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AFRICAN DEVELOPMENT FUND REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT (PMIA) COMPLETION REPORT AGRICULTURE & AGRO-INDUSTRY DEPARTMENT (OSAN) April 2008 TABLE OF CONTENTS Pages Acronyms and Abbreviations, Equivalents i-ii Basic Project Data iii-x Executive Summary xi-xv Project Matrix xvi-xvii 1. INTRODUCTION ………………………………………………………………………. 1 2. PROJECT OBJECTIVES AND FORMULATION ……………………………… 1 2.1 Project Objectives 1 2.2 Project Description 1 2.3 Project Formulation 2 3. PROJECT IMPLEMENTATION ……………………………………………………….. 3 3.1 Effectiveness and Start-up 3 3.2 Modifications 4 3.3 Implementation Schedule 4 3.4 Reporting 4 3.5 Procurement 5 3.6 Project Cost, Sources of Finance and Disbursements 5 4. PROJECT PERFORMANCE AND OUTCOMES …………………………………… 7 4.1 Operational Performance 7 4.2 Institutional Performance 9 4.3 Performance of Service Providers 11 4.4 Financial Performance 12 4.5 Economic Performance 12 5. SOCIAL AND ENVIRONMENTAL IMPACT ………………………………... 12 5.1 Social Impact 12 5.2 Environmental Impact 13 6. PROJECT VIABILITY ……………………………………………………………….. 13 7. PERFORMANCE OF THE BANK AND BORROWER ……………………… 14 7.1 Bank Performance 14 7.2 Borrower Performance 14 8. OVERALL PERFORMANCE AND RATING ……………………………………… 15 9. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS …………. 15 9.1 Conclusions 15 9.2 Lessons Learnt 16 9.3 Recommendations 17 List of Annexes 1. Map of Senegal Showing Project Site 1 2. Calculation of Economic Rate of Return 1 3. Performance Evaluation and Rating 3 4. Matrix of Recommendations and Follow-up Measures 2 5. Operating Costs for Horticulture and Intensive Farming 2 6. Sources of Information 1 7. Borrower’s Comments on the Bank’s PRC 1 ______________________________________________________________________________________ This report was prepared by Mr. N. KACEM (Agro-Economist), and a consultant Financial Analyst following a mission to the Republic of Senegal in December 2004. The report was then finalized by Messrs. X. BOULENGER (OSAN.2) and A. BA (SNFO). Questions on it should be referred to the authors or to Mr. D. KEITA, Ag. Division Manager OSAN.2 (Ext. 2086). ______________________________________________________________________________________ ACRONYMS AND ABBREVIATIONS ADB : African Development Bank ADF ; African Development Fund APU : Agricultural Policy Unit BCEAO : Central Bank of West African States BD : Bidding Documents BICIS : Banque International pour le Commerce et l’Industrie au Sénégal CIB : Consolidated Investment Budget CLS : Crédit Lyonnais du Sénégal CNCAS : Agricultural Credit Fund of Senegal DAPS : Directorate of Analysis, Forecasts and Statistics DDI : Directorate of Debt and Investment EIG : Economic Interest Group FADSR : Rural Sector Development Support Fund ha : Hectare ISRA : Senegal Agricultural Research Institute LGS : List of Goods and Service NGO : Non Governmental Organization PADERBA : Rural Development Support Project in the Anambé Basin PAPEL : Livestock Support Project PCR : Project Completion Report PMIA : Agricultural Modernization and Intensification Project SOP : Farmer Organization Specialist SYSCOA : African Accounting System UA : Unit of Account USD : United States dollars ii EQUIVALENTS Currency Equivalents At Appraisal At Completion (October 1996) (December 2005) UA 1 = CFAF 744.37 UA 1 = CFAF 793.754 UA 1 = US$1.43937 UA 1 = US$1.4241 Exchange Rate Trend (annual average) Year UA/USD UA/CFAF 1991 1.3629 385.952 1992 1.4265 367.629 1993 1.3987 390.692 1994 1.4255 796.027 1995 1.5217 757.510 1996 1.4548 741.387 1997 1.3819 798.394 1998 1.3522 802.292 1999 1.3688 838.137 2000 1.3220 938.476 2001 1.2749 934.092 2002 1.2912 905.236 2003 1.3963 816.567 2004 1.4837 783.289 2005 1.4830 776.907 Weights and Measures: Metric System Accounting Period: Calendar Year iii BASIC PROJECT DATA 1. COUNTRY : Senegal 2. PROJECT NAME : Agricultural Modernization and Intensification Project (PMIA) 3. LOAN No. : F/SEN/PMI-AGR/97/19 2100150000877 (SAP number) 4. BORROWER : Republic of Senegal 5. EXECUTING AGENCY : Ministry of Agriculture – Management Unit A LOAN 1. Loan Amount : UA10.00 million 2. Negotiation Date : 21 January 1997 3. Loan Approval Date : 06 May 1997 4. Loan Signature Date : 22 May 1997 5. Loan Effectiveness Date : 31 August 1998 B. PROJECT DATA 1. Total Cost : UA11.62 million (appraisal) : UA11.32 million (completion) 2. Initial Financing Plan ADF : UA10.00 million GVT : UA1.62 million 3. Effective Date of First Disbursement : 23 October 1998 4. Effective Date of Last Disbursement : 16 February 2006 5. Effective Start-up of Project Activities : 18 December 1998 6. Completion Date : 31 March 2006 C. PERFORMANCE INDICATORS 1. Undrawn Balance : UA 8,704 2. Time Overrun - Slippage on Effectiveness : 13 months - Slippage on Completion Date : 3 years - Slippage on Last Disbursement : 3 years - Number of Extensions to Last Disbursement : 2 3. Project Status : Completed 4. Institutional Performance : Satisfactory 5. Borrower’s Performance : Satisfactory 6. Performance of Contractors and Consultants : Satisfactory 7. Economic Internal Rate of Return : 18.6 % (appraisal) : 14.7 % (completion) iv D. MISSIONS Staff/Da Date Mission No. pers. Composition ys November 1993 Identification NA July and Aug. 1994 Preparation NA October 1996 Appraisal 2 Agro-Economist 30 8-17 Nov. 1999 Supervision 3 Agro-economist+ Financial Analyst 24 17 Feb.– 4 Mar 2002 Supervision 2 Livestock Expert + Agro-Economist 12 29 May – 15June 2003 Supervision 2 Livestock Expert + Agro-Economist 3 4-18 Dec. 2003 Supervision 2 Rural Engineer + Agro-Economist 30 3-17 Feb. 2004 Supervision 1 Financial Analyst 15 3 to 14 July 2000 Internal Audit 2 2 Auditors 24 Division Manager + Macroeconomist + Portfolio 3-8 Nov. 2001 5 Rural Water Supply Expert + Rural 30 Review Engineer + Education Expert Visit by ADB 27 January 2004 Executive 19 19 Directors Agricultural Engineer + Financial 14-29 Dec. 2004 Completion 2 30 Analyst ADF fielded 5 supervision missions, one review mission and an audit mission. E. DISBURSEMENT - Total Disbursed Amount : UA 9,991,296 (99.91%) - Cancelled Amount : UA 0 - Reallocated Balance : UA 0 - Loan Balance : UA 8,704 (0.09%) Disbursement Schedule: ADF Estimated Amount ADF Disbursed Amount Difference Year (UA) (UA) (UA) 1997 2,480,000 -2,480,000 1998 3,820,000 1,463,203 -2,356,797 1999 3,700,000 1,712,836 -1,987,164 2000 2,375,187 2,375,187 2001 2,984,389 2,984,389 2002 739,154 739,154 2003 465,360 465,360 2004 103,373 103,373 2005 129,756 129,756 2006 18,038 18,038 Total 10,000,000 9,991,296 8,704 v F. MAJOR CONTRACTS GOODS F.1 Name : Sénégalaise de l’Automobile Type of contract : Delivery of 2 PAJERO GLX 4x4 vehicles Signature date : 29/10/1998 Expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF 38,600,000 Date of purchase order : 02/11/1998 Acceptance date : 23/11/1998 F.2 Name : MATFORCE Type of contract : Delivery of a SONATA III sedan car Signature date : 29/10/1998 Expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF 14,300,000 Date of purchase order : 02/11/1998 Acceptance date : 06/11/1998 F.3 Name : MOBIL OIL - Sénégal Type of contract : Purchase of fuel Signature date : 29/10/1998 Contract expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF 17,999,608 Date of purchase order : 04/12/1998 Acceptance date : 24/12/1998 F.4 Name : CFAO SENEGAL Type of contract : Supply of 2 Pickup double cabin vehicles Signature date : 29/10/1998 Contract expiry date : 28/12/1999 Contract duration : 2 months Contract amount : CFAF 63,500,000 Date of purchase order : 02/11/1998 Acceptance date : 17/11/1998 F.5 Name : SILLICON VALLEY Type of contract : Procurement of computer equipment Signature date : 29/10/1998 Contract expiry date : 28/11/1998 Contract duration : 1 month Contract amount : CFAF 14,200,000 Date of purchase order : 02/11/1998 Acceptance date : 12/11/1998 F.6 Name : GIE MAME MATY Type of contract : Procurement of office furniture Signature date : 29/10/1998 Contract expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF 16,992,673 Date of purchase order : 02/11/1998 Acceptance date : 07/12/1998 vi F.7 Name : SOCIETE SBI INT Type of contract : Procurement of office equipment Signature date : 29/10/1998 Contract expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF 11,430,900 Date of purchase order : 02/11/1998 Acceptance date : 10/11/1998 F.8 Name : MOBIL OIL - Sénégal Type of contract : Purchase of fuel Signature date : 01/02/2000 Contract expiry date : 02/03/2000 Contract duration : 10 days Contract amount : CFAF 25,540,877 Date of purchase order : 03/04/2000 Acceptance date : 07/04/2000 F.9 Name : CFAO SENEGAL Type of contract : Supply of 5 Pickups double cabin and 2 motorbikes Signature date : 27/12/2001 Contract expiry date : 28/01/2001 Contract duration : 1 month Contract amount : CFAF 78 105 000 Date of purchase order : 27/12/2001 Acceptance date : 29/01/2002 F.10 Name : BF TRADING &SERVICES Type of contract : Supply of office items Signature date : 29/10/2001 Contract expiry date : 06/11/2001 Contract duration : 1 month Contract amount : CFAF 11,982,800 Date of purchase order : 15/11/2001 Acceptance date : 19/12/2001 F.11 Name : SILICON VALLEY Type of contract : Supply of computer equipment Signature date : 29/10/2001 Contract expiry date : 28/11/2001 Contract duration : 1 month Contract amount : CFAF 15 100 000 Date of purchase order : 05/11/2001 Acceptance date : 29/01/2002 F.12 Name : SHELL BOURGUIBA Type of contract : Purchase of fuel Signature date : 31/12/2001 Contract expiry date : 28/12/1999 Contract duration : 10 days Contract amount : CFAF 66, 875,320 Date of purchase order : 31/12/2001 Acceptance date : 31/12/2001 vii WORKS F.13 Name : Entreprise Générale de Bâtiment (E.G.B) Type of contract : Refurbishment and Fitting out of Premises Signature date : 29/10/1998 Contract expiry date : 28/12/1998 Contract duration : 2 months Contract amount : CFAF24 025 000 Service order : 02/11/1998 Acceptance date : 02/01/1999 F.14 Name : HENAN CHINE Type of contract : Rehabilitation of the Thieudeme Horticultural Scheme Signature date : 22/12/2000 Contract expiry date : 30/04/2001 Contract duration : 3months 15 days Contract amount : CFAF 196,538,771 Service order : 01/02/2001 Acceptance date : 15/10/2001 F.15 Name : grpt MATFORCE / BA 2000 Type of contract : Rehabilitation of Kiréne and Ndieguene Horticultural Schemes Signature date : 22/12/:2000 Contract expiry date : 30/08/2001 Contract duration : 7 months Contract amount : CFAF 401,606,417 Service order : 01/02/2001 Acceptance date : 08/07/2002 NB: the delay in carrying out the works was due to late receipt of the mobilization fee. The Borrower wrote a letter on 17/05/2001 invoking Article 9 of its contract. F.16 Name : grpt MATFORCE / BA 2000 Type of contract : Amendment to contract for Rehabilitation of the Kiréne Scheme Signature date : 22/02/2002 Contract expiry date : 08/04/2002 Contract duration : 1 month 15 days Contract amount : CFAF 40, 019, 257 Service order : 04/03/2002 Acceptance date : 03/09/2002 F.17 Name : HENAN CHINE Type of contract : Amendment to Rehabilitation of the Thieudéme Scheme Signature date : 22/02/2002 Contract expiry date : 08/04/2002 Contract duration : 1 month 15 days Contract amount : CFAF 19, 289, 250 Service order : 04/03/2002 Acceptance date : 03/09/2003 NB : the delay in works commencement was due to the fact that payment of the last instalment on Contract T/154154/FM was 7 months late (cf. letter from Hénan Chine dated 07/04/2002). viii SERVICES F.18 Name : SENAGROSOL CONSULT Type of contract : Study on the Rehabilitation of Horticultural Schemes Signature date : 29/10/1998 Contract expiry date : 13/01/1999 Contract duration : 2 months 15 days Contract amount : CFAF 14,644,800 Service order : 02/11/1998 Acceptance date : 07/01/1999 F.19 Name : SENAGROSOL CONSULT Type of contract : Recruitment of an environmental expert Signature date : 29/06/1999 Contract expiry date : 30/06/2002 Contract duration : 36 months Contract amount : CFAF 172,800,000 Service order : 01/07/1999 Contract completion : 30/06/2002 F.20 Name : POLYCONSULT Type of contract : Land survey and socio-economic study Signature date : 01/02/2000 Contract expiry date : 30/03/2000 Contract duration : 2 months Contract amount : CFAF 15,770,000 Service order : 01/03/2000 Acceptance date : 02/05/2000 F.21 Name : CABINET ABDOU SIDIBE Type of contract : Audit of PMIA accounts 1998/1999 Signature date : 01/02/2000 Contract expiry date : 30/03/2000 Contract duration : 2 months Contract amount : CFAF 12,900,000 Service order : 01/03/2000 Acceptance date : 29/04/2000 F.22 Name : EXCOREVI -NSA Type of contract : Audit of PMIA 2000 accounts Signature date : 29/10/2001 Contract expiry date : 30/01/2002 Contract duration : 3 months Contract amount : CFAF 7,360,003 Service order : 02/11/2001 Acceptance date : 05/12/2001 F.23 Name : ADIRA Type of contract : Advisory services Signature date : 01/02/2000 Contract expiry date : 28/02/2003 Contract duration : 24 months Contract amount : CFAF 153,000,000 Service order : 01/03/2000 Acceptance date : 28/02/2002 ix F.24 Name : POLYCONSULT Type of contract : Training in agricultural credit Signature date : 10/05/2002 Contract expiry date : 25/05/2002 Contract duration : 15 days Contract amount : CFAF 26,200,000 Service order : 05/09/2002 Acceptance date : 13/09/2002 F.25 Name : INSTITUT FORHOM Type of contract : Training in computerized management Signature date : 23/05/2002 Contract expiry date : 14/06/2002 Contract duration : 20 days Contract amount : CFAF 16,744,523 Service order : 06/06/2002 Acceptance date : 26/06/2002 F.26 Name : BEFAC INTERNATIONAL Type of contract : Training in project evaluation and management Signature date : 27/06/2002 Contract expiry date : 07/07/2002 Contract duration : 10 days Contract amount : CFAF 16,875,004 Service order : 16/09/2002 Acceptance date : 22/09/2002 F.27 Name : Générale d’Etude et de Négoce (GEN) Type of contract : Training in farm management Signature date : 13/05/2002 Contract expiry date : 20/05/2002 Contract duration : 7 days Contract amount : CFAF 16,875,000 Service order : 18/05/2003 Acceptance date : 25/05/2003 F.28 Name : Générale d’Etude et de Négoce (GEN) Type of contract : Training of producers and group managers