related activities, especially, in the Niayes areas. Degradation of the vegetation is more of a threat in the St. Louis region, and the downstream of Senegal River in the northern part of the project area, such as Walo. At the institutional level, if the rules and preventive measures are not clearly defined to enable the public sector play its new role of service promoter (see the LPDA), the implementation of the project by the private sector can lead to a conflict between the two sectors which could hamper the overall success. 1.6 Mitigation Measures The mitigation plan, which is in conformity with the World Bank's operational directives, attempts to put in place the required mechanisms to control the effects of the project on the natural environrnent. It is envisaged to carry out an inventory of the natural resources prior to the implementation of the pilot agricultural export promotion project and to establish a monitoring and surveillance mechanism for the rehabilitation and management of the perimeters, including the crop production and complimentary commercial activities at specific sites. The particular measures advocated within the framework of the project are the organization of the populations which will directly or indirectly be affected by the execution of the project. In order to ensure that the recommendations of the assessment are carried out, and subsequent mitigative measures are implemented, it is envisaged that community based organizations are established, supported and trained in the management of all environmental issues generated by the project. The mitigation measures include standard techniques to prevent or control: erosion and agrochemical pollution, increased social infrastructures, afforestation efforts combined with irrigation development, and a strong emphasis on information campaign for soil, water and biomass conservation. As one of the most important concerns is the potential negative impacts of the water-related diseases on the riparian population, protection measures to minimize such risks is very important. The type of crops to be cultivated will be another indicator to predict the possible trend of the diseases at the specific sites. Most of the project areas have little preventive measures to mitigate health risks. It is important that hygiene education and conmmunity based management and awareness component be developed to ensure better sanitation and water supply services to the affected groups. A ground water quality and soil salinization monitoring system should be set up before any further development of fragile sites particularly in the Niayes areas. A meaningful activities such as an up to date geographical information system (GIS) should be developed for further survey to subsequently quantify the natural resources available in the areas by national research institutes (CSE, CDH/ISRA, etc) which will undertake a detailed desk and field inventory study of each site.  Page 7 of 9 - 39 - For the implementation of these measures, there is a clear need for a collaborative effort between the project management, local communities and non-governmental organizations ( NGOs), as well as, outside specialists to help enhance irrigators, traders and the entire populations knowledge on how to sustain the resource base in the project zones. Another measure of paramount importance is to devise a mechanism for the protection of the ground and surface water resources from contamination either by agrochemicals or salinization. This measure requires a water resources expert or an institution with the expertise which can be able to intervene on behalf of the relevant Governnental structures to help develop guidelines for monitoring and follow-up of the water resources. It is proposed that the Government and the producers/exporters support the four components and finance a study to complement the findings of this environmental assessment on health risks and the protection of the local environment. The suggested institutions responsible of the implementation of the above activities are: 1. the Ministry of Water Resources which will coordinate and site the monitoring and the follow up facilities; 2. the public works enterprises will build the infrastructures; and 3. specialized firms in water resources management to design the system and analyze the date, this firm can also assist the administration and producers/exporters. 1.7 Environmental Monitoring The environmental monitoring of the project must be coordinated at the central level by the Ministry of Environment and Natural Resources Protection in collaboration with the Ministries of Agriculture and Water Resources. At the local level, it is envisaged to involve the services of non-govermmental organizations as well as the services of the irrigators and the population at large. If the PAEPP is to be sustainable, envionmental monitoring must be integral to the management process. The environmental monitoring component will play an important role. These evaluations would impact positively on the management process only if they identify major environmental and human problems, and verify :hat the recommendations of the EA have been carried out. In the medium and long term, these evaluations ,vould reduce the unpredictable impacts of the project on the environment by enabling the management to )ropose new measures, revisiting earlier recommendations and designing new directions to minimize manticipated negative impacts. ('he primary concern will be the identification, at the earliest stages of project implementation and on a :ontinuous basis, of any pollution of the water resources, degradation of the soils, increase in the risks of liseases and the social tension between the various players of the project notably the farmers, investors, terders, the migrant workers and the traditional land owners.  