Burkina Faso - Second National Agricultural Services Development Project

Document of The World Bank Report No. 15730-BUR STAFF APPRAISAL REPORT BURKINA FASO SECOND NATIONAL AGRICULTURAL SERVICES DEVELOPMENT PROJECT May 27, 1997 Africa Technical Agriculture III Country Department 10  CURRENCY EQUIVALENTS Currency Unit = CFAF US$1.00 = CFAF 526.00 (as of February 15, 1997) FCFA 1.00 = US$0.0190 WEIGHTS AND MEASUREMENTS Unless otherwise stated, all weights and measures used in this report are metric. 1 metric ton (ton) = 2,205 pounds (lb) 1 hectare (ha) = 2.47 acres (ac) 1 kilometer (km) = 0.62 miles (mi) 1 meter (m) = 3.28 feet (ft) FISCAL YEAR: The World Bank - July 1 to June 30 Government of Burkina Faso - January 1 - December 31 Vice President: Jean-Louis Sarbib, AFR Country Director: Serge Michailof, AFC1O Technical Manager: Jean-Paul Chausse, AFTA3 Task Team Leader: Turto Turtiainen, AFTA3  ABBREVIATIONS AND ACRONYMS AGRI-RA Ministere de I 'Agriculture et des Ressources Animales (Ministry of Agriculture and Animal Resources) AMRT Atelier Mensuel de Revue de Technologies (Monthly Technology Review Meeting) ASAC II Second Agricultural Sector Adjustment Credit CAMES African and Malagasy Council for Higher Education CAP Conseiller Agricole Polyvalent (Village-level Extension Agent) CNCA Caisse Nationale de Credit Agricole (National Agricultural Credit Fund) CNRST Centre National de la Recherche Scientifique et Technologique (National Center for Scientific and Technological Research) CRPA Centre Regional de Promotion Agro-Pastorale (Regional Center for Agro-Pastoral Promotion) DEP Direction des Etudes et de la Planification (Directorate of Studies and Planning) DOET Direction de l'Organisation de I'Elevage Traditionnel (Directorate of the Organisation of Traditional Pastoralism) DPUA Direction de la Production et des Industries Animales (Directorate of Animal Production and Animal Industries) DPCM Direction de la Promotion Cooperative et Mutualiste (Directorate for Cooperative Promotion and Mutualist) DPCLR Direction de la Promotion Cooperative et de la Legislation Rurale (Directorate for Promoting Cooperatives and Rural Legislation) DRARA Direction Regionale d 'Agriculture et des Ressources Animales (Regional Directorate for Agriculture and Animal Resources) DSA Direction de la Sante Animale (Directorate of Animal Health) DVA Direction de la Vulgarisation Agricole (Directorate of Agricultural Extension) IBE Institut Burkinabe de l'Energie (Burkinabe Institute for Energy) ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IDR Institut du Developpement Rural (Institute for Rural Development) INERA Institut d 'Etudes et de Recherches Agricoles (Agricultural Research Institute) IRBET Institut de Recherche en Biologie et Ecologie Tropicale (Research Institute for Tropical Biology and Ecology) IRSAT Institut de Recherche en Sciences Appliquees et de Technologie (Research Institute for Applied Science and Technology) LBTA Laboratoire Burkinabe de Technologie Alimentaire (Burkina Faso Food Technology Laboratory) LNE Laboratoire National de I 'tlevage (National Livestock Laboratory) LPDA Leutre de Politique de Developpement Agricole (Letter of Agricultural Development Policy) MESSRS Ministere des Enseignements Secondaire et Superieur et de la Recherche Scientifique (Ministry of Secondary and Higher Education and Scientific Research) NASDP II Second National Agricultural Services Development Project NCB National Competitive Bidding NGO Nongovernmental organization OFAR On-farm adaptive research ONA VET National Bureau of Veterinary Services ONG Organisation Non Gouvernementale (Non-Governmental Organization) OP Organisations de Producteurs (Farmer Organizations)  ORD Organisme Regional de Developpement (Regional Development Authority) PAPEM Point d'Appui de Prevulgarisation et d'Experimentation Multilocale (Mini-Station for Pre-Extension Experimentation) PASA Programme d Ajustement du Secteur Agricole (Agriculture Sector Adjustment Program) CU Coordination Unit (of AGRI-RA components) PNGT Programme National de Gestion des Terroirs (National Environmental Management Program) PRNA Projet de la Recherche Nationale Agricole (National Research Project) PRSAP Projet de Renforcement des Services d'Appui aux Producteurs (Agriculture Services Project) PRSA Plan Strategique de la Recherche Agricole (National Agricultural Research Strategy) SECAL Sector Adjustment Loan SOFPTX Societe des Fibres et des Textiles (Cotton Fibers and Textiles Company) SPA Service Provincial d'Agriculture (Provincial Agriculture Service) SPAAR Special Program for African Agricultural Research SPOFPP Service Provincial de l 'Organisation et de la Formation des Producteurs (Provincial Service for Farmer Organizations and Training) SPRA Service Provincial des Ressources Animales (Provincial Animal Resources Service) STC Scientific and Technical Conunission TLU Tropical Livestock Unit TS Technicien Specialise (Specialized Technician) UCOBAM Union des Cooperatives Burkinabg AGRI-RA&Wheres (Burkinabe Vegetable Marketing Cooperative Union) WIA Women-in-agriculture program  BURKINA FASO SECOND NATIONAL AGRICULTURAL SERVICES DEVELOPMENT PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. Credit and Project Summary ............................................................. (i) I. INTRODUCTION ............................................................. I II. AGRICULTURAL SECTOR BACKGROUND ............................................................. I A. Background ..................................1............................ B. Agricultural Organizations and Agencies ..............................................................4 Agricultural Research .............................................................. 4 Ministry of Agriculture and Animal Resources ..............................................................5 Livestock Sector ..............................................................5 Farmer Organizations ..............................................................6 Liaisons .............................................................. 7 C. Development and Agricultural Policies and Sector Development Strategy ....................7...7 Development and Agricultural Sector Policies and Objectives .......................................7 Bank Group Assistance Strategy ..............................................................8 D. IDA-Financed Agricultural Projects and Lessons Learned .......................9........................9 III. AGRICULTURAL TECHNOLOGY SUPPORT SYSTEM .......................1............. I I IV. THE PROJECT ............................................................. 12 A. Rationale, Objectives and Strategy ............................................................. 12 B. Summary Description ............................................................. 14 C. Detailed Project Description: ............................................................. 15 Agricultural research .........................................................5.... l5 Agricultural and livestock extension ............................................................. 1 5 Animal health and pastoralist promotion ............................................................. 16 Pilot programs .............................................................1 6 Restructuring of agricultural services ............................................................ . 17 V. PROJECT COSTS AND FINANCING .............................................................1 8 A. Project Costs ............................................................. 18  B. Proposed Financing Plan ............................................. 18 C. Procurement and Disbursements ............................................. 19 D. Accounting, Auditing and Reporting ............................................. 20 VI. PROJECT IMPLEMENTATION .................................................... 21 A. Overall Organization and Management ................................................... 21 B. Operation of the Different Subcomponents ............................................. 22 Agricultural research ............................................. 23 Agricultural extension and other AGRI-RA components ............................................. 23 Women-in-agriculture program ............................................. 24 Livestock health and pastoralist promotion ............................................. 25 Rural institutions ............................................. 26 Restructuring of AGRI-RA ............................................. 27 C. Planning, Monitoring and Evaluation ............................................. 27 D. Training and Technical Assistance ............................................. 27 E. Mid-Term and Completion Reviews ............................................. 29 F. Implementation Schedules ............................................. 29 VII. FINANCIAL AND ECONOMIC ANALYSIS . .30 A. Farm-level Analysis .30 Farm/herd models .30 Determination of benefits and costs .30 Inputs and financial prices .30 Output markets and financial prices .30 Farm and herd financial budgets .31 B. Project-level Economic Analysis .31 Approach and assumptions .31 Project costs in the economic analysis .32 Economic Rate of Return and Net Present Value .32 Sensitivity analysis .32 VIII. BENEFITS, JUSTIFICATION AND RISKS ......................................... 32 A. Benefits and Justification .................................. 32 Project benefits .................................. 32 Environmental issues .................................. 33 Program objectives and poverty categories .................................. 33 Participatory approach .................................. 33 B. Risks .................................. 34  IX. ASSURANCES AND RECOMMENDATIONS ....................................... 35 ANNEXES: 1. Summary Cost Tables ...................................... 37 II. Project Implementation Schedules ....................................... 41 III. Procurement and Disbursement ....................................... 43 IV. Organization Chart ....................................... 50 Maps Implementation Manual (Volume n) I. Project Components: Implementation Details ................................................................................. 1. Agricultural Research System .................................................................................................. 2. Key Findings of the Past Adaptive Research and Priorities for Future Work........................... 3. Gender and Agriculture in Burkina Faso................................................................................... 4. Key Features of the Livestock Services ................................................................................... 5. Key Features of the Other Agriculture Sector Services............................................................ II. Detailed Cost Tables ........................................................................................................................ III. Disbursement Letter....................................... Implementation Manual (Volume H) IV. Farm Budgets and Economic Analysis ............................................................................................ V. Key Features of the Agriculture Sector Agencies .......................................................................... VI. Environmental Effects........................................ VII. Operating Manuals ......................................................................................................................... The report is based on the submission of 5-year and 6-year plans by AGRI-RA and MESSRS, respectively. The post-appraisal team in February 1997 comprised Messrs./Mmes. Turto Turtiainen (Team Leader), Djibril Aw, Marie-Helene Collion, Cornelis de Haan; Ibrahim Nebie, Emmanuel Nikiema, Sophie Revillion (World Bank), and consultants Hannibal Muhtar and Pierre Rondot. The post-appraisal team benefitted from the work done by the pre-appraisal team in March 1996 and the appraisal team in June 1996. The team was assisted in the field by an extensive group of counterpart staff from the two Ministries involved in the project. Messrs. Jean-Paul Chausse and Serge Michailof were the managing Technical Manager and Country Director, respectively. Messrs. Franz Kaps (Operations Adviser) and Jerome Chevallier (Technical Manager, Operations Support) have reviewed the document and provided operational advice. The Lead Adviser was Daniel Moreau and the Peer Reviewers Derek Byerlee and V. Venkatesan. Brigitte Kerby-Kia provided operational support for negotiations.   BURKINA FASO SECOND NATIONAL AGRICULTURAL SERVICES DEVELOPMENT PROJECT STAFF APPRAISAL REPORT Credit and Project Summary Borrower The Government of Burkina Faso Guarantor N/A Implementing Agency Ministry of Agriculture and Animal Resources Ministry of Secondary and Higher Education and Scientific Research Beneficiaries The Borrower, 800,000 smallholder farm families and their institutions Poverty Program of Targeted Interventions Credit Amount SDR 30.3 million (US$41.3 million equivalent) Terms Standard, with 40 years of maturity Commitment Fee Standard Onlending terms N/A Financing Plan See paragraph 5.2 (Chart 1) Net Present Value Benefit-cost calculations for representative farm models show ratios from 1.06 to 1.95. Overall ERR is estimated at 39 percent. Staff Appraisal Report No. 15730-BUR Maps IBRD No. 28673 IBRD No. 28674   BURKINA FASO SECOND NATIONAL AGRICULTURAL SERVICES DEVELOPMENT PROJECT STAFF APPRAISAL REPORT I. INTRODUCTION 1.1 Burkina Faso is a landlocked country, with its southern border more than 600 km from West African ports. Covering an area of 274,000 square kilometers, Burkina Faso lies entirely in the Sudano- Sahelian agroecological zone. With a GDP per capita of US$230 in 1995, Burkina ranks among the world's poorest nations. Agriculture is the dominant sector of the economy: it employs an estimated 80 percent of the population, generates more than 50 percent of the export earnings and contributes about 35 percent of GDP. Agriculture's share of GDP has, however, been gradually declining; for instance, in 1965 it was 53 percent. There is significant potential for agricultural growth in the range of agroecologies that support specialization in different crops and farming systems. The Government has realized the critical role of agriculture for the country's economic growth, food security and employment. 1.2 The population, estimated at 10 million in 1994, is growing at the rate of 2.8 percent per year. The population density on arable land is high, and most rural people are engaged in low-input, low- output agriculture on which their livelihood depends. The recently prepared Poverty Profile shows that the incidence of poverty is highest among agricultural households. Thus, improving performance of the agricultural sector is critical not only to fostering economic growth, but also to alleviating poverty. 1.3 Although Burkina Faso's agriculture has performed well during the past few years, its continuous improvement will be crucial and substantial investment will be needed to meet this challenge. In 1989 the Government requested IDA assistance in preparing an agricultural sector adjustment program to modernize and diversify agricultural production, promote food security at the national, provincial, and household levels, and improve natural resource management. Serious natural resource and environmental problems led the Government to prepare a project on natural resource management, the Environmental Management Project, which is supported by an IDA credit (Cr. 2229-BUR, 1991). It was followed by an agricultural sector adjustment credit and several investment operations (para 2.30). The proposed Second National Agricultural Services Development Project, which would be based on the work started under two earlier projects (the Agricultural Research Project and Agricultural Services Project), would benefit from the policy changes effected under the agricultural sector adjustment program and the projects supporting it. II. AGRICULTURAL SECTOR A. Background 2.1 Past performance. Despite difficult agroclimatic conditions, the growth of the agricultural sector has been quite satisfactory in the latter part of the 1980s. The longer-term trend (1965 - 86) shows a growth rate of 2.6 percent/year, which however was below the population growth rate of 2.8 percent. Agricultural production markedly deteriorated in the 1970s, when the annual growth rate was 1.3 percent, but between 1984 and 1989, agriculture grew at an average annual rate of more than 5 percent. Favorable rainfall in some recent years (despite irregularities in interseasonal distribution) has allowed  2 Burkina Faso to produce record crops, particularly in cereals. Rainfall variations are reflected in highly variable growth rates between 1983 and 1994. Subsectoral growth (1983-8) and the trends in production from 1989 to 1995 are summarized in Table 1. Table I Real growth rates in the primary sector in selected periods (in percent) 1983-87 1988 1989 1990 1991 1992 1993 1994 1995 Agriculture (crops) 7.3 28.4 -4.2 -10.8 38.0 0.7 3.6 -0.4 8.5 Livestock 3.6 2.4 2.5 2.4 2.4 2.5 2.4 2.5 2.5 Forestry and Fishing 2.7 1.8 5.1 6.1 3.0 4.9 5.1 4.9 5.2 Agriculture in total 5.6 18.8 -1.8 - 6.0 21.4 1.5 3.6 0.8 7.0 2.2 Agroecological conditions. The country can be divided into four agroecological zones on the basis of climate, soils and socioeconomic factors: Sahel, Central Plateau, Southwest and East. The Sahel in the north is the driest region; its rainy season lasts two to three months a year, and average rainfall varies from less than 400 mm to 600 mm. The dominant activity is livestock rearing. The Central Plateau is the most densely populated zone. Average rainfall varies between 600 mm and 900 mm. Environmental degradation is a major concern in this zone. Although economic activities are concentrated on food production, the Central Plateau has experienced recurrent food deficits except in years of exceptionally high and well distributed rainfall. The Southwest zone, where average rainfall ranges from 800 mm to more than 1,200 mm, has the best agricultural potential. In an average year, it not only supplies its own needs for food crops but can also devote 15 percent to 30 percent of the cultivated area to cash crops, mainly cotton. Livestock activities are important for both the sedentary farmers (for animal draft power and income from animal sales) and transhumant herders. The Eastern Savanna is the least developed, and the least environmentally degraded area of the country. Average raminfall there ranges from 600 mm to 900 mm. 2.3 Use of arable land. Of the 9 million hectares of arable land, about 3.7 million hectares are cultivated each year. The average farm size is 4 hectares. Family size is the main determinant of farm size, because most work is done with handtools and little hired labor is used. Only about one fourth of the farns own draft animals or have equipment to use them. These are concentrated mainly in the cotton areas. Use of tractors or power tillers is negligible. 2.4 The major crops, covering 84 percent of the crop area, are: coarse-grain cereals (sorghum, millet and maize); other food crops, including rice (4 percent); and cash crops, mainly groundnuts, cowpea and cotton (12 percent). Most of the sugar cane is grown in a single estate in the Southwest on a few hundred hectares. As noted, agriculture can meet the country's need for staple food only in good rainfall years; increasing quantities of rice have been imported since the late 1970s. Maize is the cereal that has the best potential for increased production. Although cotton covers only 5 percent of the cultivated area, it plays a major role in the economy, accounting for about one half of the total export revenues and providing an important source of funds for the households in the areas where it is grown. Cotton area and production increased steadily from 1968 to 1991, when a record production level of 190,000 tons of seed cotton was reached. Unfavorable world market prices, overvaluation of CFAF and inadequate credit and marketing services caused a downturn in production between 1991 and 1994. The devaluation of CFAF in 1994 has provided farmers with better incentives to grow more cotton (its production in 1995 grew by 5.5 percent, but the estimation for 1996 is 36 percent) and other export crops, such as green beans grown in valley bottom lands in the beginning of the dry season, and Karit6 (Butyrospermum  3 parkii), also known as sheatree. The latter, which has been grown for centuries on farmers' fields, provides valuable income for women, who extract butter from its nuts. Livestock, which accounts for more than 10 percent of total export earnings, is the second most important item of agricultural exports (mainly to the coastal countries). Fruits and vegetables have good development potential and are increasingly important for nutrition. They are presently grown in small areas only. 2.5 Sector constraints. Although the potential for accelerated growth in agriculture remains satisfactory, there also are problems. The growth of the sector is constrained particularly by five physical factors: inadequate and uneven rainfall, low quality of soils, population pressure on land, scarcity of groundwater resources, and imbalance between demand for fuelwood and the growth capacity of vegetation. Other problems include the traditional system of land tenure, inadequate marketing outlets, smallholders' weak purchasing power and the high cost of inputs, illiteracy, the traditional undervaluation of women's work and the difficulty women have in getting agricultural services. Additionally, less than 15 percent of smallholders have adopted new technology, and extension and research linkages are inadequate. In the long run, the sustainability of the sector depends mostly on increasing the productivity of smallholders rather than expanding the cultivated area. 2.6 Rainfall is low and irregular. The rainy season is short, lasting two to four months (depending on the part of the country). The coefficient for annual rainfall variation, increasing from south to north, ranges from 20 percent to 30 percent. Crop farming and pasture management are hazardous due to the large variation in intraseasonal rainfall distribution. In these conditions, risk management is key to farming and herding. Farmers, therefore, try to reduce risk by extending the cultivated area for crops and feeding area for cattle rather than by intensifying their use of land. Moreover, average rainfall has been declining since the early 1970s. Although there is no scientific evidence that this decline is a permanent trend rather than a cyclical phenomenon, a comparison of the isohyets shows that they have moved south about 200 kilometers between the 1950 - 1967 period and the 1968 - 1987 period. As a result, farmers and herders have become even more risk averse and less disposed to adopting high-input or labor- intensive technologies. 