Signature date : 19/05/2003 Contract expiry date : 05/06/2003 Contract duration : 15 days Contract amount : CFAF 22,500,000 Service order : 18/05/2003 Acceptance date : 25/05/2003 F.29 Name : Générale d’Etude et de Négoce (GEN) Type of contract : Training in environmental aspects Signature date : 13/08/2002 Contract expiry date : 20/08/2002 Contract duration : 7 days Contract amount : CFAF 11,200,000 Service order : 18/05/2003 Acceptance date : 25/05/2003 F.30 Name : Générale d’Etude et de Négoce (GEN) Type of contract : Audit of PMIA 2001 accounts Signature date : 23/05/2002 Contract expiry date : 23/08/2002 Contract duration : 2 months Contract amount : CFAF 7,710,000 Service order : 17/06/2002 Acceptance date : 15/08/2002 x F.31 Name : ADIRA Type of contract : Recruitment of one finance expert and one credit expert Signature date : 27/12/2001 Contract expiry date : 26/01/2002 Contract duration : 1 month Contract amount : CFAF 15,000,000 Service order : 28/12/2001 Acceptance date : 01/02/2002 F.32 Name : EXCOREVI NSA Type of contract : Accounts assistants 2001 Signature date : 29/10/2001 Contract expiry date : 28/01/2002 Contract duration : 3 months Contract amount : CFAF 14,400,000 Service order : 29/10/2001 Acceptance date : 31/12/2000 F.33 Name : Générale d’Etude et de Négoce (GEN) Type of contract : Study on sustainability of the credit system Signature date : 10/06/2002 Contract expiry date : 09/08/2002 Contract duration : 2 months Contract amount : CFAF 55,650,000 F.34 Name : CIENI SA Type of contract : Final evaluation Signature date : 26/02/2004 Contract expiry date : 25/04/2004 Contract duration : 2 months Contract amount : CFAF 25,000,000 Acceptance date : May 2004 F.35 Name : KPMG SENEGAL Type of contract : Accounting Assistants 2004 Signature date : 07/04/2005 Contract expiry date : 06/05/2005 Contract duration : 1 month Contract amount : CFAF 9,102,500 Acceptance date : September 2005 F.36 Name : ERA Audit expertise Type of contract : Audit 2002/ 2003 Signature date : 26/11/2004 Contract expiry date : 25/01/2005 Contract duration : 2 months Contract amount : CFAF 7, 765,000 Service order : 29 November 2004 Acceptance date : February 2005 xi EXECUTIVE SUMMARY 1. INTRODUCTION Agriculture continues to be one of the most important sectors of economic activity in Senegal. It is, however, faced with technical, economic and financial constraints. The Government of Senegal responded to the situation with a new agricultural policy in 1984 and, in the years since then, it has continued to push ahead with reforms, including embarking on a Structural Adjustment Programme in the early 90s. In an effort to make agriculture more productive and competitive, the Government embarked on a number of measures designed to give the private sector more responsibilities in the sector. As part of its support to the ongoing reforms, the Government, supported by the Bank, initiated in 1993 the Agricultural Modernization and Intensification Programme (PMIA), a project designed to offer a suitable credit system accessible to farmers and create an investment-friendly environment. 2. PROJECT OBJECTIVE AND FORMULATION 2.1 Essentially, the project design reflected the different policies of the Government of Senegal, which laid emphasis on adapting the granting of credit to the rural context. The aim was to facilitate the acquisition of inputs by producers, especially those who were not eligible for the traditional banking system (women and poor, unemployed youths), by providing them with the necessary financial resources. The Project design drew on past experiences with rural credit, both in Senegal and in the neighbouring countries. Close attention was given to the need to preserve natural resources. 2.2 The PMIA project sought to improve food security by : (i) improving plant and animal production, (ii) increasing exports of fruit and vegetables, (iii) improving the trade balance by reducing commodity imports, (iv) raising incomes in rural areas, and (v) conserving natural resources. The specific objectives were to increase grain production by about 90,000 tonnes, market garden produce by 13,000 tonnes, and fruit production by 12,000 tonnes. The project had five main components : (i) Crop Intensification, (ii) Revival of Horticulture, (iii) Replacement and Modernization of Agricultural Equipment, (iv) Processing and Marketing, and (v) Project Management. Central to the project’s implementation was a credit fund that would be distributed to farmers by local financing institutions such as banks, and farmers’ mutual loan associations. The credit component accounted for 65% of the total project cost, and the rest was mainly earmarked for certain basic developmental investments, training activities and project management. 3. PROJECT IMPLEMENTATION 3.1 The loan agreement became effective on 31 August 1998, one year and three months after the signing of the loan agreement (22 May 1997). The conditions precedent to first disbursement were fulfilled on 23 October 1998. The delay in fulfilling the conditions was mainly due to the length of time it took to draft the agreements between the PMIA project and the financing institutions. The Government of Senegal was also late in providing its contribution of CFAF 410 million to the Guarantee Fund, which it did in February 1998. As a result, the Project, which was scheduled to be completed in three years, from 1998 to 2001, effectively started up only in December and took six years to complete, twice the duration estimated at appraisal. 3.2 Two major modifications were made to the Project at start-up: (i) an environmental expert was recruited to conduct and monitor the environmental aspects, and (ii) the objective under the ‘Crop Intensification’ component was reduced from 34,000 ha to 15,900 ha, when it was noted that the component had been over-estimated. During implementation, the List of Goods and Services xii (LGS) was readjusted several times because some headings had been underestimated and there were omissions; consequently, the project implementation schedule was extended. The Project provided ADF with regular work plans and budget estimates, but activity reports were forwarded sporadically, and the internal monitoring-evaluation system did not always afford a clear picture of the project’s implementation progress. Audit reports were sent to ADF but not on schedule. 4. PROJECT PERFORMANCE 4.1 Under its Component A ‘Crop Intensification’, the Project established 20.600 ha, compared with a revised objective of 15,900 ha, and about 31,120 tonnes of cereal and food crops were produced, representing 75% of the objectives as they stood after the surface area was scaled down. Results in the livestock sector were largely satisfactory, especially the animal fattening operations. Under Component B : ‘ Revival of Horticulture’, the amount of credit provided was enough for 1,350 ha of private horticultural schemes (green beans, tomatoes, onions, bananas, etc.), which yielded an additional production of 12,318 tonnes, and contributed 1,584 tonnes for export, representing 21% of the country’s exports of market garden produce. Through the PMIA, around 12,000 tonnes of bananas were produced, and, despite a few delays, the project also rehabilitated the three horticultural schemes planned for the Niayes area. Under Component C: ‘Replacement and Modernization of Agricultural Equipment’, PMIA financed the procurement of different types of agricultural equipment at a total cost of CFAF 838 million. Under Component D ‘ Marketing and Processing’, the PMIA provided support to 286 sub-projects at a cost of almost CFAF 1,307 million, essentially as revolving funds for the marketing of agricultural produce. Some 27,000 tonnes of agricultural produce were marketed. The post-harvest facilities envisaged were not built. 4.2 To achieve the above results, the Project had, as at 31 December 2005, granted a total of around CFAF 5.9 billion in credit. That amount went into financing a little over 2,800 projects nation-wide. With the contribution from the Guarantee and Disaster Relief Funds, loan repayment to PMIA by the banks and the farmers’ mutual loan associations stood at slightly over 90%, while the sponsors’ average recovery rate can be estimated at 79%, overall. 4.3 The Project Implementation Unit conducted the activities under Component E: ‘Project Management’ satisfactorily, notwithstanding a number of shortcomings in terms of accounting, and the departure of some staff. On the whole, consultancies were carried out properly and the contractors and suppliers provided fairly good services, apart from a delay on the contracts for the rehabilitation of horticultural schemes. Unfortunately, the monitoring-evaluation system was not very efficient, with no computerized database on project impact. 5. SOCIAL AND ENVIRONMENTAL IMPACT PMIA’s target beneficiaries were the rural population not usually catered for by the conventional banking systems. The project provided financing for 2,800 sub-projects in total and benefited almost 170,000 women. The loans awarded helped to increase production and raise incomes globally and freed women from the loan sharks. The project also had a huge impact on the feeding of the rural communities concerned (additional 43,500 tonnes was produced). Part of the production was sold to the main consumer centres. The higher incomes altered the structure of household expenditure slightly as more funds were committed to education, hygiene and sanitation. One of the best results of PMIA was that it gave the women and unemployed young people an inroad into economic circuits through the marketing and processing of agricultural produce, a fact that will help to reduce rural poverty. The project had no significant negative impact on the environment because measures were taken in the appraisal of sub-projects to preserve the equilibrium of the ecosystems. xiii 6. PROJECT VIABILITY AND SUSTAINABILITY OF THE CREDIT SYSTEM 6.1 The main project activity was to grant credit to rural communities. With the assistance of the Guarantee and Disaster Relief Funds (Fonds de garantie et de calamités), the project achieved a relatively satisfactory repayment rate (90%), with a reimbursed balance of over five billion CFA francs. The next step, however, is to create a legal and institutional framework that will ensure the sustainability of the credit system that has been put in place. A study to determine the sustainability of the PMIA was conducted through a participatory approach. It was financed by the Government and it proposed that, ideally, the PMIA should evolve into a Rural Development Support Fund (FADSR). At the time, the Bank was prioritizing other operations so it could not grant financial assistance to the Government of Senegal in the transition to this sustainable system. The Senegalese Government therefore decided to finance the transitional phase with own funds, and included almost CFAF 2.3 billion for the purpose in its consolidated investment budget for 2007. 6.2 The operational objectives of the consolidation phase were mainly : (i) to build the capacity of all workers involved in the operational system ; (ii) to improve the performance of the credit system by widening the scope of its activities, raising the credit ceilings for the farmers’ loan associations, increasing the repayment period for the loan associations, and by improving the implementation procedures of the Guarantee Fund ; (iii) to consolidate the operations begun in the active phase of ADF financing, particularly to support the beneficiary communities of the hydro- agricultural infrastructure ; and (iv) to manage the credit components of PAPEL II and PADERBA, both ADF-funded projects. This three-year transitional phase would lead to an operational institutional framework for the credit mechanism and the structure to ensure its sustainability. 7. PERFORMANCE OF BANK AND BORROWER 7.1 Bank’s Performance: Project design and appraisal by the ADF was satisfactory overall, even though the implementation schedule and some of the quantitative goals set were unrealistic and needed to be readjusted. The recruitment of an environmentalist, recommended by the Board of Directors helped significantly with the selection and validation of the sub-projects. ADF monitored the project properly having fielded nine missions (five supervision missions, one audit mission, two review missions and one visit by the Executive Directors), but it did not always have the time to closely monitor its recommendations. Lastly, lack of synchronization between the provisioning of ADF funds and the pace of work on the ground sometimes disrupted activities on certain outputs. Bank performance with regard to project design and implementation was fairly satisfactory. 7.2 Borrower’s Performance: The Government set up a Project Implementation Unit, provided its contribution to the Guarantee Fund and paid virtually the entire amount of its financial counterparty every year. Because these contractual obligations were met, the project was conducted without any hitches and with ample material and human resources. The Implementation Unit’s monitoring work was regular and constant despite having to process almost 2,800 applications, together with the Ministry of Finance (DDI). However, the Borrower was not as efficient at submitting project audit reports to the ADF, and monitoring-evaluation was deficient. Despite a slight delay, the Government was able, using its own funds, to implement a PMIA consolidation phase designed to establish a sustainable credit mechanism. Its performance is considered as satisfactory overall. 8. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS 8.1 Conclusions: Overall, the Agricultural Modernization and Intensification Project (PMIA) can be considered to have been a success for Senegal and ADF, in spite of the delays and the xiv inadequacies noted at completion. Ninety-seven per cent (97%) of the planned credit component was granted, which enabled the Project to achieve its main objectives. The Project helped to improve food security in Senegal, reinvigorated certain sectors of activities (market gardening, bananas, stockbreeding, etc.), and positively affected the lives of farmers. These are achievements that should be consolidated by implementing a second project phase, which the Government will finance. This second phase will focus on transforming the credit mechanism into a permanent structure and supporting training and professionalization for sponsors and some of the farmers’ mutual associations. 