Page 8 of 9 - 40 - The monitoring of all the above activities should be carried out by recognized Non -Governmental Organizations and private firms who have experience in community development projects and are familiar with the overall natural resources and land use activities, particularly in the Niayes and Saint-Louis areas. The monitoring project should be allocated a reasonable annual amount of funding for an effective implementation, according to the draft terms of reference and the prepared budget (annex 6). 1.8 Recommendations The most important concern in agricultural activities in semi-arid country like Senegal is the negative impacts of water-related diseases, soil degradation and water contamination and its over exploitation. There is a weak institutional link between existing irrigation scheme and preventive public health. Therefore, it is recommended that the-communities be involved in hygiene education and sanitation development in affected villages, and to train producers and their employees in a safe use of agrochemicals. A natural resource inventory and water resource management component will be required in the early planning stages of the crop production to ensure that appropriate preventive measures can be taken in a timely manner. It is recommended that the Government of Senegal support the reinforcement and the management of a ground water, surface water and soil quality monitoring system and community instinttional development component which will include the following: (i) local capacity building; (ii) social infrastructure component; and (iii) community based natural resource management. The project should benefit from detailed studies of the anticipated sites prior to actual development by carrying out detailed inventory of the natural resources, evaluate the immediate effects of the zones on the resources and recommend the possible solutions in the medium and long term for the preservation of the resources which are of paramount importance for the maintenance of the ecological equilibrium. A ground water quality and soil salinization monitoring system should be set up before any further development of fragile sites, particularly in the Niayes areas. A meaningfuil activities such as aliup to date geographical information system (GIS) should be developed for further survey to subsequently quantify the natural resources available in the areas by national research institutes (CSE, CDH/ISRA, etc..) which will undertake a detailed desk and field inventory study of each site. At the local level, it is recommended that the services of non-governmental organizations (NGOs) for sustainable and environmental monitoring as an integral part of the management process. This will also permit the reinforcement of the national capacity in the crop production and commercial activities. The local NGOs seem to be the best actors to be considered. They will, in collaboration with the project, carry out case by case studies on the socioeconomic aspects. Like wise, there should be a strong support for the establishment of community based organizations in the affected villages to provide the leadership in sound natural resources management. These community based groups may provide innovative techniques for more effective local level management which may prove useful ror the private irrigation and agro-processing project. Taking the lead role may also encourage the application zf conservation measures to reduce any unexpected negative impact on the natural and social environment .  Page 9 of 9 -41- It is recommended that a control system be established to monitor the water resources quality and behavior and soil quality, especially in the areas which will utilize surface water and ground water. This will be an effective way of eliminating the risk of salinization. The NGOs experiments in community development will prove to be valuable for the reduction of the risk of diseases spreading in the areas of intervention where the public health risks are high. This type of an intervention would facilitate community development in such zones which are highly populated.   MAP SECTION  [BED 29056 16' 15' 14' 15' 12' A Nnueknhnlt / ~ ~ ~ MA U R i TA N IA ~~AGRICULTURAL EXPORT ~~ ~~ ;77~~~;tj~~~2-~~ '-~~~4~~ ~~ Tell ~~PROMOTION PROJECT ~~A. 4~~~~a71& 4LnC Tn~~~~~d Gui- I LIII ~~~~~~~-*I'~~~~~ _____ SAIT_ IY.16~ U'1. 4IAOl%,L / MbeuIeLkIlE / Oem Sege - PRIMARY ROADS~~~~~~~~~~~~~~~~~~~~~~~~~~PRMAY RAD ii ~~~~~n4yi~~~~~ <~~~'.< ISI~~~~~~~ -iNt~~~~~~~~./~~~~~'--- ROUTE S PRINOPALES~~~~~~RUTS PINIPLE SECONDARY ROADS ROUTES SECONDAIRES D SELECTED CITIES AND TOWNS L 0 U ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~CITES ET VILLES CH0ISIES LIT ~~~~~~~ ,~~~~,,I-.'N' ,uu~~~~~~~~~~~~~~'' * DEPARTMENT CAPITALS~~~~~~~~~~~~~EPRTEN CPIAL N'. MBkhR \ Done,~~~~hkh CAP) TALES DES ISEPARTEMENTS N', Yx. Mouse N, '1 15' @ EROION CAPITALS~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5-REIONCAITL 'P ~~~~'~~' N~~~ S D.SMSOIt,% 9. 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