2.7 The soils in Burkina Faso are generally poor, and the structure is seriously depleted. In the Central Plateau, the reduced vegetation cover has allowed the soils to become exposed to water erosion (from runoff in the rainy season) and to wind erosion during the dry season. In addition, the soils throughout the country are deficient in phosphorus. Because the use of fallow periods for soil recovery is fast disappearing and because very little chemical fertilizer is used (less than 5 nutrient kg per hectare annually), the soils are being rapidly mined. 2.8 Population pressure on good land is severe. Of the total area of about 27 million hectares, only 9 million hectares are arable--less than one hectare per person. This is too low for adequate agricultural production, given the low-input technologies used. The pressure on land is most severe on the Central Plateau, where about one half of the entire population lives. The average population density is about 60 persons per square kilometer, and as high as 100 persons per square kilometer in some areas. In this part of the country, the practice of fallowing has almost completely disappeared. Because the population has exceeded the carrying capacity of the land, spontaneous migration to the Southwest has taken place since the 1980s. There, the population density had been much lower because of onchocerciasis (river blindness), a disease that has now been eradicated by concerted international action. However, the newly I/ About 65 percent of the country lies between the 500 and 800 isohyets.  4 settled areas are now in a danger of being degraded because of improper cropping and deforestation practices. 2.9 Both surface and subsurface water resources are scarce. Irrigation is little developed; although the irrigated surface has doubled since 1982, it still accounts for only I percent of total cultivated area. The river systems have a short flooding period and become dry soon after the rains stop. Surface water resources, including permanent and temporary watercourses, are difficult to tap because of the country's flat topography. To have year-round surface-water irrigation under these conditions would require large water reservoirs and thus large investments. There is also evidence that the underground water table is falling as a result of lesser infiltration and higher runoff induced by deforestation. Fetching of water is becoming increasingly time-consuming--this chore usually falls on women and children--taking a large share of time from other agricultural activities. 2.10 There is a severe imbalance between the demand for wood and the regenerative capacity of the vegetation. About 96 percent of all energy used by households, including urban households, is derived from fuelwood collected from the dwindling forests and bush fallow. The imbalance is so severe that farmers are forced to burn crop residues and cattle dung instead of recycling them to maintain soil fertility. 2.11 Livestock sector. The most important constraints to the sedentary crop-livestock farmers is the poor quality feed, especially in the dry season. For the pastoralists in the transhumant system, the encroachment of cropping into formerly critical dry-season grazing areas undermines the entire sustainability of the transhumant pastoralist system. Diseases and lack of financial management experience of the commercial producers are major impediments to intensive pigs and poultry production. In livestock research, the socio-economic effect of the technologies being developed has not been assessed. In livestock extension, front-line staff suffers from lack of training in livestock technology and appropriate tools to demonstrate such improved. The current system is not adequately equipped to supply the specialized information needs of the pastoral and commercial sectors. For the veterinary services, inadequate sanitary control and poor diagnostic support facilities, and for the private veterinarians the lack of enabling environment are key constraints. The project would address these constraints. B. Agricultural Organizations and Agencies 2.12 Agricultural research. The Ministry of Secondary and Higher Education and Scientific Research (MESSRS) oversees research activities, but guidance, coordination, planning, monitoring and evaluation of research activities are provided by the National Center for Scientific and Technological Research (CRNST) and its Board of Governors. The actual research work is carried out by several specialized research institutes. Among them, the Agricultural Research Institute (INERA) and the Research Institute for Tropical Biology and Ecology (IRBET) are responsible for research in the agricultural sector. The forestry program of ex-IRBET has been merged into INERA to form a new institute, the Institut National de l'Environnement et des Rescherches Agricoles (INERA). The new institute will collaborate with the Research Institute for Applied Sciences and Technology (IRSAT) which is also based on two earlier institutes. 2Two of IRSAT's research programs, agroprocessing and agricultural mechanization, are of interest to the present project. INERA has five research centers for the 2/ They are the Institut Burkinabe de l'Energie (IBE), the Laboratoire de biochimie et technologie alimentaire (LBTA), and some of the old INERA's research programs (such as agricultural engineering.  S research work and one that provides training to researchers in addition to research it carries out in support of the region's agriculture. Smaller field stations are linked with these centers. IRSATs organizational and physical structure would be developed under the Second National Agricultural Services Development Project (NASDP II). 2.13 Ministry of Agriculture and Animal Resources. The Ministry of Agriculture and Animal Resources (AGRI-RA) has been in charge of the sectoral policy and overall development of the agricultural sector since 1986, when the water and rural affairs were divided into two ministries. Matters relating to cooperatives and other rural institutions were later transferred back to AGRI-RA. AGRI-RA has 12 Directorates, most of which will be involved in the implementation of NASDP II. The primary Directorates benefiting from the project would be the Directorate for Studies and Planning (DEP), in charge of studies, planning, monitoring and evaluation of projects and agricultural statistics; the Directorate of Agricultural Extension (DVA), responsible for extension dealing with crops, livestock and the transformation of agricultural products the Directorates of Animal Industries (DPIA), responsible for both the modern and traditional (pastoral) livestock sector; the Directorate for Veterinary Services (DSV), dealing with the animal health delivery including the public health aspects of animal products; and the Directorate for Promoting Cooperatives and Rural Legislation. 2.14 AGRI-RA is the main institution for planning agricultural and livestock production, providing extension services to crop farmers and livestock producers; training agricultural and livestock technicians; and carrying out adaptive research in the PAPEMs (Points d'Appui de Prevulgarisation et d'Experimentation Multi-locale) planned by and implemented in collaboration with researchers of INERA (Institut de l'Environnement et des Recherches Agricoles). Input distribution (including improved seed, veterinary drugs and supplies, and agricultural chemicals) and the distribution of credit also have been AGRI-RA's responsibilities. However, these two activities have recently been suspended. These support services have been provided in practice by AGRI-RA's 12 Centres Regionaux de Promotion Agro-Pastorale (CRPA), established in 1988 as successors to regional rural development authorities (Organismes Regionaux de Developpement, ORD). The main activities of the CRPAs have involved extension, monitoring, evaluation, support services and rural works. More recently, they have also advised on the promotion of farmer institutions. CRPAs have provided their centralized services to the three specialized units of the Ministry in each of the 30 Provinces (Service Provincial de l'Agriculture--SPA; Service Provincial des Ressources Animales--SPRA; Service Provincial de l'Organisation et de la Formation Professionnelle des Producteurs--SPOFPP). The level below the provinces is the zones, where the village level agents also have their postings. Since AGRI-RA's reorganization in 1997, the CRPAs have been replaced by the "Directions Regionales de l'Agriculture et des Ressources Animales" (DRARAs). They are public agencies with no commercial operations, which concentrate on the public services previously performed by the CRPAs (para 2.17). 2.15 Livestock Sector. AGRI-RA has overall responsibility for the development of the livestock sector. At the national level, it has carried out this responsibility through: (a) the Directorate for Animal Production and Livestock Industries (DPIA), which is responsible for livestock extension and the promotion of the modem production systems; (b) the Directorate of Animal Health (DSA), responsible for veterinary protection and quality control of food of animal origin; and (c) the Directorate of Traditional Livestock Production (DOET), responsible for herder organizations, including the development of special "pastoral zones." All three Directorates contribute to the training of the field extension agents. In addition, there are a number of semiautonomous institutions in the sector. The National Livestock Laboratory (LNE) and the National Distributor of Veterinary Pharmaceuticals (ONAVET, to be privatized soon) are the most important of them. In the 1997 reorganization of AGRI-  6 RA, the Service of Pastoral Area Promotion (SAEP) has replaced DOET and integrated with DPIA. The Directorate of Veterinary Services (DVS) has replaced DSA. 2.16 At the regional level, livestock services are integrated with a Provincial Service (SPRA) which implements the animal health programs and trains the extension agents at zone and village levels. These three Directorates and agencies in the field involved in animal health and livestock extension have a total staff of about 40 veterinarians, 70 livestock technicians and 250 field agents. This gives a ratio of about one professional per 75,000 TLU (Tropical Livestock Unit), and 30,000 TLU per middle level staff, which is not excessive. Since 1991, when recruitment by the public sector stopped, an active private veterinary sector has developed. More than 50 veterinarians now operate privately (more than the number of veterinarians employed in the public sector), covering a substantial part of the Burkina livestock population. 2.17 Reorganization of AGRI-RA. During the process of preparing the Second National Agricultural Adjustment Program (PASA II), an extensive plan to reorganize AGRI-RA has also been promoted. With assistance from FAO, the Government has advanced, through a thorough process of planning and participation by concerned and interested parties, to a level where implementation of the new organigram and setting in place the other necessary changes were started in the beginning of 1997. The objectives of the reorganizations program are to: (a) assure greater efficiency of the public sector activities in the sector; (b) increase autonomy and improve professionalism of the economically-oriented farmer organizations and facilitate their participation in the planning and evaluation of public services; and (c) provide an enabling environment for the private sector to contribute to agricultural development more than hitherto. The measures to achieve these objectives are several, including introduction of a new organigram, detailed job descriptions and decentralization of staff and functions; reduction of staff in the ministry (para 4.4); liquidation of the loss-making commercial activities of the CRPAs and providing only purely public services through these regional bodies; and promotion of farmer organizations and encouraging them to take over some of the activities earlier performed by CRPAs. 2.18 Farmer organizations. There are more than 10,000 registered farmer organizations and groups (250 cooperatives and 10,627 precooperatives), in addition to groups that have been formed informally, for example, for agricultural extension and other purposes. However, the horizontal and vertical structures of farner organizations, common in more developed countries, have yet to be developed. Over the years, farmer organizations and groups have been formed following different promotion and investment programs supported by the Government, international assistance agencies and local and international nongovernmental organizations (NGOs). To facilitate centralized services and broader than local-level representation, some of these initiatives have led to the development of a vertical organization for some cooperative and other farmer organizations and to some expansion of the horizontal network of groups supported by the various initiatives. Examples of the national and provincial organizations are the Federation of Naam groups, Cooperative Union for Vegetable Growers (UCOBAM) and Federation Wendyam. However, these organizations and groups may not reflect real indigenous membership dynamism, but rather the policies and programs of external forces or groups with religious and political aspirations. 2.19 Nevertheless, although still relatively fragmented and uneven, the network of cooperatives and other farmer groups forms a basis on which genuine participatory development can be built. The Government has declared a policy of disengagement of the state from cooperative management and control, and empowerment of the producers as one of its main tenets of agricultural development. This policy is expected to be the cornerstone of the Government's approach and a condition of the donor community's support to facilitate accelerated development. This means that the Government and donors  7 would: (a) help create a regulatory environment (including suitable laws and regulations) that promote self-help activities; and (b) would supply the new or growing organizations with what they need for successful expansion. The assistance to be provided under this project (para 4.16) is based on this policy. 2.20 Liaisons. The Ministries implementing the project (AGRI-RA and MESSRS) plan to maintain liaison with several other ministries to coordinate the project activities with other operations taking place in the rural sector. The ministries involved are the Ministry of Environment, Ministry of Economy, Finance and Planning, Ministry of Water Resources, and Ministry of Basic Education and Mass Literacy. 2.21 Numerous other agencies are concerned with agricultural production, including the Societ6 des Fibres et des Textiles (SOFITEX) for cotton, the Caisse Nationale du Credit Agricole (CNCA) for medium-term credit, the S6cretariat Permanent de Coordination de la Politique Cerealiere for cereal production and the Secretariat Permanent de Coordination de la Politique de la Developpement de l'Elevage for livestock. The Secretariat Permanent de Coordination du PASA (Programme d'Adjustement du Secteur Agricole) would monitor the proposed reorganization of AGRI-RA (see para 4.18). C. Development and Agricultural Policies and Sector Development Strategy 2.22 Development and agricultural sector policies and objectives. Agriculture is the mainstay of the economy. Since the early 1 980s, the Government has followed a policy of agricultural development that aims at achieving food security, improving the incomes of the rural population, and protecting the environment. In 1985 the country endorsed the goals of intensification and diversification of agricultural production and improved management of natural resources and the performance of agricultural research. These goals were followed up by special programs for agricultural extension, research and community- based land management (Gestion des Terroirs). 2.23 Beginning in 1985, the development strategies for agricultural research were implemented on the basis of a policy paper titled "Lignes Directrices d'Organisation et d'Administration Strategique de Recherches Agricoles." It emphasized agricultural research on farming systems; soil and water management; and production of traditional cereals, legumes, vegetables, fruits, rice and cotton, as well as animal husbandry. Among the achievements during this period were: development and adaptation of improved and disease-resistant crop varieties and preparation of appropriate technical programs for growing of them; improved knowledge of the physical environment and identification of improved water management techniques; development of appropriate farming tools and postharvest processing equipment; studies on farm budgets and production constraints; development of techniques for multiplication of tree plants; creation of an ethno-botanical data bank; and quantification of natural pastures and development of improved rations for intensive sheep production for small holders. 2.24 In 1991 the Government adopted a Structural Adjustment Program to improve the competitiveness of the economy and establish a basis for sustainable development. The actions under this program concerned the fiscal policy, scope of the public sector, reform of the banking sector, reform of tariffs and trade policies and liberalization of prices. Realizing the priority that had to be accorded to the agricultural sector in the new development approach, the Government had prepared already in 1992 a special adjustment program for this sector and obtained for its implementation an adjustment credit from IDA and financial assistance from other development partners (para 1.3). The policy paper approved at  8 that time3 emphasizes three objectives for the agriculture sector: (a) modernizing and diversifying agricultural production; (b) strengthening food security; and (c) improving natural resources management. Three strategies were adopted to attain these objectives: (a) further intensification of production and improved management of natural resources; (b) liberalization of marketing and prices; and (c) restructuring the institutional environment through: (i) redefining of the role of the state, including the disengagement of the state from functions that can be done by other sectors of society; (ii) identifying the operators for rural and agricultural financing; and (iii) providing farmers' socioeconomic organizations with an expanded role; (d) making more effective use of the public finances; and (e) consolidating the policy and strategies of food security for the nation. 2.25 At present, the policies of the Government for the agronastoral sector are set forth in separate documents on agricultural research, extension, organization and staff training, land ownership and natural resources, and equipment and infrastructure. In addition, the Government is planning to reorganize the agricultural services in line with the strategies expressed in the policy documents. Nongovernmental organizations (NGOs), farmer organizations and private entrepreneurs are expected to take over selected activities that have hitherto been carried out by the state. Such a reorganization would be gradual to ensure that those assuming the new functions are capable of doing so. (The intention of the Government to follow the restructuring policies has been expressed in a "letter of intention" sent to the World Bank. However, in the project preparation report the Government has suggested that the farmer organizations restructure themselves into stronger units to take over the functions of the Government agencies. Thus, farmer organizations must demonstrate that they are capable of providing the needed services). 2.26 The development strategies also emphasize that increased productivity shall be based on smallholder production and promotion of smallholders' participation in development activities. In addition, durable agricultural development requires diversified interventions and concentration on local- level development, which can happen only if administrative structures and responsibilities are sufficiently decentralized. 