8.2 Lessons Learnt: the main lessons learnt from the implementation of the PMIA Project are the following: (i) Setting unrealistic quantitative objectives, miscalculating the expected project duration, not clarifying certain operational procedures, and failing to budget for, or underestimating expenditure for some activities planned in the appraisal report, causes confusion and often leads to delays in project implementation. (ii) Allowances should be made for possible changes to the project during implementation if necessitated by the terrain or by the need for a participatory approach; lack of flexibility or responsiveness when faced with constraints during implementation could impede the achievement of the project objectives. (iii) For projects involving the provision of rural credit, there must be periodic monitoring-evaluation of the arrangements in place, keeping in mind the type of project or public concerned so that any necessary adjustments can be made during the operation; similarly, every provision must be made, right from the outset, to ensure that the services started and the systems put in place by the project will continue after the project ends. (iv) When lines of credit meant for supporting rural activities are lodged with traditional commercial banks, an intermediation system must absolutely be put in place to raise awareness among their beneficiaries, build up their capacity and monitor their progress in order to keep repayment rates within normal limits. (v) When financing activities of the rural community, due regard should be given to the growing trend towards decentralized financial systems, and these structures should be closely associated and assisted to build their capacities. (vi) Granting credits for rainfed crops is risky, a fact that should be better reflected in project design, in particular by envisaging closer supervision of farmers and greater crop diversification, and by promoting activities designed to integrate farming and stockbreeding or, possibly, by introducing mechanisms that will help in some measure to cover such risks. 8.3 Recommendations: In view of the above observations on the project’s strengths and weaknesses, the following recommendations are made: xv The Bank: (i) at project appraisal, envisage an adequate operational arrangement encompassing all the competences required, especially in respect of monitoring-evaluation and the environmental aspects. This will require that all planned project activities be costed carefully and accurately, and provision made for an adequate remuneration package to attract and help retain highly qualified staff. (ii) when implementing similar projects containing a credit component, consider prioritizing the use of local decentralized financing systems rather than conventional commercial banks, and in all cases, take account of the need for close and effective intermediation. (iii) when designing a rural sector project with a loan or guarantee fund component, take all necessary measures to ensure that the system provided will be sustained beyond the project lifespan, and specify the final use to be made of the amounts recovered or remaining at closure. (iv) analyze the PMIA experience more thoroughly and compare it to other rural credit financing mechanisms supported by the Bank, to see to what extent, this experience could be adapted and built upon The Borrower: (i) make the provision of effective monitoring-evaluation systems an integral part of development projects and programmers that are implemented, to permit an accurate assessment of the project’s implementation status and its outcomes and impacts. (ii) continue to monitor and consolidate the encouraging results obtained at the horticultural schemes in the Niayes area, specifically by providing the farmers with advisory services and supporting them with loans for any necessary additional investments. (iii) be mindful, when developing its rural funding strategy, of developments in the country’s institutional environment, and especially, the increasing emergence of operators offering microfinance. (iv) continue to seek ways to ensure sustainability of the credit system put in place through the PMIA project, taking care to spell out the financing modalities and terms of access to the Guarantee and Disaster Relief Funds, and clearly defining the institutional framework that will ultimately lead to a permanent, sustainable structure to take over from the PMIA. xvi PROJECT MATRIX NAME OF PROJECT : Agricultural Modernization and Intensification Project (PMIA) COMPLETION DATE : December 2005 DESIGN TEAM : Appraisal: M. DIKOMBE – Completion: N. KACEM (Agronomist) and a Consultant (Financial analyst) HIERARCHY OF MEANS OF ASSUMPTIONS VERIFIABLE INDICATORS ESTIMATED AT APPRAISAL AND NOTED AT COMPLETION OBJECTIVES VERIFICATION AND RISKS SECTOR GOAL 1.1 Estimated: Production increase of 90,383 tonnes for cereals (revised objective of 30,000 tonnes), Country statistics on 12,900 tonnes for market garden produce and 12,100 tonnes for fruits. agricultural 1.1) Actual: Productions increased by 31,120 tonnes for cereals, by 13,317 tonnes for market garden production, and cereals produce and by 12,000 tonnes for fruits. balance sheets Improve food security in the 1.2 Estimated : 10% decrease in imports of cereal products starting from 1998 country 1.2) Actual: There were wide fluctuations in import levels of cereals. They fell in 2001/2002 then rose Country statistics on again in 2002/2003. imports and trade balance deficit 1.3 Estimated: Export cash crops and horticultural crops will increase by 10% as from 1997. 1.3) Actual: Export cash crops and horticultural crops increased by 23% in 2001/2002, 29% in 2002/2003, and 5.6% in 2003/2004. PROJECT 1.1) Estimated: Intensification on 34,000 ha (15,900 ha in the revised objectives) of cereal crops, of 1.1) Reports of the 1.1) Sector reforms OBJECTIVES which 8,000 ha of rice, 8,000 ha of sorghum, 9,000 ha of maize, 1,000 ha of cowpea and 8,000 ha of Project Management are effectively applied groundnut through adoption of improved and adapted technological packages. Unit, monitoring- 1.1) Actual: intensification on 20,600 ha of cereal crops of which 12,498 ha of rice, 3,109 ha of evaluation, ADF 1) Increase sorghum, 1,367 ha of maize, and 2, 240 ha of groundnut through adoption of improved and adapted supervision, credit agricultural technological packets. beneficiaries’ visits 1.2) Climatic production and conditions are normal farmers’ incomes. 1.2) Estimated: Cereal production increases by 90,380 tonnes (30,000 t. revised objectives). 1.2) Statistics from 1.2) Actual: Cereal production increased by 31,120 tonnes. the Agriculture directorate, PIU 2) Develop 1.3) Estimated: Creation of a scheme involving 300 ha of market garden crops and rehabilitation of reports, project horticulture on 300 three existing schemes. monitoring-evaluation ha and rehabilitate 1.3) Actual: the project created 1,349 ha of market garden schemes and rehabilitated three existing reports three schemes for schemes. market produce and 1.3) Credit 350 ha for fruit 1.4) Estimated: Production of market garden crops to increase by 12,100 tonnes. applications approved, crops. 1.4) Actual: production of market garden crops increased by 12,317 tonnes. Agriculture Directorate monitoring the project 1.5) Estimated : Equipping farms with small farm tools sets, 2,000 seed drills, 2,000 ploughs, 2,000 through PNVA, PIU tilling accessories, 2,000 disc harrows and carts, et 1,000 draught animals. reports data from 1.5) Actual : Farm holdings equipped with sets of small implements, 161 seed drills, 46 carts, 100 tilling project monitoring- accessories, 62 hoes, discs for disc harrows, 100 ploughs, 111 draught horses, 50 pairs of oxen, 100 power evaluation. pumps, 27 generators and one combine harvester. xvii 1.6) Estimated : Farmers make an income of CFAF30,000 per annum on farms covering 2 ha, CFAF278,000 on 6 ha farms, and CFAF455,000 on 10 ha farms ; income of 439.000 CFAF from 0.5 ha 2) Agricultural horticultural farms, and CFAF4,659,000 from 5 ha farms. credit is available and 1.6) Actual : Farmers earn an income of CFAF134,700 per annum on 2 ha farms, CFAF398,400 on 6 accessible to farmers ha and CFAF 697,800 on 10 ha ; income of CFAF 924,000 on 0.5 ha horticultural farms, and CFAF8,231,000 on 5 ha farms. 3) Rural equipment was replaced and 2) Estimated: Additional annual production of 12,900 tonnes for vegetables and market garden 2) Reports of the 3) idem modernized, in part produce, and 12,100 tonnes for citrus fruit. Management Unit and through an 2) Actual: Additional annual productions of 12,317 tonnes for vegetables and market garden produce, the Department of operational rural and 12,000 tonnes for citrus. Agriculture credit system. 4) idem 3) Estimated: About 9,000 seed drills, ploughs, carts, disc harrows, and small tools and tilling accessories procured before end- 1998. 4) The agricultural 3) Actual: 663 seed drills, ploughs, carts, disc harrows, and small tools and tilling accessories were 3) idem produce marketing procured before end-2005. 5) idem and processing support fund was 4) Estimated: In PY3, 100 drying shelters, 40 grain stores and 50 sales outlets will have been utilized. provided. 4) idem 4) Actual: This project component was never implemented. 5) The Project 5) Estimated : Six officers and support staff mobilized by 1996 ;a socio-economic study on Management Unit is horticulture conducted in 1996 ; 20 specialists in farmer organizations recruited and working ;an impact 5) idem operational. study conducted in 1998. 5) Actual: All PIU staff, including the specialists in farmer organizations, were recruited but the timing did not follow the set schedule. ACTIVITIES RESOURCES (UA million) A) Crop Intensification Component ADF GVT Total Timely preparation of B) Revival of Crop Intensification 3.07 - 3.07 Project accounts disbursement requests Horticulture Revival of Horticulture 3.25 - 3.25 C) Replacement and Modernization of Replacement and Modernization of Equipment 1.57 - 1.57 Equipment Marketing and Processing 0.88 0.27 1.15 ADF disbursements Consistent with ADF D) Marketing and rules and procedures Processing Programme Management 1.23 1.35 2.58 E) Programme Management TOTAL 10.00 1.62 11.62 1. INTRODUCTION 1.1 Agriculture continues to be one of the most important sectors of economic activity in Senegal, providing a source of livelihood for over half of the population and accounting for 10% of GDP. It is, however, a sector faced with technical, economic and financial constraints: soil degradation, poor rains, obsolete equipment, insufficient supervision, and consequently, low production. The economic and financial challenges result from the low level of incomes, which is a disincentive to savings and investment. The Government of Senegal responded to the situation by adopting a new agricultural policy in 1984 aimed at (i) intensification of rainfed crops, (ii) water management, and (iii) strengthening support services to producers. The new policy achieved mixed results, essentially because of the inadequacy of the macroeconomic framework, which made the Government to push ahead with reforms by embarking on a Structural Adjustment Programme in the early 90s. 1.2 The programme sought to achieve the following: (i) sustained agricultural growth, (ii) improved food security, (iii) rise in rural incomes and employment creation, (iv) better management of natural resources, and (v) greater effectiveness of public and private investments in agriculture. To make agriculture more productive and competitive, the Government undertook a number of measures giving the private-sector more responsibilities, including (i) privatizing production, processing and marketing in all agricultural sectors, (ii) liberalizing prices and trade in agricultural products and inputs, and (iii) creating an enabling environment for private investment in the sector. To support these reforms, and with the specific aim of creating private-sector-driven wealth by providing suitable rural credit, the Government of Senegal, with the support of the Bank, initiated in 1993 the Agricultural Modernization and Intensification Project (PMIA), the subject of this completion report. 1.3 This project aimed in particular to provide farmers with easily accessible credit, the administration of which could be decentralized and governed by appropriate procedures, and subject to banking conditions compatible with the realities of the agriculture sector. Thus, farmers, acting individually or as cooperatives, village groups or economic interest groups, would be able to obtain seasonal credit or loans for equipment, marketing and processing that they need in order to carry out income-generating activities and become part of the formal economic circuit. This project was initiated in 1993 but could not be financed until 1997, owing to resource availability problems and difficulties in formulating the credit component. 2. PROJECT OBJECTIVES AND FORMULATION 2.1 Project Objectives 2.1.1 The PMIA aimed to improve food security by: (i) increasing production (cereals, livestock, fruit and vegetables), (ii) increasing exports (fruit and vegetables), (iii) improving the trade balance by reducing commodity imports (cereals, fruit and vegetables), (iv) raising rural incomes, and (v) protecting natural resources. 2.1.2 The project’s specific objectives were to increase cereal production by about 90,000 tonnes, market garden produce by 13,000 tonnes, and fruit production by 12,000 tonnes. 