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Senegal - Agricultural Modernization and Intensification

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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
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                                                              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
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                                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
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                                     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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