2.27 In 1995 the Government approved a new strategy paper ("Plan Strategique de Recherches Agricoles"-- PSRA) to guide agricultural research. The new strategy covers the planning, programming and coordination of all agricultural research carried out by different research institutions, technical ministries, projects and NGOs in Burkina Faso. Its principal objectives and strategies are to: (a) achieve food self-sufficiency and food security, particularly through increases in agropastoral and forestry products; (b) improve the income and welfare of smallholders through intensification and diversification of agricultural production; and (c) conserve and restore natural resources through better policies and soil management practices. In addition, specific objectives in the environment sector, aim at controlling the pressure on natural resources, protecting biodiversity and initiating the process of reaching sustainability in the use of renewable resources. 2.28 Bank Group Assistance Strategy. In its Letter of Intent for Sustainable Human Development in October 1995, the Government set out its vision of socio-economic development, declaring poverty alleviation as its long-term goal and focusing on achieving monitorable progress in three objectives, viz.: (a) increasing income opportunities and productive capacity; (b) developing the social sector through a more efficient use and better targeting of public expenditure, especially for poor and women; and (c) strengthening the role of the private sector. Subsequently, the Bank started preparing a new Country / La lettre de Politique de Developpement Agricole (LPDA).  9 Assistance Strategy (CAS), which was presented to Board in July 1996. The preparation process was marked by a participatory policy dialogue between the Bank and Burkina Faso and resulted in a broad commonality of views on the necessity to tackle poverty alleviation much more ambitiously than in the past. The Bank Group's assistance strategy is focused on supporting the Government's goals of: (a) maintaining a sound macroeconomic environment in which equitable growth will lead to poverty reduction; (b) expanding the provision of social services to the poorest regions, particularly in health and education; and (c) improving productive opportunities to raise incomes and employment. To support these objectives, the strategy will strive to continuing structural reforms in agriculture, liberalizing the gold sector, completing the banking sector reforms, and improving public sector management. IDA assistance will be increasingly directed to non-lending services to improve targeting of public expenditures and identification of sources of growth. The bulk of IDA's financial assistance in the three coming years would concentrate on social sectors (education and health), and on creating and supporting a more favorable environment in which growth opportunities can be realized (agriculture, natural resources management, mining, water and infrastructure). 2.29 In its support to Burkina Faso's agriculture sector, the Bank Group intends to help the Government implement policy changes to further liberalize the sector, improve delivery of public services and develop a gender-sensitive extension program. In addition, through intensified economic dialogue and collaboration with other donors, the Bank Group will help find sustainable sources of growth for the sector and resources to finance their exploitation. Under this strategy, the Bank Group anticipates financing a second Agriculture Sector Adjustment Credit (ASAC II). It would support the completion of the reforms started earlier to liberalize the sector (on rice, sugar, cotton, trade and domestic prices) and reforms in the public sector (public divestiture, public investment program and restructuring the Ministry of Agriculture). Regarding the restructuring of AGRI-RA, there is a strong linkage between ASAC 11 and the Second National Agricultural Services Development Project (NASDP II--the object of this report).4 While the process of restructuring would be included in ASAC 11, it would be followed through with the assistance provided under NASDP 11, which has a special component for the purpose (para 4.16). The Bank Group also plans to support long-term agricultural growth and to explore new growth opportunities by starting to prepare, in close collaboration with the Government and donor agencies, an Agricultural Sector Growth Strategy. D. IDA-Financed Agricultural Projects and Lessons Learned 2.30 In the first part of the 1990s the World Bank Group financed the following projects in Burkina Faso's agricultural and environment sector: Agricultural Research Project (Cr. 1896-BUR), Agricultural Services Project (Cr. 1979-BUR), Environmental Management Project (Cr. 2229-BUR) and Food Security and Nutrition Project (Cr. 2414-BUR). The first two projects will close at the end of 1996 and 1997, respectively. The total IDA financing for these projects is US$83.9 million. In addition, IDA has financed an Agricultural Sector Adjustment Credit (Cr. 2381-BUR) of US$28 million. 4 / Another project that would benefit from the liberalization efforts and is complementing NASDP 11 is the proposed Private Irrigation Project for smallholders, to be appraised in FY 1997. 5/ Along with the IDA-financed programs, several other donors support agricultural and rural development projects. The most important programs are supported by the French, Dutch, German and Danish bi-lateral agencies and by European Union, IFAD and ADB. The projects supported by them are typically area-specific, integrated rural development projects, with only a relatively small part of the financing directed to agricultural extension. Some of these projects are implemented by Government agencies, others by separate implementation  10 2.31 Although major results have been achieved, agricultural research has had limited impact because of: (a) the lack of a participatory approach for research design and testing; (b) the weak linkage with extension and end-users; (c) the inadequate attention paid to some important subsectors and to postharvest techniques; and (d) some organizational and management issues relating to INERA's responsibilities and decision-making powers affecting implementation of the agricultural research project. As for extension, actions plans have been improving, but several concerns mentioned by the 1992 midterm review remain: (a) weak linkages between research and extension, along with a inadequate participatory diagnosis; (b) insufficient supervision and technical back-up of the front-line extension workers by the project's high-level staff; (c) a tendency to institutional over-staffing coupled with insufficient presence in the field; (d) delays in implementing impact studies; and (e) weak financial transparency and budgetary control at the decentralized level (CRPAs). An action plan is now being implemented to address these concerns; it would be pursued further under the proposed project. 2.32 In December 1994, OED issued a report on lessons and practices conceming agricultural extension on the basis of experience from Bank-funded projects throughout the world. It identified the following critical points, which apply well to phase I and are being taken into account in the follow-on project: (a) limited state fiscal capacity and commitment; (b) specific requirements of different groups of potential clients; (c) need to adapt the methods of technology transfer to the specific characteristics of beneficiaries and production systems; (d) analysis of existing and potential stock of adapted technologies by type of production system; (e) prioritization of extension activities by client groups and region, according to the available technology; (f) importance of gender issues in the effectiveness of technology transfer; (g) potential usefulness of mass media and information technology; (h) importance of participatory diagnoses and linkages with research; and (i) importance of using the potential of private agencies or organizations to provide extension services. 2.33 To study the situation in Burkina Faso, two detailed evaluations of the perforrnance and impact of extension services have been carried out by independent consultants in 1991 and 1995. The first evaluation took place one year after the country had adopted the T&V system. It showed that (a) contact group members had yields that were 20 percent to 30 percent higher than in the control group; (b) farmers who were not official contact farmers also participated in demonstration meetings; (c) 46 percent of the sample farmers rated the extension messages as highly applicable, while another 53 percent rated them as applicable; (d) 20 percent of contact group members and 8 percent of all farmers mentioned that they were involved in on-farm research. However, this study also uncovered areas where improvements were needed. About 70 percent of contact group members desired that more messages focus on animal health and production, 70 percent of members expressed a need for more messages that relate to organic matter, anti-erosion methods and water management and 47 percent of them wanted more messages for horticulture. The second study, beneficiar,y assessment carried out in 1995, confirmed in general that the contact farmers are in general satisfied with the extension services offered. The farmers were forceful, however, in their insistence that the agricultural research and extension need units as self-standing projects, but, in general, they follow the approved Government policies in regard to rural development or agricultural extension. In the area of agricultural research, the most active donors are the Dutch Cooperation (CFAF 226 million in the next three years) and the European Community (CFAF 196 million in the next two years). Sofitex provides INERA with FCFA 100 million a year over a longer period, mainly for cotton research. Researchers also have an access to small individual funds that can complement, in a flexible manner, the operating expenses budgeted under the IDA Credit.  11 to be directed more to diversification of messages and making them fully relevant to their requirements and constraints. 2.34 In addition, the following "best-practice" documents from other countries have been reviewed and their lessons considered during project appraisal: The World Bank: Agricultural Extension in Africa Discussion Paper AFT Series No. 231, 1994; The World Bank: Agricultural Research in an Era of Adjustment Policies, Institutions and Progress. EDI Seminar Series, 1995; and The World Bank: Implementation Completion Report on Kenya National Agricultural Research Project, 1995. III. AGRICULTURAL TECHNOLOGY SUPPORT SYSTEM 3.1 Agricultural Technology Support System. The main institutions involved in agricultural technology development in Burkina Faso are the Agricultural Research Institute (INERA) (including the Tropical Agricultural and Foodcrops Research Institute, IRBET, merged with INERA in 1997), universities and the network of Pre-extension Experimentation Stations (PAPEMs). INERA and the new IRSAT have a critical role in applied research, benefiting from the basic research done by the international research institutes, advanced research agencies in developed countries and, to a limited extent, the universities. For purposes of farming system research and coordination, the country is divided into five agro-ecological zones, each serviced by one of INERA's Regional Stations that have responsibility for zone-specific adaptive research and, to a certain extent, for conveying the findings to the extension and farming community. Within each zone the PAPEMs conduct adaptive research and help disseminate research results to smallholder farmers. PAPEMs are not directly linked to INERA but are part of the agricultural extension structure. However, collaboration between the PAPEMs and the research stations is active. 3.2 Thus, there are several tiers of technology development and dissemination: (a) on-farm applied research (OFR) using the farming systems teams of INERA's regional stations; (b) on-farm adaptive research (OFAR) by the PAPEMs and other state-level agencies; and (c) technology dissemination through the unified extension system using the Training and Visit (T&V) methodology of extension management. 3.3 On-Farm Applied Research (Researcher-managed Adaptive Research). Applied research is conducted by the farming system research and natural resource management teams of INERA's regional research stations to develop appropriate technologies. This type of research involves researcher-managed experiments to develop new and improved technologies under various agro-ecological conditions. The purpose for research and extension teams is to learn how farmers react to introduced changes, to what extent the introductions are accepted, modified, or rejected, and why farmers respond to new technologies the way they do. Specific experiments are carried out at research farms, PAPEM farms or on farmers' fields with as much control of the variables as possible. Combining the understanding of the farming systems practiced by farmers, the background information on technology development and interaction with farmers, the researcher teams propose improvements to increase the productivity and profitability of the farming systems. 3.4 On-Farm Adaptive Research (OFAR). OFAR serves as the bridge between the development and extension of new technologies. It is used by the extension system and its Regional Centres for Agro- pastoral Promotion (CRPAs) as the first stage in the technology dissemination process. The technologies generated from the OFAR recommendations are further tested. Farmers fully participate in these tests, so that they can adapt them to specific farming situations based on farmers' resource base, technical abilities, cropping and livestock patterns and farm/household conditions. The OFAR methodology ensures the acceleration of the adoption of proven technologies; at the same time, it helps to better prepare extension  12 staff on technologies they promote during the mass diffusion stage. It entails more work on farmers' fields, generally utilizing less expensive staff. It also requires increased expenditures in vehicle purchase and maintenance, field equipment, elementary agricultural mechanization, multiplication of improved planting, livestock and fisheries materials as well as simple tools for the trials, daily allowances and incentives. Due to resource constraints, most of the CRPAs (presently DRARAs) are yet to implement the OFAR approach. 3.5 Technology Dissemination. The dissemination of most agricultural technologies to small-scale farmers takes place through the Training and Visit System (T&V). It is the responsibility of the DRARAs under the reorganized and unified extension service. The entire country is currently using the T&V extension management system, with about 1,000 Base Extension Agents (CAPs) working at the village levels with CAP-to-farmer ratios typically ranging between 1:800 and 1: 1,200. In each zone of the DRARA, extension staff have delineated the farming areas into contiguous operational units (circles). Within these circles, the extension agent works with selected groups of farmers. These farmers are the "'official" contact group representing the rest of the farmers in the community. The contact groups also provide the upward linkage from farmers to extension and research. The CAPs, supervised by 145 Zonal Extension Supervisors, visit the contact groups and other farmers in the sub-circle at regular fortnightly intervals. During the visits, the CAPs teach the farmers a maximum of three to four carefully chosen production recommendations that they have learned at Fortnightly Training Sessions (FNTSs). Thus, under the unified extension approach, a single field-level extension agent, supervised by a zonal officer and backed by 150 Technical Specialists (TSs) specialized in subject matters typical for the region, is the farmers' principal contact for the dissemination of all agricultural technologies. There is a team of 4 to 6 TSs in each Province. 3.6 The placement of TSs within the DRARAs helps bridge the gap between the generation of technologies by researchers and the broad-scale diffusion of improved technologies by extension staff. The TSs are specialists in such fields as agronomy, agroforestry, plant protection, livestock, farm management, fisheries, water management and farm implements (agricultural mechanization). Because the CAPs are generalists, TSs are more cost-effective, if used for training CAPs, than if they were used as individual specialists working at the farmer level. Unification of extension is of critical importance given that, in a large majority of farms, livestock, agro-forestry and crop production and processing are integrated into a single farming system at the farm level. Exceptions are the nomadic pastoral and the intensive peri-urban livestock production systems which have specialized information needs. In addition, the front-line staff of the livestock service handles still a combination of control and advisory functions. It appears that the control functions take a large portion of the staff's time, thus interfering with the relationship of trust that needs to exist between the extension agent and his client farmers. IV. THE PROJECT A. Rationale, Objectives and Strategy 4.1 Rationale for IDA involvement. The proposed four-year project would continue the financial support started by the Bank Group under the National Agricultural Research Project and the National Agricultural Extension Project. In the field of research, the Bank is committed to support the Framework for Action (FFA) of SPAAR (Special Program for African Agricultural Research). At the 15th SPAAR Conference (March 1995), Burkina Faso was identified as part of the next round of FFA implementation. The Bank is also committed to long-term support of integrated agricultural services in sub-Saharan Africa. The proposed credit represents the second phase of support for these commitments in Burkina Faso. The project is consistent with the national strategy for agricultural development, in particular with  13 the LPDA, and with the Country Assistance Strategy for Burkina Faso. Approved in July 1996, the CAS stresses the need for prudent management of natural resources, explicitly supports the continuation of the ongoing research, agricultural services and natural resource management programs, and includes Agricultural Services II in the lending program. The CAS also emphasizes that the incidence of poverty, being highest in the agricultural sector, can only be reduced through efforts to create sustained growth in this sector (para 2.28). 4.2 Objectives. In coordination with the institutional reforms to be undertaken in the context of the proposed Second Agriculture SECAL, this project would seek to reduce rural poverty by helping increase smallholder production through provision of essential services and strengthening the link between agricultural research and extension. The project aims to: (a) support long-term agricultural production by maintaining an agricultural research system and reorganizing it to better meet farmers' needs, including postharvest activities, placing greater emphasis on protection of the environment and integrating research more closely into the regional and internationalnetworks; (b) increase agricultural and livestock productivity and farmers' revenues through improved agricultural extension services and empowering rural women, whose role is critical in agricultural production, food processing and nutrition; (c) improve natural resource management and promote sustainable production systems; (d) help the Government implement an improved animal health system, largely based on private veterinary services; (e) promote and empower, on a pilot basis, representative farmers' organizations that would (i) develop their know- how in providing services and increase their bargaining power in their participation in agricultural policy making and execution; (ii) help their members to gain confidence and capabilities to embrace technical change; and (iii) share on-farm work with the public sector in the field of adaptive research and technology transfer. In addition, the project would support a pilot program to study the feasibility of financing village-based initiatives ("small rural infrastructures"). 4.3 Project strategy. The project would support the Government's strategy of upgrading the rural development services. Its design has benefited from the lessons learned from experience in neighboring countries (paras 2.32) and it is in line with the new generation of agricultural services projects supported by the World Bank in West Africa. Each of the lessons learned in Burkina Faso during the implementation of the Agricultural Extension Project (PRSAP) and National Agricultural Research Project (PNRA) has been considered in the project design (Para 2. 33). Farmers opinions expressed in the evaluation study of 1991 and beneficiary assessment of 1995 will be addressed in this project, especially as they relate to more diversified extension messages, messages for livestock owners and water and natural resource management. 4.4 Implementation of NASDP II would coincide with the restructuring of AGRI-RA involved in direct support to farmers. In AGRI-RA the restructuring process concerns about 4,100 staff, including 1,000 field staff working in the current IDA supported Agricultural Extension Project. After restructuring, about 3,100 staff would have been deployed in the various organs of the Ministry, with much higher emphasis on field postings than earlier. After the staff is replaced, there would be an overall surplus of staff, most of them now employed under contract. This means that nearly all contractual staff would have to be laid off, even taking retirements into account. The rights of the laid- off employees would be determined by the law in effect at the time of severance. To enable the individual staff members to adapt quickly to their new responsibilities, targeted training would be provided from the start of the project. 