2.2 Project Description 2.2.1 The PMIA project was implemented nation-wide and aimed to carry intensification activities on a land area of 34.000 ha, focused on the production of cereals (rice, sorghum, millet, maize), groundnuts and cowpeas, the rehabilitation and revival of horticultural production on about 2 ten market garden areas managed by farm cooperatives, financing of around 400 private schemes, and provision of tilling and draught equipment for about 8,000 farms. The project activities also included the livestock sector and aimed to promote animal fattening and dairy farming, poultry farming and agriculture and mixed farming by using agricultural by-products and fodder reserves. In addition, the Project aimed to participate in financing the construction of the following facilities for groups and cooperatives: storage sheds, retail outlets in the major cities, drying shelters and sheds for preserving certain horticultural products. 2.2.2 The Project had five main components : (i) Crop Intensification, (ii) Revival of Horticulture, (iii) Replacement and Modernization of Agricultural Equipment, (iv) Processing and Marketing, and (v) Programme Management. 2.2.3 Implementation of the planned activities centred, in great part, on a credit fund to be distributed to farmers by financing institutions. The credit component represented 65% of the total project cost, the rest being set aside mainly for certain developmental investments, training and management. Arrangements adopted for the distribution of credit involved the following players: the sponsor, the financing institution (farmers’ mutual association or bank), BCEAO and the Ministry of Economy and Finance. The sponsor prepares his project with assistance from agricultural officers and/or consulting firms and submits his application to a financing institution previously approved by PMIA. When the institution approves the application, the dossier is submitted to PMIA to determine if the project is technically viable. Once the PMIA accepts the project, the institution formalizes the guarantees with the sponsor before sending a release letter to the PMIA. The PMIA then submits an application for a transfer order, together with the relevant documents, to the Debt and Investment Directorate (DDI). The transfer order is then sent to PMIA, which forwards it to the financing institution to be cashed. The credit ceiling was CFAF 5 million for the mutual associations and CFAF 50 million for the banks. Beneficiaries could apply for fresh credit only after having fully repaid the first. The interest rate was 7.8% for the short term and 6.8% for the medium and long terms. Unlike the banks, the farmers’ mutual associations were not covered by the 700 million CFA francs Guarantee Fund established by the State. 2.3 Project Formulation 2.3.1 The project design and formulation were underpinned by the orientations and different policies adopted by the Government of Senegal, which laid special emphasis on adapting the granting of credit to the context of the rural sector. The Project was designed to help economically- challenged groups (women, the poor and unemployed youth). It gave producers easier access to inputs, particularly those who did not meet the criteria for loans from the traditional banking system, by providing them with necessary funds. Project formulation drew on the experiences of past rural credit operations in both Senegal and the neighbouring countries. Close attention was also paid to the management and preservation of natural resources. 2.3.2 The Project was first appraised after a mission to Senegal in November 1993, but the ADF did not have the funds to finance it. Following the devaluation of the CFA franc in 1994, the Bank conducted two other missions to Senegal that same year to re-examine its portfolio implementation status and to see if funds could be made available to finance the PMIA. The project was rescaled following these missions and an appraisal report was then presented to the Board. Pursuant to the many observations made about the credit distribution scheme, yet another mission went to Senegal in October 1996 to review the credit component together with the authorities. A number of areas were reformulated and the Project was then negotiated on 21 January 1997. The appraisal report was presented to the Board of Directors on 17 May 1997. 3 3. PROJECT IMPLEMENTATION 3.1 Effectiveness and Start-Up 3.1.1 The loan agreement became effective on 31 August 1998, one year and three months after it was signed on 22 May 1997. The ADF accepted the 2nd legal opinion on 28 August 1998, as there had been a mistake in the first. There were seven conditions precedent to first disbursement, which the Borrower had to fulfil. Thus, ADF was to be provided with: (i) an undertaking that the sum of 290 million will be included in the 1997 budget in respect of the Guarantee Fund ; (ii) evidence of the appointment by the Project Management Unit of a financial expert and a credit expert, whose curricula vitae will have received prior Fund approval; (iii) evidence that four bank accounts have been opened : the first, at the BCEAO, to receive funds for the credit component; the second, to be opened at the BEAO, for repayments of the loans granted to the financing institutions; the third account, in which funds for the operation of the Project will be lodged, will have been opened in a commercial bank ; and the fourth account at the BCEAO for amounts paid towards the Guarantee Fund ; (iv) evidence of the establishment of a national coordination committee and a technical committee; (v) the agreements concluded with the financing institutions (banks and farmers’ mutual associations) for the credit component. The drafts of the agreements will have been approved beforehand by the Fund ; (vi) evidence showing that the sum of CFAF 410 million, representing the first tranche towards the Guarantee Fund has been paid into a dedicated account at the BCEAO; and (vii) evidence that offices have been provided for the Project Management Unit. 3.1.2 The loan agreement included two other conditions: (i) provide evidence, no later than 31 May 1997, of the signing of memorandums of understanding between, on the one hand, the Project Management Unit and the other structures involved in project implementation, including the Directorate of Agriculture, the Horticulture Directorate, the Livestock Directorate and on the other hand, the Project Management Unit and the PIU of the Project to Support Women’s Advancement Groups; the drafts of these memoranda shall have been previously approved by the Fund; (ii) pay the second tranche of CFAF 290 million into the Guarantee Fund account which shall have been opened at the BCEAO no later than 31March 1997. 3.1.3 The conditions precedent to first disbursement were fulfilled on 23 October 1998. The delay was due mainly to the fact that the Borrower took too long to prepare the agreements between the PMIA and the financing institutions (banks and farmers’ mutual associations). The Senegalese Government was also late in paying the CFAF 410 million towards the Guarantee Fund, and did so 4 only in February 1998. The delay in start-up did not have any significant effect on the implementation of the project as the Borrower was working simultaneously on fulfilling the conditions and on the preparation of the different bidding documents. 3.2 Modifications 3.2.1 Two major modifications were made to the project at start-up: (i) as the ADF Board of Directors had recommended at project appraisal, an environmental expert was recruited to conduct and monitor the environmental component, and (ii) the objective under the ‘Crop Intensification’ component was scaled down from 34,000 ha to 15,918 ha when it was noted that it had been overestimated at the project appraisal stage. 3.2.2 The List of Goods and Services (LGS) was readjusted several times as the amounts allocated for practically every single component had to be reviewed to take account of under- estimations under some headings, a number of omissions, and the fact that the project implementation schedule had been extended. These modifications made it possible to adapt the Project to the real conditions of its implementation but without altering its design. The allocations for rain-fed farming were reduced at project start up because there were very few savings and credit mutuals in the regions where this practice is prevalent. The livestock sector, where there was very strong demand, reaped the benefit. The post-harvest facilities were abandoned because the communities where they were to be built disagreed with the approved procurement method (competitive bidding). Other modifications made included the addition of refurbishment work on the project premises, support to the executing agencies, review of the costs of seminars and workshops, a mid-term review, and vehicle operating costs. 3.3 Implementation Schedule The Project was to have been implemented over a period of three years, from 1998 to 2001. It did not start up until 18 December 1998, and took 7 years to implement, over twice as long as estimated at appraisal. Several factors were to blame including: (i) under-estimation of the time it would take to prepare the agreements with the mutual associations and the banks; and (ii) the time it took to finish work on the three horticultural schemes owing to the relaunching of bidding for these contracts and the suspension of the works relating to the amendment for failure to pay the last invoice of the initial contract. With hindsight, the estimated project implementation schedule does appear to have been somewhat optimistic given the relative complexity of the operation with regard to the setting up and monitoring of the credit activities. 3.4 Reporting The Project provided ADF with work plans and budget estimates at the beginning of every year. Status reports were not submitted regularly, which meant that it was not always possible to accurately monitor project status from the standpoint of investments, accounting, institutional aspects and operational performance. The activity reports were very brief and did not provide detailed information on the project. Furthermore, they did not comply with the Bank’s recommended format. The Bank did not receive the external monitoring-evaluation report. The appraisal report had envisaged that that assignment would be entrusted to the Directorate for Analysis, Forecasting and Statistics (DAPS) and the Agricultural Policy Unit (APU) in the Office of the Agriculture Minister. That was never the case. Apart from the mid-term and final evaluation reports that the consultant prepared, the PMIA would appear not to have sufficiently capitalized on its experience. Audit reports for 1999 to 2005 were forwarded to the ADF but very late and never within the stipulated timeframe. 5 3.5 Procurement 3.5.1 During project implementation, about forty contracts were signed and overall, the procurement of goods, works and services was in conformity with Bank procedures. 3.5.2 As provided for at appraisal, services for the detailed designs of the rehabilitation of horticultural schemes, the audit, studies, land and socio-economic surveys, training, functional literacy and the final evaluation of the project were contracted out on the basis of a shortlist of national and regional consultants, and nongovernmental organizations (NGOs). 3.5.3 The national shopping procedure was used in the procurement of vehicles, motorbikes, computer equipment, furniture, office supplies and equipment for the PIU. As envisaged in the appraisal report, contracts for equipment, fertilizers, insecticides, herbicides, fungicides, fattening animals, dairy cattle, chicks and beehives, financed under the credit component, were awarded using normal procurement procedures, which were acceptable to ADF. 3.5.4 The post-harvest facilities were not built because the beneficiaries preferred direct negotiations with local labourers to the approved procurement method (NCB). Works contracts were mainly in respect of hydro-agricultural developments, in particular the rehabilitation of the three horticultural schemes at Thieudeme, Kirene and Ndieguene. It should be noted that amendments were made to the initial contracts so that additional works considered necessary could be carried out to enable the beneficiaries to make rational use of the schemes. 3.6 Project Cost, Sources of Finance and Disbursements 3.6.1 The project cost at completion amounted to UA 11,319,776 or 97.4% of the initial cost. At the project closing date, ADF had disbursed UA 9,991,296 or 99.9% of the loan. For its part, the Government had released UA 1,328,480 in counterpart funds, representing 82% of the initially estimated amount. The Table below compares the estimates in the first list of goods and services, and the actual outputs: Table 3.1 Expenditure Categories (UA) ADF GVT Category Estimated Actual Difference Estimated Actual Difference Construction 1,170,000 746,310 -423,690 230,000 --- -230,000 Equipment and Vehicles 240,000 225,545 -14,465 --- --- --- Personnel 210,000 449,598 239,598 160,000 425,746 265,746 Operation 550,000 1,073,714 523,714 940,000 902,734 -37,266 Consultancy Services 570,000 613,576 43,576 --- --- --- Credit 6,660,000 6,734,799 74,799 --- --- --- Contingencies 600,000 --- -600,000 290,000 --- -290,000 Total 10,000,000 9,991,296 8,704 1,620,000 1,328,480 -291,520 3.6.2 Only 64% of the amount allocated for construction was utilized because the planned post- harvest facilities were not built in the end. On the other hand, because project implementation was delayed, the allocations for personnel and operations were overspent by 114% and 95% respectively. The situation varied somewhat for the other expenditure categories. These modifications and adjustments were dictated by the need to adapt the Project to the real conditions of its implementation. 6 3.6.3 ADF disbursements and the release of the Government counterpart funds were effected as follows: Table 3.2 Disbursements by Sources of Finance (in UA) Estimated Disbursed Estimated Disbursed Year Difference Difference Amount ADF Amount ADF Amount GVT Amount GVT 1997 2,480,000 -2,480,000 1,180,000 -1,180,000 1998 3,820,000 1,463,203 -2,356,797 210,000 889,606 679,606 1999 3,700,000 1,712,836 -1,987,164 230,000 54,268 -175,732 2000 2,375,187 2,375,187 46,556 46,556 2001 2,984,389 2,984,389 46,658 46,658 2002 739,154 739,154 53,141 53,141 2003 465,360 465,360 55,938 55,938 2004 103,373 103,373 66,152 66,152 2005 129,756 129,756 63,856 63,856 2006 18,038 18,036 52,305 52,305 Total 10,000,000 9,991,296 -8,704 1,620,000 1,328,480 -291,520 3.6.4 The Government’s counterpart funds that were released included the amount paid into the Guarantee Fund (CFAF 700 million), some operating costs and the salaries of government officials. 3.6.5 The breakdown of project costs by source of finance is presented in the Table below showing the distribution at appraisal and the actual distribution on completion of the project. Table: 3.3 Project Cost by Source of Finance (UA Million) Estimates % Source Actual Amounts at Completion Difference at Appraisal ADF 10.00 9.99 -0.01 99.9 GVT 1.62 1.33 -0.29 82.0 TOTAL 11.62 11.32 -0.30 97.4 3.6.6 ADF financing was to cover all foreign exchange costs and 28.4 % of the local currency component, representing 86.1% of the total project cost. The Government of Senegal was to be responsible for 13.9% of the project cost, in particular, salaries for the local staff and productivity bonuses for public officials working on the project, the operating costs of the Project Management Unit, and part of the cost of providing support to the executing agencies and marketing structures. The total local currency component was estimated at UA 4.92 million, of which ADF would provide UA 3.30 million. ADF financed the entire foreign exchange component and 27% of the local currency cost. 3.6.7 The first ADF disbursement, corresponding to the initial revolving fund, was effected on 23 October 1998. The last disbursement took place on 16 February 2006, leaving an undrawn balance of UA 8.704 (0.09%). The total disbursement rate as at 31 December 2005 was 99.91% of the loan. The last approval of the deadline for last disbursement on 31 December 2005 made it possible to complete the last few activities (auditing of accounts, final evaluation, etc.) and to continue with certain actions in preparation for the consolidation/sustainability phase. 7 4. PROJECT PERFORMANCE AND OUTCOMES 4.1 Operational Performance Component A: Crop Intensification 4.1.1 The Project helped to intensify production in an area covering over 20,600 ha compared to a revised objective of 15,900 ha; the outcome thus exceeded the objective by 29% in terms of the surface area sown. It also enabled the population to acquire inputs for soil improvement and for use in developing and maintaining their crops. At the end of the Project, the quantities of NPK used were estimated at 5,198 tonnes, 13.4% above target. The quantities of urea and phytosanitary products, on the other hand, were 2,848 and 93 tonnes respectively, below the initial objectives of 4,000 tonnes and 700 tonnes respectively. The Project also used 743,307 tonnes of seed, for all crops combined. 4.1.2 Around 31,120 tonnes of cereal and food crops were produced as a result of the project (3,109 tonnes of millet/sorghum, 1,367 tonnes of maize, 12,498 tonnes of rice, 11,906 tonnes of groundnuts and 2,240 tonnes of cowpeas). This was about 30% of the objectives set at appraisal and 75% of the revised objectives set after the land areas were reduced to 15,900 ha from 34,000 ha. Yields were not assessed on a permanent basis making it impossible to accurately measure the productivity gains as a result of the PMIA. Dryland farming performed poorly owing to insufficient rains and natural disasters such as locust invasions, as well as the degradation of natural resources and loss of soil fertility. The situation resulted in a low credit recovery rate by the seven farmers’ mutual associations, less than 79%. The Disaster Relief Fund in place covered only part of the risks and the associations are still facing the problem of low credit repayment. 4.1.3 Satisfactory results were obtained in the livestock sector. The project had envisaged the procurement of only 500 nucleus herds, each of which would have a pregnant heifer and three ruminants for fattening. Through the project, 6,784 cattle and 1,489 sheep for fattening were acquired, along with 125 dairy cattle, 494,435 broiler chickens and 255,063 layers. The PMIA did finance poultry farming but encountered serious problems, mostly in connection with the importation of chicken thighs and technical difficulties (the vaccines and feeds sold by local suppliers are not always of certified quality). 4.1.4 The total amount of loans granted under this component was CFAF 2,567,884,657, an implementation rate of 108%. This amount is 43.6% of the total credit amount. In all, 1,455 sub- projects were financed under the intensification of rainfed crops as well as a total of 149 sub- projects in the livestock sector (construction of modern pens, use of animal feed, etc). Implementation of this component is fairly satisfactory. Component B: Revival of Horticulture 4.1.5 The amount of credit provided financed farming on 1,349.5 ha of private schemes instead of 300 ha, an implementation rate of 450% (397 ha of green beans, 140 ha of tomatoes, 107.5 ha of onions, 83 ha of potatoes, 71.5 ha of cabbage, 307 ha of bananas, 38 ha of orchard crops and 205.5 ha of various other crops). This amounted to an additional production of 12,317 tonnes, a 102.6% implementation rate, and contributed to the export of 1,584 tonnes, or 21% of the country’s exports of market garden produce (7,432 tonnes). The Project also produced around 12,000 tonnes of bananas thereby contributing 40% to banana production in the country, which helped to reduce the country’s banana imports. 8 4.1.6 The Project rehabilitated the three horticultural schemes in the Niayes area. Essentially, the works involved rehabilitating the pumping systems (positioning of pumps, trial runs of borehole pumping, supply and installation of pumps and generators, installation of pumps and standby generators) and rehabilitation of irrigation and water supply systems (installation of PVC piping, provision of standpipes and drinking troughs) and stabilization of access roads and sundry works (rebuilding the borehole shelters, construction of water towers and chemical treatment of boreholes, etc.). 4.1.7 Three schemes have actually been developed, but not before massive delays due to the following: (i) the relaunching of the bidding process because the BD were amended ; (ii) delay in carrying out the planned additional works under a contract amendment, due to non-payment of the final invoice for the initial contract; (iii) additional works were needed to ensure efficient use of the horticultural schemes and the supply of drinking water to Thieudeme and Ndieguene villages ; and (iv) there was a delay in obtaining a waiver that would give the farmers’ access to mutual association funds in excess of their permitted ceiling. 4.1.8 Total credit provided for market gardening crops was CFAF 1,169,366,952, an implementation rate of 64.2%. The difference of CFAF 649,799,201 was mainly because no financing was provided for fruit tree farming, as there was little demand for it, and also because of the repayment deadline (5 years maximum for the mutual associations) whereas that type of enterprise only comes into full production in its 5th or 6th year. Implementation of this component is considered satisfactory overall. Component C: Replacement and Modernization of Agricultural Equipment 4.1.9 PMIA financed the procurement of 161 seed drills, 62 hoes, 46 ploughs, 100 carts, 111 draught horses, 50 pairs of oxen, 100 power pumps, 27 generators, 5 tractors/power tillers, 1combine harvester and irrigation equipment totalling CFAF 67,522,217. These actions fall under both Components A and B because it is difficult, in practice, to dissociate equipment from the other actions financed under the two other components. Only two sub-projects, valued at CFAF 70,540,000 were charged to this component. 4.1.10 The total amount spent on replacement and modernization of equipment was CFAF 838,062.21. This was a difference of CFAF 381,560,453 compared with the initial budget due to the following reasons: (i) there were various other ongoing projects providing agricultural equipment under better conditions than the PMIA; (ii) the loan ceiling for the savings and credit mutual associations (5 million per group or per individual beneficiary) and the repayment period (5 years), were sometimes incompatible with the nature of some kinds of equipment. Performance under this component is described as deficient. Component D: Marketing and Processing 4.1.11 Under the ‘ Marketing and Processing’ component, the Project financed 286 sub-projects at a cost of CFAF 1,306,786,781, which included 18 processing plants for cereal products and groundnuts, and the rest paid out as revolving funds for the marketing of agricultural and livestock products. It is estimated that 27,000 tonnes of agricultural produce were marketed as well as 6,182 head of cattle, 50 sheep, 70,700 broilers, 3,7 million eggs, 261,000 litres of milk, 300 litres of honey, 41,000 litres of butter oil, 1,800 litres of palm oil, and 40,320 litres of juice (bissap, etc.). This was an implementation rate of 356.9% in terms of credit, which is very satisfactory. The need expressed for revolving funds is extremely important for the marketing of farm produce. The total budget set aside for this component was UA 1,140,000 (CFAF 908,738,460), including UA 388,105 (CFAF 309,373,632) for the revolving fund and UA 1,011,895 (CFAF 806,620,968) for infrastructure building. 9 4.1.12 Funding was not secured for the post-harvest facilities and that component of the project was cancelled because sponsors wanted to have the construction works carried out directly by small companies rather than awarding the contracts through competitive bidding, which was the approved procurement method. Implementation of this component can be considered as fairly satisfactory even though the facilities were not built, because it helped to improve the marketing of agricultural produce. Component E: Project Management 4.1.13 The activities planned under the ‘Project Management’ component were all implemented. The Project recruited six national professional staff: an agronomist, a credit expert, an agro- economist, a livestock officer, a horticulture expert and a financial expert. An environmental expert was also recruited on the recommendation of the ADF Board of Directors. With the increased workload, a second expert was brought in to strengthen the team. The Project also recruited support staff comprising an accounts assistant, a secretary and twenty farmer organization specialists (SOP) across the different regions. The Project procured the resources it needed to operate: computer equipment, nine vehicles and twenty motorcycles. These are still in place and are well-maintained. The vehicles were useful for the supervision of sub-projects financed under the credit component. 4.1.14 It should be noted that the some of the professional staff and SOPs left mid-way through the implementation of PMIA. The finance expert and the monitoring-evaluation expert resigned in 2002. The latter was replaced but the finance expert’s post remained vacant. This seriously affected the accounting function. The Project accounts were kept by an experienced accountant recruited after the first two left one after the other. As the Project had no finance expert, a consulting firm was brought in to help. The number of SOPs fell from 20 to 15. These different departures were mainly due to poor pay. The staff of the PMIA are competent and experienced. The total cost of this component rose from CFAF 1,920,434,600 to CFAF 2,010,088,484, an increase of CFAF 89,663,884 due to the extension of the implementation period from 3 to 6 years. Implementation of this component is satisfactory. 4.2 Institutional Performance 4.2.1 Credit Component: The main project activity was to provide credit for the rural community. As at 31/12/2006, a total of CFAF 5,935,122,200 in credit had been granted to finance 2,816 projects across the entire country. The banks and farmers mutual associations financed 108 and 2,708 projects respectively. Four banks were involved (CNCAS, CLS, BICIS and SGBS) and they mobilized CFAF 2,834,473,707. The 25 farmers’ mutual associations mobilized CFAF 3,100,648,493. The PMIA provided the revolving fund for the project, to the tune of CFAF 3,183,739,953, which represented 54% of the total credit. The rest (CFAF 2,751,382,247) was invested in building production capacity. The breakdown of PMIA funds among the short, medium and long-terms is presented below (in CFAF): MEDIUM AND LONG SHORT TERM TOTAL TERMS Banks 27,250,000 2,807,223,707 2,834,473,707 Mutuals 2,037,264,186 1,063,384,307 3,100,648,493 Total 2,064,514,186 3,870,608,014 5,935,122,200 4.2.2 The sector breakdown of PMIA financing shows that the bulk of the credit went to the livestock sector, the highest share of 23.5%. It was followed by the ‘Crop Intensification’ sub-sector with 23.3%. The ‘Horticulture’ and ‘Marketing’ sub-sectors received 19.2% and 17% respectively. The integrated projects and services sub-sectors took 15.7% and 1.2% respectively of the loan amount paid out by PMIA. Overall, this breakdown by sector is consistent with the initial estimates. 10 4.2.3 The balance on the credit account at the BCEAO as at 31/12/2005 was CFAF 70,163,852. The balance of the repayment account opened at the BCEAO, also as at 31/12/2005, was CFAF 5,170,716,120, including compensation totalling CFAF418.261.255 that the Disaster Relief Fund paid out to some members of the mutual associations. 4.2.4 The 25 farmers’ mutual associations, at 31/12/2005, had about the same average rate of repayment as the banks (80%). Repayments to the PMIA by the mutual associations are more or less the same as the rate of repayment by members to their associations. These associations can be grouped into four categories : (i) those with a repayment rate of 90 to 100%; a total of nine (TERANGA, FEPRODES, BARGNY, XEWEL SYSTEM’S, DIENDER, DIASS, UNACOIS FATICK, RASEF ET AHDIS BAMBEY); they received CFAF 1,464,705,615, 47.6% of the entire amount awarded to the farmers’ mutual associations, and performed relatively well ; (ii) those with a recovery rate between 70 and 90% are eight in number, and they received CFAF 781,104,652 25.4 % of the total that the mutual associations received; (iii) those with a less than 70% recovery rate are eight in number, and received CFAF 827,742,226, 26.9% of the total amount awarded to the farmers mutual associations; and (iv) one association was yet to begin repaying loans because the loans are not yet due. Some of the loan associations, especially those in the 3rd category, performed poorly mainly because of drought, non-seasonal rains that decimated the cattle, and excessive importation of chicken thighs. Only one association was defrauded and the perpetrator was imprisoned. The stiff sentence meted out helped to raise recovery rates. 