4.5 On the side of agricultural research, the project's effectiveness depends largely on the legal and administrative environment in which the research agencies operate. A new decree organizing CRNST  14 and its institutes has been elaborated to better define the responsibilities between these agencies. The Council of Ministers approved it before negotiations. 4.6. Because resources and implementation capacity are limited, agricultural development initially requires a project approach. However, once the implementation agencies have gained sufficient planning and institutional capacity to plan and implement the required development investments in a sector, financing of development needs can also be done by using an investment program approach. Under the latter approach, the implementation agencies receive funds for mutually agreed purposes (programs) rather than for investments decided in advance. It is possible that this approach could be used in Burkina Faso during the project implementation period. Therefore, before midterm, project funds would be used to prepare a study on the capacity to plan and implement a program approach. 4.7 Project area. The project would cover the whole country, encompassing all five agroecological zones with wide variations in population, climate, soils and vegetation. The different activities under the project would be concentrated somewhat differently in the four zones. Whereas agricultural extension would cover the entire country relatively evenly, much of the livestock component, particularly assistance to the transhumant herders, would be in the North and East. The research component, with its regional centers and field stations, would cover the whole country. The pilot component promoting fanner organizations and small rural infrastructures would probably start in the agriculturally more advanced areas and then expand to other regions. B. Summary Description 4.8 The project has five main components: 1. Agricultural research: Ongoing priority research programs would continue to be supported by the project. In line with the national Agricultural Research Strategic Plan, the project would pay greater attention to promising new fields of research such as vegetable and food production, forestry, postharvest technology and appropriate mechanization; 2. Agricultural extension (rainfed and irrigated crops, livestock natural resource management): The project would help consolidate and expand the national system of extension and adaptive research and incorporate gender-specific and literacy programs to support the effectiveness of the extension program; 3. Animal health and pastoralist promotion: the project would help promote privatization of the animal health subsector, improve the remaining public sector services and contribute to enhanced development and distribution information to transhumant pastoral producers; 4. Pilot programs: (a) Promotion offarmer organizations: On a pilot basis the project would help national, regional and local farmer organizations gain professional and financial strength so that they can provide services to smaliholders and take part in adaptive research, and, potentially, become able to transfer technologies and know-how to their members. Also, on pilot basis, the project would finance: (b) a program for small rural infrastructures to study the processes and feasibility of financing village-level operations intended for communal usage; and 5. Restructuring of agricultural services: In line with the Agriculture SECAL II appraised in June 1996, the project would carry out relevant supporting measures, including possibly setting up a  15 temporary unit in charge of restructuring, carry out detailed studies for the reorganization of AGRI-RA, and provide training for both redundant and remaining staff. C. Detailed Project Description 4.9 Agricultural Research (US$18.8 million, including contingencies). 6 Funding for research activities assumes that the 125 researchers now available would begin or continue the activities envisaged under the Strategic Plan for Agricultural Research. These researchers are located at INERA and IRSAT. The project would continue to support the ongoing priority programs. In line with the Strategic Plan, the project would also cover new areas of research such as research on forestry, farm mechanization and postharvest technologies. Great attention would be paid to the most promising lines of research, such as vegetable and fruit production. The project would contribute to improving the relevance of research from the farmers' viewpoint, quality and accountability for results, and logistical and financial management of CNRST and its specialized institutes, as well as the degree of autonomy for the latter. The project would particularly focus on participatory technology development with producer organizations and extension services. 4.10 NASDP II would finance construction of a few additional buildings or rehabilitation of buildings to complement and consolidate the infrastructure development of the predecessor project, that is, only on the sites that were part of the first project. They concern the principal the research centers of Kamboinse, Saria, Farakoba, Dori-Katchari, Di-Tougan, Kouare, and the research station of Niangoloko. The project would help CNRST recruit or continue to finance 15 contract researchers, 33 technicians and 10 technical or administrative staff. Several of the administrative staff would be needed to implement the new financial and accounting system developed under the predecessor project. This staff would progressively become regular CNRST staff, so that by the end of the project, the IDA credit would no longer finance salaries, except for a few staff directly related to the project. The project would provide agricultural and scientific equipment and contribute to the funding of research-related direct and indirect costs, including managerial costs; long- and short-term training; and costs associated with developing linkages between agricultural research, extension services and producer organizations. 4.11 Agricultural and livestock extension (US$20.3 million). The extension component covers extension for rainfed and irrigated crops, livestock production, and natural resource management. The project would help consolidate the national system of extension by improving the capacity for regional and local diagnoses, to be carried out with full participation of the benefiting farmers; strengthening linkages between research and extension to ensure the appropriateness and effectiveness of extension to farmers; continuing training and support to field extension staff, as well as the supervision of the mobile staff working with the farmers; involving producers in preparing work programs for their advisers and in the evaluation of their performance; facilitating access to extension services, especially to women; strengthening the monitoring and evaluation system and the accounting and budgetary control systems of the implementing bodies. To help broaden the competency of village-level agents, those who are proficient in crop production would be trained in animal husbandry and the livestock and forestry specialists would be trained in annual crops. The project would provide vehicles and technical equipment for staff involved in extension and pay for operating and training costs. 6 / The component cost includes neither the regular staff paid by the Government nor the small parallel operations financed by various donors.  16 4.12 Women-in-agriculture program. The project would particularly contribute to resolving the problems that hamper full participation of women in rural development. The measures would include: (a) formulating extension messages for crops or activities that are performed predominantly by women; (b) developing special modules of advice on processing of food and on simple agroindustrial activities; (c) encouraging establishment of female or mixed working groups with a goal of having women make up at least one third of the group members; and (d) giving a priority to women in the literacy and numeracy programs, which would be organized in collaboration with the Ministry responsible for adult education. Women's programs would be incorporated in the unified extension programs which would identify and recruit more female staff and finance similar investments as under that program; the literacy and numeracy program would provide funds for training of trainers, technical and classroom equipment, vehicles, and incremental operating costs. 4.13 Animal health and pastoralist promotion (US$2.5 million). Besides strengthening the capabilities of the general extension service in the dissemination of livestock technology (para 4.10), the livestock component would have two subcomponents. The first would strengthen the quality of the animal health delivery by further supporting the ongoing privatization process, through training and a review of the current animal health legislation. It would also improve the sanitary control capabilities of the public service by providing equipment, motorcycles and other vehicles, training, partial salaries and operating costs to the key livestock departments (DPIA/DSV) and to the virology, bacteriology, parasitology and epidemiology departments and four regional laboratories of LNE. The second would develop specialized information services for the transhumant pastoral producers, carrying out a detailed stakeholder analysis and developing and equipping more appropriate communication channels (radio, markets) for this mobile group. It would further include the establishment of a small advisory unit for specialized peri-urban pig and poultry livestock producers. The project would provide training to the unit's staff, short-term technical assistance to start the unit, and funds for equipment and operating costs for special training courses for commercial pig and poultry farmners. 4.14 To support these investments, the government would need to agree, at effectiveness, to eliminate competition by the public livestock service in "private good tasks" (such as curative treatments, non- compulsory vaccinations and sale of pharmaceuticals) by introducing full cost recovery (including personnel costs an d transport) for these services during the first project year. These costs would be updated every year by the DEP of AGRI-RA. Funds are provided to carry out those updates. As a further support to private veterinarians, and to use its own budget most efficiently, the Government would issue, before effectiveness, a decree governing the subcontracting ("mandat sanitaire") of public sector tasks, such as meat inspection and compulsory vaccination to private veterinarians. It would need to agree to introduce cost recovery for the advisory services for commercial producers. 4.15 Pilot programs (US$4.3 million). Promotion offarmer organizations. On a pilot basis the project would help farmer organizations (at regional and local levels, and potentially also at the national level) become stronger and prove capable of providing agricultural support services to farmers. These services are, in the first instance, expected to be commercial activities such as supplying farm inputs, marketing cash crops and organizing rural saving and credit facilities. Also, farmer organizations are expected to take part in adaptive research and, once they are sufficiently strong, participate in the transfer of agricultural technologies and know-how to their members. 4.16 Considering the relatively weak development and financial levels of the existing farmer organizations, the project would provide assistance to the Directorate for Promoting Cooperatives and Rural Legislation (DPCLR) of AGRI-RA to allow it carry out promotional activities more efficiently than it has done heretofore. Other support would concentrate directly on making farmer organizations  17 more professional and enabling them to provide services to their members and represent them in various forums where their interests are at stake. Thus, assistance under this component would support: (a) improvement of the legal and fiscal framework to provide an enabling environment for farmer organizations to grow; (b) improvement of the members' capability to develop their professional organizations through a literacy and numeracy program and cooperative and group training; (c) institution building, by training board members and staff of farmer associations in organization, management, economics and accountancy and by providing essential equipment and facilities; (d) technical training of permanent professional staff involved in farmer organizations and their promotion, including training in participatory technology development and extension; and (e) technology and logistical support to grass-roots-level savings and credit associations and their vertical organizations. Particular attention would be paid to identifying and supporting women and youth organizations and groups, or integrating members of these two groups in other farmer organizations. Wherever possible, project activities would be linked with existing organizations active in planning and implementing village land management. The project would provide consultancies, training, vehicles, technical and office equipment, and assistance to experimental programs that can be used for exhibition and training purposes, as well as regional/international study tours for board members and selected staff from farmer organizations. 4.17 Small rural infrastructures. This program finances pilot work on small infrastructures, particularly "boulis" and related economic activities, whose establishment would also be based on farmer groups. "Boulis" are small, simple-design dams constructed in natural depressions near the villages with the help of bulldozers and by doing some compacting and stone/cement strengthening. They provide water to the village and its animals until or near the end of the dry season, and are valuable for garden plots, brick laying and composting. Village wells and latrines can be added to the bouli-projects to ensure the necessary sanitation in regard to water flows. As a social benefit, it has been observed that the boulis have helped to reduce migration of the young people who are attracted by the better income that the "new occupation" of small-scale irrigation of the vegetable plots can offer. The program financed under the project would be a two-year pilot operation, the main purposes of which would be to: (a) study and record suitable procedures for developing boulis; (b) study their financial viability and the potential benefits and risks; (c) study the potential to make them into a "bankable" scheme; and (d) help prepare a larger scheme for the banks and development agencies to finance. 4.18 Restructuring of agricultural services (US$1.4 million). In line with the policies promoted under the Second National Agricultural Adjustment Credit, the project would carry out relevant supporting measures to reorganize AGRI-RA activities (para 2.17, 4.4), including possibly setting up a temporary unit in charge of restructuring, conduct detailed studies for the reorganization of AGRI-RA and CRPAs, provide training and other assistance for redundant staff. For the livestock service, the Government would present and implement annual action plans for the separation of the functions of control and advice of the livestock front-line staff, and integrating the staff available for extension tasks progressively into the unified agricultural extension system. Because the workload of livestock agents in the field would continuously change as the privatization of veterinary tasks progresses, action plans about the division of labor would be prepared every year for each province. The project would provide funds for consultaricies, training, logistics and operating costs.  18 V. PROJECT COSTS AND FINANCING A. Project Costs 5.1 The base cost of the project for the 4-year disbursement period is estimated at CFAF 22.5 billion (equivalent to US$42.7 million), with a foreign exchange component of US$25.8 million. The total foreign exchange component constitutes about 60 percent of project base costs. Physical contingencies were calculated on civil works, plant and equipment, training and technical assistance. Price contingencies of 4 percent for PY 1 and 3.0 percent for the following years were included for all local costs from FY96 onward, reflecting the local inflationary considerations. Price contingencies on foreign exchange were 2.3 percent for PY 1 and 2.5 percent for the following three years. Physical contingencies amounted to US$1.3 million (3 percent of base costs). Cost estimates are based on first-quarter 1997 international quotations (UN Inter-Agency Procurement Services Office--IAPSO) for vehicles and equipment, machinery and office supplies. Local quotations for the same period covered salaries and allowances, civil works and office furniture. A nominal exchange rate of US$1.00 = CFAF526 was used for February 1997 in determining project financial costs with depreciation of up to US$1.00 = CFAF536 during the last year of the four-year investment period. A ten-month lag between project post-appraisal and effectiveness was assumed. Given these assumptions, total project cost, including all contingencies, was estimated at CFAF 25.1 billion (US$47.3 million) (Annex 1). Table 2: Proiect Cost Summary (US$ million) % of Local Foreign Total % FE Base Cost I Agricultural Retsearch 5.9- 11.2 17.1., 65 40; Agricultural Extension 7.6 10.8 18.4 59 43 Liestocflealth L.0 1.3 2.3 57 5 Pilot operations 1 7 2.0 3.7 53 9 Restructuring of AGRI4RA 0.7 0.5 1.2 46 3 TotalVBasekCosts 16.9 25.8 42.7 60 100 Physical Contingencies 0.6 0.8 1.4 59 3 PriceCotingenciies 1.5 L.8 3.3 55 8 To>talProject Costs, 18.9 28.4 47.3 60 111 B. Proposed Financing Plan 5.2 The credit of US$41.3 million would finance 87.2 percent of total project costs, excluding taxes and duties. The credit would have a maturity of 40 years, including a ten-year grace period. It would cover 100 percent of foreign exchange, 95 percent of civil works and about 75 percent of other local costs. In viewofBurkinaFaso'sdifficultmacroeconomicsituation> the IDA credit would finance all  19 capital investments except for 5 percent of civil works, while the Government would finance a part of the recurrent expenditures (para 5.6). The Government would finance US$6 million equivalent (12.5 percent of total costs), excluding duties and taxes. The beneficiaries under the rural institutions component would finance about US$400,000 (20 percent of the direct assistance to farmer organizations under the pilot operations). The proposed financing plan for the project is summarized below (the farmer organizations' contribution has been incorporated in the Government financing): Table 3: Project Financing Plan (US$ million) Category Total IDA Government and Beneficiaries Civil Works 5.6 5.3 0.3 Equipment 3.5 3.5 0.0 Vehicles 4.5 4.5 0.0 Technical Assistance and Studies 3.8 3.8 0.0 Training 7.1 7.1 0.0 Incremental Salaries and Benefits 3.5 2.6 1.0 Incremental Operating Costs 19.2 14.4 4.8 Total Project Costs 47.1 41.3 6.0 Contribution in Percentage 100.0 87.2 12.8 5.3 The components of the project aiming at strengthening the public services amount to approximately US$43 million (of which about US$38 million IDA credit). To ensure timely availability of counterpart funds, Government contributions to the project agencies would be specified in the agencies' annual budgets and would be payable in semi-annual allotments in advance. Because deposits would be due in advance, the initial deposit in each account would be required to cover three months of operations for the particular component before the project could become effective. Failure to adhere to the semi-annual deposit schedule would be treated as a cause for suspension of the disbursements by IDA. Assurances regarding all these requirements were obtained in the course of project negotiations. C. Procurementand Disbursements 5.4 Procurement. All the project units involved in implementation include staff experienced with the Bank procurement procedures. Project procurement would conform with Bank guidelines (January 1995, modified in August 1996) within the following thresholds: (a) all civil works, except small renovation works, would be procured through national competitive bidding procedures (NCB). Contracts under the pilot component, with estimated costs of less than US$30,000 equivalent, would be let out by using the "community-participation" method, following procedures stated in the Implementation Manual and acceptable to IDA, up to an aggregate amount not exceeding US$3.0 million equivalent; (b) goods would be procured in accordance with international competitive bidding (ICB) procedures except for: (i) goods estimated to cost less than US$200,000 equivalent per contract which will be procured through NCB procedures; and (ii) goods estimated to cost less than US$50,000 equivalent per contract, in an aggregate amount not to exceed US$2 million equivalent, to be procured by local shopping based on at least three quotations. The implementation units would be requested to prepare a computer-based system to monitor that the aggregate amounts agreed  20 upon will not be exceeded. Goods manufactured in Burkina Faso will be granted a margin of preference in ICR contracts in accordance with the World Bank guidelines. Contracts for goods would, to the extent practicable, be grouped into packages of US$200,000 equivalent or more. For consultants, the Bank's consultant guidelines of January 1997 would be followed. All bidding and contract documents for civil works, goods and equipment and consultant firms exceeding US$50,000 (US$20,000 for individual consultants) would be subject to prior review by IDA. The Borrower presented to IDA a draft procurement schedule for the entire project period at negotiations. The procurement arrangements are further detailed in Annex III. 5.5 Disbursementof IDA Credit Disbursementarrangementsare explained in detail in Annex III. They will be complemented by a DisbursementLetter by the World Bank's DisbursementDivision (LOAAF) once the project has been approved. 