4.2.5 The banks achieved a rate of about 98% repayment to the PMIA as at 31/12/2005, bearing in mind that they had received repayments from the Guarantee Fund (cf. 4.2.6) for nearly 15% of credits granted. The repayment rate to the banks from sponsors was in the region of 75%. The annual reports submitted by the banks were sketchy and did not contain any in-depth analysis of the difficulties encountered regarding the sub-projects. In discussions with the banks and PMIA, the reasons for unpaid loans were found to have been related to: (i) weather conditions (drought, non- seasonal rains, floods, and locusts); and (ii) marketing problems (excessive importation of chicken thighs, imports of market garden produce and poor sales). Moreover, the monthly repayments that the banks were asking for was often incompatible with the particular type of farm activity (variable production cycle). Apart from CNCAS, the banks had no agricultural expert and depended mainly on the PMIA staff for the approval and supervision of the sub-projects. 4.2.6 The Project provided for a Guarantee Fund of 700 million CFAF, to cover 75% of the risks incurred by the banks to encourage them to invest in agriculture, a notoriously high-risk sector. The funds are lodged with the BCEAO. The Fund’s balance was CFAF 304,493,366 at 31/12/2005. The applications accepted are for a total amount of CFAF 416,489,373, broken down as follows: CFAF 189,549,531 for SGBS (seven applications), CFAF 144.328.352 for CNCAS (nine applications), and CFAF 82,611,490 for BICIS (five applications). It is worth mentioning that the Management Committee of the Guarantee Fund encountered a few problems during its meetings. For example, while there were rules of procedures for the operation of the Fund, there was no procedures manual that clearly defined the different stages of the fund mobilization process. This left the door open to different interpretations. In 2006, the Guarantee Fund was again approached to provide CFAF 132,393,254 to the banks. As for the Disaster Relief Fund (Fonds de calamités), no specific allocation had been earmarked for it in the PMIA, but in 2005, CFAF 418,261,255 was mobilized for distribution to producers who had taken loans from the farmers’ mutual associations. 4.2.7 Without the contributions of the Guarantee Fund and Disaster Relief Fund, the repayment rate for the banks and the mutual associations would be around 75%; with these Funds the repayment rate would be a little over 90%. The average recovery rate from sponsors can be estimated at 79%, which is fairly average for credit operations. In addition to the context-related factors mentioned earlier in 4.2.4 and 4.2.5, this average rate was also the result of inadequate monitoring by the sponsors, weak capacity of some of the mutual associations, a certain lack of 11 interest from the traditional banks, and mismatch between the financial products on offer and the challenges faced by the agricultural sector. The loan associations did slightly better than the banks because they are nearer to their clients, but it is necessary to build their capacities further. The different players were reassured by the fact that the BCEAO and the Ministry of Economy and Finance were involved in the credit granting mechanism. Some of the beneficiaries and financing institutions felt that, at CFAF 5 million for the mutual associations and CFAF 50 million for the banks, the credit ceilings were too low. The performance under the credit component can be considered as fairly satisfactory, despite the inadequate recovery rates. 4.2.8 Monitoring-Evaluation : Provision had been made in the project for an internal monitoring- evaluation system that was to have been entrusted to the Project Coordination Unit and for external monitoring – evaluation to be carried out by the Agricultural Policy Unit (APU) at the Ministry of Agriculture, which was replaced by the Directorate of Analysis, Forecasting and Statistics (DAPS). However, there was no internal monitoring-evaluation due to a lack of resources despite a recommendation to that effect during the mid-term review. The absence of monitoring-evaluation, and lack of specific data, made it impossible to monitor the project outcomes properly or to carry out a continuous assessment of the performance of the banks and mutual associations and the actual impact of the credits on the different sponsors. The external monitoring and evaluation mission that had been envisaged was not carried out. However, several ministerial missions were conducted, and the Government also performed a mid-term review, which resulted in recommendations that helped improve the conduct of the project activities. 4.2.9 Accounting and Financial Management: The SYSCOA system of accounting was chosen for the PMIA right from project start-up. The software was procured in 2001. The PMIA had a manual of administrative, financial and accounting procedures. Overall, the PMIA accounts were properly maintained. However, it should be pointed out that the PMIA’s accounting system was ill- suited to its activities, essentially as it had no provisions for credit-related operations. It is, therefore, recommended that, in the future, the Project should have a unified accounting system. 4.2.10 From an analysis of the operating statements (2000-2005), we can conclude that the accounts are balanced. The budgeted costs are covered by ADF resources and those of the Government. Slight deficits were recorded for some financial years because of the practice of depreciation. However, credit operations should be included in the PMIA accounting system. The summary balance sheets for FY2000 to 2005 show that the PMIA has a sound and balanced financial structure. 4.3 Performance of Service Providers 4.3.1 Performance of Consultants: The consultants involved in the Project were recruited according to Bank rules, and they provided services in conformity with the terms of their contracts. The major contracts were in respect of technical assistance in environment, advisory services, various trainings, accounting assistance, accounts audits, the sustainability study, and the final evaluation. 4.3.2 Performance of Contractors: On the whole, the contractors fulfilled their obligations and the works were carried out to acceptable standards. Two major contracts were awarded to MATFORCE and HENAN CHINE for the rehabilitation of the horticultural schemes in the Niayes region. The works were carried out to the required standards but the contracts needed to be amended with additional works because they were considered vital if the beneficiaries were to be truly able to make rational use of the rehabilitated schemes. This made the implementation period longer than was initially estimated. 12 4.3.3 Performance of Suppliers: The suppliers provided satisfactory services on the whole. In particular, the vehicles and the computer and office equipment were delivered on schedule and were of good quality. 4.4 Financial Performance Since a major part of the Project’s intervention was the provision of credit to finance the sub-projects, its financial performance can be assessed on the outcomes of the sub-projects relating to the farms concerned. Incomes from the farms growing market garden crops are satisfactory. They are estimated at CFAF 134,700 for the 2 ha farms, CFAF 398,400 for the 6 ha farms, and CFAF 697,800 for the 10 ha farms. Income for the 0.5 ha horticultural farms are estimated at CFAF 924,000 and CFAF 8.8 million for the 0.5 ha and 5 ha farms respectively. These outcomes are almost double the appraisal estimates. Moreover, encouraging results were obtained for poultry farming and animal fattening, even though imports were sometimes a disincentive to some sponsors. Mixed farmers recorded the most satisfactory results. Integrating agriculture and livestock helped to secure the loans. A 22 ha farm with 9 head of cattle earned an average of one million a year. There was a rise in the incomes of the majority of the beneficiaries of the credit component. Banana yields were in the region of 40 to 50 tonnes per hectare raising the gross margin per ha to CFAF 1,788,650. The results recorded by the banana plantations helped the country to cut back its banana imports and the plantations contributed 40% to national output. 4.5 Economic Performance The project’s economic rate of return is 14.7% (cf. Annex 4), which is a satisfactory rate (18.6% at appraisal). This rate was calculated taking all costs into account, especially those for investments and for the different plant and animal production activities. At appraisal, particular emphasis had been placed on rainfed crops whereas project implementation had focused on stockbreeding and marketing, along with banana production, which had not been factored in initially. Thus, even though, overall, the additional output from rain-fed crops was lower than expected, economic performance was still satisfactory because of the increase in, and maximum diversification of highly remunerative activities (horticulture, stockbreeding). 5. SOCIAL AND ENVIRONMENTAL IMPACT 5.1 Social Impact 5.1.1 The shortcomings in the monitoring-evaluation system made it difficult to carry out an accurate and comprehensive assessment of the project impact. Nevertheless, the different surveys conducted, by the Project and as part of the final evaluation, showed that the planned activities would impact positively on incomes and would revitalize certain sub-sectors. In the banana sector, the number of EIGs rose from 14 in 1999 to 27 in 2005. There was a tangible improvement in the living conditions of growers and the equipment they owned (procurement of carts, motorbikes, bicycles, etc.), and school attendance rates increased substantially among their children. More generally, all the local groups and communities interviewed were enthusiastic and unanimously agreed that the project had had a positive impact on medium-and large scale farms, particularly those which had diversified their activities (agriculture-livestock). For small farms growing rain-fed crops, on the other hand, profit margins remained small, which led to difficulties regarding loan repayments. It was generally agreed that the lowest repayment rate was in the dry zones in the North, which are hostage to poor, irregular rains and the degradation of natural resources. 5.1.2 In the livestock sector, (poultry, cattle fattening and sheep and dairy farming), the results obtained were significant: between CFAF 900,000 /quarter for 10 head of cattle and CFAF 7 13 million/yr for a farm with 5 cows, 100 cattle and 100 sheep. These farmers had no difficulty at all in paying back their loans. Nonetheless, a few constraints were encountered with regard to poultry farming where, depending on the period, problems ranged from price fluctuation, competition from massive imports of chicken thighs and the high cost of feed to, in some cases, poor farm management. Despite these good results, fattened animals fetched lower prices as a result of imports from neighbouring countries. 5.1.3 The PMIA’s target beneficiaries were the rural population that are not usually catered for by the conventional banking systems. The project provided financing for 2,800 sub-projects in total, and more than two-thirds of these benefited some 170,000 women essentially engaged in poultry farming, animal fattening, market garden crops, and processing and marketing of farm produce. These loans helped to increase production and raise incomes overall and freed women from the loan sharks. The increased production (an additional 43,500 tonnes) also had a huge impact on the feeding of the rural communities concerned because they were able to produce enough for their own needs. The products were sold to the main consumer centres. The rise in incomes altered the structure of household expenditure slightly as more funds were committed to education, hygiene and sanitation. One of the best outcomes of the PMIA was that it gave women and unemployed young people an opportunity to gain a foothold in the economic circuits through the marketing and processing of agricultural produce, thus helping to reduce rural poverty. 5.2 Environmental Impact In accordance with the recommendations of the ADF Board of Directors, an environmental specialist was recruited and a partnership established with the Institut Sénégalais de Recherches Agricoles (ISRA). This made it possible to assess the impact of each sub-project on the environment and comply with the Government’s environmental protection standards. In addition to the environmental expert, the Plant Protection Directorate was closely involved in the environmental protection aspects. Thanks to this method of validation, the PMIA was able to eliminate certain sub-projects which might not have been feasible from an environmental protection standpoint. Also, the environment expert regularly monitored the environmental aspects, but this was discontinued after the first three years of the project (the initial project duration), due to a lack of resources. The SOPs were also involved in monitoring-evaluation. Training courses on the environmental impact of the sub-projects were organized for staff of the PMIA, the financing institutions and the sponsors. Awareness raising activities were organized on mitigation measures, agro-forestry techniques, erosion control and the application of technological packages. The Project did not have any significant negative environmental impact because of the nature of the sub-projects themselves and because the sub-projects had included measures to preserve the equilibrium of the ecosystems and ensure strict compliance with applicable standards, especially for farming techniques and use of inputs. 