5.6 To facilitate project implementation and reduce the volume of withdrawal applications, the Governmentwould open Special Accounts for AGRI-RA, INERA and IRSAT in CFAF in a local commercial bank on terms and conditions acceptable to IDA. The authorized allocations would amount to CFAF 600 million for AGRI-RA, CFAF 400 million for INERA and CFAF 100 million for IRSAT, and would cover about four months of eligible expenditures. Upon effectiveness, CFAF 300 million for AGRI- RA, CFAF 200 million for INERA and CFAF 50 million for IRSAT will be deposited in the respective Special Account. The remaining balance will be made available when the total amount withdrawn from the Credit account and/or Special commitments issued amount to one half of allocated funds for each entity. The disbursement of funds to IRSAT would be authorized once the institute has implemented accounting and financial management systems similar to INERA (para 5.7). The Special Accounts would be used for all payments inferior to 20 percent of the initial deposits. Replenishmentapplications would be submitted monthly. All replenishmentapplications should be fully documented except for contracts of less than US$50,000 equivalent for civil works, goods and equipment, consultant firms (US$20,000 for individual consultants), training, studies and operating costs, which would be claimed on the basis of Statements of Expenditures (SOEs). All supporting documentation for SOEs would be retained at the project implementation units for review by the IDA supervision missions and external auditors. E. Accounting, Auditing and Reporting 5.7 The implementing agencies, except IRSAT, have participated in IDA-financed projects in the past and have adequate accounting systems. INERA is putting in place, with the support of an international accounting firm, an improved financial management system, including cost accounting (by programs, research centers and stations and source of funding). A system similar to that introduced in INERA would be installed at IRSAT. Funding required for the recruitment of the financial and accounting firm for IRSAT would be available after Board approval, while other disbursement of project funds for IRSAT would be authorized once the financial management system is in place and the manual of accounting procedures has been adopted by the CNRST Board. All agencies would maintain their accounts in accordance with sound accounting practices to reflect their operations and financial positions. They would have the accounts including Special Accounts and SOEs, audited by a firm of independent external auditors acceptable to IDA. Assurances were obtained at negotiations that the audited accounts and the auditors' report, including the Management Letter (long form), and a statement as to whether or not Bank funds had been used for their intended purpose, would be submitted to IDA within six months of the end of the fiscal year of each agency. 5.8 By September 30 of each year starting with 1997, the implementing agencies would submit to their respective ministries, with a copy to the IDA, their annual work programs and budgets for the following year. The report format would adequately portray project activities, unit costs, benefits and  21 productivity and would provide the basis for proper management of the project and operation of a sound project accounting system. The budget proposal would include quarterly cash flow statements. Procurement plan for goods and civil works would specify source of funds, timing, and procurement methods (whether ICB or other), and would be accompanied by an updated Procurement Schedule for the remaining life of the project. After having been reviewed and approved by the supervising ministries, the agency budgets would be reviewed by the Steering Committee (para 6.1). The supervising ministries would then submit the budgets to the Ministry of Finance to agree on the level of annual funding, financial plan, and allocation of resources. Assurances were obtained at negotiations that, by November 30 of each year starting from 1996, the supervising ministries would submit to the Bank for comments a copy of the NASDP II program and budget for the coming year. 5.9 Each participating agency would submit semiannual reports and management accounts to the supervising ministry, copied to the Steering Committee and IDA, showing actual and budgeted expenditures, statements of progress achieved and the objectives for the forthcoming quarter by each project component. Semiannual reports would contain summaries of expenditures to date and use of funds by source, plus a forecast of withdrawal of IDA credit proceeds by quarter for the immediate forthcoming year and by year thereafter. VI. PROJECT IMPLEMENTATION A. Overall Organization and Management 6.1 The general oversight of implementationwould be the responsibilityof an interministerial committee (Steering Committee for the Agricultural Services Project). It would be chaired by the Secretary Generals of AGRI-RA and MESSRS on behalf of the respective Ministers. The chairmanship would alternate annually. The committee would consist of 15 persons, representingthe ministries, regional bodies and research institutes most concerned in project operations (the list of members and the functions of the Committee are given in Annex VII of the Project ImplementationManual). The Committee would assign senior staffto take part in the wrap-up meetings of the IDA supervisionmissions. The Steering Committee would meet, as a minimum, once every six months. In addition to reviewing policy, financial and coordination issues, the Committee would approve the annual budgets and work plans and receive information about the appointment of principal staff needed for project implementation (appointment of the staff would be the responsibility of the respective ministries). The Committee would also ensure, through the respective Ministries, that adequate counterpart funds would be made available for project implementation. 6.2 Under the supervision of MESSRS and AGRI-RA, a separate body would be responsible for coordination of each project component: the Directorate General of CNRST for the research component and the Project CoordinationUnit for AGRI-RA Services (CU). The DirectorGeneral is already responsible for coordinating, supervising, monitoring and evaluation of the scientific activities in the Ministry. He would handle the same responsibilitiesfor the project. The National Coordinatorheading the Project Coordination Unit at AGRI-RA would be responsible for promoting coordinated actions under the AGRI-RA component, supervising financial management and procurement, and monitoring implementation of the plans for action. He would have three subunits to assist him: Finance and Procurement, Internal Audits and Monitoring and Evaluation. The respective Directorates of AGRI-RA would implement the AGRI-RA components. INERA and IRSAT, with their Secretary Generals in charge, would execute the research component of the project with adequate independence and authorization in using project funds and carrying out procurement under the project. The organization of project coordination and management is depicted in Chart I of Annex IV.  22 B. Operations of the Different Components 6.3 Agricultural Research. 7 INERA and IRSAT would operate under the general guidance of CRNST Board of Governors. To review the research programs that the institutes prepare within the framework of the National Agricultural Research Strategy, the Board would rely on a Scientific and Technical Commission (STC), consisting of 10 to 15 members nominated from renowned national or foreign scientists. 6.4 STC and the Directorate of CNRST have an important role in the review and approval process, as well as in the monitoring and evaluation of research. Their role would be made explicit in the procedure manual of CNRST prepard before preparation. The CRNST Board would need to adopt this manual, as well as a manual for INERA and IRSAT organizations, before the project can become effective. 6.5 Organization of research andprogram content. The new INERA, which combines the previous INERA and IRBET, would be organized into five regional research centers--Saria, Farakoba, Di-Tougan, Kouare, Dori-Katchari--corresponding to the five major agroecological zones, and one national center, Kamboinse. The national center would house all the major laboratories and would carry out the basic research activities under the direction of the department heads. The basic research carried out at Kamboinse would support the applied and adaptive research performed by the regional research centers. The Kamboinse station would also be responsible for organizing all training for scientists and other staff. Each regional center would have a multidisciplinary natural resource management and production systems team in charge of on-farm testing and adaptation as well as a participatory technology development unit to collaborate with producer organizations and extension services. 6.6 Program planning and review process. INERA is putting in place a program planning and review process to ensure that research meets the country's needs and is adequate. First, at the level of the regional centers, researchers review their research results and program the activities of the following year with a small group of producers and with regional extension and NGO staff--i.e., the users with whom they usually work on on-farm testing and adaptation. Every other year, each regional center would hold a large meeting (the Regional Technical Committee) with research clients (producer groups, extension and development staff and NGOs) to present research results, propose future activities in accordance with the consultation with the working groups, and obtain agreement on research priorities for the next two years. This process is intended to ensure that producers participate in the process, so that the research will meet their needs. The regional research activities are then aggregated, consolidated and reviewed at the program (national) level. They are reviewed by a Program Commission, an external body, which can also propose activities and provide feedback. The agreed work programs and budgets are then presented to INERA's Scientific and Management Council. This advisory body makes recommendations to the CRNST Board of Governors through the Scientific and Technical Council regarding the funding the Institute's proposed work program. During the project period, the annual research programs would be communicated to IDA for prior review before being presented to INERA's Scientific and Management Council. 6.7 Partnership with producer organizations. Participatory research methods are necessary for fostering client-oriented research. Equally important is the influence that the producers can exert on the research agenda, not only for the design of on-farm experiments but also at the on-station stage. In / See also Annexes 1.1 and I. 2 in the Implementation Manual.  23 addition to the programming and review process described above, INERA and IRSAT would develop contractual arrangements with a few producer organizations to develop technologies of interest to these organizations. These partnerships would be established gradually on a pilot basis as it takes time to make them permanent (during the past three years, three such partnerships have already been established). 6.8 National and regional collaboration. A number of scientists outside CNRST are affiliated with the university, special schools such as the Rural Development Institute (IDR), units of other ministries such as the National Livestock Laboratory, or with NGOs. A line item in the budget, managed by the Director General of CNRST, would enable CNRST to contract these scientists to collaborate with INERA and IRSAT scientists (i.e., from institutes in the North or from the regions, or with international research centers) in implementing the strategic plan and thereby optimizing the use of scarce country resources. The project also intends to support INERA and IRSAT to adapt and implement the principles of the Framework for Action of the Special Program for African Agricultural Research (SPAAR). The project would also promote the scientists' participation in regional and international research programs and networks. 6.9 Physical infrastructure and equipment. There would be only limited development of infrastructure under the project, mainly completing structures in progress and rehabilitating other facilities. Before architectural and engineering plans are prepared, INERA and IRSAT would prepare experiment station development plans to indicate the future use of buildings and grounds. A commission composed of senior scientists and engineers would oversee the development of such plans and monitor their implementation. Once INERA and IRSAT have prepared an experimental station development plan acceptable to IDA, disbursement for civil works and land improvement would be made under the IDA credit for that particular location. Disbursement for equipment would depend on the presentation of an agricultural equipment profile for the research stations and the results of a laboratory study based on an analysis of the gap between the existing equipment and the equipment needed to carry out the activities projected under the Strategic Plan. 6.10 Human resources management. Burkinabe research institutes are part of the African and Malagasy Council for Higher Education System (CAMES) for researchers' promotion. Proposals to revise the CAMES promotion system for researchers to make it more responsive to the needs of clients, rather than being academically-oriented, would be made to the CAMES Council of Ministers. Whatever the outcome of the negotiations between the MESSRS and the CAMES, the MESSRS would need to adopt a system of promotion for the researchers with criteria that would encourage development-oriented research. Agreement to adopt such a system not later than December 31, 1998, was agreed upon at credit negotiations. 6.11 The decree for establishment of CRNST and its institutes IRSAT and INERA (reglement d'etablissement) has been developed to include a description of conditions of entry for each category of staff and researcher. It also contains a system for ongoing evaluation of staff performance, including an incentive and reward system. Agreement that a performance review system, including incentives and rewards, would be adopted by the CNRST Board before December 31, 1998, was agreed upon at negotiations. 6.12 Agricultural extension and other AGRI-RA components. Under the restructured AGRI-RA, agricultural extension and related activities will be carried out through a "unified extension system," which provides a single line of command with five vertical levels. They are: (a) the local level, with about 1,000 village extension workers (CAPs), each serving about 800 households in 4 to 8 villages; (b) the zonal level, with 150 supervisors, each working with 8 to 10 CAPs; (c) the provincial level, with 30  24 teams of managers and specialists supervising and providing support to the zonal and village levels; in each province, there are also 4 to 6 Subject Matter Specialists (Technical Specialists--TS), carrying out adaptive research, training the CAPs in fortnightly workshops and serving as liaison among farmers, CAPs and researchers; (d) the regional level consisting of 12 DRARAs, which, besides supervising and supporting the layers below them, are in charge of evaluating and processing the data collected by surveyors posted in the provinces; they also carry out adaptive research at PAPEMs and organize training of the Technical Specialists during monthly workshops, getting expert assistance from researchers and other resource persons; and (e) the central level. As the extension staff age structure indicates a need to make preparations for replacements in the near future, the Government has establish a thorough record and projections of the extension staff and a policy for replacing the aging or otherwise revising staff. 6.13 At the central level, the Directorate of Agricultural Extension (DVA) will continue to have sole responsibility for coordinating and monitoring the day-to-day operations of extension activities that deal with crops, animal production, natural resource management and gender-specific activities. The DVA will also have overall responsibility for the training of extension staff, including producing and using audio-visual materials; monitoring and evaluation; adaptive research; and maintenance of linkages with the research institutes. The Director of DVA is assisted by a team of technical managers for training and extension, monitoring and evaluation, adaptive research and women's activities. The Chief of Administration and Finance in DVA is responsible for the delivery of timely and adequate resources and facilities to the entire extension system and for monitoring their efficient use. 6.14 For extension to be effective, the advisory messages must be tailored to farmers' needs. Hence, it is important that DVA solicit and obtain the participation of the various stakeholders, including the relevant farmer organizations and NGOs. Specialized organizations responsible for processing, marketing and exporting commodities, such as SOFITEX for cotton and UCOBAM for vegetables, could contribute to the content of extension messages by providing information about their concerns and perhaps by providing resource persons for the training of Technical Specialists. To strengthen the linkages with the research institutes, Technical Specialists would attend monthly workshops and refresher courses in adaptive research and training during the dry season. Assurances were obtained at negotiations that DVA would enter into agreements with SOFITEX , INERA and IRSAT, respectively. These accords would relate to each agency's contribution to the content of extension messages concerning agricultural technology, training of the Technical Specialists and financial arrangements to carry out this cooperation. 6.15 Regarding livestock extension, the current extension tools (communal demonstration herds, test herds, demonstration plots, etc.) would be adapted to include use of individually managed entire herds in demonstrations and tests; greater reliance on producer-led experimentation, information exchange and producer cross-visits; and greater reliance on mass media. The project would develop, under the respective responsibility of DPIA, a special information service for transhumant producers and encourage them to share information on pasture, water and animal health conditions along transhumance routes, marketing, land-tenure issues and other organizational aspects, and a specialized service for commercial pig and poultry producers. 6.16 Women in Agriculture Program (WIA). 8 The WIA program would promote agricultural activities that are either solely or largely carried out by women; these include crop production, livestock, food processing techniques, and utilization, storage and marketing of farm products and other off-farm income-generating activities. Appropriate technologies would be generated and developed through the / See also Annex 1.3 in the Implementation Manual.  25 agricultural research programs of INERA and IRSAT and through adaptive research at PAPEMs. A specialist at the national level in AGRI-RA, regional specialists at CRPAs and Technical Specialists at the provincial level--all integrated into the unified extension system--would implement on-farm and other extension activities and train the CAPs, including males, and their supervisors in zones. The female TSs would operate like the other technical specialists, but only in agricultural technologies that are solely or largely performed by women. 6.17 Other measures to be adopted would include increasing the number of qualified female staff at all levels (zonal, provincial, regional and headquarters) and accelerating efforts to reach more female members of the contact farm families and other female farmers with appropriate technologies. One third of the contact groups would be female. The increase in the number of female staff would be attained by identifying more female CAPs to address women in groups. The CAPs would make other production recommendations to the women as members of the contact families in their respective circles. In the provinces where there is strong inhibition against male extension workers interacting directly with women farmers, female CAPs would disseminate appropriate technologies to women farmers and select some of them as contact farmers. The proposed increase in the number of female extension workers at the head office, regions, provinces and zones would improve the coverage of women working in agriculture. The mass media would be used extensively in the work with women groups. Female CAPs would be expected to spend up to 70 percent of their time disseminating technologies on agricultural production and about 30 percent supporting the processing and use of agricultural produce. 