6. PROJECT VIABILITY 6.1 The Project’s main activity was to provide credit to the rural community. With assistance from both the Guarantee and Disaster Relief Funds, the Project achieved a relatively satisfactory repayment rate of 90%, and a repayment account balance of five billion CFA francs. However, a legal and institutional framework needs to be established to ensure that the credit system that has been put in place remains sustainable. To ensure that the project actions are sustainable, improvements must be made in respect of a number of technical, organizational and socio-economic factors: sustainability of the credit mechanism, training for beneficiaries and technical supervisory staff, institutional capacity building for some of the farmers’ mutual associations, and better choices of sub-projects to finance. It is necessary to have these orientations to ensure that the action thus 14 initiated is sustainable. The Government of Senegal has given an undertaking that it will put the institutional and legal tools in place during the PMIA consolidation phase (2007 – 2009). 6.2 A sustainability study on the PMIA has been conducted with government financing. A validation workshop was organized in May 2003 and was attended by the communities concerned, the financing institutions and Government representatives. It was decided that the PMIA should evolve into a Rural Development Support Fund (RDSF). Initially, it was thought that the Bank would finance a second PMIA phase to help consolidate the successes of the first phase and that it would partner the Government of Senegal in the transition to a permanent, sustainable system. Regrettably, the ADF was unable to take on the financing as it had a number of other ongoing operations that it considered to be a higher priority. 6.3 In a letter dated 11 August 2005, the Prime Minister of Senegal directed the Ministry of the Economy and Finance to take every necessary measure to ensure that financing would be available for the PMIA consolidation phase. Initially scheduled to start from 2006, the consolidation phase only took off in 2007 because of the delay in passing the supplementary budget law. The Government included an amount of CFAF 1.5 billion to replenish the ‘PMIA’ credit fund that would be used to refinance the banks and mutual associations, CFAF 200 million for the Guarantee Fund, and CFAF 585 million on (from) the 2007 consolidated investment budget (CIB) for the other programme activities. 6.4 Essentially, the operational objectives of this consolidation phase are: (i) to build the capacities of all those involved in the operations (promoters, DFS, management structures, and other partners) ; (ii) to make the credit system more effective by extending its reach to fishery products, aquaculture, and marketing of forestry products by raising the credit ceilings for the farmers' mutual associations from CFAF 5 to 10 million, by setting a longer repayment period for the mutual associations (24 months for short-term and between 5 and 10 years for long-term), and by improving the procedure for the operation of the Guarantee Fund (prepare a procedures manual) ; (iii) to consolidate the operations begun in the ADF active financing phase, particularly by supporting the beneficiary communities of the hydro-agricultural infrastructure and helping to create agricultural growth poles; and (iv) to manage the credit components of PAPEL II and PADERBA projects being financed by ADF. This transitional phase will last for a three-year period, leading to an appropriate institutional and operational framework for the credit system, paving the way for the creation of a permanent structure (FADSR). 7. PERFORMANCE OF THE BANK AND BORROWER 7.1 Bank’s Performance Project design and appraisal by the ADF was satisfactory overall, even though some omissions or underestimations were noted in connection with the project development and the LGS. The recruitment of an environmentalist, recommended by the Board of Directors, helped facilitate the choice of which sub-projects to finance under PMIA’s credit component and in preserving the equilibrium of the ecosystems ADF monitored the project properly having fielded nine missions (five supervision missions, one audit mission, two review missions and one visit by the Executive Directors). However, the appraisal report had envisaged that an external evaluation should be performed, albeit without stating specifically how that was to be financed. The allowances earmarked for the project implementation unit staff were lower than for similar projects as a result of which some of the staff that had been trained by the project left. Lastly, lack of synchronization between the provisioning of ADF funds and the pace of work on the ground sometimes disrupted activities on certain outputs. The schemes in the Niayes area was a case in point, where implementation works fell behind schedule because of the delay in obtaining the mobilization fee. 15 Bank performance at project appraisal and implementation was fairly satisfactory (Rating -2 out of 4). 7.2 Borrower Performance The Government set up a Project Implementation Unit, provided its contribution to the Guarantee Fund and paid virtually the entire amount of its financial counterparty every year. Because these contractual obligations were met, the project was conducted without any hitches and with ample material and human resources. The Implementation Unit’s monitoring work was regular and constant despite having to process almost 2,800 applications. All the players had a high volume of work, especially the Project Implementation Unit and the Ministry of Finance (DDI). However, the Borrower was not as efficient in submitting project audit reports to the ADF. Despite a slight delay, the Government was able, using its own funds, to implement a PMIA consolidation phase designed to establish a sustainable credit mechanism. Its performance is considered as satisfactory overall. 8. OVERALL PERFORMANCE AND RATING Almost all the activities planned under the project were implemented, despite a number of readjustments caused by delays in signing agreements with the farmer’s mutual associations and the banks, and late payment of the initial contribution towards the Guarantee Fund. The Project achieved a number of its basic objectives and was particularly successful in the areas of horticulture and livestock breeding. Accordingly, project implementation performance is considered satisfactory overall, with a score of 2.3 out of 4, despite having recorded only average recovery rates from sponsors, the lack of monitoring-evaluation arrangements and the resulting delay in the conduct of the project. 9. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS 9.1 Conclusions 9.1.1 Overall, the Agricultural Modernization and Intensification Project (PMIA) can be considered to have been a success overall for Senegal and ADF, in spite of the delays and a number of shortcomings noted at completion. Ninety-seven per cent (97%) of the planned credit component was granted, enabling the project to achieve its main objectives. The Project helped to improve food security in Senegal, re-invigorated certain sectors of activity (e.g. banana and livestock production), and positively affected the lives of farmers, women in particular. These are precious achievements that should be safeguarded and consolidated with the second phase financed by the Government and focused on improving the credit mechanism and transforming it into a permanent structure and supporting the training and professionalization of sponsors as well the institutional strengthening of some of the farmers’ mutual associations. 9.1.2 We can conclude from an analysis of the PMIA experience that the system it proposed proved to be a suitable mode of financing for the rural sector. It was successful on many fronts, despite the many problems facing the agriculture sector. Several producers, particularly unemployed women, received PMIA credit and were thus able to earn an income. In addition, there was an increase in horticultural and livestock production, and this played a significant part in the growth of the economy. The implementation of the PMIA was also instrumental in restructuring the rural sector by encouraging the people to come together under the umbrella of village groups (cooperatives) and Economic Interest Groups (EIG). 16 9.2 Lessons Learnt The main lessons learnt from the implementation of the PMIA Project are the following: (i) Setting unrealistic quantitative objectives, miscalculating the expected project duration, not clarifying certain operational procedures, failing to budget for, or underestimating expenditure for some activities planned in the appraisal report causes confusion and often leads to delays in project implementation. (ii) Allowances should be made for possible changes to the project during implementation if necessitated by the terrain or by the need for a participatory approach; lack of flexibility or responsiveness when faced with constraints during implementation could impede the achievement of the project objectives. (iii) For projects involving the provision of rural credit, there must be periodic monitoring-evaluation of the arrangements in place, keeping in mind the type of project or public concerned, so that any necessary adjustments can be made during the operation; similarly, every provision must be made, right from the outset, to ensure that the services started and the systems put in place by the project will continue after the project ends. (iv) When lines of credit meant for supporting rural activities are lodged with traditional commercial banks, an intermediation system must absolutely be put in place to raise awareness among the beneficiaries, build their capacity and monitor their progress in order to keep repayment rates within normal limits. (v) When financing activities of the rural community, due regard should be given to the growing trend towards decentralized financial systems, and these structures should be closely associated and assisted to build their capacities. (vi) Granting credits for rainfed crops is risky, a fact that should be better reflected in project design, in particular by envisaging closer supervision of farmers and greater crop diversification of crops, and by promoting activities that will aim to integrate farming and stockbreeding or, perhaps, by introducing mechanisms that will help in some measure to cover such risks. 9.3 Recommendations In view of the above observations on the project’s strengths and weaknesses, the following recommendations are made: The Bank: (i) at project appraisal, envisage an adequate operational arrangement encompassing all competences required, especially in respect of monitoring-evaluation and the environmental aspects. This will require that all planned project activities be costed, carefully and accurately, and provision made for an adequate remuneration package to attract and help to retain highly qualified staff. 17 (ii) when implementing similar projects containing a credit component, consider prioritizing the use of decentralized financing systems rather than conventional commercial banks, and in all cases, take account of the need for close and effective intermediation. (iii) when designing a rural sector project with a loan or guarantee fund component, take all necessary measures to ensure that the system provided will be sustained beyond the project lifespan, and specify the final use to be made of the amounts recovered or remaining at closure. (iv) analyze the PMIA experience more thoroughly and compare it to other rural credit financing mechanisms supported by the Bank, to see to what extent this experience could be adapted and built upon. The Borrower: (i) make the provision of effective monitoring-evaluation systems an integral part of development projects and programmes that are implemented, to permit an accurate assessment of the project’s implementation status and its outcomes and impacts. (ii) continue to monitor and consolidate the encouraging results obtained at the horticultural schemes in the Niayes area, specifically by providing the farmers with advisory services to the farmers and supporting them with loans for any necessary additional investments. (iii) be mindful, when developing its rural funding strategy, of developments in the country’s institutional environment, and most especially, the increasing emergence of operators offering microfinance. (iv) continue to seek ways to ensure sustainability of the credit system put in place through the PMIA project, taking care to spell out the financing modalities and terms of access to the Guarantee and Disaster Relief Funds, and clearly defining the institutional framework that will ultimately lead to a permanent, sustainable structure to take over from the PMIA. Annex 1 Page 1 of 1 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Map showing project site This map was prepared by staff of the ADB Group for use exclusively by readers of the report to which it is attached. Names and boundaries shown do not represent the views of the ADB Group and its staff on the legal status of any territory nor do they imply approval of its boundaries. Annex 2 Page 1 of 1 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROGRAMME COMPLETION REPORT Evaluation of Economic Rate of Return Investments Additional Income Cash-flow Year (CFAF) (CFAF) (CFAF) 1997 1 173 326 000 -1 173 326 000 1998 1 434 656 000 -1 434 656 000 1999 2 227 750 000 -2 227 750 000 2000 2 787 056 000 865 628 319 -1 921 427 681 2001 668 795 000 865 628 319 196 833 319 2002 379 440 000 865 628 319 486 188 319 2003 80 443 000 1 731 256 638 1 650 813 638 2004 1 731 256 638 1 731 256 638 2005 1 731 256 638 1 731 256 638 2006 1 731 256 638 1 731 256 638 2007 1 731 256 638 1 731 256 638 2008 1 731 256 638 1 731 256 638 2009 1 731 256 638 1 731 256 638 2010 1 731 256 638 1 731 256 638 2011 1 731 256 638 1 731 256 638 2012 1 731 256 638 1 731 256 638 2012 1 731 256 638 1 731 256 638 2013 1 731 256 638 1 731 256 638 2014 1 731 256 638 1 731 256 638 2015 1 731 256 638 1 731 256 638 IRR 14.69% Annex 3 Page 1 of 3 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROGRAMME COMPLETION REPORT Performance Evaluation and Rating Implementation Performance Rating Evaluation Criteria Observations (out of 4) The project took twice as long to complete as initially estimated at appraisal. There were huge 1. Adherence to Implementation Schedule 1 delays in the effective take-off. 2. Adherence to Costs 2.5 The estimated costs were adequate for almost all the planned outputs 3. Compliance with Covenants/Conditions 2.5 There were problems with the conditions for the allocation of plots. Technical supervision and coordination on the ground were properly carried out; status 4. Adequacy of Supervision and Reporting. 1.5 reports were irregular and of average standard; annual audit by the Administration was defective; audit performed late by private firm. 5. Satisfactory Operations 2.5 Key significant objectives were attained for all the components combined. Overall Assessment of Implementation Performance 2.0 Project Implementation Performance is Average. Annex 3 Page 2 of 3 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROGRAMME COMPLETION REPORT Bank Performance Evaluation Criteria Rating Observations (out of 4) 1. At Identification NA No identification mission as such. 2. At Preparation 2.0 Preparatory consultative missions, to work out a suitable credit system. 3. At Appraisal 2.0 Satisfactory appraisal report but project goals and schedule were over-optimistic, and contained some omissions and under-estimations. 4. At Supervision 2.0 Supervision reports and final evaluation reports are satisfactory. Supervision missions conducted fairly regularly and to acceptable standard. Speedy decision making ensured that the project was carried out under good conditions. However, there was not enough time to follow up the recommendations. Overall Assessment of Bank 2.0 Bank performance is averagely satisfactory. Performance Annex 3 Page 3 of 3 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Project Outcomes Rating Assessment Criteria Observations (out of 4) 1. Relevance and Achievement of Objectives (i) Macroeconomic Policy 2.5 (ii) Sector policy 2 The main physical quantitative objectives were achieved, (iii) Physical Outputs (including production) 2 albeit with some delay. Equipping of producers and crop (iv) Financial Policy 2 yields are satisfactory. The project helped to raise (v) Poverty Reduction 2.5 income levels of farmers who were involved in it. (vi) Environment 2.5 (vii) Private-sector Development 2.5 2.3 2. Institutional Development Community development in the rural areas was (i) Institutional Framework 1.5 strengthened through groups. Arrangements for (ii) Financial and Management Information Systems 1 monitoring-evaluation were most inadequate. The (including audit system) mechanisms for accessing the Guarantee and Disaster (iii) Transfer of Technology 2 Funds were not clearly spelt out. Audit reports were (iv) Human Resources (including turnover rate. Training 2.0 submitted late. and counterpart staff) 1.6 3. Sustainability (i) Continued Borrower Commitment 2.5 A number of encouraging points deserve mention: the (ii) Environmental Policy 2.5 market garden schemes in Niayes are operational, dynamic (iii) Institutional Framework 2 EIGs, etc. etc. there were some shortcomings related to the (iv) Technical Viability and Staff Supervision 2 weak capacity of some of the producers, lack of close (v) Financial Viability including Cost Recovery 2 supervision, etc. The Government is committed to Systems implementing a consolidation phase to ensure (vi) Economic Viability 2.5 sustainability of PMIA activities and this is a positive and (vii) Environmental Viability 2.5 encouraging step. (viii)Operation and maintenance facilitation (availability 2.5 of recurrent funding, exchange rates, spare parts, workshop equipment etc.) 2.3 4 Economic Rate of Return 3 IRR estimated at 14.7% The overall assessment of the project outcomes is Overall Assessment of Development Impact 2.3 satisfactory Annex 4 Page 1 of 2 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Matrix of Recommendations and Follow-up Measures LESSONS LEARNT MAIN FINDINGS AND CONCLUSIONS FOLLOW-UP ACTIONS RESPONSIBILITY RECOMMENDATIONS Lessons: At the time the Project was designed, its aim was to improve food security enough to satisfy part of the country’s food requirements by providing credit. Not enough emphasis was laid on the ‘Sustainability and Participatory Approach’ aspects. Project Formulation and Justification The project objectives set at appraisal were too optimistic. The environmental risks Utilization of the logical were identified and controlled. Not enough attention was given to the issue of the framework (results-based The Project was designed to help sustainability of the credit system put in place. management) and the improve food security and achieve production participatory method, ADF and of 90,000 tonnes of cereals, 13,000 tonnes of Recommendations: Local structures and farmer mutual associations must be given the adaptations dictated by Government market garden produce and 13,000 tonnes of means to play a greater role in the monitoring and evaluation of ongoing projects and the environment and by fruit crops. The central component was a credit should also be associated at the project design stage. The project should create a changes in the Project mechanism whose institutional and operational consultation framework with the banks and these should be told to ensure they have the conditions. positioning was not yet properly defined. necessary means for monitoring-evaluation. The most desirable approach will be based on actively involving the beneficiaries, together with the authorities concerned when defining objectives. The issue of sustainability of the systems introduced must be addressed during the initiation of the project. Lessons: During the development of a project, it is possible to be overly optimistic Project Implementation about implementation schedules. As this particular Project entailed a predominant credit component, its implementation was dependent on how well the institutions and Implementation of the Project, which has a sponsors performed and how successfully they carried out the planned activities. The predominant ‘credit’ component took much performance of the project implementation team is capital for the success of the project. ADF and Operational capacity longer than estimated (6 years instead of 3), Government building for project and there was a frequent turnover of part of Recommendations: At appraisal, the complexity of the assigned tasks must be seen in development the project management team. relation to the capacity of the stakeholders. Choosing and assigning competent staff who will stay the course are pivotal to smooth project implementation; this means ensuring that the remuneration packages being offered are attractive enough. Annex 4 Page 2 of 2 Compliance with Loan Covenants/Conditions Lessons: Fulfilment of the conditions precedent can prove a major cause of delay in project start-up. When a project takes a long time to complete and there is a rapid The Borrower was late in fulfilling the loan turnover of monitoring staff, it is possible to lose sight of certain conditions. effectiveness conditions and the conditions Operational capacity Recommendations: The conditions set must be realistic and should have been agreed ADF and precedent. Preparation of agreements with building for project during discussions prior to approval. Emphasis must be placed on the need to fulfil Government farmers' mutual associations and banks was an development and uphill task. There was significant delay in the conditions and the Borrower should be reminded of this fact once the loan is approved. monitoring. payment of the initial contribution to the The importance of fulfilling conditions must be stressed and discussed before approval. Guarantee fund and in obtaining the legal The Bank should adopt a system that will allow it to monitor that the conditions are opinion. being complied with. Setting up field offices should facilitate this type of monitoring. Evaluation of Project Performance and Lessons: The different audit reports were not always prepared on schedule. The Bank Outcomes conducted regular supervision missions. The conduct and monitoring of the credit Maintain a credit From an operational point of view, project component was satisfactory overall although a number of adjustments were needed. mechanism and take implementation was satisfactory and the measures to ensure its Government physical outputs were achieved on the whole. Recommendations: The pace of project supervision should be maintained at the current sustainability and that it is Institutional coordination was satisfactory. level (at least once a year) and the same goes for the transmission of reports by the set within an appropriate Economically, the average annual income of Borrower. Close attention should be paid to the credit components during the appraisal institutional framework. the beneficiaries of the credit increased. and implementation stages. Lessons : For projects that have a rural credit segment, it is important to carry out regular monitoring-evaluation of the system in place, keeping in mind the type of project and the target public, both of which might dictate adjustments during project Sustainability Implement a new phase implementation, and envisage, right from the onset, all measures to ensure that the with provisions for remedial systems provided survive after the project. Project sustainability was not addressed and consolidation measures Government specifically in the appraisal report, that will ensure a Recommendations : it is vital for Government to continue with current efforts so as to particularly the mechanism adopted for the sustainable loan granting ensure sustainability of the credit system put in place, and to specify the modalities for credit component. mechanism. financing and for accessing the Guarantee and Disaster Funds, and clarify the . institutional framework that will ensure that a sustainable structure is established to take over from PMIA. Annex 5 Page 1 of 2 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Operating Statement for Horticultural Schemes and Intensive Farming Operating statement for horticulture (thousand CFAF) 0.5 hectare 5 hectares Crop Estimated Output Estimated Output French beans - 1500 2500 Onion 750 1.250 3000 5000 Aubergine - - 2250 4500 Potato - - 3000 5000 Tomato 750 1875 1500 5000 Cabbage - - 2250 1563 1-S/Total 1500 3125 13500 23563 Auto-consumption French beans - - - 250 Onion 150 125 - 500 Aubergine - - - 450 Potato - - - 500 Tomato - 188 - 500 Cabbage - - - 156 2-S/total 150 313 - 2356 net value (1-2) 1349 2812 13500 21207 Production costs Seeds 97 141 1213 2092 Equipment 11 136 88 273 Fertilizer 112 120 268 1002 Pesticides 60 106 753 1425 Irrigation cost/levy 410 338 3876 3397 Labour 160 435 1447 2425 Processing - - 616 1750 Financial cost 60 612 578 612 3-S/Total 910 1888 8839 12976 Net income (2-3) 439 924 4661 8231 Source: PMIA Annex 5 Page 2 of 2 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Operating statement intensive farming (CFAF Thousand) 2 ha 6 ha 10 ha Crop estimated output estimated output estimated Output Sorghum 70 34.6 140 69.3 280 138.6 Maize 50 63.0 200 252.0 300 378.0 Groundnut 67 121.8 168 304.5 252 456.7 Cow pea 13 5.6 63 28.0 63 28.0 Rice - - - - 400 540.0 Cowpea & groundnut 36 120.0 108 300.0 144 300.0 tops 1-S/total 236 345.0 679 953.8 1439 1841.3 Auto –consumption Sorghum 70 6.9 56 6.9 112 13.9 Maize - 17.6 40 70.5 60 105.8 Groundnut 13 18.3 34 45.7 50 68.5 Cow pea 5 5.6 13 14.0 13 14.0 Rice - - - 240 162.0 2-S/total 88 48.4 143 137.1 475 364.2 3-Net value (1-2) 148 296.6 536 816.7 964 1477.1 Production costs Seeds 7 30.6 21 82.6 43 143.9 Small machinery 23 7.0 44 31.0 89 79.2 Fertilizer 22 60.6 65 183.0 86 337.7 Pesticides 12 8.1 45 23.0 89 93.2 Animal Draught 20 25.0 28 41.3 111 41.3 Cultivation Labour 26 20.0 38 30.0 58 33.0 Financial costs 8 10.6 17 27.4 33 51.0 4-S /total 118 161.9 258 418.3 508 779.3 Net income (3-4) 30 134.7 278 398.4 455 697.8 Annex 6 Page 1 of 1 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Sources of information BANK DOCUMENTS - Project appraisal report, March 1997 - Loan Agreement - Supervision reports - Internal audit report - Correspondence Bank / Senegal Authorities BORROWER’S REPORTS - Data provided by PMIA - Half-yearly reports - Annual work plans and budgets - Studies on the final evaluation (CIENI consulting firm) - Completion report ACCOUNTS AUDIT REPORTS - Audit reports for FY 2000 to 2005 Annex 7 Page 1 of 1 REPUBLIC OF SENEGAL AGRICULTURAL MODERNISATION AND INTENSIFICATION PROJECT COMPLETION REPORT Borrower’s Commitments on the Bank’s PCR Having considered the completion report on the PMIA, the Authorities of Senegal, via letter reference 03614/MEF/DCEF of 2 April 2008, signed by the Minister of State in the Ministry of the Economy and Finance, have indicated that they have no particular comments on the report or the recommendations included for the Borrower regarding a number of issues, including the sustainability of the credit. They also pointed out that they have already embarked on some of the recommended actions, in particular those asking for a phase during which remedial and consolidation measures will be taken to establish a permanent credit granting system. A number of drafting amendments were proposed as follows: section 6.1 page xiii: in the last line, replace « almost 2.3 billion CFAF » by « 2.285 billion CFAF ». section 8.1 page xiv: replace the last sentence ‘implementation of a second phase’ by ‘implementation of a consolidation phase’. section 3.6.2 page 5 : replace the first sentence ‘ because the post-harvest facilities were abandoned’ with ‘ because the resources allocated for the post-harvest facilities component could not be mobilized as a result of the high level of contribution (30%) that the communities were expected to provide’. Section 3.6.3 page 6: replace ‘ADF disbursements and positioning of counterpart funds’ with ‘Disbursements of ADF and counterpart funds’. Annex 4 page 2 of 2: Under ‘Sustainability’, in the ‘follow-up actions’, column, substitute ‘implementation of a consolidation phase’ for ‘implementation of a new phase’.
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