6.18 Livestock health and pastoralist promotion. 9 The livestock component would be implemented under the general coordination of the Directorate of Production and Animal Industries (DPIA), which would delegate responsibility for the extension subcomponent to the Directorate of Agricultural Extension (DVA), the pastoral component to the Division of Pastoral Areas Promotion (SAEP) and the animal health component to the Directorate of Veterinary Services (DSV). The National Livestock Laboratory (LNE) would be responsible for implementing of the laboratory component in close collaboration with INERA. To enable fast and direct disease-reporting links between the regional and national laboratories, the Government would transfer responsibility for the regional laboratories from DRARA to LNE before effectiveness. Furthermore, a study would be needed to assess the feasibility of transforming LNE into an independent administrative entity (EPA). This study would be carried out, and its results implemented, in the first project year. Specialized training activities could be subcontracted to other government organizations, regional agencies, or NGOs. Dissemination of pastoral information should be closely coordinated with other donors projects working in the same field. 6.19 To effectively implement the subcomponent for private animal health and advisory services, the Government would, as would be agreed upon at negotiation, provide equal opportunities to private veterinarians and eliminate competition of the livestock service in the "private goods tasks" such as curative treatments, noncompulsory vaccinations and sale of pharmaceuticals by phasing out all these services in the areas where a private veterinarian is established and by introducing full cost recovery (including personnel costs and transport) for all "private goods tasks." Furthermore, the Government would issue, before effectiveness, a decree governing the subcontracting (mandat sanitaire) of public sector tasks such as compulsory vaccinations and meat inspection to private practitioners, and introduce advisory services to private specialized producers under a partial and progressively increasing cost recovery system. / See also Annex 1.4 in the Implementation Manual.  26 6.20 Rural Institutions. The agencies most involved with the rural institutions component would be the Directorate of Cooperatives and Rural Legislation (DPCLR), Project Coordination Unit and the National and Regional Advisory Committees for farmer organizations. A portion of the component funds are allocated to DPCLR, which would implement it independently after presenting its annual work plans for discussion to the National Advisory Committee (CCN). Besides monitoring the activities and output, CU would, where necessary, assist in all activities, such as procurement and disbursement of project funds for the expenses of DPCLR. 10 6.21 Direct assistance for rural institutions would be elaborated on the basis of the studies and plans under way for the rural credit operations (financed by Swiss and European Union assistance) or prepared under the PASA II program for the professionalization of farmer organizations. It would be followed by a national conference to be organized by DPCLR, representative farmer organizations, IDA and other donors. Based on the overall approach to be recommended by the conference planned for early 1997, annual plans and assistance programs would be prepared by a subcommittee comprising members of CCN and staff of DPCM and CU. The endorsement of the CCN and no-objection by IDA would be needed before project funds are available for each annual program. One of the objectives is to have by the second half of the project a national-level federation of cooperatives would operate the assistance program outlined above. 6.22 Farmer organizations would receive grants (against 20 percent own financing) to help implement small subprojects formulated with the help of the DPCLR's field staff or NGOs. These subprojects would be approved by the Regional Advisory Committees (CCR). Because the component is a pilot operation, funds would be insufficient to cover all the needs in the sector, and the CCN would have to use selection criteria for choosing 5 to 6 provinces for the program, as well as the organizations and activities to be aided each year. The selection procedure and criteria were agreed upon at negotiations; the criteria would include a potential replication effect after the pilot phase, suitable size and degree of certainty that the project objectives can be achieved with the funds available, regional spread, contribution by the members at 20 percent minimum, availability of competent staff or adequate training facilities, and level of coverage (number of people involved). Whenever possible, the actual implementation of the subprojects would be contracted out by the OP to a suitable agency or consultants. A typical example of such contracting would be the literacy courses that would be best implemented by specialized NGOs (6.29). The Government has prepared the operational manuals explaining the details of these operations. 6.23 Restructuring of AGRI-RA. The Ministry of Agriculture and Animal Resources has approved a restructuring plan that has been drafted by a specialist team of FAO and thoroughly reviewed and partially revised by a Steering Committee at AGRI-RA (paras 2.17, 4.4). The restructuring program would be implemented under direct supervision of the Minister of Agriculture and Animal Resources. However, a special coordination unit set up for planning the Second SECAL would carry out the day-to- day monitoring of the restructuring program. The Steering Committee which oversees this unit is chaired by the Secretary General of AGRI-RA. Implementation of the actions required under this component will be initiated under the Second National Agricultural Sector Adjustment Credit, and, consequently, supervision of the implementation of the component will be done in collaboration with ASAC. During post-appraisal, the Government agreed that it will: (a) complete the establishment of the organs and management procedures under the restructuring program of AGRI-RA; (b) give termination / See also Annex A.4 in the Implementation Manual. The French Ministry of Cooperation is considering the possibility of offering a Farner Organizations Specialists to AGRI-RA to help, among other things, in the activities assisted by this project.  27 notice to the 600 contractual staff to be released; and (c) identify the ex-CRPA staff who can be effectively used in the new DRARAs and make a decision on their transfer. At negotiations, it was agreed that the Government: (a) carry out redeployment of personnel and organizing the related transfers as per the reorganization plan before June 30, 1998. (These arrangements would need to include separation of the control and advice functions at the level of field agents and unification of the available livestock personnel into the national extension system, based on annual action plans for each province); and (b) prepare with the help of an audit firm a financial audit of the assets and liabilities of the CRPAs not later than April 30, 1998; and (c) liquidate the liabilities not later than April 30, 1999. C. Planning, Monitoring and Evaluation 6.25 The units and systems needed for planning, monitoring and evaluation have been developed and instituted during the predecessor projects on agricultural extension and research. These units and systems would be strengthened during the NASDP II. Detailed work programs would be prepared annually for each unit benefiting from project funds. These plans would include detailed data and information on the inputs needed and outputs expected. For the AGRI-RA activities, monitoring of the implementation of the work programs would be based on reports collected and data processed in the channel of zonal, provincial and DRARA units. The DRARAs would have separate Monitoring and Evaluation Units for this purpose. At the national level, the M&E unit would be located in the Project Coordination Unit. On the side of agricultural research, information and data would flow from the field and regional research stations to INERA and IRSAT where they would be processed for the monitoring and evaluation reports. A lot of data is already being collected, but they are not always processed adequately to be of benefit for project or ministerial management. 6.26 For one part, monitoring would focus on assessing the physical implementation of the investments proposed under the project. For extension (including livestock and gender-specific extension), the key indicators would include adherence to training and visit schedules, attendance to fortnightly demonstration sessions (data to be divided by gender), and the number of demonstration plots or herds. For research, the monitoring system would report, on physical implementation of the respective activities, as well as on the advancement in each of the research programs. Evaluation of the project impact would aim at analyzing the meeting of project development objectives. These would be measured by such indicators as adoption rates and differences in yields and production in with- and without-the-project situations. As the Agricultural Statistics Directorate is responsible for annual production estimates, and as yields and production are affected by numerous factors and different agencies, collaboration will need to be arranged between these agencies and the evaluation units in AGRI-RA, CRNST and the research institutes to establish the base-line situation and to collect the essential follow-up data and information in a systematic manner. It is envisaged that consultant assistance would be needed to do all this. Additionally, independent consultants would be needed to carry out the evaluation studies every two to three years. The indicators for monitoring project performance and measuring the project impact were agreed upon at negotiations. Consultants would be recruited to help establish a coordinated monitoring system and carry out independent impact evaluations. D. Training and Technical Assistance 6.27 Training. All the components of the project would contain training elements. The project would put in place an in-service training program to reflect emerging changes and needs in technology and policy areas. The highest priority for training would be strengthening the management and technical capacity of staff at all levels through in-house and external (including some overseas) courses. The  28 training program for eligible AGRI-RA staff would be coordinated by the Directorate of Extension (DVA) I Iand for INERA and IRSAT staff by CRNST. In consultation with each operational unit, these agencies would be responsible for: (a) managing in-house training activities; (b) establishing procedures and criteria for determining staff training needs; (c) preparing criteria for selecting training programs and candidates; (d) developing procedures for evaluating training activities; (e) identifying suitable training institutions for external in-country and external courses; and (f) organizing a record keeping system for trainees. The T&V training for extension staff would be planned and executed by DVA, while training for other AGRI-RA staff would require inputs from other Directorates in the Ministry for planning and implementing the training program. National institutions would be used to conduct in-country extension training programs. A prime goal in training policy would be cost-effectiveness; for example, AGRI-RA and CRNST would try to find suitable locations for training in Burkina Faso, and only if such locations were unavailable in the country, would they look for outside opportunities, first elsewhere in Africa, then in other developing countries, and only then, in developed countries. Assurances were obtained during negotiations that the Human Resource Development Plans would be based on skill-gap analyses and updated annually, and that the annual training program for each participating agency would be submitted to the Bank for agreement before implementation. 6.28 Technical assistance. No long-term technical assistance is proposed under the project. Government agencies in the past have faced, however, difficulty in recruiting and retaining adequately experienced and qualified specialists, such as financial controllers and monitoring and evaluation experts because of higher salaries in the private sector and shortage of qualified applicants. The local expertise needed but not available in the Government service, would be obtained through contractual arrangements with Burkinabe consultant firms or individual specialists; expatriate recruitment would take place only if the required expertise is unavailable locally. In view of the highly specialized needs of the agricultural research and some other activities, such as station management and monitoring and evaluation, where professional skills as well as continuity are very important, institutions with appropriate expertise would be identified to provide short-term consultants. In addition, short-term consultants for specific studies, notably to support agricultural research, extension, human resource development and farmer organization activities, would be hired as needed. The project agencies are expected to enter into contractual arrangements at terms and conditions, and with the terms of reference and qualifications agreeable to the Bank with selected institutions or individuals to support project activities. 6.29 Literacy program and group training. The project would provide several activities to address the functional literacy needs of the officers in farmer organizations and more generally of women farmers, whose educational levels are low and who therefore have limitations in managing economic activities. First, functional literacy training provided under PRSAP I would continue under NASDP II with an emphasis on female participation. Second, group-skill trainers would be appointed at provincial level to provide training in two main subjects: the management of groups and group activities for group leaders, and transformation and agroprocessing technologies for group members. Third, regional specialists in gender issues would serve as a clearinghouse in their areas to put people who have received such training in touch with NGOs and other projects and agencies that can provide the credit so that maximum advantage can be taken of the training. / If needed, with assistance from the Directorate for Professional Training.  29 E. Mid-Term and Completion Reviews 6.30 Midterm reviews. The Coordination Unit (CU), with inputs from the benefiting Directorates of AGRI-RA, would prepare a progress report on the AGRI-RA components of the project before midterm. Similarly, INERA and IRSAT, with coordination from CNRST, would prepare progress reports. In addition, the Coordinating Unit of PASA would prepare a report on the implementation of the restructuring of AGRI-RA. These reports would form the basis for the mid-term review to be undertaken jointly by the Government and IDA at the end of Project year 2. To facilitate meaningful monitoring, implementation and impact indicators for all components were agreed upon at negotiations. The review of the AGRI-RA components would focus on assessing the success of the technology support system in adapting and disseminating new messages on crops and livestock to farmers to improve total farm productivity and in promoting sustainable use of land and water resources. Progress in strengthening of monitoring and evaluation activities in AGRI-RA and results in the program of strengthening and expanding the farmer organizations would also be assessed. Implementation of the research component would be reviewed against agreed objectives, particularly the capability of the research system to develop appropriate technology messages and liaise with other agencies for disseminating them to the farming community. Also, the operational procedures set in place at INERA and IRSAT would be reviewed. At negotiation, assurances were obtained that CU and CNRST would coordinate preparation of comprehensive progress reports and each benefiting agency would prepare their own reports for the midterm review of the project which would be completed no later than three months after the mid-term by a joint Government/World Bank team. 6.31 Implementation Completion Report. An ICR would be prepared under the coordination of the Project Steering Committee, with contributions from the participating agencies. It would assess achievements of the project in relation to its objectives; field impact of the new approach to liaisons between the agencies involved; and achievement of a consolidated level of operations by the agencies benefiting from the project. The ICR would be submitted to the Bank no later than six months after completion of the project. F. Implementation Schedules 6.32 During the first year of the project, emphasis in the AGRI-RA components would concentrate on strengthening the unification of extension services, particularly through improved linking of the livestock operations and improving quality of the on-farm adaptive research (OFAR) and extension programs. On the research side, the new administrative and organizational arrangements would take place (including establishment of IRSAT), together with firming up the programs in line with the new strategy of agricultural research. Limited civil works and rehabilitation, and procurement of most of the vehicles, field and laboratory equipment would be carried out during the first two years of the project. Applications for financing under the farmer organization component would be invited, and the first ones would probably be appraised before effectiveness of the Credit. A bar chart showing the implementation schedule for key activities is given in Annex II. Bank supervision mission timing and nature is provided in the same schedule. The first Bank supervision mission will cover three representative regions and would confirm with the CU, INERA and IRSAT the practicability of a list of performance indicators prepared under NASDP II to assess the development impact and the institutional effectiveness of the project entities.  30 VII. FINANCIAL AND ECONOMIC ANALYSIS 7.1 In Burkina Faso, determination of project benefits resulting from an agricultural services project must include agricultural and livestock activities performed by smallholders, who represent more than 90 percent of the farmers. In the analysis prepared for this project, the agricultural component included an estimation of farm budgets by agroecological zones and standard types of farms, and an assessment of overall benefits by aggregating farm budgets, according to assumptions made by the mission on prospective adoption rates. The livestock component included an estimation of herd and flock budgets by standard type and an assessment of overall benefits by aggregating herd budgets, according to assumptions made by the mission on the prospective adoption rates by cattle and sheep breeders. A. Farm-level Analysis 7.2 Farm/herd models. Primary project beneficiaries would be small farmers currently practicing low-input, low-output technologies in farming systems. Because cropping systems vary considerably within the four selected agroecological zones, it was assumed that main project benefits would accrue from incremental production resulting from adoption of the improved varieties and associated cultural practices by farmers, along with better livestock health, breeding, feeding and management. To analyze the financial and economic benefits, six different farm models were prepared, one for each agroclimatic zone and two more general models. For livestock, four typical models were used in the analysis (Annex 4, Appendices A and B). 7.3 Determination of benefits and costs. A matrix in Annex 4, Appendix A, indicates, by type of farm, the technical packages and levels of productivity that were used to assess benefits from target farms and to estimate impact in each agroecological zone. The yield increases were projected to vary from 14 percent to 41 percent (depending on the region and the crop), and to be achieved over four years only by the adopting farmers. Three types of cattle herds and one type of flock of sheep have been used for the economic model. The first corresponds to a transhumant cattle herd of 45 heads located in the Sahel. The two other types correspond to relatively sedentary cattle herds located throughout Burkina Faso, which are integrated with cropping activities through the use of ox-drawn cultivation and organic manure. 7.4 Inputs and financial prices. For cropping activities, the major inputs used in production are labor, fertilizer, farm chemicals and improved seeds. Labor, the single most important component of crop production costs in Burkina Faso, accounts for about 60 to 80 percent of total input costs. Fertilizer use in Burkina Faso is extremely low at 7.5 kg/ha. Prices for these inputs are set by the government (subsidies were suppressed in 1996, along with an important increase in the farmgate price of cotton). Other inputs of increasing importance in food crop production are improved seeds and agrochemicals for seed treatment. 7.5 Output markets and financial prices. The major constraints to efficient marketing of agricultural outputs are a poor distribution network, which leads to wide disparity between farmgate and retail market prices and seasonal price fluctuations; inadequate low-cost storage at the farm level; and inadequate processing capacity at the village level. The project includes research and extension activities to alleviate a part of these constraints, in particular through farmer organizations. As demand for domestically produced crops is high, the above project activities would facilitate the market absorption of the increased production to be generated under the project.  31 7.6 Farm and Herd Financial Budgets. For the agricultural component, the farm-level returns were estimated on the basis of "with project" and "without project" situations. Six models were reviewed in the crop production situations and four for the livestock component. All farm budgets showed a significant increase of returns to farm family; a major part of this increase can be attributed to project interventions (Annex 4, Appendix A). The benefit/cost ratios (B:C ratios) for the different crop budgets with the project varied from to 1.06 to 1.95, as against the B:C ratios without the project of 0.92 to 1.91. The ratios were calculated after allowing the present farm salaries to be paid for the family labor in the without-project situation, and increased salaries for the with-the-project situation. The best B:C ratio would be possible to reach by cultivating valley-bottom rice (anywhere in the country), followed by the farm model using oxen power in the West. The weakest ratio would be reached in the Sahel area with or without the project, the former being, however, higher. 7.7 Moreover, the budgets that were calculated for herds showed significant increases in returns to breeders, mainly because of project interventions (Annex 4, Appendix B). For instance, in the year 10 after the project start, the herds of the adopting owners would have grown up to 45 percent more (depending on the type of the herd) in the with-project case than without. The incremental benefit resulting from the value of milk, meat, hides and manure would be 41 percent to 51 percent higher in the with-project case. B. Project-Level Economic Analysis 7.8 Approach and assumptions (Implementation Manual, Annex 4). Economic benefits from the project were determined on the basis of the following assumptions: (a) a project life of 20 years, 12 commencing with a one-year lag for the accrual of benefits; (b) an investment period of six years, including the total costs of the research, agricultural service and farner organization components, but excluding the costs of the support to the restructuring of AGRI-RA; (c) a without-project situation generally increasing slightly because of inputs remaining from the predecessor project and informal transfer of technology through other than project channels ( including herds that were assumed to grow in both cases); (d) all prices of outputs and inputs expressed in 1996 constant economic values; and (e) an opportunity cost of capital of 12 percent. For internationally traded commodities such as rice and cotton, import parity farm-gate prices were used. 7.9 The number of typical farms or herd owners that would adopt technical farm or livestock packages and benefit from the full impact of this adoption was estimated by the mission on the basis of the adoption rates reported under the ongoing project (PRSAP I) by the Monitoring and Evaluation Unit of the DVA of AGRI-RA. The adoption rates used in the base case of the present economic model are on average 40 percent higher than the adoption rates reported for Phase I; they vary from 10 to 15 percent of the total number of existing farms according to the ecological zone and the type of farm. In the farm models, a farm that adopts the proposed technical package in project year (PY) n is supposed to reach the yield objectives in year n+4. For each PY, one sixth of the total target standard farms (total target is 10 to 15 percent of the existing farms) are assumed to adopt the proposed technical package. Every five years the benefits are reduced by 30 percent to take into account periodical drought. 2 / The economic analysis was computed at appraisal for a six-year project period. Because this project is a second phase of a longer term-program, the computation period was not changed at post-appraisal when the project period was reduced to four years.  32 7.10 Project costs in the economic analysis. The costs used in the economic analysis of the project contain incremental costs of investment and recurrent costs, including physical contingencies, for both the research and agricultural services component. Cost of support to the restructuring of AGRI-RA is excluded from the economic analysis. The base case takes into account only costs of staff under contract to be financed by the proposed IDA Credit (which represents a small proportion of the total staffing costs necessary to implement the project). 7.11 Economic rate of return and net present value. Based on the foregoing assumptions, the economic rate of return calculated for NASDP II is estimated at 39 percent with a net present value (NPV) of CFAF 58 billions at an opportunity cost of investment capital (OCIR) of 12 percent. 7.12 The costs of the project's main components can also be expressed as percentage of agricultural GDP. For agricultural research, the costs are about 0.5 percent of the agricultural GDP and for agricultural extension a little less. In relation to public expenditure, the demand of counterpart funds for the implementation of the project, about US$1.5 million equivalent per year, would equal about 2.1 percent of the 1997 government budget for all projects. 7.13 Sensitivity analysis. The following factors were determined as likely to affect project viability: decrease in assumed incremental benefits linked to lower yields and/or lower adoption rates; increase in costs of rural labor; increase in project costs; and delayed project impact and benefits. For a given percentage of variation from the base case of one given variable, the corresponding ERR was computed (Annex 4, Appendix C). The ERR is not very sensitive to changes in individual variables. For instance, a 60 percent reduction in the projected incremental farm and livestock output, or both combined, would still give an estimated ERR of 23 percent, 33 percent, and 19 percent, respectively. A 100 percent increase in the cost of labor, a 20 percent increase in total project costs, and a two-year delay in project implementation would still allow an ERR at 30 percent, 31 percent and 27 percent, respectively. The switching value analysis, using 12 percent opportunity cost of capital, would allow the project costs to increase by 350 percent before the project net present value (NPV) would be equal to zero. VIII. BENEFITS, JUSTIFICATION AND RISKS A. Benefits and Justification 8.1 Project benefits. The programs supported by the project are expected to help increase agricultural productivity and develop sustainable production systems for rainfed crops, irrigated crops and livestock production for the domestic market and for export. These form a set of direct quantifiable benefits used in the financial and economic analysis (Chapter 7). Direct but non-quantified benefits under the proposed project are: improved nutritional status of rural households through diversification of cropping systems and increase of milk and meat consumption; increased employment; human resource development, including improved literacy and numeracy; and improved productivity of on rural women through targeting part of the extension information to women farmers. Indirect project benefits, also not quantified in this analysis, derive from enhancing of food security in poor rural households, allowing subsistence producers to replenish stocks of food and seeds, which are usually reduced or depleted during the lean season. The project would also promote somewhat increased use of fertilizer, leading to improved soils to better sustain smallholder farming activities, as well as environmentally friendly farming practices. 8.2 Farmers' access to inputs, availability of credit, and post-harvest technologies are expected to improve during the project period. Institution building under the project would improve the efficiency  33 and effectiveness of both the public agricultural services and farmer organizations. In liaison with the Agriculture SECAL, the public agricultural services would be restructured to focus on appropriate research and extension and become more cost-efficient. By improving the managerial capacity and economic power of farmer organizations, the program would contribute to improved welfare of farmers and rural poor, and to increase added value of agricultural products. The project would also promote the rural private sector by creating an enabling environment for farmer organizations and local traders to take on roles as marketers of inputs, a role that would be transferred to them from the CRPAs. 8.3. Environmental issues. The main potential environmental issue concerns the possibility of longer-term farm land degradation resulting from the adoption of more intensive but not sustainable production systems. However, the agricultural research, extension, and on-farm adaptation programs would emphasize sustainable land and water resource management and agroforestry as part of the technology packages to be promoted to farmers. The project would be closely linked with the Natural Resources Management Project and would extend the technology developed under that project to more numerous farm communities. Moreover, adoption of better farming techniques on farmed land would reduce the necessity of expanding agriculture into more marginal lands. The project would not involve any resettlement of people or financing of agrochemicals. The proposed project is designed to promote environmentally sustainable agriculture. At initial project identification and in line with general regional policy regarding agricultural services projects, this project was classified as Category C. However, preappraisal review determined that it should be classified as Category B. Consequently, the Government will need to carry out a targeted environmental analysis according to Bank guidelines. At the time of negotiations, the consultants for environmental analysis had been invited to make proposals for the assignment. Completion of this study would be a condition of effectiveness of the project. (Environmental effects are also discussed in Annex VI of the Project Implementation Manual.) 8.4 Program Objectives and Poverty Categories. The Poverty Profile 1996 shows that the incidence of poverty is 52 percent in subsistence agriculture, substantially higher than for the population in general (35 percent). Rural areas must therefore become the focal point of public service delivery and efforts to improve access to financial resources. The smallholder farmers, including women, being the main target group of this project, the main program objectives would be the alleviation of rural poverty and farmer empowerment. The applicable Targeted Intervention Categories are expected to be Raising Productivity and Poverty Alleviation. 8.5 Participatory Approach. Project preparation relied mainly on documents prepared by the implementing agencies and experience gained over the last 6 to 7 years in implementing a similar project in Burkina Faso. Project preparation work was done entirely by staff of the two ministries involved in the project. Early client consultation started in 1995, at which time AGRI-RA began a process of preparing a participatory action plan, with an adequate focus on women, as well as obtaining the viewpoints of the involved agencies, particularly smallholder farmers and their organizations. Work performed by consultants under this assignment was extensively discussed at regional and national workshops and conferences before preappraisal. On the side of agricultural research, the research institutes have been year involving farmer organizations in their work for a year or two by making contracts on research assignments of direct interest to the members of these organizations. In the future, farmers' participation in the Agricultural Services Program, including agricultural research, will be strengthened by enhancing the capacity of farmers' organizations to participate in planning, implementation and evaluation at different levels, including workshops on a strategy for agricultural services, regional technology reviews, diagnosis at village and farm levels, program evaluations and impact assessments. The participatory approach will be based on methodology and experience already  34 well established for developing village land management plans (gestion des terroirs). The principle of participatory approach has been agreed with the Government at the initial stage of preparation. B. Risks 8.6 Besides the climatic uncertainties, the main project risks--impossible to quantify--are: (a) potential reversal of sound economic policies, including implementation of the proposed restructuring of AGRI-RA; (b) inadequate counterpart funding; and (c) constraints to achieving better efficiency of extension services, including potential lack of inputs. The approach used in this report was to analyze the factors involved, assess their impact on project outcomes, establish a subjective probability of their likely occurrence based on country information and field knowledge, and propose mitigating measures that can be taken by (he Borrower (Implementation Manual, Annex 4, Appendix C). 8.7 According to this analysis, the high-risk factors for project implementation appear to be the potential lack of counterpart funding l and less-than-needed efficiency of the project institutions. These have been taken into account in designing the project as follows: - Agricultural policies and restructuring of AGRI-R4. Many of the sector issues that often hinder agricultural development are unlikely to affect this project. Most of these issues began to be addressed under the Agricultural Adjustment Credit program (SECAL I) and they should be resolved during the Second National Agricultural Adjustment Credit program (SECAL II). They include improvement in the performance of public-sector institutions supporting agricultural development and competitiveness of key subsectors (rice, sugar, cotton and livestock). These improvements, if implemented, would support the effect of the investments under this project. To reduce the risk of implementation failure or delay, the project would provide funds to facilitate the restructuring of AGRI-RA and would include conditionalities to ensure that the deadlines are met. - Counterpartfunds. Delayed provision of counterpart funds, a problem experienced in the past, would be reduced by adapting the project scope and the share of recurrent costs to be financed by the Borrower to the Borrower's financial capacity, and seeking a relatively high level of IDA financing as requested by the Government. Increasing assistance from other multilateral and bilateral donors, usually in the form of grants, is also expected to facilitate achievement of project objectives. - The efficiency of the extension services. Inefficiencies could result from a possible lack of adapted technologies and lower-than-projected adoption rates by producers. These inefficiencies would be mitigated by implementing regional technology reviews, improving linkages between research and extension, developing participatory approaches and getting farmer organizations involved in planning and deciding on the type and quality of agricultural services and establishing priorities and adapting the pace of program implementation. 13/ The Government has provided the requested counterpart funds under the predecessor projects during the recent years, but the amounts have been smaller that during the proposed project.  35 IX. ASSURANCES AND RECOMMENDATIONS 9.1 At negotiations, the assurances obtained included the following: (a) the Government's annual budget would contain adequate provisions to meet the Government's share of project expenditures (5.3); (b) the Government would follow the World Bank/IDA guidelines in the procurement and consultant services (5.04; 6.28); (c) World Bank guidelines for financial management and the selection of and reporting by independent auditors would be followed. Audited accounts and the auditors' report, including the Management Letter (long form), and a statement as to whether or not Bank funds had been used for their intended purpose, would be submitted to IDA within six months of the end of the fiscal year of each agency (5.7); (d) the Government would prepare annually work programs and budgets for NASDP II for the coming year and submit these to IDA for comments (para 5.8); (e) a Project Steering Committee would be established to provide support to NASDP II and meet at least every six months (6.1); (f) DVA would enter into agreements with SOFITEX, INERA and IRSAT, respectively, on their contribution to the content of extension messages relating to agricultural technology, training of the Technical Specialists and financial arrangements to carry out this cooperation (6.14); (g) a study to assess the feasibility of transforming LNE into an independent administrative entity (EPA) would be prepared and its results implemented during the first project year (6.18); (h) when selecting farmer organizations to benefit from project funds, the project authorities would use criteria and a process acceptable to IDA (6.22); (i) payment for specialized advisory services to pigs and poultry producers would be progressively introduced (4.14; 6.19); (j) preparation of the Human Resource Development Plans would be based on skill-gap analysis and annual training programs be reviewed by IDA before being implemented (6.27); (k) consultants would be recruited--using procedures acceptable to IDA--to help establish a coordinated monitoring system and carry out independent impact evaluations(6.28); and (I) semiannual progress reports and the midterm review would be prepared within three months from the end of the reporting period and the Implementation Completion Report within six months (6.30 -6.31);  36 9.1 The conditions for the effectiveness of the Credit would be as follows: (a) agricultural research: (i) presentation to IDA of a manual for CNRST on financial control and external audits and a manual on the procedures of evaluating the researchers; and (ii) adoption by CNRST of a manual of procedures for the approval of programs and their monitoring and evaluation; and (iii) adoption by INERA and IRSAT of an internal management manual (6.4); (b) animal health: improving the enabling environment for private animal health operators with the following measures: (i)) promulgation of a decree ('arr&e) requiring full recovery of costs by AGRI-RA for public sector services that can be supplied by private veterinarians (treatment of animals, non-obligatory vaccinations, sale of pharmaceutical products), including provisions for their annual updates; and (ii) promulgation by the Government of a decree governing the subcontracting ("mandat sanitaire") of public sector tasks, such as meat inspection and compulsory vaccination (4.14); (c) counterpartfunding: depositing in the Project Account of the respective project implementation agencies (CU, INERA and IRSAT) the Government's share of project expenditures for three months (5.3); (d) audit: employment of independent auditors for the project implementation units (5.7); and (e) environment: completion of a targeted environmental analysis by consultants (8.3). 9.3 The dated covenants of the Credit would be as follows: (a) agricultural research: (i) CRNST would take into use the new criteria for evaluation and promotion of researchers before December 31, 1998 (6.10); and (ii) CRNST would start using latest by December 31, 1998 a set of evaluation criteria for determining the annual merit increases for all personnel who contribute to research work (6.11); (b) disbursement of certain items: (i) disbursement of funds to IRSAT would be authorized once the institute has implemented accounting and financial management systems similar to INERA (5.4); and (c) reorganization ofAGRI-RA: (i) redeployment of personnel and organizing the related transfers as per the reorganization plan before June 30, 1998. These arrangements would need to include separation of the control and advice functions at the level of field agents and unification of the available livestock personnel into the national extension system, based on annual action plans for each province; and (ii) completion of financial audits of the assets and liabilities of the ex- CRPAs by an independent /audit firm no later than April 30, 1998; (iii) and liquidation of the assets and liabilities of the ex-CRPAs not later than December 31, 1998 (6.23). 9.5 Recommendation. With the above assurances and conditions, the project would be suitable for an IDA Credit of US$41.3 million, on standard IDA terms with 40 years of maturity.  EXCOMF.XLS Burkina Faso Phase II du Projet de Developpement des Service Agricole Expenditure Accounts by Components - Base Costs (US$ '000) Physical Sante Programmes Restructuration Contingencies Recherche Vulgarisation Animal pilots of MARA Total % Amount I. Investment Costs A. Genie Civil 2,694.5 19.7 349.3 1,613.6 - 4,677.0 10.0 467.7 B. Equipements 1,791.7 797.0 197.8 181.0 196.8 3,164.2 5.0 158.2 C. Vehicule 661.2 2,948.8 289.3 36.8 97.6 4,033.6 5.0 201.7 D. Assistance Technique 1,938.7 444.7 82.6 590.3 39.4 3,095.7 3.7 115.7 E. Formation 1,793.6 2,781.3 371.5 659.2 590.3 6,196.1 6.6 411.5 F. Etudes - - - 224.3 147.6 371.9 - Total Investment Costs 8,879.7 6,991 4 1,290.5 3,305.3 1,071.7 21,538.6 6.3 1,354.8 II. Recurrent Costs A. Salaires et Indemnites 469.1 2,379.5 369.3 69.1 - 3,287.0 - B. Fonctionnernent 7,773.0 2,616.3 273.4 193.7 90.9 10,947.4 - C. Fonctionnement - Vehicules/Equip - 6,395.8 333.0 95.0 56.1 6,879.8 Total Recurrent Costs 8,242.2 11,391.6 975.7 357.8 147.0 21,114.2 - - U Total BASELINE COSTS 17,121.8 18,383.0 2,266.2 3,663.1 1,218.7 42,652.8 3.2 1,354.8 Physical Contingencies 392.1 487.1 102.7 295.2 77.7 1,354.8 - Price Contingencies Inflation Local 559.8 714.8 90.4 173.5 46.9 1,585.4 Foreign 821.8 747.9 86.9 147.4 29.6 1,833.6 Subtotal Inflation 1,381.6 1,462.7 177.2 320.9 76.5 3,419.0 Devaluation -30.5 -39.3 -4.4 -9.8 -0.5 -84.5 - Subtotal Price Contingencies 1,351.1 1,423.4 172.9 311.1 76.0 3,3344 3.0 99 3 Total PROJECT COSTS 18,865.0 20,293.5 2,541.8 4,269.5 1,372.4 47,342.1 3.1 1,454 1 Taxes Foreign Exchange 12,233.6 11,868.9 1,448.8 2,262.7 613.4 28,427.4 3.0 846.8 rv' I- 0  SUMCOM.XLS Burkina Faso Phase II du Projet de Developpement des Service Agricole Components Project Cost Summary % % Total (FCFA '000) (US$'000) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs 1. Recherche 3,136,233.2 5,912,652.3 9,048,885.5 5,934.2 11,187.6 17,121.8 65 40 2. Vulgarisation 4,009,494.3 5,705,931.0 9,715,425.3 7,586.6 10,796.5 18,383.0 59 43 3. Sante Animal 509,347.5 688,344.3 1,197,691.8 963.8 1,302.4 2,266.2 57 5 4. Programmes pilots 902,353.9 1,033,599.4 1,935,953.4 1,707.4 1,955.7 3,663.1 53 9 5. Restructuration of MARA 349,585.6 294,481.8 644,067.4 661.5 557.2 1,218.7 46 3 Total BASELINE COSTS 8,907,014.5 13,635,008.9 22,542,023.4 16,853.4 25,799.4 42,652 8 60 100 Physical Contingencies 296,215.1 419,804.0 716,019.1 560.5 794.3 1,354.8 59 3 Price Contingencies 837,879.8 1,026,858.0 1,864,737.8 1,500.8 1,833.6 3,334.4 5,5 8 Total PROJECT COSTS 10,041,109.4 15,081,670.9 25,122,780.3 18,914.7 28,427.4 47,342.1 60 111 co X C QQ 2: (DSt' H 0  EABRKF.XLS Burkina Faso Phase II du Projet de Developpement des Services Agricoles R6partltlon des Comptes de Dbpense (US$S000) CoOls de ease + lmprevus CoGts de Base Impr6vus Physiques Impr6vus sur les Prtx Totai Y Compris tmprevus sur les Locale Locale Locale Locale Prix sur (Saul (Saul (Saut (Sauf les Coots Devises Imp6ts) Total Devises Imp6ts) Total Devises lmp6ts) Total Devises lmp6ts) Total de Base I Couts dInvestissement A Genie Civil 1,8708 2,806.2 4.6770 187.1 280.6 467.7 1473 266 7 4140 2,205.2 3,353 6 5,5588 5,053.4 B Equipements 3,0060 1582 3,164.2 1503 7.9 158.2 199.4 130 2124 3,355.8 179 1 3,5349 3,3665 C Vehicule 3,831.9 201.7 4,033 6 191 6 101 201 7 244 2 16 2 260.4 4,267 7 228 0 4,495.7 4.281,6 D Assistance Technique 3.0702 141 7 3,211.9 115.7 115.7 2235 125 2360 3,409.4 154.2 3,5635 3,4402 E Formation 2,8625 3,333.5 6,196,1 1496 261.9 411.5 2109 2903 501.2 3,2231 3.8857 7,1088 6,6657 F Etudes 2231 148 8 3719 - - 14.2 116 25 9 237 4 160.4 397 8 397 8 Total CoOts d'investlsserzrent 14,864 6 6,790.1 21,654.7 794 3 560.5 1,354 8 1,039 6 610.3 1,649.9 16,698 5 7.960 9 24,659 4 23.205 3 11. CoGts R6currents A. Salaires et Indemnites 147.7 3.0232 3.1709 - - - 11 1 270.5 281 6 1588 3,2937 3,4525 3,4525 B Fonctonnement 5,3994 5,548.0 10,947.4 - - 3962 487.9 884.1 5,795 6 6,035.9 11,831 5 11,831 5 C Fonctionnement - VehiculeslEquip 5,5038 1,3760 6.8798 - - - 397.5 1195 5170 5,901.4 1,4955 7,3969 7,3969 Total Coots Recurrents 11,051.0 9,947 2 20,99.1 8 _ - 604 6 877.9 1,682 7 11,855 8 10.825 o 22,680 6 22,680.8 Total 25,9155 16,737.3 42.652.8 7943 5605 1,354.8 1,844.4 1,4882 3,332.6 28,554.3 18,7860 47,340.3 45,8862 (D r,1 X- H  EABRKF.XLS Burkina Faso Phase II du Projet de Developpement des Service Agricole Expenditure Accounts Breakdown (US$ '000) Base Cost Physical Contingencies Price Cbntingencies Local Local Local (Excl. For. (Excl. (Excl. For. Exch. Taxes) Total Exch. Taxes) Total For. Exch. Taxes) Total For. Exch. I. Investment Costs A. Genie Civil 1,870.8 2,806.2 4,677.0 187.1 280.6 467.7 147.3 266.7 414.0 2,205.2 B. Equipements 3,006.0 158.2 3,164.2 150.3 7.9 158.2 199.4 13.0 212.4 3,355.8 C. Vehicule 3,831.9 201.7 4,033.6 191.6 10.1 201.7 244.2 16.2 260.4 4,267.7 D. Assistance Technique 2,954.1 141.7 3,095.7 115.7 - 115.7 212.7 12.5 225.2 3,282.4 E. Formation 2,862.5 3,333.5 6,196.1 149.6 261.9 411.5 210.9 290.3 501.2 3,223.1 F. Etudes 223.1 148.8 371.9 - - - 14.2 11.6 25.9 237.4 Total Investment Costs 14,748.5 6,790.1 21,538.6 794.3 560.5 1,354.8 1,028.8 610.3 1,639.1 16,571.6 II. Recurrent Costs A. Salaires et Indemnites 147.7 3,139.3 3,287.0 - - - 11.1 283.1 294.2 158.8 B. Fonctionnement 5,399.4 5,548.0 10,947.4 - - - 396.2 487.9 884.1 5,795.6 C. Fonctionnement - Vehicules/Equip 5,503.8 1,376.0 6,879.8 - 397.5 119.5 517.0 5,901.4 Total Recurrent Costs 11,051.0 10,063.3 21,114.2 - - - 804.8 890.5 1,695.3 11,855.8 Total 25,799.4 16,853.4 42,652.8 794 3 560.5 1,354.8 1,833.6 1,500.8 3,334.4 28,427.4 00 M fJQ t4 0 4N  Burkins Faso Second Aericultural Serviccs Development Proiect Project Implement9tion Schedule' Project Ycar 1'rcC-Projcct 2 3 4 Calendar Ycar 97/98 98/99 99/00 0i/01 01/02 World Bank FY __ FY91 FY98 ___ FY99 ___ FY00 FYO0I I 2 3 4 _ 2 93 4 - 2 3 4 - 2 3 4 - 2 3 4 1 Thc World Bank I . I Negotiations 1 .2 Board Presentltion 1.3 Effectiven_ss 1.4 Complebion Date _ - __ - - - - - - - 1.5 Closing Date 1.6 Completion Audit 2 Project lmplementation _ - 2.1 Research Decree (Council of Ministers) _ _ 2.2 Research Decree (Adoption) _ - 2.3 MARA Reorganization (Council of Ministers) _ _ .2.4 MARA reorganization agreed actions _ _ _ _ 2.5 Privatization of veterinary services - elimination of subsidized srvices _ _ 2.6 Government decrec on 'mandat sanitaire 2.7 Study on LNE 2.8 Procurement Schedules and revisions 2.9 Steering Committee meetings _ - = - = _ 2. 10 Annual word poggrams to IDA - CRNST - PIU/MARA 2.11 Project Launching Workshop 2.12 Implementaton of annual programs -agricultural research - _ _ - _ _ _ _ - extension - livestock 2.13 Pilot Programs (a) Farner Organizatiions - annual programs to IDA - meetings of "Committees de concertation' _ - _ _ _ _ _ Further to be detailed in the Implementation Manual before negotiations (Dtl  - implementation of annual prtlrams = - - _ - v _ _ - (b) Small rural infrastructures - - - - - - selection of provinces and subprojects _ _ - - - impilmentation of subprojects - report on results 2.14 Mid-term review 2.15 Adjustments in the project - _ _ _ _ - - _ - 2.16 Reports______ _ _ _ - semi-annual___ __ __ - audited Financial Statements _ __ - GovF completion reporte_ _l_t__ - Task Manager= - ____; _ = =_ _ = - Extension /Specialist_ _ _ _ _ __ _ _ _- _ _ _ _ _ _ - Resxarch Spocialist_ ___ __ ___ m - Farmer Organizations Specialist_ ____ _ -W/A Specialist - Procurement Specialist _ _ - Financial Analyst/Auditor ti- O H  43 ANNEX III Page I of 7 BURKINA FASO SECOND AGRICULTURAL SERVICES DEVELOPMENT PROJECT Procurement and Disbursement -A. -Procurement 1. All goods 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 and as revised in January and August 1996 (Procurement Guidelines) and Guidelines: Use of Consultants by World Bank Borrowers and by World Bank as Executing Agency, January 1997 (Consultant Guidelines). Contracts to supply goods and equipment, vehicles, and civil engineering services for the project would be put up for bid and awarded by the project implementation units (Project Coordination Unit for AGRI-RA, and INERA and IRSAT for MESSRS), or, if above their approval limits, by the authorized bodies in the Government system (the respective Ministry and the National Procurement Office). Preference for domestically manufactured goods in ICB will apply in accordance with World bank Guidelines. Contracts for civil works 2 All bidding documents and contracts in this category except small rehabilitationworks and works for the pilot component "small rural infrastructures"valued at less than US$50,000 each, would be procured through NCB and reviewed by IDA. Rehabilitationand constructionworks would usually be grouped into regional lots to enable local small and medium-size enterprises to participate in the bidding, although overseas firms and firms from elsewhere in the country may also bid. Documentation acceptable to IDA would be required. Contracts for the pilot components,estimated to cost less than US$30,000 equivalent, could be made by using "communityparticipation"method, followingproceduresstated in the Implementation Manual, acceptable to IDA, with an aggregate amount not exceeding US$3 million equivalent. Contracts for vehicles. goods and equipment 3. Contracts for vehicles, goods and equipmentwould be grouped by lots. All lots valued at over US$200,000 would be procured through International Competitive Bidding (ICB) procedure based on use of the World Bank model documentation. National Competitive Bidding (NCB) procedures acceptable to IDA could be used for contracts in the range of US$50,000 to US$200,000. IDA's prior approval of the bidding documents and contract would be required for ICB and NCB procurement. Contracts under US$50,000 to purchase vehicles and small equipment, which should not exceed a total of US$2 million during the project, may be awarded on the basis of local or international shopping, provided at least three competent competitorsare invited to bid. The implementation units would be requested to prepare a computer-based system to monitor that the aggregate amounts agreed upon will not be exceeded (see para 5).  44 ANNEX III Page 2 of 7 Contracts for technical assistance and training 4. The project would not finance long-term expatriate technical assistance. Consultant services would be procured from local or, on a short-term basis, from internationalfirms. The consultantswould be selected accordingto IDA guidelines (January 1997) and the provisions of the respective Schedule in the Development Credit Agreement (DCA). Their contracts would be based on terms of reference approved by IDA, Except in specific cases approved by IDA, contracts in this category could be awarded on the basis of shopping, provided that at least three competent firms or consultants are approached. The details of the arrangements would be as follows: 4.1 Ouality- and Cost-based Selection. Except as otherwise provided in paragraph 4.3, consultants' services shall be procured under contracts awarded in accordance with the provisions of Section II of the Consultant Guidelines, paragraph 3 of Appendix I thereto, Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based selection of consultants. 4.2. The following provisions shall apply to consultants' services to be procured under contracts awarded in accordance with the provisions of the preceding paragraph. The short list of consultants for services for the Project, estimated to cost less than $100,000 equivalent per contract, may comprise entirely national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 4.3 Other Procedures for the Selection of Consultants: (a) Selection Under a Fixed Budget: Services for small contracts estimated to cost less than $50,000 equivalent per contract, related to simple engineering designs and mapping works under Parts A and D of the Project (see DCA) may be procured under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.5 of the Consultant Guidelines; (b) Selection Based on Consultants' Qualifications: Services for contracts to be implemented technical or professional support or other contracts where the need for preparing and evaluating a competitive proposal is not justified, under Parts A, B, and E of the Project (see DCA), estimated to cost less than $20,000 equivalent per contract for individual consultants and $50,000 equivalent per contract for consulting firns, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines. The shortlist of consultants for services estimated to cost less than US$20,000 equivalent may comprise entirely national consultants; (c) Single Source Selection: Services for technical or professional support, monitoring, and organizing specialized training, under Parts A, B, C, D and E of the Project, estimated to cost less than $20,000 equivalent per contract for individual consultants and $50,000 equivalent per contract for consulting firms, may, with the Administrator's prior agreement, be procured in accordance with the provisions of paragraphs 3.8 through 3.1 1 of the Consultant Guidelines;  45 ANNEX III Page 3 of 7 (d). Individual Consultants: Services for consultants and other contractual staff employed in Project implementation agencies and units under Parts A, B, C and E of the Project for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant Guidelines may, with the Administrator's prior agreement, be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines. 4.4 Review by the Bank of the Selection of Consultants: (a) Selection Planning: Prior to the issuance to consultants of any requests for proposals, the proposed plan for the selection of consultants under the Project shall be furnished to the Administrator for its review and approval, in accordance with the provisions of paragraph I of Appendix I to the Consultant Guidelines. Selection of all consultants' services shall be undertaken in accordance with such selection plan as shall have been approved by the Administrator, and with the provisions of said paragraph 1. (b) Prior Review: With respect to each contract for the employment of consulting firmns estimated to cost the equivalent of $50,000 or more, but less than the equivalent of $200,000, the procedures set forth in paragraphs 1, 2 (other than the second subparagraph of paragraph 2(a)) and 5 of Appendix I to the Consultant Guidelines shall apply. With respect to each contract for the employment of consulting firms estimated too cost the equivalent of $200,000 or more and each contract for the employment of individual consultants estimated to cost the equivalent of $50,000 or more, the procedures set forth in paragraphs 1, 2 (other than the third subparagraph of paragraph 2(a)) and 5 of Appendix I to the Consultant Guidelines shall apply. 4.5. Post Review: With respect to each contract not governed by paragraph 2 of paragraph 4.4 (b), the procedures set forth in paragraph 4 of Appendix I to the Guidelines shall apply.  46 ANNEX III Page 4 of 7 Table 1: ProcurementArrangements (US$'000) -Internation Local al Competitive Competitiv Local Direct Consultin e g Bidding Bidding Shopping Contracting Services N.F.B. Total A. Civil - 5,558.8 - - - - 5,558.8 Works (5,301.8) (5,301.8) B. Vehicles 4,495.7 - - - - - 4,495.7 (4,495.7) (4,495.7) C. Equipment 3,534.9 - - - - - 3,534.9 (3,534.9) (3,534.9) D. Technical - - - - 3,436.6 - 3,436.6 Assistance (3,436.6) (3,436.6) E. Training a/ - - - 7,005.7 103.1 - 7,108.8 (7,005.7) (103.1) (7,108.8) G. Salaries and - - - - 397.8 - 397.8 Allowances (397.8) (397.8) H.Vehicle - - - - - 3,581.2. 3,581.2 Operating 3 Costs (2,589.4 (2,589.4) ) I. Other Oper. - - 19,2228.4 - - - 19,228.4 Costs (14,433.5) (14,433.5) Total 8,030.6 5,558.8 19,228.7 7,005.7 3,937.5 3,581.2 47,342.1 (8,030.6) (5,301.8) (14,433.5) (7,005.7) (3,937.5) (2,589.4 (41,298.5) ) N.B. Figures in parentheses are the amounts to be financed by IDA. 5. Monitoring of contracts. The Administration and Finance Section of Project Coordination Unit (PCU) in AGRI-RA, and INERA and IRSAT under CNRST, would set up a computerizeddata base for monitoringprojectprocurementcontractsand keep it up to dateatall times. A contractstatusstatementfor  47 each project componentwould be a mandatorypart of the progress report submitted to IDA two weeks prior to each half-yearly supervision mission. Component contract managers would be invited to take part in the technical training sessions regularly organized by the World Bank for the benefit of the subregion, the expenses involved being eligible for inclusion as project costs. 6. Procurement schedules. Procurement packages will be based on the detailed cost tables of the project and procurement schedules would be prepared by project implementation units before negotiations on the basis of the cost tables to be discussed at appraisal. The schedules would be updated annually and maintained as part of this Annex of the Implementation Manual (Appendices I - 3).  48 ANNEX III Page 5 of 7 7. Measures to ensure adequateprocurementcapacity. The PIU at AGRI-RA and INERA already have substantial experience in the use of the Bank's procurement guidelines. At the beginning, the ProcurementOfficerof [NERA would assist IRSAT to get its procurementoperationsstarted. However, in the longer run also IRSAT needs to engage and train its own procurement officer. The measures to ensure otherwise high qual ity of procurementoperations include: - standardprocurementprocessingtimetables,includinggestiontimeforcompletionofdeliveries; - a draft procurement schedule for the project period, to be updated annually; - post-reviewsby the Bank staffand a third part (procurementagentsand auditors); and - - supplementaryand state-of-the-arttraining ofthe procurementstaff in the implementation units. 8. Documents to be used: - for ICB: World Bank Standard Bidding Documents; - for NCB: Standard bidding documents based on the Bank's SBD; - for consultants: the Bank's standard contracts; samples for Letters of Invitation (LOI) and Supplementary Information to Bidders; and - other documents include: the Bank's standard bid evaluation form and standard general and specific procurement notices. B. Disbursementof IDA Credit 9. In view of Burkina Faso's difficult macroeconomic situation, IDA would finance 100 percent of project costs less taxes in categories other than civil works, contractual staff salaries and operating costs. In thesecategoriesthe Government'scontributionwould be 5 percent,25 percentand 25 percent,respectively. The Governmentwould pay, through budgetaryarrangements,an estimated CFAF 3.1 billion (US$6 million),or 12.5 percentoftotal cost, plus taxes on the items procured underthe project. If therewould be local purchases of equipment and vehicles, IDA financing would be 90 percent. 10. The Disbursement Division of the World Bank (LOAAF) would send a Disbursement Letter to the Government once the project has been approved. The Letter, giving details of the disbursement procedures, would be attached to the Implementation Manual as Annex III. It would contain, inter alia, the following information: (a) Disbzursement conditions: disbursement against all categories of the Credit would be allowed at the effectiveness of the project, except that: (i) disbursement of funds to IRSAT would be authorized once the institute has implemented accounting and financial management systems similar to INERA; and (ii) the research agencies would have authority to withdraw funds against the civil works, goods and equipment and training after the institutes have prepared a development plan for the respective Centre, a plan of goods and equipment to be purchased (both these plans approved by the planning commissions), and an annual training plan (agreed upon with IDA), respectively; (b) Use of statement of expenses: all replenishmentapplicationsshould be fully documented except for contracts of less than US$50,000 equivalent for civil works, goods and equipment, consultant firms (US$20,000 for individual consultants),training, studies and operating costs, which would be claimed on the basis of Statements of Expenditures(SOEs); and  49 ANNEX III Page 6 of 7 (c) SpecialAccount.- (denominated in CFAfrancs). theauthorizedallocationswouldamountto CFAF 500 million for AGRI-RA, CFAF 400 million for INERA and CFAF 100 million for IRSAT, and would cover about four months of eligible expenditures. IDA would depositthe authorized allocation as per the Development Credit Agreement in each Special Account upon effectiveness, except in the case of IRSAT where disbursement of funds to IRSAT would be authorized once the institute has implemented accounting and financial management systems similar to [NERA. The Special Accounts would be for payments below CFAF 50 million, representing 20 percent of the authorized allocation. For direct payment: minimum application amount would be above 20 percent of the Special Account deposit. 11. Disbursernent categories and percentages are shown in Table 2 below. Table 2. Disbursements Category Amounts Financed by IDA (US$'000) 1. Civilworks 3,100 95% 2. Equipmentand vehicles 6,900 100% (90% for local costs) 3. Subprojectsunderthe pilot 2,600 80% components 3. Studies/consultants 2,600 100% 4. Training 5,500 100% 5. Operating costs 13,300 75% 6. Contract salaries and allowances 2,300 75% 7. Unallocated 5,000 TOTAL 41,300 NB: "Operating costs" include eligible operating expenditure incurred on account of implementing the project, and include management and supervision, office supplies, / Except for CRNST, for which IDA financing would reduce in a sliding scale, starting from 70 percent in the first project year, 50 percent in the second year, 30 percent in the third year and ending at 15 percent during the last project year.  50 ANNEX III Page 7 of 7 communication costs, office machinery and vehicle maintenance, vehicle fuel and other travel costs. The "Contract salaries and allowances" include contractual staff salaries and allowance for the staff listed in the detailed cost tables, but exclude the salaries of the civil servants paid by the Government through their regular payroll. 12. Project-Accounts andAuditing. The PIU of AGRI-RA, INERA and IRSAT will maintain project accounts in accordance with sound accounting practices acceptable to IDA. An annual audit report of project accounts, including reports of the Statements of Expenditures (SOE) and Special Accounts, will be submitted to IDA no more than six months after completion of each fiscal year. They shall be prepared by independent auditors acceptable to IDA, and be in accordance with the Bank document "Financial Account Reporting and Auditing Handbook," January 1995.  MAP SECTION   49 2